Best Business And Class Action Lawyers Near Chicago

What are the Best Defenses to a Class Action?

May 23, 2024 | Peter S. Lubin and Patrick Austermuehle

Based on our research and experience, the best defenses to a class action generally revolve around the requirements of typicality and adequacy of the class representative (Danis v. USN Communications, Inc., 189 F.R.D. 391 (1999)). The presence of even an arguable defense peculiar to the named plaintiff or a small subset of the plaintiff class may destroy the required typicality of the class as well as bring into question the adequacy of the named plaintiff’s representation. This fear arises from the possibility that the named plaintiff could become distracted by the presence of an individual defense, which could compromise the representation of the rest of the class (Al Haj v. Pfizer Inc., — F.R.D. —- (2020)), (Lipton v. Chattem, Inc., 289 F.R.D. 456 (2013)), (CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721 (2011)).

A defense unique to a proposed class representative does not need to be a sure bet to defeat the adequacy required for class certification; it only needs to be arguable and substantial (Al Haj v. Pfizer Inc., — F.R.D. —- (2020)). Similarly, defenses that are specific to the named representative may defeat the requirements of typicality or adequacy of the representative (Danis v. USN Communications, Inc., 189 F.R.D. 391 (1999)). However, these defenses need to be “unique, arguable and likely to usurp a significant portion of the litigant’s time and energy” (Danis v. USN Communications, Inc., 189 F.R.D. 391 (1999)).

It’s important to note that the assertion of individual defenses does not necessarily defeat a plaintiff’s ability to represent a class adequately (P.J.’s Concrete Pumping Service, Inc. v. Nextel West Corp., 345 Ill.App.3d 992 (2004)), (Walczak v. Onyx Acceptance Corp., 365 Ill.App.3d 664 (2006)). A class action, in which a defendant is alleged to have acted wrongfully in the same basic manner as to the entire class, is not necessarily defeated merely because certain defenses may be urged against individual class members (735 ILCS 5/2-801).

Moreover, defenses that are unique to a named plaintiff are relevant to the inquiry into whether plaintiff’s claims are typical but are not necessarily dispositive of the issue (Sebo v. Rubenstein, 188 F.R.D. 310 (1999)). In many instances when a unique defense exists a class is defeated but the court is not required to deny certification for speculative reasons; the certification decision always remains within the sound discretion of the court (Danis v. USN Communications, Inc., 189 F.R.D. 391 (1999)).

Lastly, it’s worth noting that while the merits are not typically before the appellate court when reviewing the district court’s certification of the class, the claim of the class representative may be subject to a defense that makes it an inappropriate representative of the class because other class members may not be subject to the same defense, or perhaps to any defense (CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721 (2011)).

Why Retain Lubin Austermuehle to Defend Your Class Action Lawsuit?

May 23, 2024 | Peter S. Lubin and Patrick Austermuehle

When facing a class action lawsuit, the stakes are incredibly high. The complexity of these cases requires a legal team with specialized expertise and a track record of success. Lubin Austermuehle stands out as a premier choice for several compelling reasons:

Extensive Experience in Class Action Defense

Lubin Austermuehle’s legal team has extensive experience in defending class action lawsuits across various industries. Our attorneys are well-versed in the intricate procedural and substantive aspects of class action law, ensuring that every angle of your case is meticulously analyzed and strategically addressed.

What are the Best Defenses Under Illinois Law for a Partner Accused of Breaching Fiduciary Duties to the Partnership or Other Partners?

May 11, 2024 | Peter S. Lubin and Patrick Austermuehle

Under Illinois law, defenses for a partner accused of breaching fiduciary duties to the partnership and his other partners can be varied and nuanced (LID Associates v. Dolan, 324 Ill.App.3d 1047 (2001)), (Pielet v. Hiffman, 407 Ill.App.3d 788 (2011)). Here are some potential defenses:

1. Compliance with Partnership Agreement: A partner who has acted in accordance with an express authorization in the partnership agreement may not be deemed in breach of fiduciary duties (1515 North Wells, L.P. v. 1513 North Wells, L.L.C., 392 Ill.App.3d 863 (2009). However, no language in a partnership agreement, however clear and explicit, can reduce a partner’s fiduciary duty toward other partners (Pielet v. Hiffman, 407 Ill.App.3d 788 (2011)).

2. Good Faith and Fairness: A partner can defend on the grounds that he has acted in good faith and fairness in his dealings with other partners (Winston & Strawn v. Nosal, 279 Ill.App.3d 231 (1996)). Under Illinois law, a fiduciary relationship exists between partners and each is bound to exercise the utmost good faith in all dealings and transactions related to the partnership business (Pielet v. Hiffman, 407 Ill.App.3d 788 (2011)), 1515 North Wells, L.P. v. 1513 North Wells, L.L.C., 392 Ill.App.3d 863 (2009)).

3. Lack of Personal Advantage: If a partner can show that he has not advantaged himself at the expense of the firm, this could be a defense against an accusation of fiduciary duty breach.

4. Right to Manage Partnership Affairs: If a partner was managing the affairs of the partnership and did not conceal, misrepresent or seek to take advantage of his partner, he might be able to argue that he was not in breach of fiduciary duties (Mermelstein v. Menora, 372 Ill.App.3d 407 (2007)).

5. Discrepancies in Accounting or Interpretation of Rights and Duties: Discrepancies or errors in accounting, or misinterpretations of rights and duties under partnership agreements, can be invoked as a defense, especially if the partner did not seek personal advantage.

6. Duty of Good Faith: If it can be shown that the partner always exercised good faith in his dealings with other partners, he can defend against the accusations (Pielet v. Hiffman, 407 Ill.App.3d 788 (2011)), (Winston & Strawn v. Nosal, 279 Ill.App.3d 231 (1996)).

Remember that each case is unique and the success of these defenses can depend on the specifics of the partnership agreement and the facts of the case. These defenses are not exhaustive and other defenses may be available depending on the specifics of a case. Continue reading ›

What are the Best Defenses to a Libel Suit in Illinois?

May 7, 2024 | Peter S. Lubin and Patrick Austermuehle

In Illinois, there are several defenses that can be utilized in response to a libel suit. One such defense is the doctrine of “innocent construction”, where a potentially defamatory statement is innocently construed, and therefore not actionable. Expressions of opinion are another type of defense, as they are not considered statements of fact and are therefore protected from defamation claims.

Another key defense to defamation in Illinois is the defense of truth. Under Illinois law, if the defendant can show the “substantial truth” of the alleged defamatory statement, this is considered a complete defense to defamation. The defendant need only show the truth of the “gist” or “sting” of the defamatory material.

Additionally, the establishment of a qualified privilege can also serve as a defense. If a qualified privilege is established, the communication becomes actionable only if the privilege was abused. The plaintiff must present evidence of a reckless act which shows disregard for the defamed party’s rights, such as failure to properly investigate the truth of the matter, limit the scope of the material, or send the material to only proper parties .

In some cases, the defendant can maintain a suit for defamation without proof of special damages only if the defamatory statement falls into one of four “per se” categories: commission of a crime; infection with a communicable disease leading to the infected person being shunned; malfeasance or misfeasance in the performance of office or job; and unfitness for their profession or trade.

Lastly, under Illinois statutory and constitutional provisions, when truth is published with good motives and for justifiable ends, it can be used as a defense to prosecution for criminal libel. However, both elements are necessary for the defense to prevail. Continue reading ›

Can Taking Excessive Compensation Violate a Managing Member or Majority Shareholder’s Fiduciary Duties?

May 7, 2024 | Peter S. Lubin and Patrick Austermuehle

Yes, taking excessive compensation can indeed violate a managing member or majority shareholder’s fiduciary duties. Case law supports this assertion. In Fleming v. Louvers International, Inc., the court found that a majority shareholder violated his fiduciary duties by taking excessive compensation, depriving a minority shareholder of his rightful distributions. This conduct was seen as a breach of both his common-law fiduciary duty and his duty under section 12.56(a)(3) of the Act, and also constituted constructive fraud.

The case of Kovac v. Barron highlighted the defendant shareholder who had the corporations pay him and his wife millions in excessive compensation, which was then concealed by disguising the payments as “contract labor” on the corporations’ tax returns.

Similarly, in Halperin v. Halperin, it was held that the payment of excessive compensation and the concealment of the amount of compensation received by the officers were breaches of fiduciary duty. Concealing compensation amounts from shareholders could still constitute a breach of fiduciary duty, even if the compensation was not found to be excessive. Continue reading ›

Why choose Lubin Austermuehle for Business Litigation?

May 7, 2024 | Peter S. Lubin and Patrick Austermuehle

Choosing Lubin Austermuehle for business litigation comes with several advantages, particularly due to their experience and client-focused approach. Here are some key reasons why they are a compelling choice:

Experience Across Business Litigation Domains: Lubin Austermuehle handles a wide range of business litigation matters, including disputes related to shareholders, LLC members, and partnerships, as well as issues involving trade secret theft, copyright and trademark infringement, and non-compete agreements. They are also experienced in emergency injunctive relief and a variety of other complex litigation areas such as consumer fraud and employment disputes (Chicago Business Litigation Lawyer Blog).
Dedicated Legal Team: The firm’s attorneys, including noted lawyers like Peter Lubin and Patrick Austermuehle, are recognized for their legal acumen. Both have received accolades such as “Super Lawyer” and “Rising Star,” underscoring their professional excellence (Chicago Business Litigation Lawyer Blog) (Chicago Business Litigation Lawyer Blog).

Franchise Terminations: Defenses and Legal Representation

March 25, 2024 | Peter S. Lubin and Patrick Austermuehle

In the world of franchising, the termination of a franchise agreement can be a complex and contentious issue. Franchisees facing termination must understand their rights and the defenses available to them. Equally important is choosing the right legal representation to navigate these challenging waters.

Defenses to Franchise Termination

Breach of Contract by Franchisor: If the franchisor has failed to uphold their end of the franchise agreement, this can be a strong defense. Examples include not providing agreed-upon support or infringing on the territory rights of the franchisee.
Lack of Proper Notice: Franchise agreements typically require the franchisor to provide notice before termination. If this procedure is not followed, it can be a valid defense.
Unreasonable or Unjust Termination: Franchisees can argue that the termination is unreasonable or unjust. This might be the case if the franchisor terminates the agreement without a valid reason or for a minor infraction that could have been resolved.
Good Faith and Fair Dealing: Franchisees can contend that the franchisor did not act in good faith or deal fairly. This is a broader defense that encompasses various actions by the franchisor that might be deemed unfair or oppressive.
Discrimination: If the termination is based on discriminatory reasons, this can be a legal defense, especially if it violates state or federal laws.
Retaliation: If the termination is in retaliation for the franchisee exercising a legal right, such as reporting violations, it can be contested legally.

Understanding the Freeze Out or Squeeze Outs of Minority Owners in Illinois Closely Held Companies

March 12, 2024 | Peter S. Lubin and Patrick Austermuehle

In the business world of closely held companies in Illinois, minority shareholders often find themselves vulnerable to what is known as a “freeze out” or “squeeze out.” This blog post delves into this phenomenon, exploring what it means, how it happens, and the legal backdrop in Illinois that governs such situations.

What is a Freeze Out/Squeeze Out?

A freeze out or squeeze out occurs when majority shareholders in a closely held company engage in practices aimed at marginalizing, reducing, or eliminating the minority shareholders’ stake in the company. This can be done in various ways, such as refusing to declare dividends, terminating employment, or other tactics that essentially force minority shareholders to sell their shares at a reduced value.

Common Tactics Used

Withholding Dividends: Majority shareholders may decide not to declare dividends, thereby cutting off a key financial benefit of holding shares.
Employment Termination: Minority shareholders who are employed by the company might be terminated or demoted.
Denying Access to Information: Minority shareholders might be denied access to important company information, impacting their ability to make informed decisions.
Dilution of Shares: The company might issue more shares, diluting the minority’s ownership percentage.

Legal Framework in Illinois

In Illinois, the rights of minority shareholders in closely held corporations are protected under various statutes and case law. The Illinois Business Corporation Act provides certain protections and remedies for minority shareholders, including the right to a fair valuation of their shares.

Fiduciary Duties: Majority shareholders have fiduciary duties to the minority. Breach of these duties can form the basis for legal action.
Oppression Remedies: The law provides remedies for “oppressive” actions by majority shareholders. This can include actions that are burdensome, harsh, or wrongful.

In Illinois, there are several significant cases that provide guidance on the treatment of minority shareholder or LLC member freeze-outs or squeeze-outs.

In “Vanco v. Mancini”, the court acknowledged the vulnerability of minority shareholders to freeze-outs or squeeze-outs where the majority, for personal rather than legitimate business reasons, deprives the minority shareholder of their office, employment, and salary. The court highlighted the availability of judicial remedies, including the dissolution of the corporation, in such instances.

The case of “Rexford Rand Corp. v. Ancel” further expanded on this issue. The court suggested the necessity of a fiduciary duty on shareholders in a close corporation as a protective measure against oppressive conduct by the majority. It also indicated that a minority shareholder who has been frozen out should rely on an oppressed shareholder lawsuit against the corporation seeking damages or dissolution. Interestingly, the court discussed whether a freeze-out terminates a shareholder’s fiduciary duty to a close corporation and concluded that a minority shareholder who has been frozen out no longer exercises influence over corporate affairs that gives rise to a fiduciary duty.

“Small v. Sussman” held that the injuries alleged by a minority shareholder were injuries to the corporation, thus only a shareholder derivative action was available. It also found that a freeze-out merger that, through a reverse stock split, eliminated a minority shareholder’s fractional share, did not support a constructive fraud claim. The court ruled that a minority shareholder cannot recover on a conversion claim against the majority shareholder and corporation in connection with a freeze-out merger that eliminated his fractional share.

Further to this, “Jaffe Commercial Finance Co. v. Harris” held that a majority, by merely voting its strength to effectively oust minority from participation in the business of a corporation, did not act oppressively within the meaning of the statute authorizing liquidation. Similarly, in “Jahn v. Kinderman”, it was held that frozen-out minority shareholders in closely held corporations may seek dissolution of the entity, and majority shareholders may avoid this result via a buyout of the minority at a “fair value” to be determined by the circuit court if the parties are unable to reach an agreement.

Lastly, “Bone v. Coyle Mechanical Supply, Inc.” found that majority shareholders’ conduct in failing to hold annual meetings, failing to observe corporate formalities in increasing bonuses and compensation, and effectively “freezing-out” minority shareholders could be considered as outrageous, due to evil motive or reckless indifference to the rights of others.

Please note that these cases provide a general outline of the law in Illinois on minority shareholder or LLC member freeze-outs or squeeze-outs, and the specific holdings may vary depending on the facts of each case.

Why You Should Choose Lubin Austermuehle for Trade Secret Theft or Non-Compete Matters

March 9, 2024 | Peter S. Lubin and Patrick Austermuehle

In the complex world of trade secret theft and non-compete litigation, having the right legal team on your side is critical. Lubin Austermuehle, with its strong online presence at www.thebusinesslitigators.com and www.l-a.law, stands out as a premier choice for handling these intricate legal matters. Here are compelling reasons why they should be your go-to firm:

1. Experience in Trade Secret and Non-Compete Litigation

Lubin Austermuehle has a proven track record in successfully handling trade secret theft and non-compete cases. Their deep understanding of the legal complexities in these areas ensures that they can provide effective strategies tailored to each unique case.

2. Dedicated and Experienced Legal Team

The team, including highly recognized attorneys like Peter Lubin and Patrick Austermuehle, brings a wealth of experience and accolades. Their expertise is not just in the courtroom; they understand the nuances of negotiating settlements and crafting agreements that protect their clients’ interests.

3. Commitment to Protecting Client Interests

The firm is committed to protecting the rights and interests of their clients. Whether you are defending against an accusation of trade secret theft or challenging an unfair non-compete agreement, Lubin Austermuehle works tirelessly to ensure the best possible outcome for their clients.

4. Client-Centric Approach

Understanding that every case is unique, Lubin Austermuehle prides itself on a client-centric approach. They listen to their clients, understand their specific needs, and develop strategies that are not just legally sound but also aligned with the clients’ business objectives. Continue reading ›

Why Contact Lubin Austermuehle for Your Business Dispute in Illinois? Call Us For A Free Consultation.

March 8, 2024 | Peter S. Lubin and Patrick Austermuehle

Extensive Experience in Partnership, LLC Member, and Shareholder Disputes

At Lubin Austermuehle, we understand the complexities of business disputes in closely held companies. Whether you are facing a partnership disagreement, LLC member conflict, or shareholder dispute, our experienced attorneys are here to provide you with the guidance and representation you need to protect your interests.

Personalized Attention for Closely Held Companies