Best Business And Class Action Lawyers Near Chicago

Illinois GOP Sues Governor Over Covid-19 Restrictions and Loses

October 23, 2020 | Peter S. Lubin and Patrick Austermuehle

After the governor of Illinois issued an executive order banning gatherings greater than 50 people due to the SARS-CoV-2 pandemic, the Illinois Republican Party sued. The state GOP alleged that the order’s carve out for religious services violated the Free Exercise Clause of the First Amendment because it privileged religious services over other types of speech, including political speech. The appellate panel disagreed, finding that the order did not violate the Free Exercise Clause because it was clear that speech that accompanies religious exercise had a privileged position under the First Amendment and that the executive order permissibly accommodated religious activities.

In response to the SARS-CoV-2 pandemic, Governor J. B. Pritzker of Illinois has issued a series of executive orders designed to limit the virus’ opportunities to spread. The Illinois Republican Party and some of its affiliates believe that one executive order issued by Pritzker, a ban on gatherings of groups larger than 50, violated the Free Speech Clause of the First Amendment because it contained a carve-out for the free exercise of religion, which allowed religious organizations to gather in groups of larger than 50 individuals.

The plaintiffs sought a permanent injunction against EO 43, assuming that such an injunction would permit them to gather in groups larger than 50, rather than reinstate the stricter ban for religion that some of the Governor’s earlier executive orders included. The district court denied the plaintiffs’ request for an injunction, and the plaintiffs appealed.

The appellate panel began by stating that the argument of the plaintiffs was essentially that religious groups were privileged over other groups in terms of limits on gatherings and that the only difference between the religious groups and others was the content of their speech. The panel found that, based on the Supreme Court’s Religion Clause cases, it was clear that speech that accompanies religious exercise has a privileged position under the First Amendment, and that EO43 permissibly accommodates religious activities. Continue reading ›

Supreme Court Rules that Nonsignatory to International Arbitration Agreement Can Compel Arbitration under Domestic State Law

September 28, 2020 | Peter S. Lubin and Patrick Austermuehle

In a unanimous opinion, the U.S. Supreme Court recently ruled that allowing nonsignatories to an international arbitration agreement to compel arbitration through domestic equitable estoppel doctrines does not conflict with the signatory requirement of the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the New York Convention).

That case, GE Energy Power Conversion France SAS v Outokumpu Steamless USA, LLC, stems from a 2007 contract between a contractor and steel manufacturer for the construction of mills in the manufacturer’s steel plant. The plaintiff, an international subsidiary of the global power company, General Electric, had been subcontracted by the contractor to produce nine motors for the mills. Outokumpu Stainless USA, LLC (which acquired ownership of the plant), and its insurers sued GE Energy after the motors allegedly failed.

GE Energy moved to dismiss the case and sought to compel arbitration by enforcing the arbitration clauses in the contract between the contractor and steel manufacturer. A Federal District Court granted the motion to dismiss and compel arbitration. The Eleventh Circuit Court of Appeals reversed, holding that the New York Convention: (i) requires parties seeking to compel arbitration to be signatories of the arbitration agreement, and (ii) precludes the use of state-law doctrines of equitable estoppel to compel arbitration in conflict with the Convention’s signatory requirement. In reversing the Eleventh Circuit, the Supreme Court held that use of state law doctrines of equitable estoppel to compel arbitration by nonsignatories to an international arbitration agreement was not barred by or conflict with the New York Convention.

Before announcing its holding, the Court first analyzed the two primary authorities at issue in the case, the Federal Arbitration Act (“FAA”) and the New York Convention. The Court began it discussion by noting its previous holdings that the FAA permits a nonsignatory to rely on state-law equitable estoppel doctrines to enforce an arbitration agreement. Generally, in the arbitration context, the Court explained “equitable estoppel allows a nonsignatory to a written agreement containing an arbitration clause to compel arbitration where a signatory to the written agreement must rely on the terms of that agreement in asserting its claims against the nonsignatory.” Continue reading ›

Federal Judge Rules that Three Missouri Restaurants Can Sue Insurers for COVID-19 Losses

September 21, 2020 | Peter S. Lubin and Patrick Austermuehle

ATTENTION BUSINESS OWNERS: we are investigating possible wrongful denials of business interruption insurance claims due to COVID-19. If you would like us to review your policy, feel free to send it along.

As we have written about previously, the COVID-19 pandemic and the numerous restrictions and shelter in place orders that have been implemented have spawned a number of lawsuits from business owners against insurance companies. These suits seek to determine coverage for business income losses that resulted from businesses being forced to shut down in compliance with government orders. A recent ruling from a federal judge in Kansas City could open the window for thousands of businesses whose insurers have denied their COVID-19-related claims.

Background of the COVID Coverage Disputes

Businesses holding all risk or business income interruption polices have submitted claims throughout the country to their insurers seeking coverage for business interruptions based on COVID-19-related closures. The claims generally seek recovery of lost business income and extra expenses incurred due to having to close their places of business as a result of the presence of the virus or government orders. The response from insurance companies has been almost universal: denial of the claims on the basis that the losses do not constitute a “direct physical loss or damage” at the covered property. Following the filing of hundreds of insurance coverage lawsuits, some plaintiffs are seeking consolidation of the federal lawsuits in multidistrict litigation. The Judicial Panel on Multidistrict Litigation heard an argument for consolidation in August and is expected to issue a decision in the coming weeks.

To date, most court decisions have sided with insurance companies. The courts in these cases have held that the risks posed by COVID-19 do not meet the direct physical loss or damage requirement for coverage under the insured’s respective policies. The recent opinion from U.S. District Court Judge Stephen Bough is definitely an outlier but gives new ammo for those businesses whose claims have not yet been decided or who have yet to file suit against their insurance companies. Continue reading ›

Hiscox Sued for Allegedly Failing to Pay Business Disruption Claims in the Wake of COVID-19

August 2, 2020 | Peter S. Lubin and Patrick Austermuehle

The COVID-19 pandemic has disrupted all kinds of businesses all over the world, but small businesses have been hit the hardest. Many business owners pay for business insurance to help them cover the costs of doing business when they can’t do business, or to cover the costs of litigation if they get sued.

But this pandemic has put so many small businesses out of business, even if just temporarily, those insurers have been flooded with claims – and when insurers get flooded with claims, they usually look for excuses to avoid paying all those claims.

Hiscox is a major insurance company that specializes in selling business insurance to small business owners, often directly over the internet without the aid of an insurance broker. When many of those policyholders tried to file claims with Hiscox for business disruption, Hiscox allegedly claimed the pandemic is not covered under the terms of their business disruption insurance policy.

In response to the insurance company’s refusal to pay up, almost 350 policyholders came together to form the Hiscox Action Group. Mishcon de Reya, a law firm based in London, has been hired to represent Hiscox Action Group and they quickly entered into arbitration against Hiscox over the unpaid business disruption insurance claims.

Hiscox is not the only insurance company refusing to pay small business owners for the losses they have suffered as a result of COVID-19. Seven other insurance companies, along with Hiscox, are taking part in a UK court test case to determine whether insurers can be made to pay business disruption claims in the wake of COVID-19. Continue reading ›

FTC Wins Judgment Against Company Engaged in Student Loan Fraud

July 26, 2020 | Peter S. Lubin and Patrick Austermuehle

The FTC sued a student loan debt relief company that promised consumers that it would reduce their monthly student loan payments, or arrange for their student debts to be forgiven in whole or part by their student loan servicers. Instead, the company kept most of the money sent to them by the consumers and failed to negotiate with the servicers or remit the payments in a timely fashion. The district court granted summary judgment to the FTC and issued a permanent injunction against the defendants, as well as a monetary judgment for more than $27 million in restitution.

The United States District Court for the Central District of California granted summary judgment to the Federal Trade Commission in a suit filed against Elegant Solutions, Inc. The FTC filed a complaint against Elegant Solutions for a permanent injunction and other equitable relief pursuant to § 13(b) and 19 of the Federal Trade Commission Act and 57(b) of the Telemarketing and Consumer Fraud and Abuse Prevention Act.

The FTC’s complaint charged that the defendants participated in acts or practices that violated § 5(a) of the FTC Act by representing in advertising that consumers who purchased the defendants’ debt relief services would be enrolled in a repayment plan that would reduce their monthly payments on their student loans to a lower, specific amount, or have their student loan balances forgiven in whole or part; that most or all of the consumers’ monthly payments to the defendants would be applied toward consumers’ student loans; and that the defendants would assume responsibility for the servicing of consumers’ student loans. The district court found that, in numerous instances in which the defendants made such representations, they were false or not substantiated. The panel determined that these representations constituted a deceptive act or practice in violation of § 5(a) of the FTC Act. Continue reading ›

Insurer Not Required to Defend Distributor that Fraudulently Shipped Uncertified Lumber

April 22, 2020 | Peter S. Lubin and Patrick Austermuehle

A building contractor in Minnesota ordered a specific brand of flameproof lumber from a Chicago distributor of commercial building materials. Unbeknownst to the contractor, the distributor substituted its in-house brand of lumber in the order. The in-house brand of lumber had not been certified to meet the safety standards required by the architect of the buildings and the contractor was later required to rip out the lumber and replace it with new material. The contractor sued the distributor. The distributor’s insurance company then sought a judgment that it was not required to defend the distributor. The district court and the appellate court agreed, finding that the actions of the distributor were not covered under its insurance policy.

Chicago Flameproof is an Illinois-based distributor of commercial building materials, including fire retardant and treated lumber (FRT). Chicago Flameproof maintained general liability insurance through Lexington Insurance Company. Under the policy, Lexington had the right and duty to defend Chicago Flameproof against any suit seeking covered damages, but no duty to defend against any suit seeking uncovered damages.

The policy defined an occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The policy also defined “property damage” as physical injury to tangible property, including all resulting loss of that property, or loss of use of tangible property that is not physically injured. Chicago Flameproof sold lumber to Minnesota-based residential and commercial contractors JL Schwieters Construction, Inc. and JL Schwieters Building Supply, Inc. Schwieters then contracted with two building contractors, Big-D Construction Midwest, LLC and DLC Residential, LLC to provide labor and material for the framing and paneling for four building projects in Minnesota. The architectural firm on all of the projects, Elness Swenson Graham Architects, Inc. required that FRT lumber meeting the requirements set forth in the International Building Code be used for the exterior walls of each building. Continue reading ›

Customers’ Suit Against Insurer Over Rate Hikes Not Barred

April 12, 2020 | Peter S. Lubin and Patrick Austermuehle

Longtime customers of Allstate Insurance Corporation alleged that Allstate determined they were willing to pay higher prices than new customers with similar risk profiles and started hiking their auto insurance rates as a result. The customers sued Allstate, alleging that Allstate failed to disclose its practice of optimizing rates in this fashion when it filed its rates with the Illinois Department of Insurance. Allstate attempted to have the case dismissed under the filed rate and primary jurisdiction doctrines, but the circuit court denied the motion and the appellate panel affirmed.

Allstate Corporation sells property and casualty insurance, including private passenger automobile insurance, to consumers in Illinois. Several customers who had purchased insurance from Allstate for more than two decades sued Allstate, alleging that Allstate illegally increased prices for their insurance under a practice called “price optimization,” after it determined that longtime customers would be more willing to absorb price hikes than new customers. The plaintiffs alleged that as a result they were charged higher prices than new customers who presented the same risk and that Allstate’s use of price optimization was not disclosed in its rate filings with the Illinois Department of Insurance.

In the trial court, Allstate filed a motion to dismiss the complaint, arguing that the action was barred by the filed rate doctrine and the primary jurisdiction doctrine. Following a hearing, the circuit court denied Allstate’s motion to dismiss. The court determined that Allstate failed to establish that the plaintiffs’ complaint should be dismissed under either the filed rate doctrine or the primary jurisdiction doctrine. The circuit court noted that Illinois is unique in that insurers may select their own rates and merely inform the Illinois Department of Insurance of their selection. The circuit court then granted Allstate’s motion to certify the questions of whether either the filed rate doctrine or the primary jurisdiction doctrine barred plaintiffs’ suit to the appellate court and the appellate court granted interlocutory review. Continue reading ›

Employers Must Prepare for New Employment Laws Set to Take Effect in 2020

November 3, 2019 | Peter S. Lubin and Patrick Austermuehle

As we enter the final quarter of 2019, employers must begin to look ahead and begin preparing for a number of new employment laws that will take effect January 1, 2020. Even though employers have nearly 100 days to review and revise their employment policies, they should start familiarizing themselves now with the new requirements, training management in compliance, and preparing to implement any new procedures come the start of 2020. Continue reading ›

No Love Lost between FTC and Match.com as FTC Files Suit for Misleading and Unfair Practices

October 29, 2019 | Peter S. Lubin and Patrick Austermuehle

Online dating sites are an increasingly common way people seek to find romance. But, according to the Federal Trade Commission, these sites could also be a source of scams or a haven for scammers. The FTC recently filed a lawsuit against the company that owns popular dating sites and apps such as Match.com, Tinder, OKCupid, and PlentyOfFish, alleging that the company used fake advertisements designed to trick consumers into believing someone had shown interest in them and purchase a paid subscriptions on Match.com.

According to the FTC’s complaint, many consumers received emails or instant messages containing attention-grabbing text such as: “He just emailed you! You caught his eye and now he’s expressed interest in you… Could he be the one?” (referred to as “You caught his eye”-type notices in the complaint) Although Match allows consumers to create free accounts, to actually read these messages Match required consumers to upgrade to paid subscriptions. For many consumers hoping to find that special someone, the representation that specific suitors were already eager to meet them proved impossible to pass up. Many consumers responded to these emails and messages, often paying more than $100 for a subscription in the hope of connecting with these people who had already “expressed interest” in them. Continue reading ›

Purchasers of Defective RV Not Required to Allow Seller to Cure Defect in Order to Revoke Acceptance

October 23, 2019 | Peter S. Lubin and Patrick Austermuehle

When two people purchased an RV that was later found to have a defect that substantially impaired its value, the purchasers were not required to give the seller of the RV time to cure the defect before being able to revoke their acceptance and receive a refund of their purchase price. The Illinois Supreme Court held that Illinois’ statute only required allowing the seller time to cure a defect if the purchaser had accepted a commercial unit with knowledge of a defect and an agreement with the seller which contemplated the seller repairing the defect.

In April 2014, Kimberly Accettura and Adam Wozniak purchased a new 2014 Palomino RV from Vacationland, Inc. for $26,000.25. They took possession of the RV a week later. That June, they discovered water leaking into the RV from the emergency exit window. The plaintiffs then brought the RV back to Vacationland for repair, which Vacationland performed without charge.

In July 2014, the plaintiffs took the RV to Michigan. During a rainstorm, the RV continued to leak extensively into the dinette area, damaging the walls and causing electrical failure. The plaintiffs towed the RV back to Vacationland for repair later that month. Vacationland was unable to repair the defect itself, so one of its employees told the plaintiffs that it would have to send the RV to the manufacturer for repair. Neither Vacationland’s employees or the manufacturer could give the plaintiffs an estimate for how long a repair would take. On Aug. 2, before the manufacturer picked up the RV, the plaintiffs called Vacationland and verbally revoked acceptance of the RV. Despite this, the manufacturer still picked up and repaired the RV. When the RV was returned to Vacationland at the end of September, Vacationland called the plaintiffs and told them that the RV was ready for pick up. At this point, the plaintiffs’ attorney sent a letter to Vacationland confirming the earlier revocation of acceptance of the RV. Continue reading ›