|

Two inventors who were entitled to royalties on the sales of products sued the purchaser of their former company over their royalty rights. The litigation and arbitration took years, and after the third round of arbitration, the arbitrator determined that the inventors were not entitled to compensation from the company they sued. Despite this finding, the two continued to engage in litigation against the firm. After their final suit was dismissed in the district court, the company sought sanctions for bringing a groundless lawsuit. The district court granted the motion, finding that the suit had been barred by the doctrine of res judicata and the plain language of the governing agreements. The appellate panel agreed, determining that the results of the third and fourth rounds of arbitration made the suit frivolous and it affirmed the imposition of sanctions.

In 1997, Tai Matlin and James Waring co-founded Gray Matter Holdings, LLC. In 1999, they entered into a Withdrawal Agreement with Gray Matter. The agreement entitled Matlin and Waring to royalties on the sales of certain key products. In 2003, Gray Matter sold some of its assets to Swimways Corp.

Since that sale, Matlin and Waring have been engaged with Gray Matter in protracted litigation and arbitration over their royalty rights. During the third arbitration, the arbitrator determined that Gray Matter had not transferred its royalty obligations to Swimways in 2003, and therefore remained solely responsible for any royalty compensation owed to Matlin and Waring under the Withdrawal Agreement. Continue reading ›

|

Statutory fee-shifting is usually meant to incentivize plaintiffs to bring claims involving important rights but relatively low monetary damages. Some statutes provide for fee-shifting not only to successful plaintiffs but also to successful defendants. As the recent decision in the case of Multimedia Sales & Marketing, Inc. v. Marzullo illustrates, plaintiffs considering bringing trade secret misappropriation claims in Illinois courts would be wise to review their claims before filing so to ensure that their claims are not meritless.

The plaintiff in the lawsuit, Multimedia Sales & Marketing, Inc., is a radio advertiser who sued a competitor, Radio Advertising, Inc., along with three former employees who left Multimedia to work for Radio Advertising. Multimedia alleged that the former employees misappropriated Multimedia’s potential customer lead lists or renewal lead lists, which these individuals allegedly used to attempt to woo away Multimedia’s existing and potential customers. Multimedia claimed the lists were protectable trade secrets under the Illinois Trade Secrets Act (ITSA), 765 ILCS 1065/1 et seq.

The trial court disagreed and granted the defendants summary judgment finding that the lists (1) did not qualify as a trade secret under ITSA, and (2) were not “secret” because Multimedia widely shared them with numerous parties including radio stations. Following the grant of summary judgment, the defendants filed a motion for attorney’s fees as permitted by Section 5 of the ITSA. The trial court granted the defendants’ motion and awarded them $71,688 in attorney’s fees. Multimedia then appealed the ruling that the lists did not qualify as trade secrets as well as the award of attorney’s fees. Continue reading ›

|

A disgruntled investor sued the organization that regulates registrations for certain securities brokers after he lost his investment. The investor argued that the securities broker had a history of misconduct dating back more than 30 years and should have had his membership revoked under the organization’s bylaws. The investor claimed that because the organization violated its own bylaws, it was liable for the actions of the securities broker. The district court determined that the organization did not violate the bylaws because the conduct of the broker had not led to the expulsion of an associated organization, only a voluntary withdrawal. The appellate panel agreed and affirmed the decision of the district court.

The Commodities Futures Trading Commission promotes the integrity of the U.S. derivatives markets through regulation via the Commodity Exchange Act. Congress authorized the CFTC to establish futures associations with authority to regulate the practices of its Members. Since 1981, there has been a single CFTC-approved registered futures association under the CEA, the National Futures Association. The NFA is charged with processing registrations for futures commission merchants, swap dealers, commodity pool operators, commodity trading advisors, introducing brokers, retail foreign exchange dealers, and relevant associated persons.

One requirement enforced by the NFA is Bylaw 301(a)(ii)(D), which prohibits a person from becoming or remaining a member if they were, by their conduct while associated with another member, a cause of any suspension, expulsion, or order. Between 1983 and 2015, Thomas Heneghan was an associated person of fourteen different NFA-Member firms. Dennis Troyer, an investor in financial products since the 1990s, invested hundreds of thousands of dollars in financial derivatives through NFA Members and their associates.

Although Troyer chronicled history of misconduct by Heneghan, dating as far back as 1985, the first interaction between Troyer and Heneghan was not until October 2008 when Troyer invested more than $160,000 between October 2008 and March 2011 under Heneghan’s advisement. In 2009, Heneghan came under the scrutiny of the NFA. This scrutiny continued for several years as Heneghan changed affiliation across several NFA member firms. Heneghan was eventually barred from NFA membership, associate membership, and from acting as the principal of an NFA member in 2016. Continue reading ›

|

Many states have passed laws in the past few years taking aim at automatic renewals in contracts such as subscription-based services. As people have found themselves home more and more during the COVID pandemic, the number of subscription services with automatic renewals have exploded. New York recently passed a law more strictly regulating these automatic subscription renewals. The new law is set to take effect on February 11, 2021.

New York’s new law is meant to replace an existing law concerning automatic renewals which was narrow in scope and applied only to contracts “for service, maintenance, or repair to or for any real or personal property” with a renewal period longer than one month. The scope of the new law is much broader, covering any company offering goods or services to consumers through any kind of subscription plan that automatically renews—which includes free trials, free gifts, and reduced-price trial periods that convert to paid subscriptions automatically charged to consumers’ credit cards. As the press release accompanying the passage of the law explained, the new law is meant to better protect consumers who may not understand how to cancel such subscriptions and to avoid “convoluted renewals [that] have created a public health hazard for New Yorkers during the pandemic, including some who were told they had to visit their gyms in person to cancel memberships.”

New York’s new statute prohibits automatically renewing a contract without a consumer’s “affirmative consent” for the renewal. Absent this affirmative consent, some goods the provider may have sent the consumer can be deemed “unconditional gifts.” Absent from the new law, however, are guidelines for how providers are to obtain this consent.

The new law also requires clear and conspicuous disclosures before enrollment. Specifically, it requires that “automatic renewal terms,” such as the cancellation policy, recurring charges, and length of the renewal term, among other things be presented in a “clear and conspicuous” way and in “visual proximity” to the request for a consumer’s consent. Consumers must also receive an acknowledgment in “a manner that is capable of being retained by the consumer” that includes the automatic renewal terms and information regarding how to cancel the agreement. Providers must also provide a web-based option for cancellation. And if a provider makes any material changes to its renewal terms, those new terms must be provided to consumers in a “clear and conspicuous” notice. Continue reading ›

|

An AI company harvested publicly available photographs from social media sites across the internet and then used those photographs to derive a biometric facial scan of each individual in the photograph. The company sold this database to law enforcement agencies to use in identifying persons of interest or unknown individuals. A woman sued in a class action, arguing that the harvesting of biometric data violated Illinois’ Biometric Information Privacy Act. The company removed the case to federal court, and the federal court ruled that the plaintiffs’ claims lacked standing under Article III. The appellate court agreed with the district court and affirmed, ordering that the case be remanded to state court.

Clearview AI is in the business of facial recognition tools. Users may download an application that gives them access to Clearview’s database. The database is built from a proprietary algorithm that scrapes pictures from social media sites such as Facebook, Twitter, Instagram, LinkedIn, and Venmo. The materials that it uses are all publicly available. Clearview’s software harvests from each scraped photograph the biometric facial scan and associated metadata, which it stores in its database. The database currently contains billions of entries.

Many of Clearview’s clients are law enforcement agencies. The clients primarily use the database to find out more about a person in a photograph, such as to identify an unknown person or confirm the identity of a person of interest. Users upload photographs to Clearview’s app, and Clearview creates a digital facial scan of the person in the photograph and then compares the new facial scan to those in its database. If the program finds a match, it returns a geotagged photograph to the user and informs the user of the source social-media site for the photograph.

In the wake of a New York Times article profiling Clearview, Melissa Thornley filed suit in Illinois state court under the Illinois Biometric Information Privacy Act (BIPA). BIPA provides robust protections for the biometric information of Illinois residents. Thornley’s complaint, filed on behalf of herself and a class, asserted violations of three subsections of BIPA. Clearview removed the case to federal court. Shortly after removal, Thornley voluntarily dismissed the action. Thornley then returned to the Circuit Court of Cook County in May 2020 with a new, significantly narrowed, action against Clearview. The new action alleged only a single violation of BIPA and defined a more modest class. Continue reading ›

|

Pinterest is far from the first tech company to face allegations of gender discrimination, but it is the first to publicly announce that it will be paying more than $20 million to settle those allegations in a recent lawsuit involving a single plaintiff.

Françoise Brougher, the company’s former chief operations officer, sued the company in San Francisco Superior Court back in August, claiming she was paid less than her male peers, received feedback that was gender-biased, and was left out of meetings – all this despite the fact that she played a key role in driving revenue for the company.

Pinterest has reached a settlement agreement with Brougher and her attorneys in which Pinterest will pay them $20 million, and Pinterest and Brougher together will donate a total of $2.5 million to organizations that work to advance women and other minorities in tech. According to reports, the money is to be paid before the end of 2020.

The settlement did not include Pinterest admitting to having done anything wrong, and in fact, the company continues to insist it values diversity, equity, and inclusion in its workplace. Brougher even released a joint statement with Pinterest to that effect, claiming she’s encouraged by the company’s commitment to building a workplace culture that includes and supports all its employees. Continue reading ›

|

A plastics company purchased ingredients from a producer of rubber products for many years under a series of short-term agreements. A few years after signing a long-term agreement, the rubber producer attempted to unilaterally raise the price of the products it was selling to the plastics company. When the plastics company protested that this was not allowed under the agreement, the rubber producer failed to make scheduled deliveries on time. The plastics company then sought an alternate source of rubber and sued the producer for the difference in cost it paid. The district court determined that the rubber company failed to adequately assure the plastics manufacturer of its ability to perform under the contract, and the plastics company was therefore entitled to seek supplies elsewhere and recoup damages. The appellate panel affirmed, finding that the plastic company’s actions were reasonable under the Uniform Commercial Code.

BRC Rubber & Plastics, Inc. designs and manufactures rubber and plastic products, primarily for the automotive industry. Continental Carbon Company manufactures carbon black, an ingredient in many rubber products. Before 2010, BRC bought all the carbon black it needed from Continental, though the two companies did not have a long term supply contract.

In 2009, BRC solicited bids from several suppliers of carbon black, seeking a long-term contract to ensure continuity of supply. Continental won the bidding, and in late 2009 the two companies signed a five-year contract to run to Dec. 31, 2014. Continental agreed to supply BRC with approximately 1.8 million pounds of prime furnace black annually in equal monthly quantities. The contract listed baseline prices for three types of carbon black which were to remain firm throughout the agreement. The contract also included instructions for calculating the feedstock price adjustment to account for fluctuations in the price of oil and gas. Continue reading ›

|

Amazon claims it fired Chris Smalls, a management associate, in March for violating safety procedures by continuing to come to work after having been exposed to COVID-19, despite the fact that the company says it offered to pay him to stay home for 14 days after the exposure. Smalls, who is suing his former employer in the Eastern District of New York for discrimination and retaliation, tells a different story.

According to Smalls, Amazon failed to take several safety precautions related to the pandemic, including taking employees’ temperatures before allowing them on the premises; providing hand sanitizer or personal protective equipment, such as masks and gloves; enforcing social distancing; or making sure the facility was properly cleaned and sanitized between shifts.

In the complaint, Smalls said he felt a responsibility to bring his concerns to management. He alleges management did not care about the health or welfare of the employees working under him because they were largely Black, Latino, and/or immigrants whose recent entry into the country made them unlikely to speak up on their own behalf. When Smalls again met with Amazon management, this time with a group of workers that included white employees, he alleges management was significantly more receptive to their complaints. Continue reading ›

|

Everyone knows who Sherlock Holmes is. Even if you haven’t read one of Sir Arthur Conan Doyle’s short stories featuring the famous detective, you’ve no doubt seen, or at least heard of, one of the many adaptations of Holmes and his adventures into other works of fiction, from other books and short stories, to movies and TV shows. He is known as the cold, calculating detective who sees clues everywhere, but is either incapable of taking into consideration the feelings of the people around him, or just lacks the patience to do so.

That is the Sherlock Holmes of the public domain, but later stories written by Doyle show a softer side – someone who has become more considerate in general, and more respectful towards women in particular. That version of the detective is not yet in the public domain, which forms the basis of a copyright lawsuit against Netflix, Nancy Springer, and Random House, among others.

The copyright lawsuit focused on Enola Holmes, a series of young adult books written by Springer, published by Random House, and adapted into a film starring Millie Bobby Brown that was released on Netflix in 2020. Enola is Sherlock’s younger sister and proves equally capable of solving mysteries. Both the books and the film portray a Sherlock (played by Henry Cavill in the film) who starts out dismissive of his younger sister, but gradually grows warmer towards her as she grows on him, and it is those latter characteristics that prompted the estate of Sir Arthur Conan Doyle to file their copyright lawsuit. Continue reading ›

|

If you think you’d be better off leaving your job to start your own company that does the same thing as your employer, you’d better check the terms of your employment contract first. A swimming coach based in New Jersey, John Alaimo, worked for NYS Aquatics Inc. of Goshen, which has run the “New York Sharks” swim team since 2003. Although Alaimo renewed his contract with NYSA in the fall of 2019, less than a year later, in the summer of 2020, he started his own swimming company that likewise had a shark-themed name: Shark Swimming, LLC.

NYSA responded by suing Alaimo and two other swim coaches for breach of contract, citing both non-compete and non-solicitation clauses in their employment contracts.

A non-compete agreement states you cannot work for a competitor of your employer, usually within a certain geographic distance and a certain timeframe after your employment with them has ended. A non-solicitation agreement states you cannot solicit clients, vendors, or other employees of your employer to do business with your new employer. It’s also common to have a time limit on that requirement.

It’s unclear whether Alaimo’s non-compete and/or non-solicitation agreements were limited by time, but it doesn’t matter because Alaimo was still under contract with NYSA at the time that he founded his competing company. Continue reading ›

Contact Information
Chicago Office
19 S LaSalle St #702
Chicago, IL 60603
Phone: 630-333-0333
Mailing Address
17W220 22nd St #410
Oakbrook Terrace, IL 60181
Phone: 630-333-0333 Please direct all mail correspondence to our Oakbrook Terrace address.
Highland Park Office
189 Whistler Rd
Highland Park, IL 60035
Phone: 630-710-4990
We accept the following credit cards
Credit Cards Accepted
We accept payment via Venmo at: @L-A-LAW

Please direct all mail correspondence to our Oakbrook Terrace address.

Phone: 603-333-0333
Visit our site: chicagobusinesslawfirm.com

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Please do not include any confidential or sensitive information in a contact form, text message, or voicemail. The contact form sends information by non-encrypted email, which is not secure. Submitting a contact form, sending a text message, making a phone call, or leaving a voicemail does not create an attorney-client relationship.

Copyright © 2024, Lubin Austermuehle, P.C.
JUSTIA Law Firm Blog Design