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An Illinois Appellate Court breathed new life into a petition by Chicago Bears legend Richard Dent to learn the identities of the anonymous individuals who he claims published defamatory statements about him. According to Dent’s Illinois Supreme Court Rule 224 petition, these defamatory statements ultimately cost Dent and his business a marketing contract with the energy supplier Constellation NewEnergy.

Dent played as a defensive end in the NFL from 1983-1997, including 12 seasons with the Chicago Bears. He was the MVP in the Bears’ 1985 Super Bowl victory, and was elected to the Pro Football Hall of Fame in 2011. Also named as a petitioner in the case was Dent’s company, RLD Resources, which Dent founded after his football career ended.

According to the petition, three unidentified people allegedly defamed Dent by accusing him of groping a woman and engaging in drunken behavior. These allegedly defamatory comments prompted an investigation by Constellation that ultimately caused the company to terminate its contractual arrangements with Dent.

The case dates back to September 2018 when two attorneys representing the energy supplier visited Dent’s office and told him that certain allegations had been made against him. Specifically, they allegedly told Dent, a female Constellation employee had accused Dent of making inappropriate sexual comments to her and groping her at two separate Constellation-sponsored events.

The attorneys also informed Dent that a man complained to Constellation that he had observed Dent at a hotel in Chicago collecting materials for a Constellation-sponsored event and that Dent was drunk and disorderly at that time. The attorneys refused to reveal the identities of these individuals but informed Dent that they would be reviewing the energy supplier’s contracts with Dent based on these allegations. In October 2018, Constellation sent Dent and his company a notice that it was terminating all contracts with them. Continue reading ›

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When a class action settles, class members generally have three options: (1) remain a part of the class, (2) opt-out of the settlement, or (3) object to the settlement. Many courts have bemoaned a perceived rise in the abuse of the third option by class members using a technique commonly referred to as “objector blackmail.” Objector blackmail involves class members filing frivolous objections to a class settlement, appealing decisions approving the settlement over such objections, and then seeking to obtain a side payment from the defendant in exchange for dismissal of their appeals. A recent Seventh Circuit opinion may spell the beginning of the end of this practice.

The issue of objector blackmail was front and center in the case of Pearson v. Target Corp. The plaintiffs in Pearson filed a putative class action alleging that the retailer Target, among others, made false claims about dietary supplements they manufactured and distributed. In March of 2013, the parties reached a settlement and asked the district court to approve it. After the first settlement was thrown out on appeal, the parties then reached a second settlement. Following the district court’s preliminary approval of the second settlement, three class members objected to the settlement. The objections ran the gamut from the number of class counsel’s fees to the failure of the defendants to admit liability under a statute they had not been accused of violating in the case. Continue reading ›

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After a non-profit discovered some alleged invoicing irregularities it sued its founders and former directors and the companies that submitted the allegedly fraudulent invoices. The trial court dismissed the complaint. An Illinois appellate court reversed the trial court’s dismissal with regard to several of the fraud claims but affirmed the lower court’s dismissal of the remaining claims.

In 2002, Nancy Morgan and Donna Sardina formed and incorporated the National Alliance of Wound Care (NAWCO), a non-profit corporation that provides education and credentials for medical personnel in wound injuries. At its founding, Morgan and Sardina were NAWCO’s sole directors but were not on NAWCO’s board of directors as of 2016 or anytime thereafter.

Soon after incorporating NAWCO, Morgan and Sardina established for-profit corporations, Wound Care Education Institute, Inc. (WCEI) and Wild about Wounds (WOW). WCEI is in the business of providing training and education to medical professionals regarding skin, wound and ostomy care and management. WCEI provides courses to assist healthcare workers in preparing for the national certification exams developed by NAWCO. WOW provides a national conference and trade show for health care professionals in the wound care field.

In 2016, Morgan sent NAWCO an invoice totaling $243,500 on behalf of WCEI for meeting room rentals. In 2017, Morgan sent NAWCO a series of invoices totaling $654,000 on behalf of WCEI for various services. NAWCO paid each invoice upon receipt.

In November 2018, NAWCO filed suit against Morgan, Sardina, WCI and WOW alleging breach of contract, breach of fiduciary duty, fraud, conversion, and conspiracy. In the complaint, NAWCO alleged that these invoices Morgan submitted on behalf of WCEI were fraudulent because they contained charges for work never performed by WCEI and/or work for which NAWCO had already paid WCEI. NAWCO also alleged that WOW submitted charges totaling $583,744.34 to NAWCO from 2006 to 2015, for expenses that were “not legitimate” because of “the utter lack of supporting documentation for these significant charges.” After various amendments and motions to dismiss, the court dismissed NAWCO’s claims for failure to state a claim.

On appeal the Court found that the complaint had stated a claim for fraud against the defendants and reversed the trial court’s dismissal of those claims. The court affirmed dismissal of the remaining claims. Continue reading ›

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After discussions about going public, Promega Corp., a privately-held biotech company based in Wisconsin, decided instead to remain a privately held company back in 2014 and tried to buy back the stock owned by its minority shareholders and regain a controlling interest in the company. Those minority shareholders claimed the price at which Promega wanted to buy back their shares was deeply discounted, and when they tried to negotiate for a higher price point, Promega allegedly refused, which ultimately led to the massive lawsuit between the company and its minority shareholders that dragged on for about five years.

The team of attorneys arguing the case for the minority shareholders was headed by James Southwick and Alex Kaplan, two partners of the Susman Godfrey law firm in Houston, Texas. They recently announced that the lawsuit settled for $300 million, a victory to which they attribute their months of research and preparation leading up to the trial, as well as their decision to stick to one main allegation: shareholder oppression.

Other attorneys might have argued that the defendants had breached their fiduciary duty to their shareholders, or they would have alternated between making the case for shareholder oppression, arguing breach of fiduciary duty, and making the case for other allegations throughout the course of the trial. Instead, Southwick and Kaplan decided their best bet was to argue that Promega had tried to oppress its shareholders and to continue to make that case throughout the month-long bench trial. It was an unusual strategy, but one that ultimately paid off. Continue reading ›

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Terminating an employee can be a difficult thing for an employer. It can become even more difficult if the former employee decides to sue her former employer. An Illinois appellate court recently addressed such a situation and ultimately found that the trial court had properly granted summary judgment in favor of the employer on the former employee’s claims of retaliatory discharge and intentional infliction of emotional distress.

The plaintiff, Rita DiPietro began working for GATX Corporation, a Chicago-based equipment finance company, in July 2016 as a customer service representative. During her employment, the plaintiff took sick leave occasionally to care for her mother. Her manager told her to record this time off in the company’s timekeeping program. The program only accepted time recorded in half-day increments. As a consequence, even when the plaintiff took leave of fewer than four hours, the timekeeping program would reflect that she had taken four hours of leave.

When the plaintiff discussed the issue of the timekeeping program overstating the amount of sick time she had used, her manager allegedly told her to continue using the system to track her leave time. The plaintiff later complained about the sick time issue to both her manager’s manager and someone in the human resources department. She allegedly asked that her manager not be informed about the complaints because her manager had warned her not to complain to human resources or her manager’s manager about the issue. Nonetheless, her manager was informed of the plaintiff’s complaints.

Upon learning that the plaintiff had gone over her head, the plaintiff’s manager allegedly began contacting the plaintiff’s coworkers to question them about the plaintiff, seeking negative information that could be used to justify terminating the plaintiff. Approximately six weeks after making her complaint to HR and her manager’s manager, the plaintiff was terminated.

When the plaintiff requested a copy of her personnel file from GATX, it allegedly contained handwritten notes from the plaintiff’s manager that falsely documented counseling sessions with the plaintiff and back-dated documents that purported to criticize the plaintiff. The plaintiff denied that her manager or anyone else told her that her performance was deficient, counseled her in any respect, or took away any of her responsibilities. Instead, she asserted that she frequently received praise from upper management and attached emails representing a portion of those accolades to her pleadings. She also pointed to the fact that she received a rating of “solid achievement” on her only performance review and was given an above-average performance bonus in response. Continue reading ›

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Following a trial that spanned over 16 days, the UK’s High Court dismissed Johnny Depp’s libel claim against The Sun newspaper over an article that accused Depp of being a “wife beater.” The judge presiding over the trial, Justice Andrew Nichol, issued a 129-page, 585-paragraph opinion thoroughly detailing the allegedly defamatory statements and the trial. Justice Nicol ultimately held that Depp had proved the necessary elements for a libel action, but also found that The Sun had proven that the article in which the allegedly defamatory statements appeared was “substantially true.”

In April 2018, The Sun published an article originally titled “GONE POTTY: How can JK Rowling be ‘genuinely happy’ casting wife-beater Johnny Depp in the new Fantastic Beasts film?” The article’s title was later changed to “GONE POTTY How Can JK Rowling be ‘genuinely happy’ casting Johnny Depp in the new Fantastic Beasts film after assault claim?” The article asserted among other things that Depp was violent towards his ex-wife Amber Heard throughout the course of their relationship. In response to the story, Depp filed a defamation lawsuit against The Sun’s publisher, News Group Newspapers Ltd., and executive editor, Dan Wootton. Continue reading ›

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Copyright infringement lawsuits over tattoos have become increasingly popular since Mike Tyson’s tattoo artist famously sued Warner Brothers over its recreation of Tyson’s face tattoo on the face of actor Ed Helms in the Hangover II. The latest bout of suits involving copyrighted tattoos involves video game maker Take-Two Interactive Software.

Take-Two is responsible for a number of popular game franchises including Grand Theft Auto, NBA 2K, and WWE 2K. In addition to releasing some of the most popular video games titles of the year, Take-Two has found itself defending against two separate copyright infringement suits over the company’s use of tattoos in its NBA 2K and WWE 2K games.

A federal judge in New York earlier this year dismissed the lawsuit over Take-Two’s depiction of athletes’ tattoos in its NBA 2K video games. In dismissing the lawsuit, the judge found that Take-Two’s use of the tattoos did not infringe the plaintiff’s copyrights because Take-Two had an implied license to display the tattoos and also because Take-Two’s use constituted fair use and was de minimis in the context of the entire games.

The second lawsuit filed in an Illinois federal court concerned Take-Two’s depiction of tattoos in its WWE 2k games. After the case proceeded to discovery, the parties filed cross-motions for summary judgment. The plaintiff’s motion sought partial summary judgment on the issue of actionable copying based on Take-Two’s admission “to copying Alexander’s tattoos in their entirety in order to depict Orton in WWE 2K as he appears in real life.” Take-Two’s motion asserted the same affirmative defenses of implied license, fair use, and de minimis copying. Despite the similarity of the cases and Take-Two’s defenses, the federal judge overseeing the Illinois case did not warm to Take-Two’s arguments. Continue reading ›

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The Edelson law firm filed a motion to protect its Lion Air Crash victims’ settlement monies from alleged selling off by Erika Jayne of her expensive designer clothing suspecting she would allegedly spend the proceeds in violation of the Court’s order.  The Motion states in relevant part:

On information and belief, some and likely all of the property offered for sale is community property in which Tom Girardi has an interest, and is therefore among his assets. For example, one of the items offered for sale is a $1,000 dress from Australian label Ellery. Ellery was founded during the Girardis’ marriage and the dress therefore could not have been acquired prior to the marriage. Further, while Edelson is unaware of the exact relationship between Vestiaire Collective and Erika Girardi, Erika Girardi may be attempting to move Tom Girardi’s assets outside the United States by selling them through a French company. Although Erika Girardi is not herself a party to the asset freeze order, she is bound by it. “[A]n injunction is binding on the parties to the proceeding; their officers, agents, and employees (acting in that capacity); and nonparties with notice who are either ‘legally identified’ with a party or who aid and abet a party’s violation of the injunction.” Nat’l Spiritual Assembly of Baha’is of U.S. Under Hereditary Guardianship, Inc. v. Nat’l Spiritual Assembly of Baha’is of U.S., Inc., 628 F.3d 837, 840 (7th Cir. 2010). “[T]he ‘legal identity’ justification for binding nonparties is limited to those who have notice of the injunction and are so closely identified in interest with the enjoined party that it is reasonable to conclude that their rights and interests were adjudicated in the original proceeding.” Here, Erika Girardi has notice of the injunction, because a copy of it was sent to her attorney. And even though divorce proceedings have been initiated, Erika Girardi could not be more closely associated with Tom Girardi. The property she is attempting to sell likely belongs, in part, to Tom Girardi, and she is only permitted to manage or sell it as a fiduciary to Tom Girardi. In addition, Edelson PC suspects that Tom Girardi and Erika Girardi have acted and continue to act in concert to divert money from Girardi Keese for their personal use. Tom Girardi’s creditors attested to $20 million in “loans” advanced to Erika Girardi’s company by Girardi Keese. Given the opacity of Tom Girardi and Girardi Keese’s finances, there is every reason to believe that Erika Girardi has client money. Simply put: the Court froze all of Tom Girardi’s assets, and that means all community property is frozen too. Erika Girardi must stop selling her clothes.

Here is the motion filed by the Edelson firm regarding stopping Erika Jayne from selling off her expensive clothing. Continue reading ›

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In a recent decision, the Delaware Court of Chancery granted a motion to dismiss filed by the defendants in response to a shareholder’s lawsuit requesting to compel the company to pay a dividend and also seeking to find that the board of directors breached their fiduciary duty of care.

The plaintiff in the case of Buckley Family Trust v. Charles Patrick McCleary, was the Buckley Family Trust. The trust was one of seven stockholders of McCleary, Inc., a privately held snack food company headquartered in South Beloit, Illinois near Rockford, and only one of two stockholders that were not family members of the Company’s founder, Eugene “Mac” McCleary. Neither of the two non-family member shareholders served on the Company’s board of directors.

Unhappy with the direction of the Company and the decisions being made by the Company’s board of directors, the Plaintiff filed a two-count complaint against the Company and the five family members who served on the Company’s board of directors. In its first count, the Trust alleged that the board of directors engaged in minority shareholder oppression by failing to declare a dividend for seven years. In its complaint, the Trust argued that the Company had the funds to pay a dividend but refused to in an effort to squeeze-out the Trust and force it to sell its shares to the defendants at a steep discount.

In its second count, the Trust sought to bring a shareholder derivative action against the board of directors for allegedly breaching their fiduciary duties when it approved certain actions and failed to act on other occasions. In particular, the Trust sought to challenge the Company’s decisions to transition away from the grocer Aldi, a key customer; to authorize building a new warehouse; and to improve the Company’s production facilities to do business with a competitor. The Trust also challenged various non-actions by the board members including their failure to authorize improvements to the Company’s existing food production facilities or to manage the Company’s tax obligations and to observe corporate formalities.

In deciding the motion to dismiss, it reviewed the requirements for adequately pleading each of the Trust’s claims. With regard to the shareholder oppression claim, the Court found that the Trust failed to demonstrate that the board member’s actions were part of a squeeze-out scheme. For one, the Court pointed to the fact that the decision affected the Trust and the members of the board equally as they were all holders of common stock and would share equally on a pro rata basis any dividend paid by the Company. The Court also pointed to the fact that the “steep discount” referenced by the Trust in the Complaint was a contractually agreed to “discount of thirty (30%) percent applicable to all non-voting shares for lack of marketability and control” found in the Common Stock Purchase and Restriction Agreement to which the shareholders were a party. Consequently, the Court dismissed the claim concluding that the lack of dividend was not an abuse of discretion and that there was no evidence of self-interest.

In turning to the second claim, the Court noted that the Trust did not make a pre-suit demand on the board members before filing the derivative action on behalf of the Company. Consequently, the Court was required to analyze whether failing to make such a demand was excused under the demand futility exception to the demand requirement, which excuses the failure to make such a demand if it would have been futile to do so. The Trust argued that a demand would have been futile because the board members faced significant likelihood of personal liability under any such suit brought by the Company, a recognized exception to the demand requirement.

The Court reviewed various board meeting minutes and other documents presented by the parties to determine if the board members sought to properly educate themselves before making decisions or whether they acted with reckless indifference or without the bounds of reason, which would open them up to a substantial risk of personal liability. The Court determined that this evidence did not establish that the board acted recklessly or outside the ordinary bounds of reason. As such, the Court concluded that the Trust failed to demonstrate that making a demand on the board before filing the lawsuit would have been futile, and dismissed the Trust’s derivative claim.

The Court’s full opinion can be found here. Continue reading ›

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The Americans with Disabilities Act requires employers to provide reasonable accommodation to qualified employees with disabilities. The key phrase in that sentence that is so often the subject of litigation is “reasonable accommodation.” In a recent decision, the Seventh Circuit considered whether a two-pound lifting limit and a restriction on repetitive grasping and lifting arms more than 5% above the shoulder were reasonable accommodations for an employee of a regional sporting goods retailer. In affirming an order of summary judgment in favor of the sporting goods store, the Seventh Circuit found that such accommodations were unreasonable and left the employee unable to perform her essential job functions.

The plaintiff in the case, Angela Tonyan, was employed as a store manager at a Dunham’s Sports store in Wisconsin. During her employment, Tonyan sustained a series of injuries to both shoulders and left arm. After multiple surgeries and various temporary restrictions failed to remedy her condition, her doctor imposed several permanent restrictions including a two-pound lifting limit and restricting her from having to raise her arms above her head.

In response to these restrictions, Dunham’s fired Tonyan. The sporting goods retailer contended that its “lean” staffing model made physical work such as unloading and shelving merchandise essential job functions of its store managers like Tonyan. Following her termination, Tonyan sued claiming that the company violated her rights to reasonable accommodation under the ADA. The District Court found that the store did not violate her rights under the ADA and granted summary judgment to her former employer. Continue reading ›

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