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When facing corporate oppression, selecting the right legal representation is crucial. Lubin Austermuehle stands out as a firm capable of effectively handling such complex legal matters. Here’s why you should consider them for your corporate oppression case:

1. Concentration in Corporate Law

Lubin Austermuehle possesses a deep understanding of corporate law, including the nuances of corporate oppression. Their experience in dealing with closely-held companies and understanding the dynamics of shareholder relationships positions them well to address the unique challenges of corporate oppression cases.

2. Commitment to Client Success

The firm’s commitment to delivering significant victories for their clients extends to their approach to corporate oppression matters. They focus on achieving outcomes that are not only legally sound but also aligned with the best interests of their clients.

3. Reputation for Integrity and Success

Lubin Austermuehle has established a reputation for honesty and success in the Chicagoland area. This is reflected in the recognition received by its lawyers, including Peter Lubin being named a “Super Lawyer” and Patrick Austermuehle as a “rising star” by prestigious rating services. Their accolades demonstrate their commitment to legal excellence.

4. Personalized Attention to Clients

One of the key strengths of Lubin Austermuehle is the personal attention they provide to each client. This is particularly important in corporate oppression cases, where understanding the specific context and nuances of each situation is crucial for effective representation. Continue reading ›

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In closely held companies, particularly LLCs and corporations with a limited number of shareholders, the issue of compensation for owners and shareholders can be a legal minefield. A significant concern arises when majority owners, often also serving as executives, award themselves excessively high salaries or compensation. This practice, while appearing to be a clever business strategy, can veer into illegality, particularly if it’s done with the intent to minimize or avoid distributions to minority owners.

Understanding the Legal Framework

The legal principles governing such practices are rooted in the fiduciary duties that majority shareholders or LLC owners owe to minority stakeholders. These duties include the duty of loyalty, which mandates that decisions must be made in the best interests of the company and all shareholders, not just a select few.

When majority owners inflate their compensation unjustly, they may be breaching this duty. This is especially true if the inflated salaries negatively impact the company’s profitability or the ability to pay dividends or distributions to other shareholders.

Case Law and Legal Precedents

Various legal precedents highlight this issue. Courts have often scrutinized such practices under the lens of fairness and the fiduciary duties owed. For instance, in cases where the majority shareholders’ salaries are disproportionately high compared to the company’s overall financial health or industry standards, courts have found this to be a breach of fiduciary duty.

In cases such as Fleming v. Louvers International, Inc., courts have found that depriving a minority shareholder of his rightful pro rata distributions through excessive compensation can constitute a breach of fiduciary duty. Another case, Kovac v. Barron, identified a shareholder who committed constructive fraud by causing the corporation to pay him and his wife millions in excessive compensation, which was then concealed as “contract labor” on tax returns.

Certain regulations also provide guidance on this matter. For instance, compensation exceeding the costs that are deductible as compensation under the Internal Revenue Code are deemed unallowable for owners of closely held companies. The Small Business Administration (SBA) views the payment of excessive officers’ salaries as a type of withdrawal from a company, implying that the SBA may see such actions as an attempt to avoid excessive withdrawal limitations. Continue reading ›

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Yes, a business can be considered a consumer under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and can therefore file a suit under this Act. The ICFA allows private plaintiffs, including corporations, to file a suit if they can demonstrate damage due to a violation of the Act. The Act is designed to protect consumers, borrowers, and businesses against fraud, unfair competition, and other unfair and deceptive business practices. Importantly, the Act extends its protections to business entities as well.

The term “consumer” under the ICFA is defined as any person who purchases merchandise “not for resale in the ordinary course of his trade or business”. This means a business can be considered a consumer if it buys goods or services for its use and not for resale. For example, courts have found businesses to be consumers under the Act when they purchased insurance services for their own use. Yes, a business can be considered a consumer under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and can therefore file a suit under this Act. The ICFA allows private plaintiffs, including corporations, to file a suit if they can demonstrate damage due to a violation of the Act. The Act protects consumers, borrowers, and businesses against fraud, unfair competition, and other unfair and deceptive business practices. Importantly, the Act extends its protections to business entities as well. Lefebvre Intergraphics v. Sanden Mach. Ltd., 946 F. Supp. 1358, 1369 (N.D. Ill. 1996) (finding that Plaintiff bought Defendant’s printing press for its own use and not for resale in the ordinary course of its business.); Labella Winnetka, Inc. v. Gen. Cas. Ins. Co., 259 F.R.D. 143 (N.D. Ill. 2009) (finding that Plaintiff is a consumer where it purchased Defendant’s insurance services for its own use and not for resale.); Commonwealth Ins. Co. v. Stone Container Corp., 2001 WL 477151, *4 (N.D. Ill. May 3, 2001) (same).

Please note that the definition of “person” under the Act includes legal or commercial entities such as corporations. This further supports the notion that a business can be a consumer under the Act.

If a business does not meet the definition of a “consumer” under the Act, it must establish a connection to consumer protection concerns in its claim. It needs to demonstrate that the deceptive or unfair practices in question have implications beyond the immediate contractual relationship and could potentially harm other consumers or the market more generally.

To prove a claim under the Illinois Consumer Fraud Act, a plaintiff must show (1) a deceptive act or practice by the defendant; (2) the defendant’s intent that the plaintiff relies on the deception; (3) that the deception occurred in the course of conduct involving trade and commerce; and (4) damages. Note that the Consumer Fraud Act does not authorize a suit by a non-consumer where there is no injury to consumers. Therefore, a business must show actual damage as a consequence of a violation of the Act. Also, to meet the causation element of a claim under the Consumer Fraud Act, a plaintiff must have actually been deceived in some manner by the defendant’s alleged misrepresentations of fact.

It’s essential to understand that the ICFA does not apply to every contract dispute, and failure to fulfill contractual obligations alone does not necessarily constitute a deceptive act or practice. Furthermore, a lawsuit under the ICFA cannot be based on the filing or threat to file time-barred suits without specific allegations of actual damages.

Please note that the definition of “person” under the Act includes legal or commercial entities such as corporations. This further supports the notion that a business can be a consumer under the Act. Continue reading ›

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In general, you can be sued for posting internet reviews, even if they are truthful and critical, but the likelihood of the lawsuit being successful depends on various factors. Here’s a breakdown of the legal considerations:

  1. Truth as a Defense: Truth is a key defense against defamation claims. In most jurisdictions, if the statements you made in your review are true or are your genuine opinion, it’s less likely that a defamation lawsuit against you would succeed.
  2. Opinion vs. Fact: Expressing an opinion is typically protected speech, but stating something as a fact that can be proven false could lead to legal issues. For example, saying “I think this restaurant has the worst service” is an opinion, whereas saying “this restaurant has health violations” when it does not, is stating a false fact.
  3. Public vs. Private Figures: Public figures, like celebrities and politicians, have a higher threshold to prove defamation. They must prove that the statement was made with actual malice or reckless disregard for the truth. Private individuals only need to prove that the statements were false and damaging.
  4. Context Matters: The context of your review can also be important. If the review is posted on a platform known for hyperbolic or humorous reviews, it might be taken less seriously than a review on a more formal platform.
  5. Local Laws: Defamation laws vary widely by country and even by state or province within countries. Some places have stricter laws about what constitutes defamation.
  6. Retractions and Apologies: In some cases, retracting a statement or issuing an apology can mitigate damages or even negate a defamation claim.
  7. SLAPP Lawsuits: Some lawsuits, known as Strategic Lawsuits Against Public Participation (SLAPP), are filed to intimidate or silence critics by burdening them with the cost of legal defense. Many jurisdictions have anti-SLAPP statutes that protect individuals from these kinds of lawsuits.
  8. Insurance: Many homeowners insurance policies or umbrella policies provide libel defense insurance. You should retain independent legal counsel to deal with your insurance carrier as the carrier’s have a conflict of interest since the policies exempt intentional misconduct which libel claims often encompass.

It’s always advisable to be thoughtful and factual in online reviews and to understand the potential legal implications of what you post online. If you are concerned about a specific situation, consulting with a legal professional is recommended. Continue reading ›

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In Illinois, the situation regarding LLC minority members bringing a derivative lawsuit for member oppression is quite specific. The Illinois Limited Liability Company Act allows LLC members to file a derivative action to protect the interests of the LLC. This is particularly relevant when the LLC itself has a cause of action, but the managers or members have failed to pursue it. Such a derivative action enables members to enforce the rights of the LLC and recover damages on its behalf.

However, it’s important to understand that a derivative action is distinct from a member oppression claim. While derivative actions are filed on behalf of the LLC for wrongs against the LLC, certain types of member oppression claims are brought by individual members against the controlling members for actions that unfairly prejudice the minority members’ rights or interests and case-specific injury to the minority member but not the LLC as a whole.

For a derivative action to be initiated, certain conditions must be met. The member initiating the action should not be a manager of the LLC, and they must have made a written demand on the managers or members of the LLC to take action to enforce the right. If the managers or members fail to take action within 90 days, the member can then file a lawsuit on behalf of the LLC. It is crucial to note that derivative actions are complex and can be costly, so seeking advice from an experienced business attorney is recommended.

For member oppression, minority LLC members in Illinois have legal options to protect their interests and seek remedies, such as judicial dissolution, breach of fiduciary duty claims, specific performance or injunctive relief, and buyout or monetary damages. Again, legal counsel is crucial in navigating these options and understanding the rights and legal remedies available under the Illinois Limited Liability Company Act.

Continue reading ›

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When a shareholder or LLC (Limited Liability Company) member faces a “freeze-out” or “squeeze-out,” they are typically being pushed out of the company’s decision-making process or their economic interests are being diminished. This can be a challenging and complex situation, requiring a careful and strategic approach. Here are some general steps that might be considered:
  1. Understand Your Legal Rights and Documents: Review the company’s governing documents, such as the bylaws, shareholder agreement, or operating agreement. These documents often outline the rights and obligations of shareholders or members and may contain provisions relevant to your situation.
  2. Gather Evidence: Document any actions that contribute to the freeze-out or squeeze-out. This could include meeting minutes, emails, financial statements, or any other relevant communications.
  3. Seek Legal Advice: Consult with an attorney who specializes in corporate law, particularly someone experienced in shareholder/member rights in LLCs or corporations. They can provide advice specific to your situation, including the interpretation of any legal documents and the identification of any breaches of fiduciary duties or violations of state laws.
  4. Explore Negotiation and Mediation: Before taking any legal action, consider whether the situation can be resolved through negotiation or mediation. These alternative dispute resolution methods can often be less costly and time-consuming than litigation.
  5. Consider Your Goals: Identify what you want to achieve. Do you want to regain your position in the company, receive compensation for your lost interests, or simply exit the company in a fair manner? Your goals will guide your strategy moving forward.
  6. Possible Litigation: If negotiations fail and your legal rights are being significantly infringed upon, litigation may be necessary. Your attorney can advise on the likelihood of success and the costs involved.
  7. Financial Implications: Consider the financial impact of your chosen course of action, including legal fees, potential loss of income, and any tax implications.
  8. Communication with Other Shareholders/Members: If other shareholders or members are also being affected, it might be beneficial to communicate with them. There could be strength in numbers, either in negotiations or in legal action.
  9. Understand the Impact on Relationships: Consider the long-term business relationships and how they will be affected by your actions. Sometimes the best legal strategy might not align with your long-term business or personal relationships.
  10. Plan for the Future: Regardless of the outcome, think about your future with or without the company. This might involve considering other business opportunities or roles.

Every situation is unique, and the best course of action will depend on the specific circumstances, the governing laws of the state where the LLC or corporation is registered, and the details of the company’s governing documents. It’s crucial to balance legal considerations with practical business and personal considerations.

Continue reading ›

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Several cases in Illinois have awarded punitive damages for auto fraud by used car dealers. One such case is “Gent v. Collinsville Volkswagen, Inc.” where the court upheld punitive damages against the dealership for fraud or gross negligence, though the award was reduced from $12,000 to $3,000 as it was deemed excessive.

In the case “Totz v. Continental Du Page Acura”, punitive damages were awarded to the buyers for misrepresentations about the car’s condition, violating the Consumer Fraud and Deceptive Business Practices Act. This case was referred to in “Pigounakis v. Autobarn Motors”, where the court ruled that punitive damages can be awarded for outrageous conduct, specifically reckless indifference to the rights of others.

The case “Perez v. Z Frank Oldsmobile, Inc.” also awarded punitive damages for fraudulent actions other than misrepresenting a car’s mileage. In “Tague v. Molitor Motor Co.”, a $17,000 punitive damages award was justified due to the dealer’s pattern of bad faith and the danger posed to the customer and others due to unexpected brake failure. Continue reading ›

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Fake internet reviews can potentially state claims for deception under Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) laws. UDAAP laws are designed to protect consumers from deceptive practices by businesses, including misleading statements about products and services. This protection ensures consumer confidence, particularly in financial transactions, and it addresses unfair practices that can financially harm consumers and which they cannot reasonably avoid.

Under these laws, if a business or service provider uses fake reviews to deceive consumers into making purchases or forms a misleading impression about their products or services, this could be construed as a violation of UDAAP. Civil penalties may apply in these cases, regardless of whether the deceptive acts were committed intentionally or accidentally. It’s important to note that the scope of UDAAP violations is broad and can encompass a range of deceptive practices, including those occurring in online environments.

The Federal Trade Commission (FTC) has specifically addressed the issue of fake reviews and other misleading endorsements. The FTC is exploring rulemaking to combat deceptive or unfair review and endorsement practices, including the use of fake reviews, suppression of negative reviews, and payment for positive reviews. These actions are considered deceptive and can mislead consumers who rely on reviews for genuine feedback on products or services, and they can unfairly disadvantage honest businesses.

Overall, fake internet reviews have the potential to fall under UDAAP violations due to their deceptive nature and the misleading information they present to consumers. Continue reading ›

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In Illinois, the elements of tortious interference with prospective business relationships are as follows:

1) A reasonable expectation of the plaintiff entering into a valid business relationship.
2) The defendant’s knowledge of this expectancy.
3) The defendant’s intentional and unjustifiable interference, causing a breach or termination of the expectancy.
4) The plaintiff suffering damage as a result of the defendant’s interference.

Several notable cases have detailed and applied these principles. In Titan Intern., Inc. v. Becker, the plaintiffs claimed that the defendants interfered with their prospective business relations with various entities, causing economic harm. In Force Partners, LLC v. KSA Lighting & Controls, Inc., it was highlighted that commercial competitors can interfere with each other’s prospective business relationships as long as the intent is not solely motivated by malice or ill will. Doctor’s Data, Inc. v. Barrett clarified that a reasonable expectancy requires more than the mere hope of a business relationship – a plaintiff must identify a reasonable business expectancy with a specific third party. In Labor Ready, Inc. v. Williams Staffing, LLC, it was established that a company can state a claim against a competitor for tortious interference by alleging that the competitor purposely interfered with prospective business relations through various means, causing the company to lose future business. Lastly, in Giant Screen Sports LLC v. Sky High Entertainment, it was emphasized that a plaintiff must allege that the defendant’s interference prevented the expectancy from being fulfilled.

Additional case law includes Buckley v. Peak6 Investments, LP, which explained that even when an employer’s statement is deemed privileged from a tortious interference claim, the plaintiff can still prevail by showing that the defendant acted with malice. This can be achieved by showing that the defendant made unjustified statements, excessively published statements, or made statements in conflict with the interest which gave rise to the privilege. Furthermore, the terms “tortious interference with prospective economic advantage”, “business expectancy”, and “business relations” are used interchangeably under Illinois law, as noted in Allstate Insurance Company v. Ameriprise Financial Services, Inc. Finally, Butler v. Holstein Association, USA, Inc. clarified that a plaintiff must demonstrate that the defendant purposefully interfered, preventing the plaintiff’s legitimate expectancy from ripening into a valid business relationship. These cases collectively provide a comprehensive view of tortious interference with prospective business relations under Illinois law.

Continue reading ›

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The statute of limitations that applies to a contract that is both oral and written is generally that of an oral contract. This is because if essential terms of the contract cannot be fully ascertained from the written contract itself and require oral evidence to be complete, it is treated as an oral contract for the purposes of the statute of limitations.

Illustratively, in Illinois, actions on written contracts are generally subject to a 10-year statute of limitations, while actions on oral contracts have a 5-year statute of limitations. Therefore, for a contract that is both oral and written, the 5-year statute of limitations would be applied.

Moreover, a contract is considered to be written if all the essential terms of the contract are in writing and can be determined from the document itself. If additional oral evidence is needed to make the contract complete, then the contract is treated as being oral under the statute of limitations. However, if parol evidence is not necessary to establish the existence of an essential term, but is used to interpret a term, the contract is deemed a written contract and the ten-year statute of limitations applies. Continue reading ›

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