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A reseller of athletic apparel entered into a contract with a large retailer to resell aged and customer-returned athletic wear products. The agreement contained a right of refusal and other provisions, including an automatic extension provision. The agreement was extended several times over a period of 14 years. The parties continued to deal with each other after the final expiration, but eventually, the retailer pulled out of the arrangement. The reseller sued, arguing that the retailer’s behavior in continuing to sell it product served to extend the term of the agreement. The district court disagreed and dismissed the case. The appellate panel affirmed, finding that the contract was not ambiguous and that the reseller’s interpretation of the agreement was not reasonable.

Finish Line Sports is a large retailer of athletic shoes, apparel, and accessories. Division Six specializes in the resale of both aged and customer-returned athletic wear products. In 2001, Finish Line and Division Six entered an agreement by which Division Six received the exclusive right to purchase aged and customer-returned merchandise from Finish Line. The agreement provided for an 18-month term that could be extended by written agreement of the parties prior to the expiration of the term or any extension thereof. The agreement also gave Division Six a right of first refusal if Finish Line received a bona fide arms-length offer from a third party to purchase its surplus merchandise within six months prior to the term’s expiration. If Finish Line did not receive such an offer, the agreement would automatically renew for an additional eighteen-month term. Continue reading ›

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Divorce proceedings can be contentious but some can be more contentious than others. In the case of disbarred McHenry County lawyer, Mark McCombs, a contentious divorce led to his filing of a defamation and malicious prosecution lawsuit. The First District Appellate Court affirmed the trial court’s dismissal of the complaint in which McCombs alleged that his former wife defamed him and had him falsely charged with harassment. The Court also affirmed the denial of sanctions that McCombs sought against his ex-wife in the suit.

McCombs and his former wife, Kathryn Crivolio, started divorce proceedings in 2010. The proceedings soon became contentious. So contentious in fact that at one point in the proceedings, the judge entered an order prohibiting McCombs “from filing any pleadings in this matter without first seeking leave of court [ ] to do so.”

Shortly before the divorce proceedings began, McCombs, who had served as special counsel to the Village of Calumet Park from 2002 to 2010, was indicted for stealing between $600,000 to $800,000 from the Village. McCombs pled guilty and was sentenced to six years in prison. A few months later in January 2012, he was disbarred.

While McCombs was in prison, he conversed with his wife via email. In one of the email exchanges, Crivolio allegedly wrote to McCombs: “You have stolen from me, your employers, your client’s (sic) and your own mother.” McCombs alleged that Crivolio also published this statement to his children, family, and others, which he alleged “lowered [him] in the eyes of the community.” The complaint pled claims for both defamation per se and defamation per quod. Circuit Judge Kathy Flanagan dismissed the complaint with prejudice on the grounds that the allegations lacked substance. Continue reading ›

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In an 8-1 decision, the Supreme Court ruled that a company’s bankruptcy does not allow it to rescind a trademark licensing agreement it had entered with a licensee. In so ruling, the court settled an issue that had split the federal appellate circuits and congress over the handling of trademarks licenses in bankruptcy.

The case stems from a 2012 license agreement between New Hampshire-based Tempnology LLC and New York-based Mission Product Holdings Inc. over the exclusive rights for U.S. distribution of Tempnology’s apparel and accessory products, which were designed to stay cool when worn during exercise. The products, chemical-free towels, socks, and headbands, were sold under the brand names Coolcore and Dr. Cool. The license also included the nonexclusive right for Mission Product Holdings to use Tempnology’s trademarks.

In 2014, the parties’ relationship soured, which led to the filing of arbitration. In arbitration, the arbitrator ruled that Mission Product Holdings was entitled to maintain its distribution and trademark rights through July 2016, even though it did not intend to place any further orders with Tempnology. In 2015, Tempnology filed for Chapter 11 bankruptcy, claiming that Mission Product Holdings had “starved” it of income. In bankruptcy, Tempnology attempted to rescind the license agreement under Section 365 of the Bankruptcy Code.

At the time Tempnology made the request to rescind the license agreement, the law in the various circuits was not settled, which likely prompted the high court to take on the issue in the first place. The First Circuit had long followed the Fourth Circuit’s 1985 ruling in Lubrizol Enterprises v. Richmond Metal Finishers, Inc., which held that a debtor-licensor could abrogate a licensee’s rights by rejecting the license agreement pursuant to Section 365(a) of the Bankruptcy Code. Congress later overruled Lubrizol as it related to patents and copyrights but refused to do so with regard to trademarks, insisting that more study of the issue was required due to the unique ongoing obligations of mark owners in policing their marks. Continue reading ›

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An insurance company defended a construction firm against a claim by a condo association for defective design and construction of a building, as it thought the claim arose during the company’s policy period. The insurance company was not estopped from later denying payment for the claim when it was discovered that the claim had in fact arisen 10 years before the policy went into effect.

In 2002, the Blue Moon Lofts Condominium Association filed a complaint against The Structural Shop, Ltd in Illinois state court seeking damages arising out of TSS’s allegedly defective design and construction of a building. Blue Moon served notice of action to TSS’s registered agent, Thomas Donohoe on November 2002. TSS never responded to the notice or appeared in the state court action to defend itself, leading in May 2003 to the state court declaring the company in default. In 2009, the state court entered a default judgment and set the damages amount at $1,356,435 plus costs.

Many years later, Essex Insurance Company sold TSS a policy for claims first made against TSS from May 2012 to May 2013. Essex knew nothing about the prior litigation. For a time, both TSS and Essex believed that Blue Moon had failed to properly serve TSS in 2002, and thus had first brought notice of the claim to TSS in 2012 when it attempted to collect the default judgment. Laboring under this mistaken belief, TSS petitioned the state court to vacate the default judgment. The court granted the motion and vacated the judgment. TSS then informed Essex of the developments and Blue Moon’s claim. Essex, unaware that Blue Moon had properly served TSS in 2002, considered the claim to have arisen during the policy period and thus acted on its duty to defend TSS. Continue reading ›

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Testimonies are generally reserved for trials, so when the editor of The New York Times, James Bennet, testified before a judge who was deciding whether to dismiss a case, the hearing itself was already highly unusual.

Normally, a motion to dismiss asks the judge to consider the merits of the case and whether it’s worth the court’s time to pursue the matter. If anyone is brought in to testify, it’s not until after the judge has determined that the claims have merit and the case should move forward.

But Judge Jed S. Rakoff of the Federal District of Manhattan, went off-script when he summoned Bennet to testify before making his decision regarding whether to dismiss Sarah Palin’s case against The New York Times.

Palin sued the major newspaper after it published an editorial, written by Bennet, linking Palin to a mass shooting in Tucson, Arizona on January 8, 2011, in which 6 people were killed and 13 wounded, including Representative Gabrielle Giffords. Continue reading ›

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For too long, law enforcement and the courts have refused to acknowledge the real-world damage that can be done by online hate, but that attitude seems to be turning around. In just the past few months, one internet “troll” has been ordered to pay a total of more than $20 million to three different targets of his online vitriol.

Andrew Anglin is the publisher of a neo-Nazi website called The Daily Stormer that has targeted (among others) a black female college student, a Jewish real estate agent, and an Arab-American comedian. In June, the comedian won a $4.1 million lawsuit against Anglin, and shortly after that, Anglin was ordered to pay the real estate agent $14 million.

The most recent award against Anglin is for $725,000 for targeting Taylor Dumpson, the first African American female student body president of American University. The award includes $500,000 as punishment for his actions, plus $124,000 in legal fees and costs, and $101,000 to compensate Dumpson for the damage she suffered.

Dumpson was the target of racist hate and vitriol from the day she was sworn in as student body president of American University, back in May of 2017, when bananas hanging from nooses were found all over campus. Many of the bananas had messages written on them, including references to her predominantly black sorority, and to a gorilla that was killed at the Cincinnati Zoo in 2016.

After news outlets reported on the bananas in nooses around the American University campus, Anglin published Dumpson’s personal information on The Daily Stormer and allegedly encouraged harassment against her. Two of Anglin’s followers, Brian Ade and Evan McCarty, responded to Anglin’s call by allegedly harassing Dumpson online with racist and demeaning messages and threats. Continue reading ›

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If you’ve used Facebook at all in the past few years, you’ve probably noticed that every time you post a photo with one of your friends, Facebook automatically suggests you tag that person. While that might seem innocent enough, the facial recognition technology Facebook uses to accomplish that is highly controversial and possibly illegal.

Facial recognition technology is a relatively recent development and it didn’t take long for it to become controversial. With the abundance of cameras all around us, facial recognition technology allows owners of the technology to find us just about everywhere we go, which is why Facebook is now facing a class action consumer lawsuit on behalf of millions of Illinois users.

According to the lawsuit, Facebook used its facial recognition technology to gather and store biometric data on its users without their consent, which violates the Illinois Biometric Information Privacy Act of 2008. Facebook tried to have the class action dismissed and to force each plaintiff to sue them individually, knowing the costs of filing the lawsuit would prohibit most, if not all the plaintiffs from pursuing legal action.

But the court said the class action was the proper format for this particular lawsuit. Facebook appealed that decision, and the appellate court recently upheld the lower court’s ruling, allowing the class action to proceed as is. Continue reading ›

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A manufacturer of yachts was sued by a disgruntled buyer for breach of contract after the yacht he ordered was not usable in waters in the European Union as he originally specified. The buyer lost in court, however, because he argued that the yacht was a total loss, and the company presented evidence that the conversion to allow the yacht to operate in Europe would cost less than $2,000, and that it had repaired other small defects for free.

Porter, Inc. is an Indiana company that manufactures boats under the Formula and Thunderbird trade names. In September 2012, Erich Schwaiger attended a boat show in Friedrichshafen, Germany, and met Alfred Zurhausen, the owner of Poker-Run-Boats, one of Porter’s international dealers of Formula boats. Schwaiger expressed interest in ordering a Formula yacht with supercharged engines and high-end accessories and furnishings. Zurhausen later met Schwaiger in Munich to discuss the options and pricing in more detail. Schwaiger later, through one of his companies, SelectSun, executed a contract with Poker-Run-Boats in October 2012. The yacht and custom-built lift cost Schwaiger approximately $1 million.

The contract required that the boat be CE certified, so that it would be authorized for operation in the European Union. Porter did not, however, manufacture the boat to meet that specification due to a miscommunication during the ordering process that Porter had with one of its domestic dealers, International Nautic. Schwaiger took delivery of the yacht in Germany in May 2013. He used the boat throughout much of the 2013 season in Europe. During the first few months, Porter covered a series of minor warranty repairs at no charge to Schwaiger. By the end of August, however, Schwaiger was fed up with the yacht, complaining to Poker-Run-Boats of problems with the boat’s engines, steering column, exterior gel coating, and interior furnishings. Schwaiger then returned the yacht to Poker-Run-Boats with instructions to sell it. When the boat did not immediately sell, Schwaiger sued. Continue reading ›

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Do you ever think that all pop songs sound the same? If you have, you might not be the only one who’s had that thought. Several musicians lately have sued better known musicians, claiming their success comes, at least in part, from stealing parts from older, lesser-known songs. Lately, the musicians filing the lawsuits demanding compensation for their stolen work have been successful in court, leaving many people asking about the difference between inspiration and infringement.

The latest musician to achieve success in the courtroom is Marcus Gray, who goes by Flame in the music industry. Gray wrote a Christian rap song called “Joyful Noise,” which was released in 2008. When Katy Perry released “Dark Horse” five years later, Gray sued, claiming Perry’s song had stolen important elements of “Joyful Noise,” and that the alleged theft was a significant factor in the song’s success, which included holding the top spot on Billboard’s Hot 100 list for four weeks in 2014.

Perry’s attorneys argued before a federal jury in Los Angeles that the musical elements the two songs had in common with each other, such as a few notes that were repeated in a pattern, are basic elements of music, rather than intellectual property that could be protected by copyright.

Whether Perry was even aware of Gray’s song when she and her five collaborators came together to write “Dark Horse” is not entirely clear, but even if she had been aware of it, could she have used it as inspiration for her own song without going so far as to steal it? These copyright lawsuits have forced juries (and the music industry) to consider the difference between inspiration and infringement, and it’s not yet clear where that line will land. Continue reading ›

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An electrical subcontractor sued the general contractor after the general contractor withheld $58,000. The general contractor claimed that it was owed a setoff for work performed by other electricians, but the trial court found that the money spent by the general contractor was not within the scope of the original agreement, and the electrical contractor had performed additional work and worked overtime to complete the project, despite delays caused by other contractors. The Illinois appellate court affirmed, finding that the trial court had not made a determination against the manifest weight of the evidence.

Hunter Construction Services entered into a general contract to construct a Buffalo Wild Wings restaurant in Dickinson, North Dakota. Hunter had built 14 similar stand-alone Buffalo Wild Wings prior to the North Dakota project. Hunter reached out to Mormat Electrical & Construction Services, LLC to be the electrical subcontractor on the project. Mormat had worked on other Buffalo Wild Wings projects and understood the general scope and labor requirements, even though the North Dakota project was larger than most. Mormat agreed, and Hunter and Mormat entered into an oral subcontract for electrical work. The electrical budget was $135,000, and Mormat was responsible for all the electrical labor and wiring over 120 volts, including the wiring and installation of all light fittings and fixtures as well as the equipment connections related to heating and cooling, kitchen appliances, and mechanical equipment. The scope of work necessitated a four to five man electrical crew.

Prior to entering into the contract, Mormat, a nonunion contractor, informed Hunter that it could not acquire a North Dakota electrical permit because it did not employ an electrician capable of being licensed in North Dakota. Hunter and Mormat agreed that a local contractor would need to be present on site to pull the necessary permits and perform inspections. Integrity Electrical was hired directly by Hunter on a time and material basis to provide the permit and supervision for the project. Continue reading ›

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