Chicago Personal Injury Lawyer Blog

When completing a business contract, it is important to make sure that you satisfy all the requirements as stated. Even if someone verbally tells you to waive one of the requirements, in the end you might be the one who loses out. Take for example the case of Michael Downs, et al. v. Rosenthal Collins Group, LLC, et al., No. 1-09-0970 and 1-09-2091 (Consolidated) (December 16, 2011). The plaintiff, Michael Downs, lost out on an interest at his former company because he failed to comply with the contract's requirements.

Downs was hired by Rosenthal Collins Group (RCG) in 1997 as its CEO. His starting annual salary was $350,000. In addition, Downs's employment contract offered the option to purchase a 2.5% limited partnership interest at "book value." In order to exercise his purchasing right, Downs needed to sign a promissory note. However, for one reason or another, Downs failed to do so.

A year after Downs was hired, RCG reorganized as an LLC, at which point a distinction was made according to the different classifications of owners. Under this new classification, Class A owners were majority owners and managing members, while Class C owners were those owning less than 1/10 of 1% of the company. From 1999 to 2002, Downs began receiving compensation above and over his annual salary based on his additional responsibilities. This additional compensation amounted to 2.5% of the company's net profits, or a 6.5% distribution.

In 2004, Downs was fired from RCG. Downs then sued the company for breach of contract in which he alleged that he owned a 6.5% share of RCG. However, the trial court found that Downs only owned a 2.5% of the corporation, a finding that RCG contested. Both parties appealed the court's decision in the commercial litigation lawsuit; Downs on the basis that he owned more and RCG on the basis that he owned nothing.

Continue reading "Illinois Appellate Court Holds That Express Terms in Employment Contract Not Waived - Downs v. Rosenthal Collins Group" »

It is fairly common for companies to include a non-compete clause in their employee documents, which generally prohibits individuals from competing against the company during the course of their employment. However, this does not prevent some employees from violating these covenants not to compete. The recent Illinois Supreme Court case of Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, clarifies the legal analysis regarding violations of non-compete clauses.

Reliable Fire Equipment is an Illinois company that sells, installs, and services fire prevention and alarm systems. The defendant, Rene Garcia, began working for Reliable in 1992, at which time he signed a covenant not to compete as part of his employee agreement. The co-defendant, Arnold Arredondo, signed a similar agreement when he began working for Reliable in 1998. Under this agreement, both employees agreed not to compete with Reliable both for the duration of their employment and one year following their termination. The covenant further specified that employees were specifically prohibited from competing in Illinois and the surrounding bordering states of Indiana and Wisconsin.

The business litigation issue in Reliable arose under claims that both defendants violated this agreement during the course of their employment. While still working for Reliable, Arrendondo founded High Rise Security Systems, LLC, a company dedicated to selling fire alarm systems in the Chicagoland area. Soon thereafter, Garcia signed an operating agreement with High Rise; he was also still employed by Reliable.

Continue reading "Illinois Supreme Court Settles Employment Covenants Not to Compete Debate: Refutes Marginalization of the Legitimate Business Interest Prong" »

There is a certain level of trust that exists between an employer and employee based on the assumption that all parties will work in the company's best interest. However, sometimes certain parties put their own interests first, even going to the extent of committing fraud against their company. The Illinois business fraud lawsuit of Catmet Company, Inc. v. Michael Melnick, 4M Trading, LLC, et al., 05 L 9164, involves three separate counts of fraud committed by a former employee.

The business fraud cases were brought by Catmet Company, Inc., a company involved in processing catalytic converters. Catmet's business model involves purchasing catalytic converters from scrap yards and other supplies. Catmet then removes valuable metals from the used catalytic converters, e.g. platinum, palladium, and rhodium, which it then sells to other end-users.

Catmet alleged that between 2003 and 2005 one of its former employees, Michael Melnick, had worked in conjunction with other outside parties to defraud Catmet. Catmet's lawsuit involved not one, but three different schemes in which Melnick had swindled its employer out of business profits. And while the jury considered each of the schemes separately, it returned verdicts in favor of Catmet on all three counts.

Continue reading "$5M Verdict for Company for Conspiracy and Fraud Against Ex-Employee - Catmet Company v. Melnick" »

An Illinois Appellate Court upheld a trial court's ruling that a hotel chain did not infringe on a design firm's design copyright when building its hotel; Nova Design Build, Inc. v. Grace Hotels, LLC, et al., No. 10-1738. However, while the trial court came to this conclusion based on its assessment that the design firm failed to comply with the copyright requirements, the appellate court concluded that the design was not truly original and thus not protectable under copyright laws.

In order to understand the outcome of the copyright lawsuit, some background information is required. In 2006, Nova Design Build submitted architectural plans to Grace Hotels to try and secure a bid to build a new Holiday Inn Express in Waukegan, Illinois. During the negotiation process, Grace Hotels and Nova Design agreed that even if Grace did not contract Nova Design to build the hotel, that it would pay Nova various fees and costs in order to use its design.

Grace Hotels eventually decided not to contract Nova and its builders to construct the new hotel. And while the contract called for Grace to pay $28,000 to Nova for design fees and the right to use the design, both parties agreed to reduce that amount to $18,000. However, the dispute did not end there. Nova went on to register its design with the US Copyright Office and then proceeded to sue Grace for violating that copyright and using Nova's design without permission.

Continue reading "Copyright Found Not Protectable in Holiday Inn Express Design Case - Nova Design Build v. Grace Hotels" »

Whenever a party enters into a contract with another party, he/she is agreeing to the terms and conditions set out in that contract. However, the assumption is that if one of the party fails to abide by the terms of the contract, that the other party may terminate the contract. Yet in order to justifiably terminate the contract and incur not penalties there needs to be a valid breach of contract. Whether or not there was in fact a breach of contract was the subject of the Chicago case of Paper Recovery, Inc. v. Segerdahl Corp., Segerdahl Graphics Inc., Marcells Paper & Metal Inc., 07L-3762.

The case centered on the written contracts between Paper Recovery, Inc. and Segerdahl Corporation and Segerdahl Graphics. Segerdahl had contracted Paper Recovery to dispose of its paper waste products. Under the terms of this contract, Paper Recovery would act as the go-between for Segerdahl and paper recycling plants.

Paper disposal companies, such as Paper Recovery, collect and separate the various types of paper waste and then make their money by selling that paper to recycling plants. The amount the recycling plants pay for the different types of paper depends on the paper's grade, which refers to the quality of the paper product. For example, cardboard yields more per recycled ton than newspapers; therefore, recycling plants will pay more for cardboard than newspapers.

Continue reading "Jury Awards Chicago Recycler $3.25 Million for Business Breach of Contract – Paper Recovery, Inc. v. Segerdahl Corp." »

Four years ago, Microsoft was sued by a technology company for patent infringement. The Toronto-based company, i4i, won its patent lawsuit against the computer giant and were to receive a payment of $290 million for Microsoft's wrongdoing. However, the payment by Microsoft had been held up by the appeals process Microsoft was engaged in to try and reverse the large settlement.

The Supreme Court recently issued its decision, affirming the lower court's ruling in Microsoft Corp v. i4i Limited Partnership, 10-290. The main issue before the Court was the level of proof required. In patent lawsuits, courts assume that the patent, in this case held by i4i, is valid. Therefore, the burden of proof lies with the entity accused of violating that patent, which in this case is Microsoft.

The Canadian company, i4i, accused Microsoft of using technology developed by i4i when creating Word 2003 and Word 2007. Specifically, i4i stated that Microsoft has infringed on its patent setting out a new and improved method for editing documents. In the original jury trial, Microsoft was found guilty of willfully infringing on i4i's patent and was ordered to pay $290 million to i4i and discontinue versions of Microsoft Word containing i4i's technology.

Continue reading "U.S. Supreme Court Orders Microsoft to Pay $290 Million in Patent Infringement Lawsuit" »