Articles Posted in Corporate Law

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TABFG is a limited liability corporation.  It brought a lawsuit against Richard Pfeil, claiming that among other things that Pfeil had tortuously interfered with a contract.  After a bench trial, the district judge entered judgment in favor of TABFG in the amount of $957,659.68, comprised of a principal of $674,121.87 plus prejudgment interest of $279,530.36 and costs of $4,007.45.  Pfeil appealed that judgment.

In April 2003, a joint venture was formed between the limited liability companies TABFG and NT Prop Trading (NT Prop).  The purpose of the joint venture was trading securities for financial gain. 

TABFG was made up of three individual members and managers whose responsibilities were all of the securities trading for the joint venture.  NT Prop was tasked with funding the joint venture and included two members who were also limited liability corporations.  The sole member, manager and owner of one of the limited liability corporations of NT Prop were Pfeil Commodity Fund, in which Richard Pfeil was known as the “money man” for the joint venture.

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Craig Yale was a limited liability member of Wolcott LLC, a real estate development operation.  The two plaintiffs, Dr.Biplob Dass and Brett Garry, brought a lawsuit against Wolcott LLC, claiming they were duped when purchasing a garden condominium unit from Wolcott.

In the complaint it was alleged that the unit flooded several times;   they also discovered that the promised inspection and repair work that would have eliminated the water hazard had not been done by Wolcott.  At first, Dass and Garry did not know that Craig Yale was a member of the limited liability company. 

When Wolcott filed for bankruptcy protection and its debts were discharged, Dass and Garry sued Yale. The trial judge in the case dismissed the fraud claim against Yale based on §10-10 of the Illinois Limited Liability Company Act.  On appeal, the Illinois Appellate Court affirmed by stating that Dass and Garry “do not argue that Yale defrauded them in his individual capacity and do not argue that Yale should be liable through the doctrine of piercing the corporate veil.”

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In December 2007, the plaintiffs, Brothers Future Holding LLC and Custom Gourmet Concepts LLC purchased a vacant meat packing plant located at 2684 N. 900 East Road in Ashkum, Ill.  The plaintiffs planned to use the property to start up a new custom contracting cooking company. The plaintiffs hired Assurance Agency, which was an insurance brokerage firm to procure insurance for any loss or damage to the property, and the brokers were to obtain a policy through Indiana Insurance Co.

Between Nov. 27, 2009 and Dec. 7, 2009, the real property was severely damaged by vandals and thieves who broke into the premises, cut and removed copper pipes, stripped copper from all of the electrical wiring and refrigeration systems and stole other fixtures and equipment for a total property loss of $2,272,168. However, the defendants — the insurance brokers — chose not to obtain ongoing vacancy coverage for the property, causing plaintiffs’ insurance claim for the loss to be denied by the insurer, Indiana Insurance Co.

The plaintiffs’ lawsuit asserted that the defendants knew that the building was vacant and that the plaintiffs had specifically requested vacancy insurance coverage.

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Non-competition agreements are usually a part of an employment agreement that the company develops; employees have access to company secrets, trade secrets and customer lists, all of which can be detrimental if known by those outside the company, including competitors. It has long been the case that the traditional non-competition agreements are difficult to enforce. In the case of Reliable Fire Equipment Co. v. Arredondo, 2011 Ill. 111871, the Illinois Supreme Court reaffirmed the three-part rule of reason test courts have used to determine enforceability of an employment-based non-compete clause. In Reliable, it was held that a restrictive covenant is reasonable if it:  (1) is not greater than is required for the protection of a legitimate business interest of the promissee (usually an employer); (2) does not impose an undue hardship on the promisor (usually an employee); and (3) does not injure the public.

Illinois courts have held that traditional business interest requires a company to show a support for the non-competition agreement, but that is ill-defined. The test set out in the Reliable Fire case would require that extensive pretrial discovery be conducted in order to know if the employer has the facts to make out a case.

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According to a recent Chicago U.S. District Court decision, a Maine aircraft repair company cannot be brought into a court in Illinois. The decision was based on an argument that because the company’s website can be accessed in Illinois, jurisdiction would lie in U.S. District Court.

In the written opinion issued by Chief U.S. District Court Judge Ruben Castillo, the lawsuit was dismissed.

Clover Technologies LLC, based in Ottawa, Ill., filed a lawsuit against Oxford Aviation Inc. of Oxford, Maine. 

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This shareholder derivative lawsuit arose out of a long and unsuccessful effort by Baxter International Inc. to fix various problems with a medical device called Colleague Infusion Pump. The plaintiff in the case, Westmoreland County Employee Retirement System (Westmoreland) alleged that Baxter’s directors and officers breached their fiduciary duties by “consciously disregard(ing) their responsibility to bring Baxter into compliance with the 2006 Consent Decree and related health and safety laws.” 

The breach was alleged to have caused Baxter to lose more than $550 million after the Food and Drug Administration (FDA) mandated a recall of the Colleague Infusion Pumps in 2010. Westmoreland was a shareholder that sustained a significant stock value loss; it claimed the loss was caused by Baxter’s board’s and officers’ breach of fiduciary duty.

In the mid-1990s, Baxter was manufacturing and selling a product called the Colleague Infusion Pump (Pump), an electronic medical device used to deliver intravenous fluids to patients. The FDA closely regulates the medical device industry and required that companies comply with “current good manufacturing practices” and “quality system regulations” (see 21 C.F.R. Part 820), when manufacturing such medical devices. Between 1999 and 2005, the pumps were suffering from a range of defects, some relating to the manufacturing process and others to flaws in the machinery. The FDA discovered some of these problems during its inspections on Baxter’s facilities. The FDA sent a series of warning letters to Baxter in which it detailed Baxter’s failure to bring its manufacturing process into compliance with quality-controlled standards. In October 2005, the FDA took the drastic step of filing a complaint in federal court seeking forfeiture of all of Baxter-owned Colleague Infusion Pumps. 

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