Illinois Appellate Court Reverses Dismissal of Breach of Fiduciary Duty Lawsuit in Which Employee Has Significant Fiduciary Responsibilities

The Illinois Appellate Court has reversed and remanded the decision dismissing the lawsuit brought by Advantage Marketing Group Inc. James P. Keane Sr. was one of the founders of Advantage Marketing Group Inc. Keane maintained a 35% shareholder stake in the company.  Keane had formally served as a director, officer and employee at Advantage Marketing.

Despite not being a company officer for the past several years, Keane repeatedly held himself as an owner and received the same bonus as Patty Hermann, the majority shareholder director at Advantage Marketing, and was a “principle employee . . . with wide-ranging responsibilities equivalent to those of an officer.”

Keane had developed and maintained Advantage Marketing’s natural records and explored strategic acquisitions, buying up competing businesses.

Keane’s son, James Keane Jr., also an Advantage Marketing employee, contacted the company about buying a competitor located nearby called “The Mail House.” In 2013, the elder Keane began to go into business for himself.

In 2014, Keane transferred his assigned corporate cell phone number to his personal account outside of Advantage Marketing’s supervision. In 2015, Keane registered eight internet domains for The Mail House, formed Keane Inc. d/b/a The Mail House, and on Sept. 4, 2015 resigned from Advantage Marketing.

A day later, Advantage Marketing found its security cameras turned off and its security tapes missing. Two days later, James Keane Jr. resigned. Two days after that, the website was disabled. The elder Keane refused to transfer the central files to re-establish the website for over a week, forcing Advantage Marketing to build and register an entirely new website.

Advantage Marketing filed suit against Keane, alleging breach of fiduciary duty and tortious interference with prospective economic advantage, alleging that Keane kept a new client referral from a company, called JD Graphics, which he received before he resigned and took to the new company, The Mail House.

In addition, Keane told other Advantage Marketing clients and vendors prior to his resignation that Advantage Marketing was in danger of closing.

Keane moved to dismiss the lawsuit, arguing that as a former employee and with no evidence indicating he was a corporate officer at the time, he was not liable for breach of fiduciary duty for violating a corporate opportunity doctrine. That dismissal was reversed and the case remanded back to the trial court for further disposition.

Advantage Marketing Group Inc. v. James P. Keane, Sr., 2019 IL App (1st) 181126 (May 10, 2019).

Kreisman Law Offices has been handling business litigation matters, breach of fiduciary duty lawsuits, corporation shareholder disputes and appeals for individuals, families and businesses for more than 40 years in and around Chicago, Cook County and its surrounding Illinois areas, including Elk Grove Village, Park Ridge, Niles, Lincolnwood, Lincolnshire, Bloomingdale, Lake Zurich, Westchester, Berwyn, Cicero, Joliet, Aurora, Downers Grove, Naperville, Bolingbrook, Romeoville, Orland Park, Orland Hills, Mokena, Matteson, University Park, Chicago Heights, Sauk Village, Glenwood, South Holland, Country Club Hills, Evergreen Park, Franklin Park, Chicago (Logan Square, Near North Side, Little Village, West Town, Wicker Park, Lincoln Square, Uptown, Ravenswood, Ravenswood Manor, Old Irving Park, Portage Park, North Park, Sauganash, Mount Greenwood, West Ridge, Rogers Park, Jefferson Park, Edison Park, Belmont Cragin, Ukrainian Village, Humboldt Park, Pilsen, Austin), Oak Park, River Grove, Schiller Park, Norridge and Harwood Heights, Ill.

Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.

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