Saturday, January 31, 2009

Sharing Online Password Leads to Lawsuit

The Financial Times is suing the Blackstone Group for the repeated use of a single online password. FT is also suing current and/or former employees of Blackstone "who have used the account credentials of another person" as John Does 1 through 100. The suit alleges violation of the Computer Fraud Abuse Act and copyright infringement.

The Financial Times was first published in 1888. It is the British rival of the Wall Street Journal. Subscriptions to its website are priced from $179 to $299 per year and its website receives 72 million unique hits each month.

Blackstone is a $116 billion equity firm. The complaint calls it a "global financial enterprise." The complaint alleges that a senior employee in its finance and compliance division authorized the initiation and repeated renewal of a single individual subscription. The complaint alleges that multiple employees used the sole username and password to access a "massive" amount of subscription articles described as "more than an individual would normally access." The username was "theblackstonegroup" and the password was "blackstone." (d'oh!)

The suit asks for actual damages, statutory damages, compensatory damages, and attorneys' fees. Here's the complaint.

Thursday, January 22, 2009

Litigation Strategy

The Second District recently issued an opinion in the case Wickman v. Illinois Property Tax Review Board ("PTAB"). The issue was whether Wickman's property tax appeal was timely filed. Wickman mailed his appeal at 4:45 pm on the 30th day after the assessment issued, but the PTAB did not receive it until the 31st day, one day late. They refused to consider his appeal.

I won't get into the specifics of that case, but at the beginning of that opinion, the court quickly dealt an interesting issue of appellate strategy.

"At the outset, we note that the PTAB has filed a motion to strike an exhibit attached to Wickman's reply brief. The exhibit consists of photographs of a United States mailbox labeled to indicate that mail is collected at 4:45 p.m. The PTAB also moves to strike references to the exhibit from Wickman's reply brief. We ordered the motion taken with the case. The photographs are not part of the record on appeal. Attachments to briefs not included in the record on appeal are not properly before the appellate court, and they cannot be used to supplement the record. Accordingly, we grant the PTAB's motion."

Pretty cool. I don't know what weight those photographs would have carried with the court, but it was quick thinking nonetheless for the PTAB's lawyers to move to strike them.

That situation was very similar to a move that won the MD Electrical case for me before the Illinois Supreme Court. I usually try to avoid shameless self-promotion in this blog, but the circumstances were just too similar between that case and my own.

Loyal readers will recall that my case was dismissed by the trial court. We appealed and won. My opponent then filed a Petition for Leave to Appeal to the Illinois Supreme Court. PLAs are very similar to appellate briefs; in fact, Supreme court rules give petitioners the right to stand on their petition in lieu of filing an additional brief. Well in this case, my opponent decided to file an additional brief.

When I received their brief, I found a new argument which I had not seen before. It had never been raised in the case before and I was sure that I did not see it in the PLA. It was especially shocking because I knew I could not overcome this new argument. My case was one for quantum meruit. Defendants cited cases in their brief which held that subcontractors could not recover under quantum meruit because they had no contractual privity with the homeowners. These cases held that a mechanics lien is the only remedy available to an aggrieved subcontractor. Upon further review, they were right, and the lien time lines had long since passed.

However, I hit the library. I found a case that said "if a party fails to raise in issue in its petition for leave to appeal, it may be deemed a forfeiture of that issue." I made that argument in my reply brief and the Supreme Court bought it. They held that "the quantum meruit issue presented to this court [in defendant's brief] is not properly presented by the record in this case and is therefore forfeited."

I then prevailed on the sole remaining issue relating to the Home Repair and Remodeling Act.

In conclusion, always think about framing the issues and evidence before the court. Don't assume that all evidence offered by the other side is admissible and don't assume that the issues presented by the other side are the true issues of the case.

Wednesday, January 14, 2009

Calculating Damages for Injuries to Pets

I have recently been approached by two potential clients whose pets have suffered injuries. One dog died due to the alleged malpractice of a veterinarian, and one dog was injured due to the faulty design of a kennel. I have been following the developing body of animal law over the past couple of years, so I was aware that courts have been awarding damages above and beyond the actual value of the pet, but it seemed to be a coincidence that the Fourth District Appellate Court issued an opinion dealing with the death of a pet just days after I met with one of these potential clients.

In Leith v. Frost, decided December 31st, the plaintiff's dachshund was mauled to death by the neighbor's Siberian huskie. Apparently, the huskie escaped from a fenced back yard and attacked the dachshund. The trial court found that the owner of the huskie was negligent for letting the dog escape, but only awarded the plaintiff $200 in damages because that was the value of the lost property (the dachshund).

The trial court reasoned that "under Illinois law, a dog is considered personal property. The cost of repairs to personal property is usually the measure of damages, but when the cost of repairs exceeds the fair market value of the personal property, the value of the personal property becomes the ceiling on the amount of damages which can be recovered." The court reasoned that not too many people would be willing to pay more than $200 for a seven year old dachshund, so it awarded the plaintiff $200.

The defendant appealed on the issue of liability and the plaintiff appealed the amount of the damages. The appellate court affirmed liability, but modified the amount of damages up to $5000. With respect to the issue of damages, the appellate court outlined a new theory by which damages for injuries to pets can be calculated.

The court noted that "Illinois courts recognize that certain items of personal property, such as heirlooms, photographs, trophies, and pets have no market value. Damages for harm to such items are not restricted to nominal damages. Rather, damages must be ascertained in some rational way from such elements as are attainable."

The court went on to say that "the proper basis for assessing compensatory damages in such a case is to determine the item's actual value to the plaintiff. The plaintiff is entitled to demonstrate its value to him by such proof as the circumstances admit."

In this case, the plaintiffs demonstrated how much their dachshund was worth to them by paying nearly $5000 in veterinary bills to try to save it. So, the court awarded the plaintiffs the full amount of their vet bills.

I believe lawyers will begin to get creative in their attempts to demonstrate pets' values to their owners using "such proof as the circumstances admit." It won't be long before courts begin to allow evidence regarding a pet's value as a companion and as a member of the family. That will make for some interesting examinations during jury selection. Seat the right jury and I could possibly see huge dollar amounts being awarded for the death of a pet.

Monday, January 12, 2009

Corporate Board Members' Personal Liability

Corporate suits against current or former corporate board members are not only reserved for the likes of Enron, failed hedge funds, and the Sun-Times, but are also available to aggrieved shareholders of smaller, local businesses and non-profits.

A lot of regular, working people volunteer for Board positions at smaller corporations, including homeowners’ associations. It may be frightening for some of them to learn that they face personal liability for injuries to the corporation if those injuries are caused by the board’s neglect or mismanagement.

That is why I found the case Davis v. Dyson, decided by the 2nd Dist. on December 19, 2008, particularly interesting. The case involved the embezzlement of more than $550,000.00 from a Condo Association by a former property management company.

Several homeowners filed suit against the individuals who sat on the Association’s Board of Directors during the time that the fraud was occurring. The homeowners brought suit on individual and derivative bases. A derivative action is one that a corporate shareholder brings on behalf of a corporation, when the corporate management declines to act due to fraud or incompetence. The defendants were former members of the Association’s Board of Directors.

Plaintiffs alleged breaches of fiduciary duty. Corporate board members owe fiduciary duties to shareholders. In the case of a condo association, this includes complying with Illinois Condominium Property Act and the Association’s bylaws. Plaintiffs specifically allege that the board members violated the Condo Act by failing to purchase insurance to protect the Association against the fraud that occurred.

The defendants asserted the business judgment rule. They argued that the fraud was not foreseeable and that it did not make sound business sense to carry that much insurance. Under the business judgment rule, absent evidence of bad faith, fraud, illegality, courts are not at liberty to interfere with the exercise of business judgment by corporate directors. In other words, it isn’t a breach of fiduciary duty to simply make a bad business decision.

The Court affirmed the trial court’s dismissal of the homeowners’ individual counts. The Court held that the plaintiff homeowners did not allege any separate and distinct injury from that suffered by all of the other homeowners.

The injury was to the Association, so the Court reversed the trial court’s dismissal of the homeowners’ derivative count. In doing so, the Court found that plaintiffs’ allegations, when viewed in the light most favorable to plaintiffs, could potentially support a finding that the director defendants breached their fiduciary duty of due care.

Therefore, the case was remanded to the trial court for further proceedings, where the defendants will face personal liability for the decisions they made while on the board.

Sunday, January 11, 2009

NIU-COL Student Appointed to Illinois Senate

Toi Hutchinson, a student at the Northern Illinois University College of Law, was unanimously appointed by Illinois Democratic Party officials to serve as the Illinois State Senator of the 40th Congressional District. The Illinois State Senate seat was vacated by Debbie Halvorson after she successfully ran for the United States Congress.

Hutchinson, of Olympia Fields, Ill., was previously Halvorson’s chief of staff and the Olympia Fields village clerk. Hutchinson also worked for United Way as its executive director in South Cook County and was soon promoted to chief professional officer in its Southwest Suburban office. At that time, she was the youngest chief professional officer and the only African-American director in the State of Illinois. Most recently, Hutchinson was a lobbyist in Springfield for the Chicago law firm of Vincent R. Williams & Associates, P.C.

Hutchinson received her B.A. from the University of Illinois at Urbana Champaign. She also is a graduate of the Harvard University Kennedy School of Government’s Executive Management Program. Hutchinson will be sworn into the Illinois State Senate on January 14, 2009 in Springfield.

Friday, January 9, 2009

Another topic on the Multistate Bar Exam?

The National Conference of Bar Examiners is considering including questions about civil procedure to the 200-multiple choice test, in addition to questions from the existing topics of torts, criminal law, contracts, real property, evidence and constitutional law.

Full details here.

Wednesday, January 7, 2009

Return Your New Car?

We all have seen it; recent data has shown the auto industry is in much turmoil. The headlines report General Motors down as much as 22.7%, Chrysler down 30%, and Toyota down 15%. That being said… it is by far the best time to purchase a car, IF YOU TRULY NEED ONE. Automakers have thrown out incentive after incentive in attempts to entice new car buyers but few have been as radical as the one Hyundai has recently announced.

With roughly a 3% market share Hyundai has recently announced the, “Hyundai Assurance Program”. The program is one which allows a new car buyer to return a vehicle within the first 12 months of ownership. The program also covers the cost of depreciation on the vehicle within the first 12 months of ownership up to $7,500 in negative equity. The company states that the program is intended to protect the consumer, in case of involuntary unemployment, physical disability, loss of driver’s license due to medical impairment, international employment transfer, self-employed personal bankruptcy, and accidental death.

The program is subject to approval by Hyundai, stipulates that the assurance program coverage is limited to the above situations, and a consumer must have made at least two scheduled payments prior to filing a “benefit request” with Hyundai Assurance. Furthermore upon filing a request the value of the vehicle is assessed by the dealer.

It’s an interesting plan, which targets those who are currently on the fence about buying a new vehicle but hesitate due to the current economic situations. In 2008 Hyundai was down 14% in overall sales compared to 2007; let’s see where this new program takes them... who knows maybe others will follow?