In Illinois, a derivative lawsuit can be filed by an individual shareholder or a member of a limited liability company (LLC) to enforce a right that belongs to the corporation or the LLC (Silver v. Allard, 16 F.Supp.2d 966 (1998)), (Pistone v. Carl, Not Reported in N.E. Rptr. (2020). The aim of such a lawsuit is to protect the interests of the corporation or the LLC from the misconduct of its directors and managers (Silver v. Allard, 16 F.Supp.2d 966 (1998)).
There are certain prerequisites for filing a derivative lawsuit. Firstly, the shareholder or member must make a demand upon the board of…
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Yes, taking excessive compensation can indeed violate a managing member or majority shareholder’s fiduciary duties. Case law supports this assertion. In Fleming v. Louvers International, Inc., the court found that a majority shareholder violated his fiduciary duties by taking excessive compensation, depriving a minority shareholder of his rightful distributions. This conduct was seen as a breach of both his common-law fiduciary duty and his duty under section 12.56(a)(3) of the Act, and also constituted constructive fraud.
The case of Kovac v. Barron highlighted the defendant shareholder who had the corporations pay him and his wife millions in excessive compensation, which…
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In Illinois, there are several defenses that can be utilized in response to a libel suit. One such defense is the doctrine of “innocent construction”, where a potentially defamatory statement is innocently construed, and therefore not actionable. Expressions of opinion are another type of defense, as they are not considered statements of fact and are therefore protected from defamation claims.
Another key defense to defamation in Illinois is the defense of truth. Under Illinois law, if the defendant can show the “substantial truth” of the alleged defamatory statement, this is considered a complete defense to defamation. The defendant need only…
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It is well settled that “Illinois courts abhor restraints on trade” and therefore “postemployment restrictive covenants are carefully scrutinized . . . because they operate as partial restrictions on trade.” McInnis v. OAG Motorcycle Ventures, Inc., 2015 IL App (1st) 142644 at ¶26; see also Medix Staffing Sols., Inc. v. Dumrauf, 17 C 6648, 2018 WL 1859039, at *2 (N.D. Ill. Apr. 17, 2018) (granting motion to dismiss and noting that “[u]nder Illinois law, covenants not to compete are disfavored and held to a high standard”); Grand Vehicle Works Holdings Corp. v. Frey, 03 C 7948, 2005 WL 1139312, at…
Continue Reading Non-Solication Agreements That Bar an Employee From Servicing Any Customer of a Former Employer are Generally Not Enforceable in Illinois or Subject to Discretionary Blue Pencilling

Yes, punitive damages can be awarded in derivative actions, but these awards often come with certain conditions. Punitive damages are typically awarded when the tort committed involves fraud, actual malice, deliberate violence or oppression, or when the defendant displays willful or grossly negligent behavior that shows a wanton disregard for the rights of others. This means that the defendant’s conduct must show a high degree of moral culpability for such damages to be awarded.
There are specific cases in which courts have allowed for punitive damages in derivative actions. For instance, in Caparos v. Morton, punitive damages were awarded in…
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In the world of franchising, the termination of a franchise agreement can be a complex and contentious issue. Franchisees facing termination must understand their rights and the defenses available to them. Equally important is choosing the right legal representation to navigate these challenging waters.
Defenses to Franchise Termination

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Under Illinois law, various defenses are recognized for libel actions. The first defense is the innocent construction doctrine. This doctrine posits that if a statement could be construed in a non-defamatory way, it cannot be considered defamatory.
Another defense is the expression of opinion. Statements of opinion, even if they are defamatory, do not result in a defamation claim if the statement cannot be reasonably interpreted as stating actual facts. The statement must have a precise and readily understood meaning, be verifiable, and its literary or social context should signal that it has factual content.
The defense of truth is…
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In the business world of closely held companies in Illinois, minority shareholders often find themselves vulnerable to what is known as a “freeze out” or “squeeze out.” This blog post delves into this phenomenon, exploring what it means, how it happens, and the legal backdrop in Illinois that governs such situations.
What is a Freeze Out/Squeeze Out?
A freeze out or squeeze out occurs when majority shareholders in a closely held company engage in practices aimed at marginalizing, reducing, or eliminating the minority shareholders’ stake in the company. This can be done in various ways, such as refusing to declare…
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In the complex world of trade secret theft and non-compete litigation, having the right legal team on your side is critical. Lubin Austermuehle, with its strong online presence at www.thebusinesslitigators.com and www.l-a.law, stands out as a premier choice for handling these intricate legal matters. Here are compelling reasons why they should be your go-to firm:
1. Experience in Trade Secret and Non-Compete Litigation
Lubin Austermuehle has a proven track record in successfully handling trade secret theft and non-compete cases. Their deep understanding of the legal complexities in these areas ensures that they can provide effective strategies tailored to each…
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When facing corporate oppression, selecting the right legal representation is crucial. Lubin Austermuehle stands out as a firm capable of effectively handling such complex legal matters. Here’s why you should consider them for your corporate oppression case:
1. Concentration in Corporate Law
Lubin Austermuehle possesses a deep understanding of corporate law, including the nuances of corporate oppression. Their experience in dealing with closely-held companies and understanding the dynamics of shareholder relationships positions them well to address the unique challenges of corporate oppression cases.
2. Commitment to Client Success
The firm’s commitment to delivering significant victories for their clients extends to their approach…
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