Minority Member in LLC Alleges Majority Engaged in Scheme to Force Him Out
Shih v. Lordi
BUSINESS LITIGATION SESSION
Ashley Shih, one of the founders of IGS Holdings LLC, has filed a complaint against the other two founders, Robert Lordi and Mindy Berman, alleging that the two have engaged in a scheme to force him to sell his equity interest in IGS for less than its fair value. IGS provides market study services related to mergers and acquisitions and other business transactions, and is the product of the Shih, Lordi, and Berman's purchase of Ernst & Young's Investor Group Services Division. The parties, being experts in the M&A market, apparently determined they could do even better by selling their own company. As they contemplated a potential sale of IGS, and, after learning that IGS had significant value, Lordi and Berman allegedly attempted to maximize that value for themselves by acquiring Shih's 26.3% interest in IGS (the same percentage held by each of the founders) at well below fair value - which Shih alleges is in the millions of dollars. When Shih rejected Lordi's and Berman's direct offers to purchase his interest for only the value of his capital account, they reduced his compensation, in an alleged attempt to force Shih to resign, thereby triggering a provision in one of their agreements that would allow Lordi and Berman to purchase Shih's interest at book value. When that attempt apparently failed, Lordi and Berman terminated Shih's employment to trigger a repurchase option that would force Shih to sell his interest. Shih meanwhile claims that these actions were taken in bad faith and in breach of the LLC agreement and in breach of Lordi and Berman's fiduciary duties. He seeks a declaratory judgment, injunctive relief and damages.
Class Action Filed Over Fuel Surcharges Charged By Towing Company, Alleging that Drivers Are Taken for a Ride
BUSINESS LITIGATION SESSION
A class action has been filed against Stanley Services, Inc., a towing company, alleging that Stanley Services has violated Massachusetts regulations by charging "fuel surcharges" when towing cars. According to the complaint, fuel surcharges may only be assessed when a vehicle is towed more than five miles and certain information regarding the fuel surcharge is provided. The class representative alleges that Stanley Services towed his car twice from Jamaica Plain a total distance of less than five miles, was provided no information regarding the fuel surcharge, but was nonetheless assessed a fuel surcharge each time.
Additional Complaints Filed Alleging Defective Cigarettes
BUSINESS LITIGATION SESSION
Additional complaints have been filed alleging that R.J. Reynolds, Philip Morris USA, Inc. and others marketed and sold cigarettes that were defective and unreasonably dangerous. Both plaintiffs alleges that they were first given cigarettes as children as part of the defendants' campaign to get people addicted to smoking cigarettes, that they did become addicted, and later developed serious medical conditions (cancer or COPD) as a result of decades of smoking. Both complaints seek damages for pain and suffering and medical expenses.
Law Firm Sued in Patent Dispute
BUSINESS LITIGATION SESSION
A malpractice action has been filed against IP law firm Finnegan Henderson over Finnegan's prosecution of a patent for a "razor utility knife with a graphite pencil blade" (the "Marking Blade"). According to the complaint, Finnegan was engaged to prosecute the patent on behalf of Accutrax LLC, its client (which at the time of engagement had not yet been formed, and whose members had planned to use a different name for the entity). The inventor, Michael Kildevaeld, one of the three members of the LLC to be formed, was to assign all of his rights in the Marking Blade to the LLC. Instead, Finnegan prosecuted the patent on behalf of Kildevaeld individually, who is now asserting that he owns all rights to the patent issued over the objections of Accutrax's other two members. The LLC alleges that Finnegan filed properly to document the assignment to it of patent rights to the Marking Blade and that Finnegan had a conflict in representing and advising Kildevaeld individually adverse to the interests of the LLC.
