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Illinois Supreme Court Grants Leave to File an Appeal in a Corporate Opportunity Doctrine Case

In 2014, Indeck, a Buffalo Grove-based energy company, sued former employees, Christopher DePodesta and Karl Dahlstrom. Indeck alleged the defendants breached their fiduciary duty of loyalty and usurped corporate opportunities when they wrongfully cut the plaintiffs out of potential business dealings with Merced Capital Partners, L.P, a Texas based natural gas company. Indeck also sought a permanent injunction against the defendants to keep them from capitalizing on the alleged usurped opportunity.

DePodesta served as Indeck’s vice president of business development from 2011 to 2013. His role was to find new business opportunities and bring them back to Indeck. Dahlstrom started working for Indeck in 2011 as the director of business development and reported to DePodesta.

Throughout 2013, Merced and Indeck were in negotiations to partner on the development of natural gas power plants in Texas. Indeck was also interested in purchasing two turbines worth roughly $50 million from Carson Bay Energy Ventures in exchange for equity in Indeck’s natural-gas-power-plant development with Merced. Indeck and Carson Bay entered into a mutual confidentiality agreement, which DePodesta signed on Indeck’s behalf. The complaint alleges Dahlstrom and DePodesta falsely conveyed negotiations between all three companies’ officers to make them appear unreasonable, and therefore caused them not work together. The defendants also allegedly scheduled a negotiation meeting for a date they knew Indeck’s president would not be available.

While working at Indeck, Dahlstrom and DePodesta individually interviewed for positions at Merced. Then in July of 2013, DePodesta and Dahlstrom contacted Merced from Indeck company phones informing them they were considering forming their own company. On November 1, 2013, DePodesta resigned from Indeck. Dahlstrom’s resignation quickly followed on November 4, 2013. Ultimately, both defendants went on to work at Halyard Energy Ventures (HEV) upon resignation. HEV is a power generation consulting company founded by Dahlstrom in 2010 that he had since been operating out of his home. On November 6, 2013, Merced III and HEV formed Merced Halyard Ventures, LLC (MHV). MHV and HEV entered into a management agreement where HEV, as an independent contractor, would receive a $500,000 annual management fee.  The complaint alleges that negotiations between DePodesta, Dohlstrom, and Merced regarding the formation of MHV and the details of the management agreement began in August of 2013.

The trial court ruled in favor of the defendants on count I, determining the confidentiality agreement between the defendants and Indeck to be unenforceable, citing its broadness and unreasonable duration. The trial court also found Indeck failed to prove any damage or harm as a result.  In count II, the trial court partially found in favor of the plaintiffs and issued a three-year restriction on defendants from using or sharing four of the seven alleged company trade secrets. The trial court also ruled in favor of the plaintiffs on count IV, finding the defendants to have breached their fiduciary duties while employed at Indeck from March through November of 2013. The court ordered a disgorgement of their salaries earned during the time period.

In count V, Indeck alleged the defendants usurped the business opportunity Indeck had with Merced. The defendants argued the same opportunity was still available for Indeck to pursue after the defendants had resigned from the company. The defendants asked for a directed ruling in their favor, which was granted by the trial court.

In December of 2019, the appellate court, in reversing the trial court’s decision on count V, determined Indeck provided enough evidence to support a viable corporate usurpation claim against the defendants. The Illinois Supreme Court granted leave to file an appeal on March 26, 2020.

You can find more information on this case and access the Complaint at the following link https://courts.illinois.gov/Opinions/AppellateCourt/2019/2ndDistrict/2190043.pdf. If you have any questions about this or other business-related issues, please contact Tomlinson & Shapiro, P.C. at (312) 715-8770.

 

Michael Shapiro
(312) 715-8770
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