District Court, N.D. Illinois — appointed by William Jefferson Clinton
DE DAVID v. Alaron Trading Corp.
District Court, N.D. Illinois · 2011-05-10
In this case, twenty foreign individuals and corporations who held futures trading accounts with defendant Alaron Trading Corporation alleged that Alaron, its Miami branch, and three Florida-based employees operated a Ponzi scheme with a Guatemalan introducing broker that defrauded plaintiffs of at least $11 million between 2005 and 2008, in violation of the Commodity Exchange Act and various state laws including fraud and breach of fiduciary duty. The defendants moved to dismiss the second amended complaint under Federal Rules of Civil Procedure 12(b)(6), 8, 9(b), and related provisions, arguing insufficient particularity in the fraud allegations. The court denied the motions to dismiss filed by Alaron, Tarafa, and Alvarez in full, and denied Ortega’s motion except as to Counts III and X, which were dismissed with prejudice as to him. The core reasoning was that the second amended complaint remedied prior deficiencies by providing specific details such as account numbers, dates, and individual defendants’ roles in meetings and guarantees, thereby satisfying Rule 9(b)’s heightened pleading standards and stating plausible claims.
business & regulatoryproceduretorts & liability
Palacz v. Village of Harwood Heights
District Court, N.D. Illinois · 2011-03-02
Plaintiff Albert Palacz, a former police officer and K-9 handler for the Village of Harwood Heights, sued the Village after his termination, bringing claims under Title VII for sex and disability discrimination and retaliation, the Fair Labor Standards Act for unpaid overtime, breach of a K-9 contract, and the Illinois Whistleblower Act for providing an affidavit in a related state-court lawsuit about the unauthorized spaying of the police dog. Defendant moved to dismiss only the whistleblower count under Rule 12(b)(6), arguing that the complaint failed to allege that Palacz reasonably believed the spaying violated a state or federal law rather than just a contract, and that the affidavit was not disclosed "in a court." The court denied the motion, concluding that the facts alleged permitted a plausible inference of reasonable belief in a legal violation and that supplying the affidavit for use in the lawsuit satisfied the Act's disclosure requirement via its catch-all "or in any other proceeding" language.
labor & employmentprocedure
DE DAVID v. Alaron Trading Corp.
District Court, N.D. Illinois · 2010-11-02 · cited 1×
The case involved twenty foreign plaintiffs suing Alaron Trading Corporation, its Miami branch, and three Florida-based employees for allegedly participating in a futures and options Ponzi scheme with a Guatemalan introducing broker from 2005 to 2008, asserting four counts under the Commodity Exchange Act plus state-law claims for fraud, breach of fiduciary duty, and unjust enrichment. Defendants moved to dismiss under Rule 12(b)(6) for failure to state a claim, with one defendant also seeking dismissal under Rules 12(b)(2) and (b)(3) for lack of personal jurisdiction and improper venue. The court denied in part and granted in part the 12(b)(6) motion and denied the jurisdictional and venue motion, holding that the complaint sufficiently alleged knowing participation in deceptive practices, excessive trading, and concealment of losses to support several CEA and state claims while dismissing others, and that the CEA provided a basis for jurisdiction over the out-of-state defendant.
business & regulatoryprocedure
Clausen Miller, P.C. v. Citibank, N.A.
District Court, N.D. Illinois · 2010-09-14 · cited 3×
In this case, plaintiff Clausen Miller, P.C. sued defendant Citibank, N.A. under 810 ILCS 5/4-302, alleging that Citibank failed to timely return or provide notice of dishonor for a $372,640 counterfeit check that the plaintiff had deposited, making the bank accountable for the amount. The parties filed cross-motions for summary judgment after establishing undisputed facts about the check's receipt on July 16, 2008, and its handling. The court denied the plaintiff's motion and granted the defendant's, ruling that Citibank complied with the statute by dispatching the physical check to the Federal Reserve Bank of Philadelphia via courier before midnight on July 17, 2008, and sending electronic notice the same day, as returning banks like the Fed qualify under the UCC rule requiring action by the midnight deadline. The decision turned on the legal definition of a timely 'return' for purposes of the banking provision, with no genuine issues of material fact remaining.
business & regulatoryprocedure
Turek v. General Mills, Inc.
District Court, N.D. Illinois · 2010-09-01 · cited 4×
In Turek v. General Mills, Inc., plaintiff Carolyn Turek sued General Mills and Kellogg under the Illinois Consumer Fraud and Deceptive Practices Act, alleging that the companies' marketing of products like Fiber One bars and yogurt failed to disclose the presence of non-natural fiber (inulin from chicory root extract) and that current science did not show it provided the same health benefits as natural fiber. Defendants moved to dismiss for lack of subject-matter jurisdiction, arguing the claims were preempted by the federal Nutrition Labeling and Education Act (NLEA). The court granted the motion, holding that the NLEA expressly preempts state-law requirements that are not identical to its food-labeling rules, which permit inulin to be labeled simply as fiber without additional disclosures about its type or relative benefits. The court reasoned that the plaintiff's proposed labeling mandates would impose non-identical obligations on manufacturers and that the NLEA's strong preemptive language overcame the usual presumption against preemption in areas of traditional state regulation like food labeling.
business & regulatoryfederal power
Freedom Mortgage Corp. v. Burnham Mortgage, Inc.
District Court, N.D. Illinois · 2010-06-14 · cited 38×
Freedom Mortgage Corporation sued Burnham Mortgage, Exeter Title Company, Ticor Title Insurance Company, attorney John Jeffrey Hlava, and others, alleging a mortgage fraud scheme involving nine properties and asserting claims including fraud, negligent misrepresentation, civil RICO, breach of fiduciary duty, negligence, and civil conspiracy. Hlava and Exeter moved to dismiss the claims against them, while Ticor moved to dismiss all claims except breach of contract and for partial summary judgment regarding three properties. The court granted Hlava’s and Exeter’s motions as to the civil RICO counts but denied them as to the remaining claims; granted Ticor’s motion to dismiss the listed claims against it; granted Ticor’s partial summary judgment motion; and struck requests for attorney’s fees and prejudgment interest from certain counts. These rulings were based on pleading sufficiency under Federal Rules of Civil Procedure 12(b)(6) and 9(b), the economic loss doctrine, the elements required for RICO and fiduciary duty claims, and prior district court and Seventh Circuit decisions on the scope of the action.
business & regulatoryproceduretorts & liability