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Appellant's Brief FILED 10.5.18 (00431492xAF516)
Appellant's Brief FILED 10.5.18 (00431492xAF516)
)
ADVANTAGE MARKETING GROUP, LTD., ) Appeal from the Circuit Court of Cook
) County
Plaintiff-Appellant, )
) Case No. 2017 CH 05559
v. )
) Circuit Judge: Neil H. Cohen
)
JAMES P. KEANE, SR., ) Appeal from Orders dated May 1 and 9,
) 2018
Defendant-Appellee. )
)
BRIEF OF PLAINTIFF-APPELLANT
Kenneth J. Vanko
Clingen Callow & McLean, LLC
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
(630) 871-2600
[email protected]
i
William Lynch Schaller, Disloyalty and Distrust: The Eroding Fiduciary Duties of
Illinois Employees, 3 DePaul Bus. L.J. 1 (Fall/Winter 1990-91)………...….......11
Foodcomm Int’l v. Barry, 328 F.3d 300 (7th Cir. 2003) .............................................. 11,12
LCOR, Inc. v. Murray, No. 97 C 1302, 1997 WL 136278 (N.D. Ill. Mar. 20, 1997) ..... 12
Regal-Beloit Corp. v. Drecoll, 955 F. Supp. 849 (N.D. Ill. 1996)..................................... 13
D. AMG properly alleged that Keane failed to disclose and tender The Mail
House acquisition opportunity. ....................................................................... 14
Mullaney, Wells & Co. v. Savage, 78 Ill. 2d 534 (1980) ................................................... 14
Weatherman v. Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d 472 (1999)............ 14
III. The factual allegations arising from Keane’s appropriation of The Mail
House opportunity place it within a cognizable tortious interference claim.14
Fellhauer v. City of Geneva, 142 Ill. 2d 495 (1991)........................................................... 15
Conclusion ........................................................................................................................ 17
Certificate of Compliance .............................................................................................. 19
ii
NATURE OF THE ACTION
This is an appeal from the circuit court’s dismissal of two claims that
Advantage Marketing Group, Ltd. (“AMG”) brought against James P. Keane, Sr.
liable for breach of fiduciary duty and tortious interference with prospective
both claims under Section 2-615 of the Code of Civil Procedure. (C. 206-09; A1-4).
The next week, the circuit court entered an Order of Dismissal with prejudice
after AMG represented that it would not seek to amend its pleading any further.
(C. 210; A5). AMG filed its Notice of Appeal on May 31, 2018 and seeks a reversal
The issues AMG raises in this appeal are on the pleadings alone and seek to
determine whether AMG stated legally and factually sufficient tort claims
against Keane.
(1) Has AMG stated a proper claim for breach of fiduciary duty against
Keane for his pre-resignation purchase of a direct competitor?
(2) For purposes of its tortious interference claim, did AMG sufficiently plead
that it had a reasonable expectation of acquiring a competing business
1
with which Keane interfered, given Keane’s knowledge of, and
involvement in, evaluating strategic acquisitions for AMG?
STATEMENT OF JURISDICTION
The circuit court entered an Order on May 1, 2018, which dismissed Counts I
and II of the Amended Complaint. (C. 206-09; A1-4). That Order disposed of the
only claims in AMG’s pleading. Then on May 9, 2018, the circuit court entered an
Order of Dismissal after AMG represented that it would not seek to amend its
complaint any further. (C. 210; A5). AMG filed its Notice of Appeal on May 31,
2018. (C. 211-19; A39-47). This Court thus has appellate jurisdiction under Illinois
STATEMENT OF FACTS
For purposes of this appeal, AMG assumes the truth of the factual allegations
The Parties
services for its clients. (C. 140; A10). Its Elk Grove Village facility warehouses a
full data processing center, as well as laser, print, and inserting equipment. (Id.)
When he resigned, Keane was an AMG shareholder and key employee. (Id.) He
also was an original founding AMG director and officer, but Keane did not hold
2
Hermann (“Hermann”), AMG’s director and majority shareholder. (Id.) About a
month before, Keane formed a corporation to acquire The Mail House, which
also is in Elk Grove Village. (Id.; C. 144; A14). Around the same time, Keane had
with seven other domain names that all contained some iteration of the
“mailhouse” name. (C. 145; A15). At all times, The Mail House has conducted
letter-shop and fulfillment services much like, and competitive with, those
offered by AMG. (C. 144; A14). Keane negotiated and closed on the purchase of
The Mail House (or its assets) before severing his ties with AMG. (Id.)
acquire The Mail House. (C. 147; A17). Nor did Keane ever advise Hermann or
AMG that the prior owners of The Mail House were interested in selling their
The Mail House acquisition for himself. (Id.) And Keane never disclosed any
facts to AMG about The Mail House acquisition opportunity before he purchased
For several years before his resignation, Keane was a principal employee of
3
• had substantial responsibility for AMG employment decisions,
including hiring and termination of staff;
• had access to all AMG books and records, including client lists,
employee records, tax documents, vendor information, and billing
data;
(Id.)
Throughout his tenure with AMG, Keane also was expected to explore—and
letter-shop businesses, their equipment, and customer lists. (C. 141-43; A11-13).
These acquisitions and potential opportunities were all ones that Keane first
potential strategic targets. (C. 142-43; A12-13). Though AMG did not ultimate
close on two of the deals identified in the Amended Complaint, they were both
within AMG’s line of business and were the type of business opportunities that
(C. 143; A13). Before Keane’s departure, Keane and Hermann had even discussed
The Mail House as a potential acquisition target. (Id.) The Mail House provided
4
comparable products and services to the same type of clientele that AMG had
Around the time Keane acquired The Mail House, he also engaged in other
pre-resignation activity that supports AMG’s tort claims. (C. 144-47; A14-17).
Those facts include Keane’s conduct in: (a) appropriating a client referral for The
Mail House that Keane hid from AMG until after he resigned; (b) disparaging
AMG to clients and vendors; (c) disabling AMG’s website; (d) soliciting a key
employee to join Keane at The Mail House; and (e) retaining samples of
Keane moved to dismiss the Amended Complaint. (C. 169-77). After full
briefing, the circuit court entered a Memorandum and Order granting Keane’s
motion and dismissing both claims in the Amended Complaint. (C. 206-09; A1-4).
In this Order, the court outlined the reasons why it determined that neither tort
claim met the Section 2-615 pleading standards. (Id.) The circuit court made the
ARGUMENT
I. Standard of Review
The Court uses a de novo standard of review to determine whether the circuit
Gary-Wheaton Bank of Fox Valley, N.A., 186 Ill. 2d 472, 491 (1999). Under this
5
standard, the Court should determine whether the allegations of the Amended
Complaint, when construed in the light most favorable to AMG, are enough to
establish a cause of action on which relief may be granted. Id. The Court
considers all well-pleaded facts, along with reasonable inferences drawn from
II. AMG’s claim for breach of fiduciary duty establishes that the evaluation of
acquisitions, and so The Mail House opportunity itself, were part of
Keane’s agency relationship.
(C. 147-49; A17-19). Under Illinois law, AMG can state a cause of action for
breach of fiduciary duty if it pleads: (1) the existence of a duty; (2) breach of that
duty; and (3) that the breach proximately caused the injury of which AMG
complains. Lawlor v. North American Corp. of Ill., 2012 IL 112530, ¶ 69. This appeal
hinges on the test’s first element. That is, has AMG stated a plausible claim that
Keane owed a fiduciary duty to disclose and tender The Mail House acquisition
A. In holding that Keane owed AMG no duty, the circuit court failed to
apply corporate opportunity principles and Supreme Court precedent.
More than once, the Supreme Court has addressed an agent’s obligation to
his principal when the agent learns of a corporate opportunity. That is, an agent
may not “seize for his own advantage a business opportunity which rightfully
6
Savage, 78 Ill. 2d 534, 545-46 (1980). The basic contours of the doctrine are clear
and uncompromising. The fiduciary must disclose and tender, upon all pertinent
prospective operations. Kerrigan v. Unity Sav. Ass’n, 58 Ill. 2d 20, 28 (1974). The
opportunity” on its own behalf if the fiduciary falls short of the disclose-and-
But in dismissing Count I, the circuit court did not mention the corporate
Savage. Nor, for that matter, did the circuit court acknowledge Keane’s fiduciary
status when he learned of the The Mail House opportunity and seized it for
himself. (C. 206-09; A1-4). Yet this status is an essential component of fiduciary
and directors owe a duty of loyalty to their employer.”); Ray v. Winter, 67 Ill. 2d
296, 304 (1977) (stating “[w]here, however, one voluntarily acts as an agent for
Instead, the circuit court deconstructed Keane’s job title and status within
7
To be sure, the corporate opportunity doctrine is not limited to directors and
officers. Under Savage, the corporate opportunity doctrine reflects agency law and
549-50. That rule makes perfect sense, since businesses act through their agents.
Third parties deal with agents; principals expect agents to act. As Savage even
describes, “standard agency doctrine” obligates one in Keane’s position “to act
solely for the benefit of” his principal “in all matters connected with his agency.”
Savage, 78 Ill. 2d at 547. Keane thus had to disclose and tender all corporate
court was in no position to reach the correct result on Keane’s Section 2-615
motion. It conflated Keane’s title (really, the lack of officer status) with the scope
of his agency relationship at AMG. That is, the court never addressed the latter
and placed undue weight on the former. But Illinois courts have done nothing to
suggest that the corporate opportunity doctrine splits down the middle based on
The Supreme Court has explained that a fiduciary duty claim “is founded on
174 Ill. 2d 281, 294 (1996). It should come as no surprise, then, that the scope of a
fiduciary’s agency relationship with his principal delimits the duty the fiduciary
8
owes. As an illustration, this Court in one corporate opportunity case stated that
the “precise nature and intensity of the duty of loyalty depends, however, upon
the degree of independent authority” the fiduciary exercises and the “reasonable
expectations” of his relationship with the principal. Dremco, Inc. v. S. Chapel Hill
Gardens, Inc., 274 Ill. App. 3d 534, 538 (1st Dist. 1995) (emphasis added). That
Rather than focus on the investiture of a title, the circuit court should have
assessed the scope of Keane’s agency relationship with AMG. Only then could
the circuit court evaluate the duty question that girds Count I. In a prior order
recognize the importance of Keane’s actual responsibilities and the scope of his
agency relationship at AMG. (C. 86-89). The circuit court noted that AMG, in its
initial pleading, “did not allege that Keane’s position with AMG involved
acquiring businesses for AMG. Nor does the Complaint allege that Keane
learned of the opportunity to buy The Mail House as part of his duties for
AMG then addressed this very concern. Indeed, AMG pleaded that
9
and could make discretionary, strategic decisions along with Hermann about
just how Keane had evaluated acquisitions for AMG in the years leading up to
duty, Kerrigan and Savage required Keane to disclose and tender that opportunity
to AMG for its full consideration and evaluation upon all material facts. Kerrigan,
58 Ill. 2d at 28; Savage, 78 Ill. 2d at 547. Only if AMG rejected the deal could
The circuit court’s analysis, though, inverted Kerrigan and Savage altogether,
formal officer status. The inquiry should have focused on Keane’s agency
relationship with AMG. Viewed through that prism, AMG sufficiently alleged
The circuit court went on to absolve Keane further, stating he was “entitled to
form a competing business and purchase The Mail House while still employed
by AMG so long as he did not begin to compete against AMG while still
10
employed.” (C. 208; A3). The court’s discussion of this line of authority,
argument Keane made in claiming that he could acquire The Mail House without
first presenting it to AMG for evaluation. (C. 171-72). Indeed, Keane argued that
the circuit court should look past the corporate opportunity doctrine altogether,
reasoning that it applies “only to officers.” (C. 171). As Savage holds, that
that argument called upon the circuit court to look past Kerrigan and Savage. A
discrete number of appellate court cases have stated that employees “may plan,
form and outfit a competing corporation while still working for the employer,
but they may not commence competition.” Dowell v. Bitner, 273 Ill. App. 3d 681,
691 (4th Dist. 1995); Veco Corp. v. Babcock, 243 Ill. App. 3d 153, 160 (1st Dist. 1993).
No court appears to have reconciled or even grappled with the tension between
the appellate court’s preliminary stages doctrine and the Supreme Court’s rules
Illinois, with its focus on agency law principles, would endorse the preliminary
What is clear, however, is that courts still shun formal labels or titular status
in favor of a more pragmatic assessment of just what it is the fiduciary did for his
principal. The Seventh Circuit’s decision in Foodcomm Int’l v. Barry, 328 F.3d 300
1 See William Lynch Schaller, Disloyalty and Distrust: The Eroding Fiduciary Duties of
Illinois Employees, 3 DEPAUL BUS. L.J. 1 (Fall/Winter 1990-91).
11
(7th Cir. 2003), provides an example. There, the court found that two highly paid
even though they were not executives within the company. Id. at 304. The key
facts in that case involved the employees’ decision to approach a key customer
before leaving Foodcomm and to create a rival entity that usurped Foodcomm’s
plans for a strategic deal with its customer. Id. at 302-03. Relying on Savage, the
court placed great weight on the employees’ control over purchasing and sales,
their compensation, job descriptions, and degree of autonomy and discretion. Id.
at 304. The lack of an officer title was simply irrelevant. What was relevant was
here, AMG vested Keane with significant responsibility across all corporate
Also instructive is LCOR, Inc. v. Murray, No. 97 C 1302, 1997 WL 136278 (N.D.
Ill. Mar. 20, 1997). Relying on Savage, the court in LCOR found that an employee
had breached his fiduciary duty by secretly negotiating to purchase property his
employer had sought to acquire. Id. at *8. Because the acquisition was within the
employee’s agency, the court found that his self-dealing over the acquisition was
a breach of his fiduciary duty under Savage. Id. Again, the core inquiry was not
the employee’s title; the nexus between his agency relationship and the
different than this case because the responsibilities for evaluating acquisitions
12
Another case on point is Regal-Beloit Corp. v. Drecoll, 955 F. Supp. 849 (N.D. Ill.
1996). That case, too, rejected Keane’s preliminary stages defense and discounted
the lack of a formal officer title when assessing whether some individuals owed a
the court found that even if the defendants were not “officers” they still owed
their employer a duty of loyalty over all matters under their agency. Id. at 858. To
be sure, that is precisely what Savage says. Savage, 78 Ill. 2d at 546-47. Given the
Regal-Beloit, 955 F. Supp. at 858. Once again, cases like Regal-Beloit reveal the
formality of a title.
In the Amended Complaint, AMG alleged specific facts outlining why the
“preliminary stages” doctrine would not absolve Keane from disclosing and
tendering The Mail House acquisition opportunity. Not only did AMG highlight
relationship, but it also outlined his involvement with negotiating and evaluating
specific acquisitions. (C. 140-44; A10-14). This was more than enough to sustain
Count I.
13
D. AMG properly alleged that Keane failed to disclose and tender The
Mail House acquisition opportunity.
The essence of the disclose-and-tender rule is that Keane had to present AMG
with The Mail House acquisition opportunity for evaluation purposes before
true, would underscore that Keane breached this duty. (C. 147; A17). Those
allegations show that Keane presented no aspect of The Mail House opportunity
to AMG while he was its fiduciary, let alone provide it with a full disclosure of
material facts. (Id.) The Court should credit those allegations for purposes of
AMG thus alleged a factually robust breach of fiduciary duty claim against
Keane for misappropriating The Mail House opportunity. The circuit court
applied the wrong legal standard to evaluate this claim. This Court should find
that AMG stated a proper cause of action in Count I of the Amended Complaint,
III. The factual allegations arising from Keane’s appropriation of The Mail
House opportunity place it within a cognizable tortious interference claim.
economic advantage. To sustain such a claim, AMG must allege: (1) its
14
knowledge of the expectancy; (3) purposeful interference by Keane that prevents
the legitimate expectancy from ripening into a valid business relationship; and
(4) damages to resulting from the interference. Fellhauer v. City of Geneva, 142 Ill.
AMG based its interference claim on two particular expectancies: The Mail
House acquisition itself and a client referral that Keane first received at AMG,
hid for himself, and then exploited when he left. (C. 149-50; A19-20). In its May 1
Memorandum and Order, the circuit court never addressed the first basis for
AMG’s interference claim. (C. 208-09; A3-4). Even so, AMG alleged enough facts
15
able to evaluate, much less acquire, a strategic
competitor. (C. 150; A20).
Under the four elements outlined in Fellhauer, the circuit court should not
have dismissed Count II had it even examined the allegations about Keane’s
The circuit court also improperly dismissed Count II for failing to state a
In its analysis, the circuit court only stated that AMG failed to allege facts
expectancy for such a relationship.” (C. 209; A4). The circuit court, though,
The Amended Complaint set forth facts showing that Keane received a
referral from JD Graphics related to print work for a division of the Daily Herald.
(C. 145; A15). Keane learned of this referral before his resignation from AMG. (Id.)
AMG, however, was unaware of the referral until JD Graphics followed up to see
what had occurred with it. (Id.) Ultimately, The Mail House—with Keane at the
These facts support each element of AMG’s interference claim. For starters,
the circuit court simply got it wrong when it evaluated whether AMG had an
expectancy in work with JP Graphics. (C. 209; A4). The expectancy was the work
referred by JD Graphics. And this Court should make the reasonable inference
later followed up on with AMG, was in fact intended for AMG. (C. 145; A15).
16
AMG has also alleged facts demonstrating knowledge of the expectancy.
Keane received the referral from his son, James, Jr., who at the time was also an
AMG employee. (C. 145; A15). That referral came into AMG. (Id.) James, Jr. then
sent the referral to Keane’s personal email address, meaning Keane had full
access to it after he severed his ties with AMG just a few days later. (Id.) Again,
AMG has identified facts supporting the knowledge component of the tort claim.
So too, these same facts show purposeful interference, particularly since The Mail
House exploited the referral sent to AMG shortly after Keane resigned. (Id.)
Lastly, AMG has alleged damage since it lost to The Mail House the client work
JD Graphics had sent. The circuit court truncated its analysis of Count II, failed to
evaluate the elements of the interference claim, and overlooked key factual
CONCLUSION
For these reasons, AMG requests that the Court reverse the circuit court’s
Chancery with prejudice, and remand this cause to the circuit court for further
17
Respectfully submitted,
18
CERTIFICATE OF COMPLIANCE
I certify that this brief conforms to the requirements of Supreme Court Rules
341(a) and (b). The length of this brief, excluding the pages containing the Rule
341(d) cover, the Rule 341(h)(1) statement of points and authorities, the Rule
Respectfully submitted,
Kenneth J. Vanko
Clingen Callow & McLean, LLC
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
(630) 871-2600
[email protected]
Counsel for Plaintiff-Appellant
19
No. 1-18-1126
)
ADVANTAGE MARKETING GROUP, LTD., ) Appeal from the Circuit Court of
) Cook County
Plaintiff-Appellant, )
) Case No. 2017 CH 05559
v. )
) Circuit Judge: Neil H. Cohen
)
JAMES P. KEANE, SR., ) Appeal from Orders dated May 1
) and 9, 2018
Defendant-Appellee. )
)
Plaintiff,
Defendant.
ORDER OF DISMISSAL
THIS CAUSE, coming on to be heard for a status hearing, and Plaintiff having
advised the Court that it will not seek further amendment of its Complaint;
IT IS HEREBY ORDERED:
ENTERED
ENTERED:
!<mw<«.wk.do<:x /v. I
A5
ELECTRONICALLY FILED
1/23/2018 10:30 AM
2017-CH-05559
CALENDAR: 05
PAGE 1 of 33
CIRCUIT COURT OF
IN THE CIRCUIT COURT OF COOK COUNTY COOK COUNTY, ILLINOIS
CHANCERY DIVISION
COUNTY DEPARTMENT, CHANCERY DIVISIONCLERK DOROTHY BROWN
NOTICE OF FILING
TO: Paul W. Carroll
Eric P. Sparks
222 North LaSalle Street, Ste. 800
Chicago, Illinois 60601
[email protected]
PLEASE TAKE NOTICE that on January 23, 2018 we electronically filed with the
Clerk of the Circuit Court of Cook County, Illinois the following documents: Plaintiff’s
Amended Complaint at Chancery, true and correct copies thereof are served upon you
herewith.
Respectfully submitted,
Kenneth J. Vanko
Clingen, Callow & McLean, LLC
Attorney No. 39631
2300 Cabot Drive, Suite 500
Lisle, IL 60532
630.871.2600
[email protected]
{00391545.DOCX /v. 1 }
A6
PROOF OF SERVICE
The undersigned non-attorney, certifies that on January 23, 2018, she caused to be
served via email the foregoing Notice of Filing and Response to Defendant’s Motion to
Dismiss upon the following counsel of record:
Paul W. Carroll
Eric P. Sparks
222 North LaSalle Street, Ste. 800
Chicago, Illinois 60601
[email protected]
{00391545.DOCX /v. 1 }
A7
IN THE CIRCUIT COURT OF COOK COUNTY
COUNTY DEPARTMENT, CHANCERY DIVISION
The Plaintiff, Advantage Marketing Group, Ltd., states as follows for its Amended
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1. This is an action for breach of fiduciary duty and tortious interference with
prospective economic advantage, which arises out of James P. Keane, Sr.’s relationship
with Advantage Marketing Group, Ltd. (“AMG”). In the months leading up to his
abrupt resignation, Keane― a significant shareholder and a key employee with duties
2. During his AMG affiliation, Keane had the responsibility to explore the
Had AMG known The Mail House was for sale, it would have sought to acquire it.
Keane owed a strict fiduciary obligation to disclose and tender this corporate
opportunity to AMG and not to actively exploit his position at AMG for his own
A8
personal benefit. Instead of complying with this duty to disclose and tender, Keane
bought The Mail House for himself and then abruptly quit.
3. In this action, AMG seeks the imposition of a constructive trust over The Mail
House business Keane purchased, a judgment ordering Keane to convey his interest in
The Mail House to AMG, and damages caused by his breach of fiduciary duty.
5. Keane is an Illinois resident who, upon information and belief, currently lives at
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6. Keane, Inc. is an Illinois corporation with its registered office at 222 N. LaSalle
St., Suite 800, Chicago, Illinois. Keane is the President of Keane, Inc., which has a
registered assumed name of “The Mail House.” Upon information and belief, Keane is
the sole owner of The Mail House. AMG does not join The Mail House as a necessary or
the right to further amend this Amended Complaint at Chancery should discovery reveal,
or should the Court determine, that The Mail House should be a necessary or
White Gates Skeet Club, Inc. v. Lightfine, 276 Ill. App. 3d 537 (2d Dist. 1995).
7. Venue is proper in this Court because all parties reside in Cook County, Illinois.
2
A9
Background Facts
8. For over twenty years, AMG has been a marketing services company, providing
letter-shop and fulfillment services for its clients. Its Elk Grove Village facility
warehouses a full data processing center, as well as laser, print, and inserting
equipment. AMG handles print and mailing programs, small and complex, for its
clients.
percent shareholder in AMG. Keane was an original AMG founder, owner, and
director.
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10. At 4:16 p.m. on September 4, 2015 (the Friday before Labor Day), Keane resigned
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from AMG “effective immediately.” Keane delivered his resignation notice by e-mail to
11. Upon information and belief, Keane had already acquired The Mail House, or
substantially all of its assets, from the company’s previous owner by the time he
12. For several years before his abrupt resignation, Keane was a principal employee
3
A10
c. Keane had access to all AMG books and records, including client lists,
records and had full access to the same in the QuickBooks accounting
system;
g. Keane was the face of AMG to many repeat customers over which he had
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13. Throughout his tenure with AMG, Keane also was expected to explore, and
14. For instance, AMG’s first acquisition involved the purchase of equipment and
15. Keane was involved with the negotiation and acquisition of We’ve Got Time.
AMG even retained Keane’s personal accountant to explore acquisitions before the
16. Keane’s responsibility for, and involvement with, acquisitions continued beyond
AMG’s closing of We’ve Got Time’s assets. In this regard, Keane was the key point of
4
A11
contact with auction houses and business brokers who facilitated asset sales in the
letter-shop business.
17. For instance, in July of 2012, Keane received an e-mail to his personal address
advertised the auction of mailing equipment for a business called The Mailing
Department, LLC in Palatine, Illinois. A true and correct copy of the July 18, 2012 e-mail
to Keane is attached as Exhibit A. AMG later acquired The Mailing Department’s useful
18. Thereafter, Keane was aware of, and involved with, other strategic acquisitions
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Printer/Mailer with a business broker named Chuck Lutzlow of CAL Financial Group.
Keane received an e-mail from Lutzlow’s office dated May 7, 2013, in which Lutzlow’s
further business sale negotiations. A true and correct copy of the May 7, 2013 e-mail to
19. Later that year, in October of 2013, Keane again received a communication from
Glenn A. Winternitz, advertising for sale a business in Kentucky called Gannett Direct
true and correct copy of the October 8, 2013 e-mail to Keane is attached as Exhibit C.
Printer/Mailer, and Gannett Direct―were all ones that Keane initially received,
disclosed to Hermann, and later evaluated with Hermann as potential strategic targets.
5
A12
21. Though AMG did not ultimate close on two of those deals (Rockford
Printer/Mailer and Gannett Direct), they were both within AMG’s line of business and
were the type of business opportunities that Hermann reasonably expected Keane to
22. Illustrating the breadth of his strategic and acquisition responsibility at AMG,
Keane was the key point of contact throughout 2013 regarding AMG’s opportunity to
move or acquire property to conduct its business operations. True and correct copies of
e-mails demonstrating Keane’s involvement in these real estate discussions are attached
as Group Exhibit D.
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23. Before Keane’s 2015 departure from AMG, he also was aware of The Mail House,
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the business he ultimately acquired just before resigning. This competing business sat
24. On July 10, 2013, Keane’s son, James, Jr., sent an e-mail to Keane and Hermann.
In this e-mail, James, Jr. (then an AMG employee) wrote the subject line “re:
Mailhouse―Rebranded Website―Is that the same ownership group as before?” In the body of
the e-mail, James, Jr. then attached a link for The Mail House’s website. A true and
25. Keane and Hermann discussed The Mail House in the Summer and Fall of 2013
and whether it was a viable acquisition target. Though Hermann is unaware of when
Keane ultimately began his own discussions about buying The Mail House, the business
6
A13
26. As illustrated by the foregoing, Keane had significant strategic and tactical
27. At some point before his departure from AMG, Keane started to withhold
information for himself and communicated outside of AMG channels, using his
personal e-mail account while failing to forward information that he wished to hold for
28. On March 10, 2014, and without disclosing this to AMG, Keane ported his
assigned corporate cell phone number to his own personal account and outside the
view of AMG. This enabled Keane to retain and use the number following his
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resignation from AMG and further prevented AMG from controlling communications
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29. On August 12, 2015, before his resignation, Keane formed Keane, Inc. d/b/a The
Mail House. Upon information and belief, Keane formed this corporation to acquire The
Mail House, which (like AMG) is located in Elk Grove Village. At all times, The Mail
House has conducted letter-shop and fulfillment services similar to, and competitive
30. Upon further information and belief, Keane was interested in acquiring The Mail
House well before his abrupt resignation on September 4, 2015 and in fact negotiated
and closed the transaction before severing his ties as a key AMG employee with duties
7
A14
31. For instance, on August 3, 2015, Keane registered a new domain name called
mailhousedm.com, along with seven other domain names that all contained the name
“mailhouse.”
32. Keane’s competitive activities in the week leading up to his resignation extended
beyond the acquisition of The Mail House. In September of 2015 before he resigned
from AMG, Keane failed to disclose and tender to AMG a referral he received from JD
33. In particular, James, Jr. forwarded to Keane (at his personal e-mail account) the
referral from JD Graphics. A true and correct copy of James, Jr.’s e-mail to Keane dated
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34. Keane then exploited this same referral after he began operating The Mail House.
In fact, AMG did not learn of the referral until JD Graphics followed up with a phone
call to AMG to ascertain the referral’s status. JD Graphics had learned that The Mail
35. During this same period shortly before resigning, Keane approached and told
clients and vendors of AMG that AMG was in danger of closing its doors because of
financial issues.
36. The day after Keane’s departure (September 5), AMG discovered the security
cameras were turned off and its security tapes were missing.
37. And then a few days later on September 9, Keane disabled AMG’s website. He
did not transfer AMG’s website materials back to AMG for more than a week. By that
time, AMG had established, out of business necessity, an entirely new website.
8
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38. One day before transferring the website content files back to AMG, James, Jr.
registered a new website domain – amgltd.co – which differs by one letter from AMG’s
39. James, Jr. is actively involved in The Mail House. Upon information and belief,
Keane either was aware of, or actively encouraged, James, Jr. to disable AMG’s website
40. While he was a key AMG employee, James, Jr. directly reported to Keane. James,
Jr. tendered his resignation to AMG on September 7, 2015, the day before the start of the
41. Before he resigned from AMG, Keane solicited James, Jr. to leave AMG and join
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him at The Mail House. At the time James, Jr. left AMG, he was the second-highest paid
42. Keane never sought AMG’s consent before soliciting James, Jr. to leave AMG and
join a direct competitor. Nor did Keane seek AMG’s consent to appropriate the JD
43. At the time of his departure, James, Jr. acquired samples of confidential client
material that belonged to AMG. The client sought to have AMG examine these
44. Keane kept the samples for himself, resigned, and then only returned these client
materials after AMG’s then-counsel demanded their return. Since his acquisition of The
Mail House, Keane has continued to perform letter-shop and print work for this
particular client.
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45. At all times before Keane’s resignation, The Mail House was known to AMG as a
competitor. The Mail House provided comparable products and services to the same
type of clientele that AMG had serviced and cultivated. Accordingly, The Mail House
46. At no point in 2015 did Keane disclose to Hermann or AMG that he sought to
acquire The Mail House. Nor did Keane ever advise Hermann or AMG that the prior
owners of The Mail House were interested in selling their business to a third party.
47. To this day, AMG is unaware of the terms on which Keane bought The Mail
House.
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48. Had Keane brought The Mail House acquisition opportunity to AMG, AMG
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49. AMG never consented to or approved Keane’s appropriation of The Mail House
acquisition for himself. Moreover, Keane never disclosed any fact―let alone all material
50. Since Keane has acquired The Mail House, he has solicited and serviced
customers of AMG, including those such as The Hope Institute for Children and
COUNT I
CLAIM FOR BREACH OF FIDUCIARY DUTY
51. AMG restates and realleges Paragraphs 1-50 as though fully restated and
10
A17
52. As a key AMG employee with responsibility equivalent to those of an officer,
Keane owed a fiduciary duty of loyalty, fidelity, rectitude, candor, and good faith.
53. Keane’s fiduciary duty in this capacity prohibited him from actively exploiting
his position within AMG for his own personal benefit and from hindering the ability of
54. Keane also owed AMG a fiduciary duty to disclose and tender all corporate
Mail House, while still employed by AMG and serving as a key AMG
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of an officer;
potential acquisition of The Mail House, to AMG for its full and complete
consideration;
c. Soliciting James, Jr. to leave AMG and join The Mail House;
11
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56. Keane took these actions knowingly, willfully, and intentionally, and without
just cause.
57. As a direct and proximate result of Keane’s breach of fiduciary duty, AMG has
Accordingly, AMG requests that this Court enter judgment in its favor on Count I
A. Impose a constructive trust on The Mail House business to be held for the
D. Award AMG punitive damages for Keane’s willful and wanton conduct in
the time Keane first breached his fiduciary duty to AMG through September
4, 2015; and
F. Award AMG its costs and such other relief as the Court deems just and
appropriate.
COUNT II
CLAIM FOR TORTIOUS INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE
58. AMG restates and realleges Paragraphs 1-50 as though fully restated and
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59. By virtue of Keane’s position as a significant AMG shareholder with
employment duties akin to that of an officer, AMG had a reasonable expectancy of: (a)
acquiring competing letter-shop and fulfillment services companies, such as The Mail
House; and (b) capitalizing on referrals for client print work, as discussed more fully
above.
60. Keane had knowledge of AMG’s expectation of entering into a valid business
as The Mail House, and to capitalize on referrals for print work, as discussed more fully
above.
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61. By acquiring The Mail House for himself and by appropriating the client referral
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62. Keane took these actions knowingly, willfully, and intentionally, and without
just cause.
63. As a direct and proximate result of Keane’s actions, AMG has incurred damages.
Accordingly, AMG requests that this Court enter judgment in its favor on Count II
B. Award AMG punitive damages for Keane’s willful and wanton conduct in
C. Award AMG its costs and such other relief as the Court deems just and
appropriate.
13
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Dated: January 16, 2018 Respectfully submitted,
Kenneth J. Vanko
Clingen Callow & McLean, LLC
(I.D. No. 39631)
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
630-871-2600
[email protected]
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14
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EXHIBIT A
A22
1/7/2018 Fwd: Online Auction - Late Model Mailing Equipment
Hi, just a reminder that you're receiving this email because you have expressed an interest in Glenn A.
Winternitz, LLC. Don't forget to add [email protected] to your address book so we'll be sure to
land in your inbox!
W G L E N N A.
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JLuction
•* M »,
rn
https://mail.aol.com/webmail-std/en-us/PrintMessage 1/4
A23
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EXHIBIT B
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EXHIBIT C
A26
1/7/2018 amgltd Mail- Fwd: Available for Immediate Sale! Gannett Direct Marketing Services - Louisville. KY
Gm il i«i|v
Patty Hermann <[email protected]>
Fwd: Available for Immediate Sale! Gannett Direct Marketing Services - Louisville,
KY
2 messages
Forwarded message
From: <[email protected]>
Date: Tue, Oct 8, 2013 at 3:15 PM
Subject: Fwd: Available for Immediate Sale! Gannett Direct Marketing Services - Louisville, KY
To: Patty hermann <[email protected]>
Patty FYI
Subject: Available for Immediate Sale! Gannett Direct Marketing Services - Louisville, KY
2017-CH-05559
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t $
4
feBSBW£-.~
i
AVAILABLE IMMEDIATELY!
all equipment subject to prior sale
EXHIBIT D
A28
1/7/2018 amgltd Mail - Fwd: nichols
t.v,.'0;>k-
Fwd: nichols
1 message
Forwarded message
From: <[email protected]>
Date: Tue, May 14, 2013 at 11:23 AM
Subject: Fwd: nichols
To: phermann <[email protected]> Manny <[email protected]>
951 Nicholas Elk Grove ; See second to last building from Jeffs building prior email
asking $6.50 gross if we got $5.50 average year one / two /three S7966 month
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Taxes low at $1.45 sq foot currently; could be due to building being vacant
2017-CH-05559
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parking okay
Jim,
Per our convo please see attached spec sheet. There is a layout on the last page. They have
reduced the sale price. Please let me know if a purchase is a possibility.
Jeff
Jeffrey J. Provenza
Darwin Realty & Development Corporation
970 N. Oak Lawn Avenue
Suite 100
Elmhurst, IL 60126
(630) 782-9520 Office
(630) 747-6350 Mobile
[email protected]
www.darwinrealty.com
https://mail.googlexom/mail/u/2/?ui=2&ik=0d7d0943b6&jsver=veKV0pjlDTc.en.&view=pt&q=jpk2459%40comcast.net&qs=true&search=query&th=160... 1/2
A29
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A31
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EXHIBIT E
A34
1/7/2018 amgltd Mail - Fwd: Mailhouse - Rebranded Website - Isthat sameownership group as before?
Gm il i
Patty Hermann <[email protected]>
Forwarded message
From: James Keane <[email protected]>
Date: Wed, Jul 10, 2013 at 11:56 AM
Subject: re: Mailhouse - Rebranded Website - Is that same ownership group as before?
To: [email protected]
Cc: [email protected]
http://www.maildawn.com
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https://mail.googlexorrtfmail/u/2/?ui=2&ik=0d7d094^ 1/1
A35
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EXHIBIT F
A36
Advantage Marketing Group Ltd Mail - Fwd: Wood Dale, IL Ready f... https://niail.google.coni/inail/u/0/?ui-2&ik-lb00b9031b&jsver=CS.
GmsiI
byCopgte
Patricia Hermann <[email protected]>
Sincerely,
Jimmy Keane
e: [email protected]
p: 847.212.9031
Nick DeBlasio
Business Development
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Forwarded message
From: Nugara, Joe <jnugara@tspubs com>
Date: Wed, Aug 12, 2015 at 10:05 AM
Subject: Wood Dale, IL Ready for Print
To: Nick DeBlasio <[email protected]>
Cc: "Ray, Scott" <[email protected]>
Good morning Nick, the files for Wood Dale are ready and on our FTP site. Below is the print confirmation.
Thanks!
WOOD DALE, IL
8.5" x 10.875"
28 Total Pages (24+Cover)
6,500 Copies
Saddlestitch
A37
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CALENDAR: 05
PAGE 1 of 9
CIRCUIT COURT OF
IN THE CIRCUIT COURT OF COOK COUNTY COOK COUNTY, ILLINOIS
CHANCERY DIVISION
COUNTY DEPARTMENT, CHANCERY DIVISIONCLERK DOROTHY BROWN
NOTICE OF FILING
TO: Eric P. Sparks
Justin W. Hanson
222 North LaSalle Street, Ste. 800
Chicago, Illinois 60601
[email protected]
[email protected]
PLEASE TAKE NOTICE that on May 31, 2018 we electronically filed with the Clerk
of the Circuit Court of Cook County, Illinois the following documents: Notice of Appeal,
true and correct copies thereof are served upon you herewith.
Kenneth J. Vanko
Clingen, Callow & McLean, LLC
Attorney No. 39631
2300 Cabot Drive, Suite 500
Lisle, IL 60532
630.871.2600
[email protected]
{00411451.DOCX /v. 1 }
A39
CERTIFICATE OF SERVICE
The undersigned hereby states that she served the referenced documents to the
parties listed in the attached service list via e-mail on May 31, 2018.
Eric P. Sparks
Justin W. Hanson
222 North LaSalle Street, Ste. 800
Chicago, Illinois 60601
[email protected]
[email protected]
By: /s/ Nikki Matthiscyk
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{00411451.DOCX /v. 1 } 2
A40
APPEAL TO THE APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
FROM THE CIRCUIT COURT OF COOK COUNTY
COUNTY DEPARTMENT, CHANCERY DIVISION
NOTICE OF APPEAL
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PLEASE TAKE NOTICE that the Plaintiff, Advantage Marketing Group, Ltd.,
appeals to the Appellate Court of Illinois, First Judicial District, from the Order of the
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Circuit Court of Cook County, entered in this case on May 1, 2018, made final and
PAGE 3 of 9
appealable by the Order entered May 9, 2018, true and correct copies of which are
attached as Exhibit A.
The Plaintiff requests that the Appellate Court of Illinois reverse the Orders entered
and from which the Plaintiff appeals and remand the case for further proceedings.
/s/Kenneth J. Vanko
Kenneth J. Vanko
Kenneth J. Vanko
Clingen Callow & McLean, LLC
(I.D. No. 39631)
2300 Cabot Drive, Suite 500
Lisle, Illinois 60532
630-871-2600
[email protected]
A41
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2
EXHIBIT A
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A46
IN THE CIRCUIT COURT OF COOK COUNTY
COUNTY DEPARTMENT, CHANCERY DIVISION
Plaintiff,
Defendant.
ORDER OF DISMISSAL
THIS CAUSE, coming on to be heard for a status hearing, and Plaintiff having
advised the Court that it will not seek further amendment of its Complaint;
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IT IS HEREBY ORDERED:
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ENTERED
ENTERED:
!<mw<«.wk.do<:x /v. I
A47
Table of Contents
APPEAL TO THE APPELLATE COURT OF ILLINOIS
FIRST JUDICIAL DISTRICT
FROM THE CIRCUIT COURT OF THE COOK JUDICIAL CIRCUIT
COOK COUNTY, ILLINOIS
Page 1 of 2
Page 2 of 2
NOTICE OF FILING
PLEASE TAKE NOTICE that on October 5, 2018, we electronically filed with the
Clerk of the Appellate Court, First Judicial District, Illinois: Brief of Plaintiff-
Appellant, a true and correct copy of which is attached and hereby served upon you.
The undersigned hereby states that she served the referenced documents to the
parties listed in the attached service list via e-mail and regular mail on October 5, 2018.