New Developments Update
No. 71 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. September 2012
Special Update Issue
Recognizing that the law is not static and that no analysis can stop further development, Sharp Thinking from time to time publishes update issues discussing new developments in areas already covered – develop-ments which individually do not justify another issue on the topic, but of which we want to make you aware. This issue provides such updates on several topics.
If a topic is of interest and you do not have the original issue to consult for reference, please check it out on our website, www.thesharpfirm.com, or request it by e-mailing Brenda@lotsharp.com.
Use of Credit Card Accepts Previously-Communicated Standard Terms
A credit card holder who uses the card after receipt of original or amended standard terms thereby agrees thereto for purposes of that trans-action, an Appellate Court panel ruled recently.
However, the court in Razor Capital v. Antaal, 2012 IL App (2d) 110904, said that conclusion was “not particularly relevant” to cases holding that credit card cases are actions upon unwritten contracts for statute of limitations purposes. See Sharp Thinking No. 21 (June 2009) and No. 51 (Aug. 2011).
In affirming dismissal of a Second Amended Complaint, the panel said that whether the agree-ment is written or oral, “It is essential . . . to allege facts sufficient to indicate the terms of the contract.” To plead that a generic agreement was applicable when the cardholder used the card, the plaintiff “must, at a minimum, allege facts reflecting that those terms were communicated to defendant, via mail to defendant’s most recent billing address or in another similar manner by which it would be reasonable to presume that defendant received them, and that defendant accepted those terms by subsequently using the card” the panel said (emphasis in original). See also Asset Acceptance, LLC v. Tyler, 2012 IL App (1st) 093559 (“Consistent with the treatment of each credit card purchase as a separate offer and acceptance, modifications to credit card terms are binding between the parties when, after notice of the modifications, the cardholder uses his card”).
No Work Product Protection Without Anticipation of Litigation
The conclusion that no work product protection applies to lawyers who are not working in, or in anticipation of, litigation (Sharp Thinking No. 52 (Sept. 2011)), has been adopted in the bankruptcy context. In Golden Grove Pecan Farm, 460 B.R. 349 (Bankr. M.D. Ga. 2011), the court refused to allow the bankrupt’s former attorneys to assert the work product doctrine in opposition to the trustee’s demand for the law firm’s files. Moreover, the court said that even if the “anticipation of litigation” requirement was met, it still would reject the firm’s objection because the doctrine should not protect documents from the firm’s clients, and the trustee stands in the shoes of the client.
Unsophisticated Consumer Must Represent Significant Population
The “unsophisticated consumer” remains the standard under Fair Debt Collection Practices Act § 1692g (see Sharp Thinking No. 63 (May 2012)), but even that “uninformed, naïve and trusting” hypothetical individual has “a rudimentary knowledge about the financial world”, is capable of “making basic deductions and inferences,” and is not confused by mere “puffery,” the 7th Circuit ruled recently. Moreover, Zemeckis v. Global Credit & Collec. Corp., 679 F.3d 632 (7th Cir. 2012), makes clear that the claimed “unsophisticated consumer” must represent “a significant fraction of the population” in order to obtain treatment of the alleged confusion as a disputed matter of fact.
Appellate Courts Differ On Employee Classification Act
Another Appellate Court panel has called into question Bartlow v. Shannon, 399 Ill. App. 3d 560 (2010) (see Sharp Thinking No. 38 (Oct. 2010)) respecting whether the Employee Classification Act (820 ILCS 185) (Sharp Thinking No. 11 (Aug. 2008)) violates due process. At issue seems to be the courts’ disagreement on employer/contractor rights after the Department of Labor has determined the “civil fines” for alleged violations. However, noting that the parties in World Painting Co. v. Costigan, 2012 IL App (4th) 110869, had “agreed to a constitutional plan for conducting their interaction as the Department investigates plaintiff’s possible violations,” the court found the plaintiff was not entitled to injunctive relief.
Plaintiff’s Own Conduct Justifies Alleged Retaliatory Discharge
A plaintiff cannot state a cognizable wrongful discharge claim (see Sharp Thinking No. 50) (Aug. 2011)) by claiming her employer discharged her for complaining of inadequacies for which she herself was responsible, a panel of the Appellate Court has ruled. In Ulm v. Mem. Med. Ctr., 2012 IL App (4th) 110421, the plaintiff allegedly complained of shortcomings in record-keeping for which she, as operations manager of health information, was responsible.
Restrictive Covenant Upheld
A 2-year restrictive covenant which prohibited an income-tax preparer from servicing clients for whom she worked while employed with the covenantee has been upheld by the Appellate Court’s 4th District.
Applying the Illinois Supreme Court’s decision in Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871 (see Sharp Thinking No. 58 (Feb. 2012)), the court upheld the restriction despite lack of a geographical term, which it found unnecessary due to the limited prohibited customer base. “This covenant does not prohibited defendant from preparing taxes or providing related services to the general public, or to plaintiff’s or H&R Block’s clients generally. She is only prohibited from serving those clients she serviced while employed by plaintiff. This limited restriction reasonably balances defendant’s right to earn a living with plaintiff’s right to protect its customer relationships and its investment in developing defendant’s skills”, the court said
More Rule 9011 Sanctions Imposed
Noteworthy uses of Federal Rule of Bankruptcy Procedure 9011, discussed in Sharp Thinking No. 55 (Dec. 2011), continue to arise. In In re Blue Pine Group, Inc., 457 B.R. 64 (9th Cir. BAP 2011), a Bankruptcy Appellate Panel affirmed sanctions of $109,528 for an attorney’s filing of a Chapter 7 bankruptcy on behalf of a corporation which in fact had not properly authorized the filing. Similarly, in Lamar Crossing Apts., L.P., 2011 WL 6155714 (6th Cir. BAP 2011), another panel affirmed sanctions of $42,299.08 for the filing of a limited partnership’s bankruptcy without proper authorization. Moreover, in In re Love, 461 B.R. 29 (Bankr. N.D. Ill. 2011), a court ordered the debtor’s attorney to disgorge all but $250 of his fee for putting the debtor into a Chapter 13 bankruptcy when she should have been in Chapter 7.
— John T. Hundley, 618-242-0246, Jhundley@lotsharp.com
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