Friday, November 22, 2013

Abreu v. Unica Indus. Sales, Inc. case brief

Abreu v. Unica Indus. Sales, Inc. case brief summary
586 N.E.2d 661 (1991)


CASE SYNOPSIS
Defendant directors appealed judgment against them entered by the Circuit Court of Cook County (Illinois), in plaintiff shareholder's derivative action, pursuant to which court appointed a provisional director, awarded attorney fees in addition to monetary award, and issued an injunction.

CASE FACTS
Plaintiff shareholder alleged defendant directors breached their fiduciary obligations by attempting to procure trade secrets so that products utilizing them could be produced without going through plaintiff corporation. Pursuant to plaintiff shareholder's derivative action, the trial court appointed a provisional director who happened to be plaintiff shareholder's son-in-law; awarded attorney fees in addition to a monetary award; and ordered an injunction.

DISCUSSION

  • The appellate court affirmed appointment of the provisional director, holding that such appointment was in the best interests of the corporation, regardless of the fact that the appointee here appeared to be aligned with plaintiff shareholder. 
  • However, the award of attorney fees separate from damages was erroneous, as there was no indication of vexatiousness by defendant directors during the litigation. 
  • Also, the injunction was overbroad where it prohibited defendant directors from disseminating any information from which the trade secrets could be obtained, as such would have prohibited permissible reverse engineering.

CONCLUSION
Provisional director appointment affirmed, as it was in best interests of corporation, notwithstanding fact that appointee was plaintiff shareholder's son-in-law. However, award of attorney fees separate from damages was reversed, as there was no indication of vexatiousness by defendant directors during the litigation, and injunction issued was overbroad.

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