Court Rejects Broad Ranging Attack on Employment Arbitration Clause

Diggs v. CITIGROUP, INC., Dist. Court, ND Texas 2013 - Google Scholar:

This is an employment case.  Because the employee signed an arbitration clause, the court ordered the parties to proceed to arbitration.  Citigroup sought sanctions.  The employee argued that arbitration clauses were systematically unfair to employees.  The argument was based on a research study.

This looks like a test case, designed to attack arbitration clauses.

Edward X. Clinton, Jr.

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Illinois Supreme Court Answers Corporate Law Question

Pielet v. Pielet, Ill: Supreme Court 2012 - Google Scholar:

The Illinois Supreme Court has answered an important corporate law question.  Can you sue a dissolved corporation? The Illinois Business Corporation Act says "yes." The next question is: can you sue the corporation when the claim does not accrue until the corporation has dissolved? The Illinois Supreme Court has answered "No" to that question.

The court sets forth the statutory provision:

"¶ 31 The section of the Business Corporation Act of 1983 relevant to this appeal is section 12.80 (805 ILCS 5/12.80 (West 2006)), which provides:

"The dissolution of a corporation *** shall not take away nor impair any civil remedy available to or against such corporation, its directors, or shareholders, for any right or claim existing, or any liability incurred, prior to such dissolution if action or other proceeding thereon is commenced within five years after the date of such dissolution. Any such action or proceeding by or against the corporation may be prosecuted or defended by the corporation in its corporate name."

¶ 32 The first question we must resolve today is whether this provision permits a claim for breach of contract to be asserted against P.B.S. One, Inc., a dissolved corporation, where the alleged breach did not take place until after the corporation was dissolved.^[3]"

In this case, Pielet was owed certain funds by a corporation.  The corporation was dissolved and the liability was transferred.  Pielet could not sue the corporation because the obligation did not accrue until after the corporation dissolved.

Comment: from a policy standpoint the opinion makes sense.  It is not a good idea to allow a corporation to incur and obligation, dissolve, and leave the other party without a remedy.  Letting someone sue when the breach occurs after the corporation is dissolved is more problematic.  My concern with this case is that it may create a loophole for clever corporate planning.  A corporation might be able to use this case to avoid payment of an obligation.

Edward X. Clinton, Jr.

www.clintonlaw.net

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