Breach of Fiduciary Duty Claim Dismissed as SLAPP Suit

On October 20, 2010, the Illinois Appellate Court upheld the dismissal of company’s lawsuit against a former employee for breach of fiduciary duty and fraud as a SLAPP suit. Hytel Group, Inc. v. Butler.  The lawsuit was filed nearly six months subsequent to the employee’s firing, and four months after the employee filed a wage claim against the company.  The employee argued that after she was terminated she repeatedly tried to secure her last paycheck and was told that if she filed a wage claim, the company would “sue [her] ass.”  She further argued that the company’s lawsuit was, in fact, in retaliation of her pursuit of the wage claim, in violation of the Illinois Citizen Participation Act (Illinois’ anti-SLAPP statute).

The company countered that a wage claim was a purely private matter to which the Citizen Protection Act did not apply.  However, the court found that the Act was to be construed liberally and that the employee’s wage claim was “an exercise of her right to petition for redress of grievances.”  The company also argued that its claims were unrelated to the employee’s wage claims and therefore did not impinge the employee’s First Amendment right to petition for redress of her grievance.  However, the court held that the focus was whether the company’s claims were in retaliation for the wage claims, rather than whether they were directly related.

Finally, the company argued that applying the Act is such a way would have the unintended consequence of eliminating all counterclaims, because every counterclaim filed after a movant’s initial claim would be deemed a response to the initial claim. The court rejected this argument as well, noting that the court has a role in determining whether a counterclaim is brought with “retaliatory intent.”  For example, “retaliatory intent may be inferred when a claim lacking merit is filed shortly after the exercise of protected rights” but if a counterclaim “states a potentially valid cause of action and seeks damages within the ordinary range recoverable  . . . and there are no other facts suggesting an intent to chill the other party’s exercise of first amendment right to seek redress, then the later claim has not been brought ‘in response to’ the other party’s exercise of first amendment rights within the meaning of the Act.”

Hytel demonstrates the sweeping protections of the Citizen Participation Act and how the Act may be used outside the traditional parameters of defamation actions resulting in the dismissal of retaliatory lawsuits.  The Illinois Act is one of the broadest of its kind in the country, and the interpretation and scope of the Act are likely to be the subject of further judicial opinion.  Whether the court’s determination of a party’s “intent” in bringing a claim or counterclaim can be clearly established remains to be seen, as well as how courts will handle scenarios where a party may have mixed motives.

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