Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Ill.: Company, not individual owner, was the real party in interest in tortious interference, unfair competition suit, (Dec 9, 2013)

By Linda O’Brien, J.D., LL.M.

A fitness business, not the business owner, was the real party in interest for purposes of tortious interference and unfair competition claims under the Illinois’ Deceptive Trade Practices Act against a nutritional supplement manufacturer, the federal district court in Chicago has ruled (Forza Technologies, LLC v. Premier Research Labs, LP, December 5, 2013, Gottschall, J.). However, the claims could proceed against the manufacturer’s limited partner as they were based on conduct in his individual capacity and not in his role as limited partner.

Forza Technologies, LLC, a multimedia development service provider, filed an action against Premier Research Labs, LP, a manufacturer of nutritional supplements for breach of contract and fraud. Forza alleged that Premier agreed to supply Forza with nutritional products and that Premier did not meet delivery deadlines and supplied products that failed to meet Forza’s specifications. Premier filed a counterclaim against Mia Scheid, a member of Forza, as an additional defendant.

Scheid filed a counterclaim against Premier and a third-party claim against Robert Marshall, Premier’s founder and limited partner. She alleged that Marshall retaliated against her for Forza’s lawsuit against Premier by attempting to damage her and her exercise and fitness business, Fitness Arts, LLC. Specifically, Scheid alleged that she was an authorized seller of Premier’s nutritional supplements for several years and became a leading seller. On his radio program, Marshall allegedly falsely represented that Scheid was no longer a seller of nutritional supplements and attempted to divert sales from her to other sellers. Marshall also directed Premier to discontinue a discount Premier previously provided in order to driver her and Fitness Arts out of business. Premier and Marshall moved to dismiss Scheid’s counterclaim and third-party claim.

Premier argued that the tortious interference and unfair competition claims by Scheid affected her only indirectly as owner of Fitness Arts and the action should have been brought by Fitness Arts as the real party in interest.

The court found that Fitness Arts was the real party in interest in both of Scheid’s claims. Scheid purchased Premier’s products and established business relationships with customers through Fitness Arts. Although Scheid had an interest in Fitness Arts, any harm or loss suffered by the company was derivative to her individually. Thus, Fitness Arts was allowed time to ratify, join or be substituted in the current action and its failure to do so would result in the dismissal of counterclaim and third-party claim.

In denying the motion to dismiss Scheid’s claims against Marshall, the court noted that the claims were based on Marshall’s individual conduct on his radio program and not in his role as limited partner in Premier.

The case is No. 12 CV 7905.

Attorneys: Raymond P. Niro (Niro, Scavone, Haller & Niro, Ltd) for Forza Technologies, LLC. Ryan Mathew Kaiser (Amin Talati, LLC) for Premier Research Labs, LP.

Companies: Forza Technologies, LLC; Premier Research Labs, LP

Cases: StateUnfairTradePractices IllinoisNews