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Abstract

Illinois courts have departed from the corporate-law jurisprudence that traditionally served as a champion of fiduciary duties. Historically, Illinois courts have consistently protected minority shareholders and punished directors and those in control for engaging in unfaithful, abusive, and deceitful behavior. In recent years, however, the Illinois Supreme Court has taken a technical approach to fiduciary duties, resulting in wrongdoers getting away with unconscionable conduct. First, this Article will demonstrate why Illinois has historically been characterized as a “shareholder” state by comparing the Illinois and Delaware corporate statutes and examining Illinois courts’ favorable fiduciary duty jurisprudence. In the latter half of the twentieth century, the Illinois Supreme Court took a firm stance against fiduciaries when they engaged in conflicts of interest, seized corporate opportunities, and competed with the entity they served. The Illinois Supreme Court did not limit its stance to situations involving the fiduciary-entity relationship; however, it also held fiduciaries to the same standard when they dealt among themselves. Consistent with these approaches, the Illinois Supreme Court also took a broad approach to the related concept of oppression when it interpreted the term to mean abusive and not necessarily illegal or fraudulent.

Next, by examining two recent Illinois Supreme Court decisions, Indeck Energy Services, Inc. v. DePodesta and Walworth Investments-LG, LLC v. Mu Sigma, Inc., this Article will examine whether there is a countervailing trend in state judiciary practices. Indeck represents the Illinois Supreme Court’s departure from its long-standing jurisprudence covering the fiduciary duty of loyalty, specifically, the standard for establishing the usurpation of a corporate opportunity. In Walworth, the court, applying Delaware law, took an extremely technical approach in interpreting an anti-reliance clause. This analysis will illustrate the Illinois Supreme Court’s failure to recognize the defendant’s fraudulent behavior, which induced the plaintiff to agree to the anti-reliance clause.

Finally, the Article concludes with a discussion of Illinois courts’ jurisprudence covering anti-reliance clauses in fraud in the inducement claims, offering solutions courts and lawyers can take to address the problem.

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