Likelihood of Success: Other Claims Against Puig Defendants
7. Cleveland Hair has also demonstrated more than the requisite likelihood of success, within the meaning of Roland Machinery and later cases, on its other claims--claims that assert a breach of the duties owed to Cleveland Hair by Puig Defendants by reason of the parties' status as co-venturers and by reason of the additional duties owed by Puig in his various capacities as a shareholder, employee, officer and director of Cleveland Hair. In those respects the evidence demonstrates that Puig Defendants utilized the invalid termination Notice to implement their opportunistic plan to take over all or substantially all of Cleveland Hair's business, assets and goodwill, and to leave Cleveland Hair in a position in which it would have virtually no chance of surviving as a viable business entity. While Puig Defendants apparently did not actually start the operations of their new venture before the effective date of the termination Notice, they did engage in impermissible pre-termination activities that coupled Puig Group's invalid Notice with, among other things, interfering with the relationships that Cleveland Hair enjoyed with its employees and its advertising agency (including Comitor, the "voice and face" of Cleveland Hair); obtaining a commitment and covenant not to compete from Haenschen, the doctor on whom Cleveland Hair was dependent for its Rosemont operation; arranging for Puig Group itself to be unavailable to Cleveland Hair, thus leaving it without any doctors; failing to give Cleveland Hair adequate notice of their plans; selling the practices, files and patient lists of several of Cleveland Hair's east coast operations; and frustrating Cleveland Hair's efforts to arrange for the continuation of its business following the termination.
8. In addition, immediately following the effective date of the termination, Puig Defendants not only piggybacked onto Puig Group's invalid Notice by engaging in further activity to Cleveland Hair's detriment but also committed other independently wrongful acts, some of which exploited information acquired during the existence of the fiduciary relationship. Puig Defendants' post-termination conduct included hiring key employees from Cleveland Hair's Rosemont operations and interfering with its ability to enter into relationships with other doctors. Those acts were aimed at rendering Cleveland Hair unable to continue in business as a viable competitor, if at all. That conduct is unlawful notwithstanding the fact that Puig Group did not actually begin operating its new venture before the termination became effective (see, e.g., Comedy Cottage, Inc. v. Berk, 145 Ill. App. 3d 355, 361, 495 N.E.2d 1006, 1011-12, 99 Ill. Dec. 271 (1st Dist. 1986); Smith-Shrader Co. v. Smith, 136 Ill. App. 3d 571, 578, 483 N.E.2d 283, 288-89, 91 Ill. Dec. 1 (1st Dist. 1985); H. Vincent Allen & Assocs., Inc. v. Weis, 63 Ill. App. 3d 285, 291-92, 379 N.E.2d 765, 770, 19 Ill. Dec. 893 (1st Dist. 1978). Moreover, Puig Group, under its Agreement with Cleveland Hair as well as pursuant to the parties' long-standing practices, controlled the doctors--an admittedly scarce resource and one that Cleveland Hair needed to stay in business. Thus Puig Defendants knew that Cleveland Hair's business could be decimated, and hence that Cleveland Hair could be positioned for Puig Defendants' coup, without the need for their actual commencement of their new business operations before the termination became effective (see, e.g., National Gas Appliance Corp. v. Manitowoc Co., 311 F.2d 896, 900 (7th Cir. 1962) and early Illinois cases cited there; James C. Wilborn & Sons, Inc. v. Heniff, 95 Ill. App. 2d 155, 163, 237 N.E.2d 781, 786 (1st Dist. 1968) (confirming the actionability of "a proven plot to destroy another's business ( Duane Jones Co. v. Burke, 306 N.Y. 172, 117 N.E.2d 237 (1954)"). In that respect the adoption of a "belt and suspenders" strategy by Puig Defendants and Haenschen, involving wrongful pre-termination acts, simply shows that they were not taking any chances. They did everything they could think of to ensure that they would accomplish their objectives.
9. Much of what has been said to this point is based on undisputed evidence, including defendants' own testimony and documents that they authored. Indeed, to the extent that Puig offered any purported "defense" to Cleveland Hair's charges, he did not deny or controvert the underlying facts but rather attempted to explain why his actions were not malicious or in bad faith, or why they were purportedly justified. To begin with, bad faith on the part of Puig Defendants is not as such essential to the success of Cleveland Hair's claims. But even if it were, this Court rejects Puig's explanations, as the evidence has developed to this point, and finds that his actions were part of an opportunistic plan to ambush Cleveland Hair and to leave it in a position in which it would have no viable alternative other than to turn over its Rosemont operations "lock, stock, and barrel" to Puig Group.
Relatedly Puig has failed to establish that he acted in the manner that he did because of any controlling professional standard or ethical obligation.
10. To the extent if at all that Puig's testimony may be deemed to dispute the evidence on which Cleveland Hair relies or the inferences that readily may be drawn from that evidence, his testimony is not credible. Puig was frequently impeached on material matters, and his answers were frequently evasive. Moreover, his explanations for his conduct were self-serving after-the-fact attempts to justify what he did, not grounded in a credible or plausible view of the parties' relationship and their past practices of long standing, or truly grounded in professional standards. In addition, Puig and his then counsel also withheld critical documents and evidence from disclosure until compelled to do so by Cleveland Hair's efforts.
Likelihood of Success: Claims Against Haenschen
11. Cleveland Hair has also demonstrated the requisite likelihood of success (in Roland Machinery terms) on its claims that Haenschen participated in and assisted Puig Defendants in breaching the duties that they owed to Cleveland Hair (though not on its claim that Haenschen wrongfully induced the breach of the Agreement by Puig Group's invalid termination Notice). Although Haenschen did not know any of the particulars of the Agreement, he knew generally (a) of the relationship between Puig Group and Cleveland Hair, (b) that Cleveland Hair was dependent on Puig Group and particularly on Haenschen himself for its ability to conduct business operations in the Rosemont office, where Haenschen had performed most of the surgeries for many years, and (c) that no contingency plans existed that would permit Cleveland Hair to continue to function in Rosemont if Haenschen and the staff employed by Cleveland Hair there were to quit.
12. As evidenced by the Cleveland-Hair-takeover projections that Haenschen prepared and the unprecedented $ 250,000 signing bonus that he received, as well as the contemporaneous increase in his fee-for-service schedule, Haenschen also knew (a) that he was critical to Puig Defendants' plans, (b) that Puig could not terminate his relationship with Cleveland Hair and take over the Rosemont operation without Haenschen and (c) that Puig was planning a surprise attack to maximize Puig Group's advantage. Haenschen furthered that plan by signing on and allying himself with Puig and by complying with Puig's request for secrecy.
13. Cleveland Hair was an intended third-party beneficiary of the relationship that existed between Haenschen and Puig Group, whose agreements with Haenschen and the other doctors were entered into so that Puig Group could satisfy its obligations to staff Cleveland Hair's facilities (see, e.g., Weil, Freiburg & Thomas v. Sara Lee Corp., 218 Ill. App. 3d 383, 393, 577 N.E.2d 1344, 1352, 160 Ill. Dec. 773 (1st Dist. 1991) and cases cited there). There is no question that Haenschen was well aware of that purpose of the relationship, which refutes his contention that he was "only" an independent contractor of Puig Group and owed no related duty to Cleveland Hair.
14. Haenschen also participated in Puig Defendants' scheme in a number of other ways: by soliciting Cleveland Hair's Rosemont staff to induce them to quit their employment there and to enter Puig Group's employ instead; by complying with the request of Puig and Puig's lawyers that he refuse to meet with Cleveland Hair's President; by utilizing Puig Defendants' lawyers to represent him and to direct his actions in furtherance of the new venture; by threatening Malmin; by threatening a doctor with whom Cleveland Hair was attempting to establish a relationship; and by filing the earlier-referred-to state court lawsuit against that doctor, Malmin and Cleveland Hair. All of those actions were motivated by Haenschen's economic self-interest and by his desire to ensure the success of Puig Defendants' and his new venture.
15. Haenschen knowingly decided to cast his lot with Puig Defendants and to join their scheme with all of its attendant risks. Among other things, the notes prepared by Haenschen's former lawyer Tinaglia reflects that Haenschen was aware of the risks and exposures of joining forces with Puig, but that he did so with indifference to those risks. When told of those risks by Tinaglia, Haenschen responded "It's war--harm to Carlos [Puig], harm to me" (Tinaglia Dep. Exs. 6 and 7 at 12; see also Tinaglia Dep. Ex. 6 and 7 at 11, stating that Haenschen "realizes risk" of filing the state court action "but says he and Carlos must go forward").
16. What was said as to Puig Defendants in Conclusion 9 is equally true as to Haenschen: In principal part the evidence supporting the foregoing Conclusions is undisputed and is based on Haenschen's own testimony and notes and on uncontroverted documents. Haenschen's proffered explanations likewise do not constitute a legal justification for his knowing participation in Puig Defendants' scheme.
17. Although Haenschen is not himself a fiduciary vis-a-vis Cleveland Hair, his conduct clearly renders him liable to it. Under Illinois law a person who knowingly colludes with a fiduciary or assists the fiduciary in breaching its duties is also liable for the breach (see, e.g., Appley v. West, 832 F.2d 1021, 1030-31 (7th Cir. 1987) and cases cited there).
18. As is true with Puig, some aspects of Haenschen's testimony also lacked credibility so as to impair his attempted justifications of his conduct. Thus Haenschen's testimony about many of the events surrounding the filing of the state court litigation was materially impeached, and he was also impeached in such matters as these:
(a) Although Haenschen testified during his July 5 deposition that the meeting at which he solicited the Cleveland Hair staff was scheduled because the nurses requested it, he later produced notes that showed that he had planned and initiated the meeting before he ever communicated with the nurses (Haenschen Dep. Ex. 17).
(b) Haenschen's testimony at his deposition that he was not interested in offering a job to Cleveland Hair's telemarketer was misleading at best. To the contrary, Haenschen's notes show that he instructed Puig to extend an offer to the telemarketer and even dictated the terms of the offer (Haenschen Dep. Ex. 17; compare Haenschen Dep. 72-74 with id. 287-88). And see also Haenschen Dep. 70 and Ex. 3, which turned out to be false in the light of his later testimony given after critical documents were finally produced (compare Haenschen Dep. 285 and Ex. 17).