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Williams v. Caterpillar Inc.

United States District Court, C.D. Illinois, Peoria Division

April 15, 2013

ED WILLIAMS, as assignee of the Bankruptcy Estate of Firefly Energy, Plaintiff,
CATERPILLAR INC., a Delaware corporation, Defendant

Page 841

For Ed Williams, Plaintiff: Jonathan A Backman, LAW OFFICE OF JONATHAN A BACKMAN, Bloomington, IL.

For Caterpillar, Inc, Defendant: Robert G Abrams, LEAD ATTORNEY, Gregory James Commins, Jr, BAKER & HOSTETLER LLP, Washington, DC; Jeffrey B Rock, Julie L Galassi, HASSELBERG ROCK BELL & KUPPLER, Peoria, IL.


JOE BILLY McDADE, United States Senior District Judge.

Page 842


This matter is before the Court on Defendant's Motion to Dismiss Plaintiff's Second Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 19). Defendant originally filed a Motion to Dismiss on October 11, 2012, to which Plaintiff responded on October 28, 2012. (Doc. 13; Doc. 16). On March 20, 2013, the Court sua sponte issued an Order for Plaintiff to properly establish diversity of citizenship, so that the Court could satisfy itself that it had subject-matter jurisdiction to hear the case. (Doc. 17). Plaintiff properly alleged citizenship in his Second Amended Complaint, Defendant subsequently filed a Motion to Dismiss Plaintiff's Second Amended Complaint, and Plaintiff filed a Response to Defendant's Motion.[1] (Doc. 18; Doc. 19; Doc. 20). For the reasons stated below, Defendant's Motion to Dismiss Plaintiff's Second Amended Complaint is granted in part and denied in part and Defendant's Request for Oral Argument is denied.

I. Legal Standard

"In ruling on Rule 12(b)(6) motions, the court must treat all well-pleaded allegations as true and draw all inferences in favor of the non-moving party." In re

Page 843

march FIRST Inc., 589 F.3d 901, 904 (7th Cir. 2009) (citing Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008)). To survive a motion to dismiss under 12(b)(6), a plaintiff's complaint must first " describe the claim in sufficient detail to give the defendant 'fair notice of what the . . . claim is and the grounds upon which it rests.'" EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 560-63, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). If the complaint overcomes this first hurdle, it must next plead enough facts to " plausibly suggest that the plaintiff has a right to relief . . . above a 'speculative level.'" Id. While detailed factual allegations are not needed, a " formulaic recitation of a cause of action's elements will not do." Twombly, 550 U.S. at 545. Rather, " the complaint must contain 'enough facts to state a claim to relief that is plausible on its face.'" Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 602 (7th Cir. 2009) (quoting Twombly, 550 U.S. at 557; Tamayo, 526 F.3d at 1084).

II. Background[2]

Plaintiff, Ed Williams, is the former Chief Executive Officer of Firefly, a corporation that produced special types of batteries for a wide variety of uses. (Doc. 18 at 2). In 2009, Firefly required equity capital to continue its product development and to satisfy growing customer and market demands for its product. (Doc. 18 at 2). Plaintiff secured a commitment for funding from a large venture capital fund, Trident Capital, following many months of negotiations in May 2009. (Doc. 18 at 2). Trident Capital agreed to lead an investment group that would invest up to a total of $18 million of equity in Firefly pursuant to terms set forth in a term sheet that had an extended acceptance deadline of May 26, 2009. (Doc. 18 at 2). The term sheet was styled as non-binding, but Trident Capital had made representations of its commitment to Plaintiff. (Doc. 18 at 3). Pursuant to the terms of the term sheet, Trident Capital required existing holders of preferred Firefly stock to effectively relinquish their warrants for additional preferred Firefly stock. (Doc. 18 at 3). Trident Capital also proposed changes to the Firefly Board that would likely reduce the role of the company's existing largest shareholders, and proposed a substantial liquidation preference for new preferred stock to be issued under its facility, which would impact the liquidation rights of existing Firefly preferred stockholders. (Doc. 18 at 3). Defendant Caterpillar, Inc. was a large existing shareholder of Firefly. (Doc. 18 at 3).

Firefly's eight-member Board of Directors (the " Board" ) at the time of negotiations with Trident Capital included Mr. Siamak Mirhakimi, a senior executive from Defendant Caterpillar, Inc. (Doc. 18 at 3). On May 26, 2009, the day of the acceptance deadline from Trident Capital, the Board had a telephonic meeting at which a quorum was present to accept Trident's term sheet and to finalize the terms of Trident's equity investment. (Doc. 18 at 3). Mr. Mirhakimi attended the Board meeting with Mr. Fanfu Li, a Caterpillar representative who was not a member of the Firefly Board. (Doc. 18 at 4). Caterpillar executives authorized Mr. Mirhakimi and Mr. Li to attend the Board meeting to make a presentation and offer on its behalf regarding an equity investment by Caterpillar in Firefly. (Doc. 18 at 4).

At the Board meeting, Mr. Mirhakimi told the Board that ...

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