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Underground Solutions, Inc. v. Palermo

United States District Court, N.D. Illinois, Eastern Division

May 15, 2014

UNDERGROUND SOLUTIONS, INC., Plaintiff,
v.
EUGENE PALERMO, Defendant

For Underground Solutions, Inc, a Delaware corporation, Plaintiff: Christopher T. Sheean, LEAD ATTORNEY, Swanson, Martin & Bell LLP, Chicago, IL.

For Eugene Palermo, also known as Gene Palermo, Defendant: John David Fitzpatrick, Stephen J. Rosenfeld, Steven P. Mandell, LEAD ATTORNEYS, Mandell Menkes LLC, Chicago, IL.

Page 721

MEMORANDUM OPINION AND ORDER

MATTHEW F. KENNELLY, United States District Judge.

Underground Solutions, Inc. (UGSI) has sued Eugene Palermo, asserting claims of trade libel, intentional interference with prospective economic advantage, violation of the Illinois Uniform Deceptive Trade Practices Act, 815 ILCS § 510/2(a)(7) & (8), and the Lanham Act, 15 U.S.C. § 1125(a), and tortious interference with contract. UGSI bases its claims on Palermo's alleged distribution and presentation of information that it alleges contained defamatory information about UGSI's products. UGSI alleges that Palermo presented this information at conferences and published it on his website. Palermo has moved to dismiss UGSI's complaint. He has also filed a motion to strike, arguing that California's statute against strategic lawsuits against public participation (SLAPP) governs this dispute and warrants striking UGSI's state law claims. For the reasons stated below, the Court denies Palermo's motion to strike.

Background

The Court has taken the following facts largely from UGSI's complaint. UGSI is a

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Delaware corporation principally based in California. The company is a developer and seller of fusible polyvinyl chloride (PVC) pipe and is " the sole supplier of thermally butt-fused PVC pipe in the United States." Compl. ¶ 15. The pipe " creat[es] a monolithic, leak-free pipe system capable of being pulled in long lengths (e.g., through an existing host pipe or into a new directionally drilled hole) and also capable of withstanding the pressures utilized in water and certain wastewater applications." Id. ¶ 1. The competing product to UGSI's PVC pipe is high-density polyethylene (HDPE) pipe. UGSI alleges that its PVC pipe " has created a competitive alternative to HDPE pipe." Id. ¶ 3.

UGSI alleges that Palermo is a paid spokesman for Performance Pipe, an HDPE pipe manufacturer. Id. ¶ 22. It also alleges that Palermo is a Tennessee resident. Id. ¶ 17. UGSI contends that Palermo " intentionally disseminated, verbally and in writing, false and misleading information about the quality, characteristics, and reliability of Fusible PVCorks Association and the Canadian Standards Association. Id. ¶ 29.

Discussion

If a district court is sitting in diversity, it " must apply the choice of law principles of the forum state . . . to determine which state's substantive law governs the proceeding." West Bend Mut. Ins. Co. v. Arbor Homes LLC, 703 F.3d 1092, 1095 (7th Cir. 2013). Here, the parties agree that Illinois's choice of law rules apply to this dispute. In Illinois, " the rights and liabilities as to a particular issue are to be governed by the jurisdiction which retains the 'most significant relationship' to the occurrence and the parties." Barbara's Sales, Inc. v. Intel Corp., 227 Ill.2d 45, 61, 879 N.E.2d 910, 919, 316 Ill.Dec. 522 (2007). In adopting this rule, Illinois has " jettisoned the lex loci delicti rule--also termed the place-of-the-injury rule." Id.

The parties also agree that Illinois follows the doctrine of dé peç age, which " 'refers to the process of cutting up a case into individual issues, each subject to a separate choice-of-law analysis.'" Chi v. Loyola Univ. Med. Ctr., 787 F.Supp.2d 797, 801 (N.D. Ill. 2011) (quoting Townsend v. Sears, Roebuck & Co., 227 Ill.2d 147, 169-70, 879 N.E.2d 893, 906-07, 316 Ill.Dec. 505 (2007)). This concept applies when " it is appropriate to apply the law of more than one jurisdiction," such as when " the issues to which the different laws are applied are separable." Spinozzi v. ITT Sheraton Corp., 174 F.3d 842, 848 ...


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