Bohaboy v. Baxter International, Inc.

2024 IL App (1st) 230868, 254 N.E.3d 947
Appellate Court of Illinois·Decided September 20, 2024·No. 1-23-0868·Published

Opinion

2024 IL App (1st) 230868

No. 1-23-0868

Order filed September 20, 2024 FIFTH DIVISION

IN THE

APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT

SCOTT BOHABOY, ) Appeal from the Circuit Court of ) Cook County, Law Division.

Plaintiff-Appellant, )

) No. 2022 L 002528

v. )

) Honorable

BAXTER INTERNATIONAL, INC., a Delaware ) Thomas M. Donnelly, Corporation, and JAMES ATHAS, ) Judge, presiding.

)

Defendants-Appellees. )

JUSTICE MITCHELL delivered the judgment of the court, with opinion.

Presiding Justice Mikva and Justice Lyle concurred in the judgment and opinion.

OPINION

¶1 Plaintiff Scott Bohaboy appeals the circuit court’s dismissal of his third amended complaint against defendants Baxter International, Inc., and its in-house counsel, James Athas, for negligence pursuant to a voluntary undertaking, legal malpractice, and breach of a duty to warn. The issue on appeal is whether the circuit court erred in dismissing plaintiff’s complaint with prejudice because plaintiff alleged at least one viable cause of action in connection with his ultimate termination as a corporate officer at Baxter. For the following reasons, we affirm.

¶2 I. BACKGROUND

¶3 Plaintiff served as treasurer for defendant Baxter between 2015 and 2020. As treasurer, plaintiff oversaw and approved Baxter’s international financial and accounting practices. In 2019, Baxter began an internal investigation into its foreign currency exchange and accounting practices. The investigation was centered around currency exchange transactions between select foreign subsidiaries of Baxter that were intended to maximize gains or minimize losses on the exchange rates.

¶4 The subject currency exchange transactions had been a common operating practice for Baxter’s financial division for several years prior to plaintiff’s promotion to the role of treasurer. The practice had received routine approval from plaintiff’s predecessors, including several current and former chief financial officers, as well as Baxter’s external auditor, PricewaterhouseCoopers.

¶5 As part of the investigation, plaintiff voluntarily participated in three interviews that lasted for a total of 20 hours. Defendant Athas was present, as well as another of Baxter’s in-house counsel, Holland Tahvonen, and a stenographer. Baxter’s outside counsel, David Rosenbloom, led the questioning, and when a question was unclear or plaintiff did not understand, Athas or Tahvonen would offer clarification.

¶6 After the third interview, plaintiff was called in to speak with Baxter’s vice president of human resources, Heather Wechet. Wechet asked plaintiff to “take a few days off,” so he would not be subject to internal or external questions regarding Baxter’s upcoming earnings call, where the company intended to announce the internal investigation. The following Sunday, Wechet asked plaintiff to meet with her and Athas at Baxter’s offices that afternoon. There, plaintiff was placed on administrative leave for the remainder of the investigation, though he was assured his

compensation would not be impacted. At this same meeting, plaintiff learned that the currency exchange transactions were the subject of an investigation by the Securities and Exchange Commission. Plaintiff asked Athas if he should retain independent counsel. Athas told plaintiff he should and that Baxter would pay the attorney fees so long as he cooperated with the investigation.

¶7 Athas recommended that plaintiff hire law firm Mayer Brown to represent him. Athas did not disclose to plaintiff that Mayer Brown represented Baxter on other legal matters. Mayer Brown executed a draft engagement agreement which disclosed that Mayer Brown was engaged to represent Baxter in other matters at the time it began its representation of plaintiff. The engagement letter was never signed by Mayer Brown or plaintiff. Nevertheless, plaintiff attended a fourth interview with Rosenbloom, this time represented by three Mayer Brown attorneys. Shortly after this interview, on March 16, 2020, Baxter terminated plaintiff’s employment via e-mail.

¶8 Mayer Brown continued to represent plaintiff during the subsequent SEC investigation. Plaintiff never received a bill for, nor a description of, the legal services rendered. Mayer Brown sent all invoices directly to Baxter. In 2022, the SEC investigation found that plaintiff had violated securities laws, and plaintiff agreed to a settlement that neither admitted nor denied the allegations against him personally. Baxter was found to have violated securities law relating to the currency exchange transactions and was fined $18 million. As a consequence of the settlement agreement, plaintiff was fined $125,000, and a salary bonus of $191,981 was recouped by Baxter. Since the settlement, plaintiff has been unable to find employment, has suffered financial losses, and has been diagnosed with clinical depression.

¶9 Plaintiff filed suit in the circuit court of Cook County against Baxter and Athas. After extensive motion practice and two prior opportunities to replead, plaintiff filed his third amended

complaint making claims for negligence based on voluntary undertaking, legal malpractice, and duty to warn. On defendants’ motion, the circuit court dismissed the third amended complaint with prejudice. Plaintiff filed a timely notice of appeal. Ill. S. Ct. R. 303(a)(1) (eff. July 1, 2017).

¶ 10 II. ANALYSIS

¶ 11 Plaintiff challenges the dismissal of his complaint and argues that he alleged sufficient facts to state a viable claim. A motion to dismiss under section 2-615 of the Code of Civil Procedure challenges the legal sufficiency of a complaint based upon defects apparent on its face. Beacham v. Walker, 231 Ill. 2d 51, 57 (2008); see 735 ILCS 5/2-615 (West 2022). Though a plaintiff need not set forth all evidentiary facts that will eventually prove his claim, he must present sufficient facts to support each element of the cause of action alleged. City of Chicago v. Beretta U.S.A. Corp., 213 Ill. 2d 351, 369 (2004). All well-pleaded facts, and all reasonable inferences that may be drawn from those facts, must be taken as true and construed in the light most favorable to the plaintiff. HBLC, Inc. v. Egan, 2016 IL App (1st) 143922, ¶ 25. “Where unsupported by allegations of fact, legal and factual conclusions may be disregarded.” Kagan v. Waldheim Cemetery Co., 2016 IL App (1st) 131274, ¶ 29. A cause of action should not be dismissed pursuant to section 2- 615 unless it is clear that no set of facts could ever be proven that would entitle the plaintiff to recovery. Tedrick v. Community Resource Center, Inc., 235 Ill. 2d 155, 161 (2009). We review an order granting a motion to dismiss de novo. Id.

¶ 12 A

¶ 13 Plaintiff contends that the circuit court erred in dismissing his negligence claim against Baxter because he pleaded sufficient facts to state a claim. Defendants argue that the complaint was properly dismissed because plaintiff failed to plead that Baxter voluntarily undertook a duty,

that it breached that duty, or that plaintiff suffered a compensable injury as a result of the alleged breach.

¶ 14 Plaintiff’s complaint alleged that Baxter was negligent:

“74. In negligent breach of its duty to provide Plaintiff with the best possible advice for Plaintiff’s protection, both legal and professional, Baxter failed to exercise reasonable care in the performance of its voluntary undertaking and committed one or more of the following acts or omissions:

a. Baxter failed to disclose to Plaintiff that his interests were adverse to its own;

b. Baxter failed to disclose to Plaintiff at the outset of the internal investigation that his career with Baxter was in extreme jeopardy; Baxter failed to disclose to Plaintiff that it would protect PwC, Almeida, and Saccaro at all costs from SEC sanctions, even if it meant sacrificing Plaintiff—which of course is what happened;

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Bohaboy v. Baxter International, Inc., 2024 IL App (1st) 230868, 254 N.E.3d 947 (Ill. Ct. App. 2024).

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