Williams v. Caterpillar Inc.

940 F. Supp. 2d 840, 2013 WL 1624381, 2013 U.S. Dist. LEXIS 54167
CourtDistrict Court, C.D. Illinois
DecidedApril 15, 2013
DocketCase No. 12-cv-1170
StatusPublished

This text of 940 F. Supp. 2d 840 (Williams v. Caterpillar Inc.) is published on Counsel Stack Legal Research, covering District Court, C.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Williams v. Caterpillar Inc., 940 F. Supp. 2d 840, 2013 WL 1624381, 2013 U.S. Dist. LEXIS 54167 (C.D. Ill. 2013).

Opinion

ORDER & OPINION

JOE BILLY McDADE, Senior District Judge.

This matter is before the Court on Defendant’s Motion to Dismiss Plaintiffs 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 Plaintiffs 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 Plaintiffs 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 [843]*843marchFIRST 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 Atl. 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, 127 S.Ct. 1955. 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, 127 S.Ct. 1955; 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 Caterpillar was pre[844]*844pared to invest at least $5 million in equity capital in Firefly, and to lead a round of equity investments that were effectively certain to generate more equity for Firefly. (Doc. 18 at 3-4). Mr. Mirhakimi expressly stated that he had 100% authorization from Caterpillar to invest at least $5 million in exchange for preferred stock of Firefly. (Doc. 18 at 4). The specific terms of the offer communicated by Mr. Mirhakimi and Mr. Li were that Caterpillar would invest $5 million, within two weeks, in exchange for the precise number of preferred shares to which an investor would be entitled based on a pre-money valuation of Firefly of $12 million. (Doc. 18 at 4). This was the arrangement previously agreed to by Trident Capital and would equate to 20,434,231 shares of Series D Preferred Stock at price per share of $0.24469. (Doc. 18 at 4). Moreover, under the Caterpillar deal, the preferred stock that Caterpillar would acquire would have no liquidation preference, and Firefly’s shareholders, such as Caterpillar, would not have to relinquish their existing warrants for Firefly stock. (Doc. 18 at 5). Mr. Mirhakimi and Mr. Li indicated that Caterpillar might also be willing to invest more than $5 million pending further discussions, but that Caterpillar’s offer to invest at least $5 million for the preferred stock was not contingent on the outcome of any additional discussions and negotiations. (Doc. 18 at 5).

Because the Firefly Board preferred the terms of Caterpillar’s offer, it voted to reject the Trident Capital equity investment and to proceed instead with the Caterpillar investment. (Doc. 18 at 6). On or about June 2, 2009, Caterpillar informed Firefly that it decided not to acquire the $5 million in Firefly preferred stock and would not lead a round of equity investors in the company. (Doc. 18 at 6). Firefly was unable to raise additional equity capital thereafter, and subsequently filed for bankruptcy in March 2010. (Doc. 18 at 2, 6). The trustee of Firefly’s bankruptcy estate sold to Plaintiff all rights, claims, and causes of action that Firefly possessed against Defendant by Bill of Sale dated October 17, 2011. (Doc.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Gregory Glass v. Kemper Corporation
133 F.3d 999 (Seventh Circuit, 1998)
Tamayo v. Blagojevich
526 F.3d 1074 (Seventh Circuit, 2008)
Bissessur v. Indiana University Board of Trustees
581 F.3d 599 (Seventh Circuit, 2009)
In Re marchFIRST Inc.
589 F.3d 901 (Seventh Circuit, 2009)
Van Der Molen v. Washington Mutual Finance, Inc.
835 N.E.2d 61 (Appellate Court of Illinois, 2005)
A & B Freight Line, Inc. v. Ryan
576 N.E.2d 563 (Appellate Court of Illinois, 1991)
Borg-Warner Corp. v. Anchor Coupling Co.
156 N.E.2d 513 (Illinois Supreme Court, 1958)
Lydon v. Eagle Food Centers, Inc.
696 N.E.2d 1211 (Appellate Court of Illinois, 1998)
Wasleff v. Dever
550 N.E.2d 1132 (Appellate Court of Illinois, 1990)
Smith v. Kurtzman
531 N.E.2d 885 (Appellate Court of Illinois, 1988)
Gilbert v. Sycamore Municipal Hospital
622 N.E.2d 788 (Illinois Supreme Court, 1993)
Advance Mortgage Corp. v. Concordia Mutual Life Ass'n
481 N.E.2d 1025 (Appellate Court of Illinois, 1985)
Amcore Bank, N.A. v. Hahnaman-Albrecht, Inc.
759 N.E.2d 174 (Appellate Court of Illinois, 2001)
Weil, Freiburg & Thomas, P.C. v. Sara Lee Corp.
577 N.E.2d 1344 (Appellate Court of Illinois, 1991)
Granite Properties Ltd. Partnership v. Granite Investment Co.
581 N.E.2d 90 (Appellate Court of Illinois, 1991)
First American Title Insurance v. TCF Bank, F.A.
676 N.E.2d 1003 (Appellate Court of Illinois, 1997)
Connick v. Suzuki Motor Co., Ltd.
675 N.E.2d 584 (Illinois Supreme Court, 1996)

Cite This Page — Counsel Stack

Bluebook (online)
940 F. Supp. 2d 840, 2013 WL 1624381, 2013 U.S. Dist. LEXIS 54167, Counsel Stack Legal Research, https://law.counselstack.com/opinion/williams-v-caterpillar-inc-ilcd-2013.