Dallas v. Chicago Teachers Union
945 N.E.2d 1201
Ill. App. Ct.2011Background
- Dallas sued the CTU, Stewart, Koffman, and Walsh alleging conspiracy to damage his reputation and remove him as CTU vice president.
- Following a 2008 union proceeding, Dallas was expelled from the CTU and removed as vice president.
- In May 2009, the parties entered a confidential settlement agreement containing paragraphs 1.3, 2.1, and 4, including a confidentiality clause and a liquidated damages provision.
- Paragraph 2.1 bars written or oral statements about Dallas or the settlement in CTU publications or events, with a minimum liquidated damages of $100,000 for violations.
- In October–November 2009 CTU publications published articles referring to Dallas and the former vice president, allegedly violating paragraph 2.1; Dallas moved to enforce the settlement, and the circuit court ordered $100,000 in liquidated damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether paragraph 2.1’s liquidated damages are enforceable as a penalty. | Dallas contends 2.1 is a valid forecast of damages. | CTU argues 2.1 is a penalty and unenforceable. | Enforceable if reasonable at contracting and related to potential damages. |
| Whether 2.1 reasonably relates to potential damages given content/verity of statements. | Dallas argues the clause targets any statements about him. | CTU argues the scope is broader than disparagement only. | Yes, 2.1 covers statements about the plaintiff or the settlement, not limited to disparagement. |
| Whether the $100,000 minimum is a permissible fixed sum for any breach. | Dallas's liquidated damages provide a floor, not a fixed sum. | CTU argues a floor is permissible and avoids ambiguity. | Permissible; a minimum but not an impermissible penalty under the test. |
| What is the proper interpretive standard for the contract’s liquidated damages provision? | Lenzi/contract-language dictates interpretation based on text. | Defendant asserts potential ambiguity but the text is clear. | Contract language unambiguous; circuit court properly construed 2.1. |
Key Cases Cited
- Jameson Realty Group v. Kostiner, 351 Ill.App.3d 416 (Ill. App. Ct. 2004) (test: reasonableness and relation to potential damages; enforceability of liquidated damages)
- Curtin v. Ogborn, 75 Ill.App.3d 549 (Ill. App. Ct. 1979) (second-element requirement: relation to damages at contracting time)
- Med + Plus Neck & Back Pain Center, S.C. v. Noffsinger, 311 Ill.App.3d 853 (Ill. App. Ct. 2000) (penalty if liquidated damages bear no relation to costs; inverse relation example)
- Grossinger Motorcorp, Inc. v. American National Bank & Trust Co., 240 Ill.App.3d 737 (Ill. App. Ct. 1992) (optional nature of liquidated damages renders clause unenforceable as penalty)
- Catholic Charities v. Thorpe, 318 Ill.App.3d 304 (Ill. App. Ct. 2000) (absence of optional damages language supports enforceability or non-enforceability depending on contract text)