Charles K. Schafer

CHAD SCHAFER helps clients solve their most pressing and challenging problems across multiple substantive areas. His cases often have a technology component at their core, from prosecuting and defending trade secrets and restrictive covenant disputes, software implementation litigation, and state and local tax controversies involving taxing authorities’ attempts to apply 20th century tax laws to clients’ 21st century technology and practices. Chad also handles a wide variety of other high-stakes litigation, defending corporations in connection with allegations of federal statutory violations as well as defending and prosecuting the breach of significant contracts.

Chad is also an experienced trial lawyer who has served as lead counsel in numerous high-stakes federal and state court proceedings and arbitrations. He handles litigation matters involving the most complex legal, factual, and economic issues facing his clients. Clients regularly turn to Chad when navigating their most challenging issues. His involvement starts before and continues after high-stakes litigation, not only ensuring successful results when litigation cannot be avoided, but also the development of effective strategies for avoiding litigation. Chad serves as a regular sounding board for legal and business clients as they navigate existential risks and bet-the-company decisions.

Chad has prosecuted and defended dozens of claims regarding breaches of restrictive covenants  — including non-competition agreements (“non-competes”), non-solicitation agreements, confidentiality clauses, non-disparagement obligations, and associated claims of tortious interference, conspiracy, and unfair business practices — in claims covering individual senior executives and mass raid situations, including in the retail mortgage lending, software development, financial services, FinTech, IT management, healthcare operations, entertainment, education, automobile servicing, insurance, and insurance technology industries. 

In connection with these cases, as well as other non-employment cases, Chad has litigated claims regarding the misappropriation and misuse of significant trade secrets, including obtaining a full defense verdict on summary judgment in Edgenet, Inc. v. Home Depot U.S.A., Inc. (7th Cir. 2011; Wis. 2012), in a case seeking more than US$1 billion in damages on claims that Home Depot misappropriated trade secrets in developing competing software.

Chad has represented companies and individuals in disputes regarding failed, and allegedly failed, software implementations (often involving ERP systems) in cases seeking damages that ranged from a few million dollars to more than US$1 billion. Chad also has helped clients avoid litigation in dozens of other cases, getting involved early to successfully resolve allegations of breach and misrepresentation, including claims of missed deadlines, underperformance, staffing failures, and nonpayment or underpayment of fees, working with clients either to help terminate relationships or reset relationships with revised contractual conditions.

Chad has represented dozens of corporations and individuals in a variety of tax controversies, covering sales tax (retailer’s occupation tax and use tax), corporate and individual income tax, estate tax, franchise tax, and utility tax, including: 

• Hartney Fuel Oil Co. v. Department of Revenue, 2013 IL 115130 (Ill. Nov. 21, 2013), in which Sidley prevailed in a Protest Monies Act case on behalf of the Hartney Fuel Oil Company brought against the Illinois Department of Revenue, protesting the Department’s US$23 million assessment of Hartney for prior sales tax payments. Chad handled the trial and helped defend the trial judgment on appeal, culminating in affirmance by the Illinois Supreme Court in a case that invalidated Illinois sales tax regulations that had been in place for more than 50 years. 
  

Other notable matters include: 

• City of Chicago v. Expedia Inc., et al., 2017 IL App (1st) 153402 (Ill. App. 2017), in which the Illinois Appellate Court reversed a US$29 million judgment for unpaid hotel taxes against clients Expedia Inc., Hotels.com, and Hotwire. 
  
• Regional Transportation Authority v. United Airlines, Inc. et al. (Cook County, IL) & Regional Transportation Authority v. American Airlines, Inc. et al. (Cook County, IL), representing both United Airlines and American Airlines in separate lawsuits brought by the Regional Transportation Authority, alleging that each airline avoided paying tens of millions of dollars in sales taxes for jet fuel used at O’Hare through sourcing those sales to a lower tax jurisdiction in Illinois. 
  
• Obtaining dismissal on behalf of Lyft, Inc., of a case brought by the Chicago Convention and Tourism Bureau and other local entities in the Circuit Court of Cook County seeking to hold Lyft liable for not paying airport departure taxes applicable to taxis and limousines. 
• Serving as national coordinating counsel for an online ticket marketplace, and serving as trial counsel in litigated disputes against State Departments of Revenue concerning sales tax liability, obtaining the voluntary dismissal of one action, and the circuit court reversal of an assessment, upheld by agency tax tribunal, of approximately US$30 million.

Chad regularly represents companies in state and federal court, as well as U.S. and international arbitration proceedings, regarding significant breach of contract actions, including: 

• Numerous disputes between buyers and sellers in M&A and private equity transactions regarding purchase price adjustments and other post-closing disputes.
  
• A global supplier in an arbitration brought by a customer alleging breach of contract relating to supply shortages and seeking more than US$100 million in damages. 
  
• A global beverage manufacturer in international arbitration alleging breach of contract against a supplier for product defects. 
  
• A multinational corporation in litigation regarding breach of an agreement to share in hundreds of millions of dollars in environmental cleanup costs. 
  
• The defense of a national bank against breach of contract claims regarding the sale of charged off consumer credit card debt, resulting in summary judgment and the award of attorney’s fees in client’s favor. 
  

Chad also has defended consumer class actions, both at the trial level and on appeal, in conjunction with national Federal Multi-District Litigation, including: 

• Wippman v. American Airlines, Inc. (Cook County, 2018), obtaining dismissal with prejudice on grounds of Airline Deregulation Act preemption in a putative class action seeking damages on a class basis in the United States under a European Union Regulation 261/2004, designed to compensate passengers for flight delays. 
  
• De Bouse v. Bayer, 235 Ill. 2d 544 (2009), a victory on summary judgment, upheld on appeal in the Illinois Supreme Court in a certified economic loss class action brought under the Illinois Consumer Fraud Act, alleging that Bayer committed consumer fraud with respect to the marketing of the statin, Baycol, which victory was named one of the top three most significant product liability decisions of 2009 by Drug and Device Law. 
  
• Grubhub, Inc., in an action brought by the City of Chicago alleging consumer fraud and unfair business practices relating to the company’s online ordering processes.
  

Chad has significant experience conducting a variety of corporate internal investigations throughout the United States and multiple foreign countries involving instances of tax fraud, theft, and embezzlement by executives, inquiries from regulators and law enforcement, and alleged violations of the Foreign Corrupt Practices Act in the United States, Singapore, Hong Kong, Mexico, Australia, and Venezuela.

Chad has also briefed and argued appeals before federal and state appellate courts, including the U.S. Supreme Court, U.S. Courts of Appeals for the Seventh and Ninth Circuits, the Illinois Supreme Court, Alabama Supreme Court, and numerous intermediate state courts of appeals.

Outside of his practice, Chad is on the Board of Directors of the American Brain Tumor Association (“ABTA”) and the Board of Ambassadors for the American Cancer Society.

Chad is the head of Litigation Training for the Chicago Litigation group and one of the Knowledge Management partners for the firm’s national litigation practice. He is a member of the firm’s Committee for the Evaluation and Compensation of Associates and a member of the firm’s Technology Industry Group.

Chad has an active pro bono practice, primarily representing indigent individuals in both civil and criminal matters. Chad has been working on cases as part of Sidley’s Capital Litigation Project since 2005, currently serving as lead counsel for two individuals on death row in Alabama in post-conviction proceedings, successfully obtaining a remand from the Alabama Court of Criminal Appeals regarding the dismissal of a post-conviction petition for relief.