Waiver is a valid basis for the denial of a motion to disqualify; a former client who is entitled
to object to an attorney's representation of an adverse party on the grounds of conflict of interest
but who knowingly refrains from asserting it promptly is deemed to have waived that right.
Chemical Waste Management, Inc. v. Sims, 875 F. Supp, 501, 504-5. (N.D. Ill. 1995), Although
the length of the delay in bringing a motion to disqualify counsel is obviously important, it is not
dispositive. fd. at 505. A court should also consider factors such as when the movant learned of
the conflict; whether the movant was represented by counsel during the delay; why the delay
occurred; and whether disqualification would result in prejudice to the nonmoving party. id.
(citations omitted),

For six months, Defendants were aware of Mr. Gabrielides’ representation of Plaintiffs.
Rather than raising the possible conflict immediately, they opted to engage in a series of settlement
talks with Plaintiffs. Defendants argue they consciously declined to mention the conflict earlier out
of fear that it would chill settlement negotiations. The court does not find this explanation
satisfactory. Defendants now claim they “will be in a complete state of paranoia regarding what
Gabrielides knows and how he is going to use it against them’ if he is allowed to continue serving
as counsel to Plaintiffs. (Defendants’ Reply at 2.) If they are so worried now, why were Defendants
not in a “state of paranoia” during the earlier settlement negotiations? In settlement talks as well
as in court, the court presumes that having knowledge of an opponent's strategy and inner
workings might give a negotiating attorney an improper advantage.

As troubling as Defendants’ delay is, Seventh Circuit and Northern District of Illinois case
law leave the court unable to conclude that Defendants entirely waived their right to move to
disqualify Mr. Gabrielides and the firm. Compare Weeks v. Samsung Heavy Indus. Co., Lid., 909
F. Supp. 582, 584 (N.D. Ill. 1996) (waiver found after twenty-four months); Chemical Waste
Management, Inc. v, Sims, 875 F. Supp. 502 (N.D. Ill 1995) (waiver found twenty-one months),

Shermanchaice, Inc. v. Wellmark Community Ins., Inc., No. 98 C 8414, 1999 WL 608721, at *3

13



substantially related matter in which the party's interests are materially adverse to the interests of
the former client. In re Brand Name Prescription Drugs Antitrust Litigation, No. 94 © 897, 2001 WL
103419, at *1 (N.D. Ill, Jan. 30, 2001). Local Rule 83.51.10 bars a lawyer associated with a firm
irom representing a client when the lawyer knows that LR 83.51.9 would prohibit another lawyer
associated with that firm from taking on the representation. /d.

The court recognizes its duty to protect the special relationship between attorneys and
clients by ensuring that clients receive the undivided loyalty of their counsel. Guillen v. City of
Chicago, 956 F. Supp. 1416, 1421 (N.D. Ill. 1997). Atthe same time, it is well settled that attorney
disqualification is “a drastic measure which courts should hesitate to impose except when
absolutely necessary.” Owen v. Wagering, 985 F.2d 312, 317 (7th Cir. 1993) (quoting, inter alia,
Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983)). In addition to creating unnecessary
delays, unwarranted disqualifications often deprive parties of their chosen legal advisor. Guillen,
956 F. Supp. at 1421. Moreover, as the Seventh Circuit has noted, motions for disqualification
“should be viewed with extreme caution for they can be misused as techniques of harassment.”
Freeman v, Chicago Musical Instrument Co,, 689 F.2d 715, 722 (7th Cir. 1982), With these
considerations in mind, the court must consider whether an ethical violation will result from Mr.
Gabrielides' continued representation and whether disqualification is the proper remedy, Alex
Munoz Gen. Contractor, Inc. v. MC3d, Inc., No. 98 C 4489, 1998 WL 831806, at *2 (N.D. Ill. Nov.
25, 1998).

Attorney Disqualification

In determining whether to disqualify an attorney, courts in this Circuit employ a three-step
analysis. First, the court will determine whether a substantial relationship exists between the
subject matter of the prior and present representations. If the court concludes that a substantial

relationship does exist, the next step is to ascertain whether the presumption of shared confidences



presumably privy to a substantial amount of strategic thinking and discussion.

Plaintiffs argue that at most, the former and current representations bear a “superficial
resemblance” to each other, and therefore are not substantially related. Robin v. Doctors
Officenters Corp., 686 F. Supp. 199, 205 (N.D. Ill, 1988). The court believes ta the contrary, that
Defendants have demonstrated that there are “specific subject matter, issues and causes of action
in the former representation that are common to the present one to enable the court to determine
whether the substantial relationship test has been met." /d. Much of Mr. Gabrielides’ work for
Defendants consisted of registering and reviewing their trademarks, two of which are the subject
of the lawsuit filed on behalf of his current clients. As for Plaintiffs’ contention that the problems
are “wholly distinct,” again the court disagrees. Cf. Committee Comment to LR 83.51.9 (recogniz-
ing that there may be an exception to disqualification for a lawyer who recurrently handled a type
of problem for a former client and later seeks to represent another client in a wholly distinct problem
even though the subsequent representation involves a position adverse to the prior client). Mr.
Gabrielides bilied hundreds of hours of intellectual property work to the Defendants, work which
included reviewing the trademark status for two of the same trademarks involved in the present
litigation. Far from being wholly distinct, the matters reveal substantial likeness to one another.
Finally, the information regarding Mr. Gabrielides’ prior representation of Defendants supplies the
court with more than “abstract” evidence; it is sufficient for the court to conclude that the work is
substantially related to the current representation. Gen-Cor, LLC v. Buckeye Corrugated, Inc., 111
F. Supp. 2d 1049, 1056 (S.D. Ind. 2000); SWS Financial Fund A v. Salomon Brothers, inc., 790
F. Supp. 1392, 1401-02 (N.D. Ill. 1992).

B. Is the Presumption of Shared Confidences Rebutted?

Having found that a substantial relationship between the former and current representations

does exist, the court will proceed to determine whether Mr. Gabrielides has rebutted the



id. Mr. Gabrielides stated in his affidavit that he has “no recollection of working on any Rainbow
Fraction matter or issue for ETA/Daigger.” Gabrielides Aff. ] 3. In any event, the billing records
provided by Defendants indicate that Mr. Gabrielides did at least a small amount of work for LRI
on Hexagram, worked on the Rainbow Fraction trademark application for LRI, and spoke with
representatives of Daigger regarding a product called “Fraction Factory.” Submission in Support
of Defendants’ Motion to Disqualify, Vol. 1, Tab 1, 2,4. In 1998, Laff, Whitesel represented LRI
in an action against defendant Summit Financial Products, inc. (“Summit”) for trade dress
infringement, false advertising, violation of the Illinois Consumer Fraud and Deceptive Practices
Act, and Unfair Competition. Mr. Gabrielides appears to have been heavily involved in the litigation
until his departure from Laff, Whitesel in July 1998. Submission in Support of Defendants’ Motion
to Disqualify, Vol. 2, Tab 7.

Although the Summit lawsuit did not involve the marks at issue in the present litigation, Mr.
Gabrielides must have been exposed to LRI's business practices, litigation strategy, and other
confidential information. Mr. Gabrielides states that he has no recollection of working on any
Rainbow Fraction matter or issue for Daigger, and that any work he may have done on Hexagram
was insubstantial. Gabrielides Aff. J] 3, 7. Mr. Gabrielides has not denied, however, that he was
privy to much of Defendants’ confidential business planning and strategy.

It is reasonable to infer that confidential information about Defendants’ business and legal
strategies would have been given to an attorney who worked on several intellectual property
matters over several years. Mr. Gabrielides does not deny this inference. The substantial
relationship standard does not require that a party moving to disqualify another party's attorney
point to or reveal a particular piece of confidential information which the challenged attorney
actually received; its receipt will be presumed in circumstances which make it a likely possibility.
LaSalle National Bank v. County of Lake, 703 F.2d 252, 256 (7th Cir. 1983). The second prong

of the substantial relationship test is therefore met.

6



with respect to prior representation has been rebutted. If the court concludes this presumption has
not been rebutted, the court must then determine whether the presumption of shared confidences
has been rebutted with respect to the present representation. Cromley v. Board of Education of
Lockport Township High School Dist. 205, 17 F.3d 1059, 1064 (7th Cir, 1994). If the attorney
whose role is challenged is unable to rebut this second presumption, disquatification will be proper.
As the Seventh Circuit has explained, the term “substantially related" boils down to whether the
lawyer could have obtained confidential information in the first representation that is potentially
relevantin the second, Analytica, Inc. v. NPD Research, inc., 708 F.2d 1263, 1266 (7th Cir. 1983).

A. Does a Substantial Relationship Exist?

Determining whether a substantial relationship exists itself entails a three-level inquiry. The
first step requires a factual reconstruction of the scope of the prior legal representation. Second,
lhe court must determine whether it is reasonable to infer that confidential information would have
been given to a lawyer representing a client in those matters. Third, it must be determined whether
that information is relevant to the issues raised in the litigation pending against the former ctient.
LaSalle National Bank v. County of Lake, 703 F.2d 252, 255-56 (7th Cir. 1983); Westinghouse
Electric Corp. v. Gulf Oi! Corp., 588 F.2d 221, 225 (7th Cir. 1978).

Based on the court's review of the documents provided by the parties, it appears that during
his tenure at Laff, Whitesel, Mr. Gabrielides likely obtained confidential information about
Defendants’ business practices that might be relevant to the case at hand. Laff, Whitesel’s billing
records indicate that Mr. Gabrielides devoted substantial time to the review and filing of various
trademarks for Defendants; at minimum he billed approximately 200 hours to representations of
LRI, and several additional hours to Daigger. Submission in Support of Defendants’ Motion to

Disqualify, Vol. 1, Tab 1. Included in these records is evidence that he worked on at least two of

the marks owned by LRI that are at issue in the present lawsuit, Rainbow Fraction and Hexagram.



antitrust offenses. /d. NPD moved to disqualify Schwarz & Freeman from representing Analytica
in that litigation.

Affirming the district court's decision granting the motion, the Seventh Circuit found a
substantial relationship between Schwarz & Freeman’s work for NPD and the Analytica lawsuit.
id. at 1267. The court pointed out that Mr. Fine had access to and received confidential financial
and operating data of NPD. Only a few months later Schwarz & Freeman represented an
adversary of NPD’s before the FTC, and in that proceeding and later in the antitrust lawsuit
advanced contentions to which the data Mr. Fine received might have been relevant. The data
concerned NPD's profitability, sales prospects, and general market strength—all matters potentially
germane to the antitrust suit. /o. The Seventh Circuit held that the two representations were thus
substantially related, “even though we do not knaw whether any of the information Fine received
would be useful in Analytica’s lawsuit. . .or if so whether he conveyed any of it to his partners and
associates who were actually handling the suit.” /d.

The Seventh Circuit reached a similar result in LaSalle National Bank v. County of Lake,
in which the court disqualified an attorney from representing the bank in a lawsuit against the
county. The attorney had previously served as head of the civil division of the Lake County State’s
Attorneys office. The court observed, “[aJithough he may not have been involved in the precise
subject matter of this litigation, he was clearly privy to a substantial amount of discussion and
strategic thinking.” 708 F.2d 252, 256 (7th Cir, 1983).

In the case before this court, the fact that two of the marks involved in the pending lawsuit
are common to Mr. Gabrielides' prior representation only strengthens the court's determination that
there is a substantial relationship between his prior work for Defendants and his current work for
Plaintiffs. Just as the firm in Analytica was presumed to know its former client’s business strategy,
this court presumes that Mr. Gabrielides has extensive knowledge about the business planning and
strategy of the Defendants. Particularly during the litigation with Summit, Gabrielides was

8



Morne Geet ith (008 F

United States District Court, Northern District of Illinois

Name of Assigned Judge se ; Sitting Judge if Other
Rebecca R. Pall;

or Magistrate Judge than Assigned Judge

+
CASE NUMBER 1 C9498 DATE 10/23/2002

CASE Safc-T-Products, Inc., et al. vs. Tearning Resources, Inc., et al.

TITLE

[in the following box (a) indicate the party filing the motion, e.g, plaintilf. defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion Ising presente
DOCKET ENTRY:
am Filed motion of { use Listing in “Motion” box above.]
@) Oo Baief in support of motion duc
q@) Ll Answer brief to motion due___. Reply to answer bricfduc___
(4} o Ruling/Tearing on Wa _setfor al
e oO Stams hearing|helW/continued to] [ser for/re-set for] on setfor___ at
@ 8 Pretrial confecencefheld/continued to| [set for/re-set Lor] on___set for a
Q) a lrial[set for/re-set for]on at
(8) o (Bench/Jury trial] (Hearing) held/continued to al
(9) 7 This case is dismissed [with/without] prejudice and withvut costs[by/agreement/pursuant to]
OFRCP40n) O Local Rule 41.1 OFRCP41(a)(1) OO FRCP41(a)(2).

an _| [Other docket entry} Enter Memorandum Opinion and Order. Defendants’ motion to disqualify

(Doc. No. 13-1) is granted in part and denied in part. Attomey John Gabrielides is barred from further
work on this matter, but the motion to disqualify the law firm Brinks, Hofer, Gilson & Lione is denied.

adi ff [Por further detail sce order attached to the original minute order]

Document
Number

Nov notives required, advised in open court 2?

No nutices required
eg require umber of notices

av Notices matted by judge's staff. OCT 24 2002

Natiticd counsel by telephone. date dacketed

Docketing to mail notices
Marl AQ 430 fori ie OTL initials
Copy to judge/magistrate judge. a mf
vorasaoz
lve nied nope
courtraom
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initials:

Date/time received in
central Clerk's Otfice veiling depary initials



id. Defendants correctly point out that Brinks, Hofer has not demonstrated any mechanism they
have put in place to prevent shared confidences. Rather, Plaintiffs rely on Mr. Gabrielides’ affidavit,
as well as the affidavits of his colleagues, in which they all slate that no confidences were ever
revealed. Gabrielides aff. J 12; Gilson aff. {J 3, 4; Slavick aff. {ff 3. 4; Stoneberg aff. 1] 3, 4.
While this will help save Brinks, Hofer from being disqualified altogether, it is not sufficient to rebut
the presumption regarding Mr. Gabrielides himself under Seventh Circuit law. The firm allowed Mr.
Gabrielides to serve as the primary attorney on the case; this is hardly a “Chinese Wall.”

Because a substantial relationship exists between Mr. Gabrietides’ prior and current work
and because Plaintiffs have not rebutted the presumption that he was privy to confidential
information, the court concludes that Mr. Gabrielides must be disqualified fram doing any further
work on this case.
Disqualification of Law Firm

Mr. Gabrielides is presumed to have confidential information protected by Local Rule
83,51.9 that is material to the matter at hand. Therefore, in order to satisfy Local Rule 83.51.10(b),
Brinks, Hofer should have screened Mr. Gabrielides from this lawsuit. The court nevertheless
declines to take the drastic step of disqualifying the entire firm, which would be unduly prejudicial
fo Plaintiffs. Instead, the court will allow Brinks, Hofer to remain on the case, with the
understanding that Mr. Gabrielides will be immediately removed from the matter. The court
reaches this conclusion for two primary reasons. First, Plaintiffs’ affidavit and those of their
attorneys state that no canfidential information passed from Mr. Gabrielides to his new partners or
associates. Second, by unnecessarily delaying their disqualification motion for six months,
Defendants waived their right to object to Mr. Gabrielides’ representation of Plaintiffs during that
time period.

Mr. Gabrielides stated that he has not given Jerome Gilson or Scott Slavick, the other



presumption of shared confidences with respect to the prior representation. LaSalle National Bank
v. County of Lake, 703 F.2d 252, 256 (7th Cir, 1983), The affidavits supplied by Defendants
indicate that Mr. Gabrielides was privy to extensive confidential information. Richard Woldenberg,
President and Chief Executive Officer of LRI, stated that “Mr. Gabrielides became extremely
knowledgeable about LRI's business, its legal tactics, and its strategies in the intellectual property
area." Woldenberg Aff. 5. Mr. Woldenberg also claims that he had “numerous discussions [with
Mr. Gabrielides] regarding case strategy and handling. . . .He was very much exposed to my way
of looking at and thinking about intellectual property litigation.". Woldenberg Aff. 1 6. Dennis
Goldman, President of ETA/Cuisenaire, a division of Daigger, stated that Daigger “utilized Mr.
Gabrielides' services consistently and extensively,” and that Mr. Gabrielides “became extremely
knowledgeable about Daigger/ETA's business, its legal tactics, and its strategies in the intellectual
property area.” Goldman Aff. J 10. Plaintiffs have not refuted these statements; rather, they have
relied on their argument that there was no substantial relationship between the former and the
current representation. Therefore, Plaintiffs have not rebutted the presumption of shared
confidences.

Cc. Is the Presumption Rebutted for the Current Representation?

Finally, the court must determine whether the presumption of shared confidences has been
rebutted with respect to the current representation. In other words, the court must determine
whether the knowledge of the “confidences and secrets” of the Defendants which Mr. Gabrielides
brought with him has been passed on or is likely to be passed on to the members of Brink, Hofer.
Schiessle v. Stephens, 717 F.2d 417, 421 (7th Cir. 1983). Seventh Circuit case law dictates that
the presumption of shared confidences can be rebutted by demonstrating that “specific institutional
mechanisms’ (e.g. “Chinese Walls”) have been implemented to effectively insulate against any flow

of confidential information from the “infected” attorney to any other member of his present firm.

10



Applying the third prong of the Seventh Circuit's substantial relationship analysis, the
confidential information and business planning Mr. Gabrielides was presumably privy to during his
work at Laff, Whitesel is potentially relevant to the current litigation. Between 1994 and 1998, he
counseled Defendants about intellectual property matters such as trademarks and dress, and
records given to the court indicate that Laff, Whitesel assisted in developing the “Rainbow” name,
a trademark at issue in this case. Submission in Support of Defendants’ Motion to Disqualify,
Vol, 1, Tab 1-3. In 1998, he represented LRI in a lawsuit similar to the one pending before this
court. As the Seventh Circuit held in Analytica, it is fair to presume that some of the confidential
information Mr. Gabrielides presumably gleaned in his previous work might be relevant to the
current lawsuit.

In Analytica, Inc. v. NPD Research, Inc., the Seventh Circuit held that prior and current
representations were substantially related even though they did not deal with precisely the same
issues. 708 F.2d 1263, 1268-69 (7th Cir. 1983). In Analytica, attorney John Fine was hired by
NPD Research, Inc. ("NPD") to devise a plan whereby co-owners of stock in NPD would transfer
one share of stock back to the corporation, which would then issue the stock to an NPD employee,
Mr. Malec, along with a cash bonus. The stock and cash bonus were deemed to be the employee's
compensation, and a deductible business expense to the corporation. To enable Mr. Fine to
estimate the value of the taxable stock, NPD furnished him with information on NPD's financial
condition, sales trends, and management. Malec’s relationship with NPD went sour, and he left
the firm in May 1977. Id, at 1265. His wife, who had also been an employee at NPD, left at the
same time and within a month incorporated Analytica to compete with NPD in the market-research
business. /d. In October 1977, Analytica retained attorney Fine's law firm, Schwarz & Freeman,
who complained on Analytica’s behalf to the Federal Trade Commission that NPD was engaged
in anticompetitive behavior that was preventing Analytica from establishing itself in the market.

When the FTC declined to act, Analytica brought its own suit against NPD, charging various

7



1, Tab 1. Defendants claim that Mr, Gabrielides’ former representation is substantially related to
the present lawsuit, necessitating Mr. Gabrielides and the firm’s disqualification.

Having reviewed the documents provided by the parties and the law of this Circuit, the court
concludes that Mr. Gabrielides should be disqualified from any further work on this matter. The
court has determined further, however, that the Brinks, Hofer firm may continue to represent
Plaintiffs in this case. As to the work that has been done by Mr. Gabrielides thus far, the court has
determined that due to their delay in bringing the motion for disqualification, Defendants have
waived the right to “set back the clock,” or to ask the court to disregard the work done by him on
this matter.

DISCUSSION

Defendants contend that Plaintiffs’ attorney and firm are disqualified under the Rules of
Professional Conduct that have been adopted by the Northern District of Illinois (‘Local Rules”).
All attorneys and firms practicing in the Northern District are bound by these rules, which became
etfective September 1, 1999. Specifically, Defendants claim that Mr. Gabrielides is disqualified
under Local Rule 83.51,9(a)' and that Brinks, Hofer is disqualified under Local Rule 83.51.10(b).”
Pursuant to Local Rule 83.51(9)(a), a lawyer who has formerly represented a client in a matter shall

not, without the former client's consent, thereafter represent another party in the same or a

——

‘ Local Rule 83.51.9(a) provides that “[a] lawyer who has formerly represented a client
in a matter shall not thereafter represent another person in the same or substantially related matter
in which the person's interests are materially adverse to the interests of the former client unless the
former client consents after disclosure.”

® Local Rule 83.51.10(b) states that“[w]hen a lawyer becomes associated with a firm,
the firm may not represent a person in a matter that the firm knows or reasonably should know is
the same or substantially related to a matter in which the newly associated lawyer, or a firm with
which that lawyer was associated, had previously represented a client whose interests are
materially adverse to that person unless: (1) the newly associated lawyer has no information
protected by LR 83.51.6 or LR §3.51.9 that is material to the matter; or (2) the newly associated
lawyer is screened from any participation in the matter and is apportioned no specific share
therefrom.



(N.D. Ill. Aug. 5., 1998) (no waiver after three months). However, the court finds that by actively
negotiating with Plaintiffs’ counsel for several months, Defendants waived the right to object to any
work done by Plaintiffs’ counsel between October 12, 2001 and April 16, 2002. Additionally, due
io the unnecessary delay in bringing the motion, the court will not order the disqualification of
Brinks, Hofer. To do so would be to cause substantial prejudice to Plaintiffs, whose lawsuit has
already been delayed during the pendency of this motion.
CONCLUSION

For the reasons set out above, Defendants’ motion to disqualify (Doc. No. 13-1) is granted
in part and denied in part. Attorney John Gabrielides is barred from further work on this matter, but
the motion to disqualify the law firm Brinks, Hofer, Gilson & Lione is denied.

ENTER:

Dated: October 23, 2002



Spude, Vice-President of Safe-T, Classroom Products, inc., and Extra Measures, Inc., of 10/12/01,
Ex. B to Plaintiffs’ Complaint.) Daigger demanded that Plaintiffs immediately discontinue using the
trademarks and trade dress, and warned that, should Plaintiffs fail to do so, Daigger would
“aggressively pursue legal recourse to protect the goodwill, value and reputation embodied in the
{alleged trademarks and trade dress].” fd. On November 30, 2001, Learning Resources, Inc.
(“LRI") alleged that certain products displayed in Plaintiffs’ 2001 catalog were being offered for sale
under terms that infringe LRI’s trademark rights. LRI demanded that Plaintiffs discontinue using
the trademarks and trade dress, or LRI would “take immediate and appropriate legal action to
protect [its] valuable legal rights.” (Letter from Marvin N. Benn, attorney for LRI, to Stoneberg and
Spude of 11/30/01, Ex. C to Plaintiffs' Complaint.) Daigger is an affiliate of LRI and both a licensor
and license of intellectual property with LR!. Daigger is one of LRI's largest customers, Goldman
Aff. 4. Daigger and LRI share some of the members of their upper level management and
Boards of Directors. Plaintiffs’ Complaint at 2.

Attorney John Gabrielides, a partner with the law firm Brinks, Hofer, Gilson & Lione
(hereinafter “Brinks, Hofer’ or “the firm”) has represented Plaintiffs at all stages of the controversy.
(Letter from John Gabrielides, attorney for Plaintiffs, to Brown of 10/17/01, Ex. H to Plaintiffs’
Opposition to Defendants’ Joint Motion to Disqualify Counsel.) From the date the action was filed
in December 2001 through April 2002, the parties tried unsuccessfully to settle the case. On April
16, 2002, Defendants notified Plaintiffs for the first time of their intent to move for disqualification
of Mr, Gabrielides and the firm. The basis for this motion is Mr. Gabrielides’ previous association
at the firm Laff, Whitesel, Conte and Saret (“Laff, Whitesel”). Mr. Gabrielides was an associate at
Laff, Whitesel from 1990 until July 1, 1995, when he became a shareholder, He left Laff, Whitesel
for Brinks, Hofer in July 1998. Gabrielides Aff. | 2. During Mr. Gabrielides’ tenure at Laff,
Whitesel, he represented both Defendants on trademark and other matters, billing more than 200
hours between 1994 and 1998, Submission in Support of Defendants’ Motion to Disqualify, Vol.

2



UNITED STATES DISTRICT
NORTHERN DISTRICT OF ILLINOIS:
EASTERN DIVISION

SAFE-T-PRODUCTS, INC., CLASSROOM
PRODUCTS, INC., and EXTRA MEASURES, INC.,

Plaintiffs,
Vv. No. 01 C 9498

LEARNING RESOURCES, INC. and A. DAIGGER &
co., INC.,

Judge
Rebecca R. Pallmeyer

wwe ES SS SS ES

Defendants.

MEMORANDUM OPINION AND ORDER

On December 12, 2001, Safe-T Products, Inc., Classroom Products, Inc., and Extra
Measures, Inc. (three jointly-owned corporations, hereinafter, “Plaintiffs”) filed this action against
Learning Resources, inc. and A. Daigger & Co., Inc. (“Defendants”), under 28 U.S.C. § 2201.
Plaintiffs and Defendants create and sell a variety of educational products in the subjects of math
and science. In response to cease-and-desist demands from Defendants, Plaintiffs filed this action
seeking a declaration that products in Plaintiffs’ catalogues do not infringe any valid trademark or
entorceable trade dress restriction owned by either Defendant. Plaintiffs’ Complaint for Declaratory
Judgment (hereinafter “Plaintiffs’ Complaint”), at 1, 3. Six months after the dispute arose, and
without any advance warning to Plaintiffs, Defendants have moved to disqualify Plaintiffs’ lead
attorney, John Gabrielides, and his law firm. The litigation has been effectively stayed while the
court addresses this motion.

The controversy between the parties dates back to October 12, 2001, when A. Daigger &
Go. (“Daigger’), through its division ETA/Cuisenaire, asserted that certain products displayed in
Plaintiffs’ 2001 Catalog were being offered for sale under terms that infringe Daigger’s trademark
and trade dress rights. (Letter from David T. Brown, attorney for Daigger, to Bruce J. Stoneberg,

President of Safe-T Products, Classroom Products, Inc., and Extra Measures, Inc., and James


Brinks, Hofer attorneys on the present matter, any material information based on his prior
representation of Defendants. Gabrielides Aff. J 12. Gilson and Slavick’s affidavits state that they
never received any confidential or proprietary information regarding either Defendant, or any
privileged communication or work product relating to Mr. Gabrielides’ work with either Defendant
while at his former firm. Gilson Aff. J] 3, 4, Slavick Aff. 9 3,4. Bruce Stoneberg, president of
each of the Plaintiffs, swore in an affidavit that he never received any privileged communication or
wark product relating to Mr. Gabrielides’ work with either Defendant, nor has he been provided with
any information that is confidential or proprietary to either Defendant. Stoneberg Aff. {1 3, 4.
Given that the Brinks, Hofer attorneys and Plaintiffs have not been given any material or
confidential information, the court is satisfied that screening him from any further work on this case
will meet the ethical standards set forth in the Local Rules. In effect, the court hereby requires that
Brinks, Hofer erect an “institutional mechanism’ discussed above to screen Mr. Gabrielides from
this matter.

This conclusion is bolstered by the court's determination that Defendants’ delay in bringing
this motion for disqualification was unwarranted and prejudicial to Plaintiffs. As early as October
17, 2001, Plaintiff Daigger was aware of Mr. Gabrielides’ involvement in the matter. (Letter from
Gabrielides to Brown of 10/17/01, Ex. H to Plaintiffs’ Opposition to Defendants’ Joint Motion to
Disqualify Counsel.) By November 13, 2001, LRI was aware of Mr. Gabrielides' involvement
(Letter from Brown to Gabrielides of 11/13/01, Ex. | to Plaintiffs’ Opposition to Defendants’ Joint
Motion to Disqualify Counsel “[w]e have notified [LR!] of the subject matter of this Settlernent. . .

Learning Resources will communicate with you separately regarding these issues, if any.”)
Defendants acknowledge that the dispute arose no later than October 12, 2001, and they first
notified Plaintiffs that they would seek disqualification on April 16, 2002. Defendants’ Reply in
Support of Joint Motion to Disqualify Counsel at 9, n.6 (hereinafter “Defendants’ Reply”). Six
months went by while the parties negotiated; Defendants said nothing about Mr. Gabrielides’ role.

12