Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("the Firm" or "C&H") has been approached by Metropolitan Transit Development Corp. ("MTDC"), a governmental transit authority organized under the Illinois Local Mass Transit District Act, 70 ILCS 3610/1 et seq., and headquartered at 550 West Harrison Street, Suite 1400, Chicago, Illinois 60607. MTDC seeks to retain the Firm as outside counsel in connection with a data-p

II. Procedural History of the Intake The following chronology sets forth the procedural history of the MTDC intake request and the identification and escalation of the conflict: May 6, 2024: MTDC General Counsel Terrence Whitfield contacted Rachel Bernstein, Partner, Privacy & Data Security, in the Firm's Chicago office, by telephone. The contact was made following a referral from Constance Hargrove, lead partner at

III. Description of the Proposed MTDC Engagement (Proposed Matter No. 1031-00001) A. The Prospective Client Metropolitan Transit Development Corp. is a unit of local government and special-purpose transit authority established under the Illinois Local Mass Transit District Act, 70 ILCS 3610/1 et seq. MTDC was created by referendum in 1968 and has operated continuously since that date as the principal public transit p

1. Illinois Attorney General's Civil Investigative Demand (CID Ref. CRB-2024-0417) On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights issued a Civil Investigative Demand to MTDC under CID Reference Number CRB-2024-0417. The CID was issued under the authority of the Illinois Attorney General Act, 15 ILCS 205/6.1, and is led by Deputy Attorney General for Civil Rights Malcolm Jeffries. The CID al

2. Employee Class Action (Cook County Case No. 2024-CH-04417) On April 29, 2024, one week after the AG's CID was issued, a putative class-action complaint was filed in the Circuit Court of Cook County, Chancery Division, bearing Case Number 2024-CH-04417. The complaint was filed on behalf of a putative class of approximately 12,400 current and former MTDC employees who were required to use the TruScan 360 biometric t

IV. Description of the Existing Pinnacle Engagement (Matter No. 1031-00001) A. The Existing Client Pinnacle Workforce Analytics, Inc. is a Delaware corporation with its registered agent at Cobalt Ridge Technologies, 1209 Orange Street, Wilmington, Delaware 19801. The company is headquartered at 11900 Sunrise Valley Drive, Suite 500, Reston, Virginia 20191. Pinnacle develops, licenses, and supports biometric workforce

V. Conflicts Analysis Under the Illinois Rules of Professional Conduct The proposed MTDC engagement is subject to the Illinois Rules of Professional Conduct, which govern the Firm's Chicago-office lawyers who would staff the engagement and which apply to the matters at issue in Illinois. The analysis below also considers the ABA Model Rules of Professional Conduct and relevant Illinois case law and ethics opinions, t

VI. Financial Considerations The following financial information is provided for the Conflicts Committee's awareness. Financial considerations do not drive the ethical analysis, and the General Counsel wishes to emphasize that the recommendation to decline the proposed MTDC engagement is based solely on the ethical analysis set forth in Section V above. Nevertheless, the Committee should be aware of the financial dim

VII. Preliminary Recommendation Based on the foregoing analysis, the General Counsel's preliminary recommendation is as follows:

1. The proposed MTDC engagement (Proposed Matter No. 1031-00001) should be declined. The conflict with existing client Pinnacle Workforce Analytics, Inc. (Matter No. 1031-00001) constitutes a non-waivable concurrent-client conflict under Illinois Rules of Professional Conduct 1.7(a)(1) (direct adversity) and 1.7(a)(2) (material limitation). The waivability analysis under Rule 1.7(b) confirms that consent cannot cure

2. Communication of the declination to MTDC. The Firm should communicate the declination to MTDC's General Counsel, Terrence Whitfield, promptly following the Conflicts Committee's approval. The declination communication should be made in appropriately general terms, stating only that the Firm has identified a conflict of interest that prevents it from accepting the engagement. The communication should not disclose t

3. Referral to alternative counsel. The Firm should offer to facilitate a referral to qualified alternative counsel with demonstrated BIPA and biometric data-privacy expertise and no conflicts of interest with respect to the MTDC matters. Potential referral candidates include, without limitation: • Sanderson, Pryce & Gutierrez LLP (Chicago, IL) — nationally recognized BIPA defense practice • Callahan & Yun LLP (Chica

4. Confirmation regarding Pinnacle confidential information. The Firm should confirm to the Pinnacle engagement partner, Jonathan Mercer, and to Pinnacle's General Counsel, Sandra Yee (if inquiries are made), that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team or to MTDC's General Counsel during the intake and conflicts-clearance process. Based on the General Cou

5. Documentation and database updates. The Conflicts & New Business team should update the Firm's conflicts database to reflect the declination of the proposed MTDC engagement, including cross-referencing MTDC as a declined prospective client associated with the Pinnacle conflict (Matter No. 1031-00001). The intake file for Proposed Matter No. 1031-00001 should be closed and retained in accordance with the Firm's rec

VIII. Items for Conflicts Committee Discussion (May 14, 2024 Meeting) The following items are submitted for the Conflicts Committee's discussion and consideration at its meeting scheduled for May 14, 2024:

1. Confirmation of unwaivability determination. The Committee is requested to review and confirm the General Counsel's determination that the conflict between the proposed MTDC engagement and the existing Pinnacle engagement is unwaivable under Illinois Rules of Professional Conduct 1.7(a)(1), 1.7(a)(2), and 1.7(b). If any member of the Committee disagrees with the analysis or identifies additional considerations, th

2. Approval of recommended course of action. The Committee is requested to approve the recommended course of action, which consists of: (a) declining the proposed MTDC engagement; (b) communicating the declination to MTDC's General Counsel; (c) offering to facilitate a referral to qualified alternative counsel; and (d) confirming to the Pinnacle engagement partner that no confidential information was compromised.

3. Declination letter language. The Committee should discuss and approve appropriate language for the declination communication to MTDC. The communication must strike a careful balance between providing a sufficient explanation for the declination (to preserve the Firm's professional reputation and relationship with MTDC and the referring firm, Hargrove, Tillman & Reese LLP) and protecting Pinnacle's identity and con

4. Conflicts database updates and cross-referencing. The Committee should confirm the steps to be taken by the Conflicts & New Business team to update the Firm's conflicts database, including: (a) recording MTDC as a declined prospective client; (b) cross-referencing the declined MTDC matter (Proposed Matter No. 1031-00001) with the existing Pinnacle matter (Matter No. 1031-00001); (c) noting the basis for the declin

5. Communication to referring firm. The Committee should consider whether any communication should be made to Constance Hargrove at Hargrove, Tillman & Reese LLP regarding the declination. As the source of the referral, Ms. Hargrove may inquire about the outcome. Any communication to Ms. Hargrove should be limited to the fact that the Firm identified a conflict and was unable to accept the engagement, with no further

6. Communication to Rachel Bernstein and engagement team. The Committee should confirm that Rachel Bernstein and the proposed engagement team (Miriam Calloway, Devon Archer, and Nadia Petrov) are informed of the declination and the reasons therefor in sufficient detail to ensure compliance with the Firm's conflicts policies, without disclosing specific Pinnacle confidential information.

7. Any additional considerations. The Committee should address any additional considerations that members may wish to raise, including any implications for the Firm's broader BIPA practice, any lessons learned for the intake and conflicts-screening process, and any adjustments to the Firm's conflicts protocols that the Committee believes would be beneficial.

IX. Attachments The following documents are referenced in this memorandum and are attached hereto for the Conflicts Committee's review. These attachments are subject to the same privilege and confidentiality protections as this memorandum and are not to be distributed beyond the named recipients without the prior written consent of the General Counsel. Attachment A: Conflicts Search Report — Round 1 (issued May 10, 2