Contract analysis

I. CALL TO ORDER Lawrence Keating, Senior Partner and Chair of the Conflicts Committee, called the meeting to order at 2:00 p.m. CDT. Mr. Keating confirmed that a quorum of the Conflicts Committee was present, with all five required participants in attendance either in person at the Chicago office or via the firm's secure videoconference platform from the New York office. Mr. Keating noted that the videoconference co

II. ATTENDEES The following individuals were present for the entirety of the meeting: No other attorneys, staff members, or third parties were present at any point during the meeting. Attendance was strictly limited to the above-listed participants in order to preserve confidentiality and minimize the potential for any inadvertent disclosure of information related to either the prospective engagement or the existing

III. BACKGROUND AND OVERVIEW OF PROPOSED ENGAGEMENT Mr. Keating invited Rachel Bernstein, Partner in the firm's Privacy & Data Security practice group and the proposed Responsible Partner for the MTDC engagement, to present the background, scope, and details of the proposed engagement. Ms. Bernstein's presentation covered the following matters. A. The Prospective Client Ms. Bernstein explained that the prospective cl

1. Defense of Civil Investigative Demand. On April 22, 2024, the Illinois Attorney General's Bureau of Civil Rights issued a Civil Investigative Demand ("CID") to MTDC, bearing Reference No. CRB-2024-0417. The CID was issued under the authority of the Attorney General's office and is led by Deputy Attorney General for Civil Rights Malcolm Jeffries, with support from outside special counsel retained by the Attorney Ge

2. Defense of Putative Employee Class Action. On April 29, 2024, a putative employee class action was filed in the Circuit Court of Cook County, Chancery Division, styled as Williams et al. v. Metropolitan Transit Development Corp., Case No. 2024-CH-04417. The complaint was brought on behalf of a putative class of approximately 12,400 current and former MTDC employees by class counsel Kessler, Brandt & O'Neill LLP, w

3. Remediation of Biometric-Data Practices. MTDC has requested advice regarding the remediation and restructuring of its biometric-data practices to bring its workforce-management operations into compliance with BIPA, PIPA, and any other applicable state and federal privacy laws. This workstream would involve a comprehensive audit of MTDC's existing data-collection, storage, and destruction practices; development and

4. Cross-Claims and Indemnification Proceedings Against Technology Vendors. Ms. Bernstein stated that MTDC's anticipated litigation strategy includes the assertion of cross-claims and indemnification demands against its technology vendors, notably including Pinnacle Workforce Analytics, Inc. ("Pinnacle"), under the Master Software License and Services Agreement ("MSLA") dated June 15, 2021, between MTDC and Pinnacle.

5. Employment Counseling. MTDC has also requested related employment counseling on workforce-monitoring policies, including the development of revised timekeeping and scheduling procedures that do not rely on biometric data collection, as well as guidance on employee communications and labor-relations considerations associated with the transition to new timekeeping systems. Ms. Bernstein provided the following additi

IV. OVERVIEW OF EXISTING CLIENT RELATIONSHIP WITH PINNACLE WORKFORCE ANALYTICS, INC. Mr. Keating invited Jonathan Mercer, Partner in the firm's intellectual Property / Patent Litigation practice group and the Responsible and Billing Partner for the firm's existing Pinnacle engagement, to present an overview of the firm's relationship with Pinnacle and the nature of the existing matter. A. The Existing Client Mr. Merc

1. Detailed technical specifications of TruScan 360, including system requirements, performance benchmarks, and integration protocols.

2. Source-code architecture summaries, including high-level descriptions of the software modules responsible for biometric-data capture, processing, encryption, and storage.

3. Data-flow diagrams illustrating the pathways by which biometric data is collected at the point of capture, transmitted to Pinnacle's cloud infrastructure, processed by the AI-driven recognition algorithms, stored in biometric databases, and — in certain deployment configurations — shared with third-party payroll and analytics platforms.

4. Biometric-data retention policies, including Pinnacle's internal guidelines on data-retention periods, deletion protocols, and the circumstances under which biometric data may be retained beyond an employee's period of active enrollment in the TruScan 360 system.

5. Algorithm design documents describing the proprietary machine-learning models, training datasets, and optimization methods used by TruScan 360's biometric-recognition engines.

6. Patent-prosecution correspondence, including communications with the United States Patent and Trademark Office and internal strategy memoranda concerning the scope, validity, and enforceability of Pinnacle's patent portfolio related to the TruScan platform. Mr. Mercer stated, with emphasis, that this body of confidential information is directly relevant to the BIPA claims that MTDC would defend against and to any

V. CONFLICTS SEARCH RESULTS Mr. Keating invited Colleen Farrow, Director of Conflicts & New Business, to present the results of the conflicts searches conducted in connection with proposed Matter No. 1031-00001. A. Round 1 Search — May 9, 2024 Ms. Farrow reported that a comprehensive conflicts search was run across all firm databases on May 9, 2024, in connection with the opening of the new-matter intake for the prop

VI. CONFLICTS ANALYSIS Mr. Keating invited Helen Drazkowski, General Counsel of Calderwood & Harkness LLP, to present her analysis of the conflict. Ms. Drazkowski stated that she had prepared a final written analysis memorandum dated May 14, 2024 (the "Drazkowski Memorandum"), copies of which had been distributed to all attendees in advance of the meeting via the firm's secure document portal. Ms. Drazkowski summariz

1. Reasonable belief of competent and diligent representation (Rule 1.7(b)(1)). Ms. Drazkowski stated that no reasonable lawyer could conclude that the firm can provide competent and diligent representation to both MTDC and Pinnacle simultaneously, given the diametrically opposed legal positions that the two engagements require regarding TruScan 360. The MTDC engagement requires the firm to argue that TruScan 360's b

2. Substantially related matters. Ms. Drazkowski emphasized that the two matters are not merely positionally inconsistent in unrelated contexts — a scenario in which consent might, in some circumstances, be effective. Rather, the matters involve the identical technology platform (TruScan 360), overlapping factual questions regarding the platform's biometric-data collection, storage, and dissemination practices, and t

3. Confidential information. Ms. Drazkowski noted that the firm possesses Pinnacle's confidential technical architecture documents, source-code architecture summaries, data-flow diagrams, biometric-data retention policies, and algorithm design documents — all of which are directly material to the BIPA claims at issue in the proposed MTDC engagement. The firm's possession of this confidential information creates an ad

4. Representation not prohibited by law. Ms. Drazkowski acknowledged that no statute expressly prohibits the concurrent representation at issue. However, she stated that the irreconcilable nature of the conflict renders any purported consent ineffective as a matter of professional responsibility. Where the threshold test of Rule 1.7(b)(1) is not met, the question of whether the representation is prohibited by law is

VII. DISCUSSION Following the presentations by Ms. Bernstein, Mr. Mercer, Ms. Farrow, and Ms. Drazkowski, Mr. Keating opened the floor for discussion. The following comments and observations were made. A. Statements by Jonathan Mercer Regarding the Pinnacle Relationship Mr. Mercer confirmed that the Pinnacle relationship is active, ongoing, and of significant institutional importance to the firm. He noted that Calder

VIII. DETERMINATION Following deliberation, the Conflicts Committee reached the following unanimous determination: The Conflicts Committee unanimously determined that the proposed engagement of Metropolitan Transit Development Corp. (proposed Matter No. 1031-00001) must be declined due to an unwaivable conflict of interest with existing client Pinnacle Workforce Analytics, Inc. (existing Matter No. 1031-00001). The C

1. Direct adversity under Illinois Rule of Professional Conduct 1.7(a)(1). The proposed representation of MTDC would be directly adverse to the interests of Pinnacle, a current firm client, because (a) Pinnacle is a named responsible party in the Attorney General's CID and a potential co-respondent in any enforcement action; (b) MTDC's anticipated cross-claims and indemnification demands would be asserted directly ag

2. Material limitation under Illinois Rule of Professional Conduct 1.7(a)(2). There is a significant risk that the firm's representation of MTDC would be materially limited by the firm's responsibilities to Pinnacle, because the two engagements require diametrically opposed legal positions regarding the lawfulness and legitimacy of TruScan 360's biometric capabilities, and the firm could not zealously advocate for ei

3. The conflict is not waivable under Rule 1.7(b). No reasonable lawyer could conclude that competent and diligent representation of both MTDC and Pinnacle is possible given the irreconcilable nature of the conflict. The matters involve the same technology platform, overlapping factual and legal questions, and the same underlying contractual instrument. The firm possesses extensive Pinnacle confidential information d

4. The conflict is imputed to the entire firm under Rule 1.10(a) and cannot be cured by screening. Because the conflict arises from concurrent representation by a current firm partner and not from the lateral movement of an attorney, the screening exception under Rule 1.10(d) is inapplicable, and the disqualification extends to every lawyer at Calderwood & Harkness LLP. The motion to decline the proposed MTDC engagem

IX. DIRECTED NEXT STEPS The Committee directed the following actions to be taken in connection with the declination of proposed Matter No. 1031-00001:

1. Declination Communication. Rachel Bernstein shall prepare a formal declination letter addressed to Terrence Whitfield, General Counsel of MTDC, advising that Calderwood & Harkness LLP is unable to accept the proposed engagement due to the existence of an unwaivable conflict of interest. The letter shall be reviewed and approved by Helen Drazkowski before it is transmitted to Mr. Whitfield. The declination letter m

2. Referral to Qualified Alternative Counsel. In connection with the declination, Ms. Bernstein shall identify and recommend to MTDC qualified alternative outside counsel with substantial BIPA expertise and no conflicts of interest that would prevent their acceptance of the engagement. Ms. Bernstein shall prepare a referral letter to be transmitted to Mr. Whitfield concurrently with or promptly following the declinat

3. Confirmation of No Information Sharing. Colleen Farrow shall confirm and document, in a written memorandum for the Conflicts Committee file, that no Pinnacle confidential information was disclosed to any member of the proposed MTDC engagement team — including Rachel Bernstein, Miriam Calloway, Devon Archer, and Nadia Petrov — at any point during the intake process or at any time prior to or during the Committee me

4. Notification to Pinnacle Engagement Partner. Following the formal declination and closure of proposed Matter No. 1031-00001, Ms. Farrow shall provide written confirmation to Jonathan Mercer that the proposed matter has been formally declined and closed, and that the firm's ethical obligations to Pinnacle Workforce Analytics, Inc. have been preserved. This notification shall confirm that no Pinnacle confidential in

5. Matter Closure. Rachel Bernstein shall complete the firm's standard matter closure form (C&H Form MC-1) for proposed Matter No. 1031-00001. The form shall reflect the reason for closure as "Declined — Unwaivable Conflict of Interest." Colleen Farrow shall process the closure in all firm systems, including the billing system, the matter-management system, and the conflicts database. The matter shall reflect zero fe

6. Conflicts Database Update. Colleen Farrow shall update the firm's conflicts database to reflect MTDC as a declined prospective client, the nature of the conflict (direct adversity and material limitation involving an existing client), and a cross-reference to existing Matter No. 1031-00001. The database entry shall be flagged for review in the event that the Pinnacle engagement terminates in the future and a new M

7. Document Retention. All internal work product generated in connection with the conflicts review — including the Drazkowski Memorandum dated May 14, 2024, the Round 1 and Round 2 conflicts reports, these minutes, and all related correspondence and internal communications — shall be retained in accordance with the firm's seven-year retention policy under the "Declined Engagements — Conflicts" retention category. Mat

8. Quarterly Report. An entry summarizing the Committee's determination shall be included in the Q2 2024 Conflicts Committee quarterly report to the Management Committee. The broader-distribution version of the quarterly report shall describe the nature of the conflict in general terms and shall omit the identity of the existing client (Pinnacle Workforce Analytics, Inc.) to preserve confidentiality. The restricted-d

X. ADJOURNMENT There being no further business to come before the Committee, Mr. Keating called for a motion to adjourn. Ms. Drazkowski moved to adjourn, and Ms. Bernstein seconded the motion. The meeting was adjourned at 2:47 p.m. CDT. Mr. Keating thanked all participants for their prompt attention to the matter and for the thoroughness of their presentations and analysis. He noted that the Committee's ability to id

XI. APPROVAL Minutes prepared by: ________________________________________ Colleen Farrow Director, Conflicts & New Business Calderwood & Harkness LLP Date: May 14, 2024 Reviewed and approved by: ________________________________________ Lawrence Keating Senior Partner; Chair, Conflicts Committee Calderwood & Harkness LLP Date: May 15, 2024 Distribution: Limited to attendees listed in Section II above. One copy retain