Contract analysis

I. Executive Summary This memorandum analyzes whether Calderwood & Harkness LLP's ("the Firm's") proposed representation of Metropolitan Transit Development Corp. ("MTDC") in connection with a Biometric Information Privacy Act ("BIPA") enforcement action commenced by the Illinois Attorney General and a related employee class-action lawsuit pending in the Circuit Court of Cook County would be "directly adverse" to the

1. Pinnacle is a named "responsible party" in the Illinois Attorney General's Civil Investigative Demand issued April 22, 2024 (Reference No. CRB-2024-0417), and the Attorney General has indicated that Pinnacle may be joined as a co-respondent in any resulting enforcement action. Any defense mounted on behalf of MTDC will necessarily place blame on the design, configuration, and data-handling protocols of Pinnacle's

2. The proposed scope of the MTDC engagement expressly contemplates that the Firm will draft and prosecute cross-claims and indemnification demands directly against Pinnacle under the Master Software License and Services Agreement dated June 15, 2021 (the "MSLA"). The Firm cannot simultaneously represent Pinnacle in a current, active engagement and file affirmative claims against it in another.

3. The legal characterization the Firm would advance on MTDC's behalf — that TruScan 360's biometric-data collection, storage, and disclosure practices violate BIPA, 740 ILCS 14/1 et seq. — is diametrically opposed to the position the Firm currently advocates on Pinnacle's behalf in the pending patent-enforcement action in the Eastern District of Virginia, in which the Firm champions the technological and commercial

II. Scope and Purpose of This Memorandum This memorandum is one of several supporting analyses I have prepared, at the request of Ms. Bernstein and under the supervision of Mr. Archer, for the Conflicts Committee's review of the proposed representation in Matter No. 1031-00001. It is limited to the threshold question of whether direct adversity exists under Illinois Rule of Professional Conduct 1.7(a)(1). The followi

III. Background Facts The following factual summary is drawn from the new-matter intake for Matter No. 1031-00001, the Firm's existing files for Matter No. 1031-00001, the Civil Investigative Demand issued by the Illinois Attorney General, the complaint in the Cook County class action, and communications with MTDC's General Counsel, Terrence Whitfield, and Pinnacle's General Counsel, Sandra Yee (the latter conducted

1. Defense of the Illinois Attorney General's Civil Investigative Demand. On April 22, 2024, the Bureau of Civil Rights of the Office of the Illinois Attorney General issued a Civil Investigative Demand referenced as CRB-2024-0417, alleging that MTDC's deployment of a biometric workforce-management platform to track employee timekeeping, scheduling, and access control violates BIPA, 740 ILCS 14/1 et seq., and the Ill

2. Defense of a putative employee class action. On April 29, 2024, a putative class of approximately 12,400 current and former MTDC employees filed suit in the Circuit Court of Cook County, Chancery Division, styled Reynolds, et al. v. Metropolitan Transit Development Corp., et al., Case No. 2024-CH-04417. Class counsel is Kessler, Brandt & O'Neill LLP (lead: Martin Kessler; co-counsel: Yolanda Brandt; 120 North LaSa

3. Remediation advice. Counseling on the redesign and remediation of MTDC's biometric-data collection, storage, retention, and dissemination practices, including vendor management protocols.

4. Cross-claims and indemnification proceedings against technology vendors. Analysis, drafting, and prosecution of cross-claims and indemnification demands against MTDC's technology vendors, expressly including Pinnacle Workforce Analytics, Inc.

5. Employment counseling. Related labor and employment counseling with respect to workforce-monitoring policies, collective-bargaining implications, and employee communications. Estimated fees under the proposed engagement are $3.5 million to $5.2 million over an 18-to-24-month period. MTDC's potential BIPA statutory-damages exposure, as calculated by its consulting actuary, Lakefront Actuarial Advisors, LLC (princip

IV. Applicable Ethical Standard: Illinois Rule of Professional Conduct 1.7(a)(1) A. Text of the Rule Illinois Rule of Professional Conduct 1.7(a), adopted by the Supreme Court of Illinois effective January 1, 2010 and enforced by the Illinois Attorney Registration and Disciplinary Commission ("ARDC"), provides in relevant part: "Except as provided in paragraph (b), a lawyer shall not represent a client if the represe

1. Same-proceeding adversity. The clients' interests are opposed as parties or de facto parties in the same transaction, negotiation, or judicial or administrative proceeding.

2. Cross-matter positional adversity. The lawyer would be required to take, in one matter, a legal position that would harm the interests of another current client in a different matter — particularly where the two matters involve the same or substantially related subject matter, technology, product, or course of conduct.

3. Foreseeable-liability adversity. The lawyer's actions on behalf of one client will foreseeably and directly result in legal claims against, or increased liability exposure for, another current client, whether through cross-claim, indemnification demand, third-party practice, joinder, or the marshalling of a factual record against the other client. Illinois Rule 1.7, Comment [6], makes clear that direct adversity m

V. Analysis: Three Independent Grounds for Direct Adversity A. Ground One: Pinnacle Is a Named "Responsible Party" in the Attorney General's CID and a Likely Co-Respondent in Any Enforcement Action The Civil Investigative Demand issued by the Illinois Attorney General's Bureau of Civil Rights on April 22, 2024 (Ref. CRB-2024-0417) names Pinnacle as a "responsible party" alongside MTDC. In the preliminary conference h

VI. Additional Considerations Reinforcing the Direct-Adversity Finding Although the three grounds set forth in Section V are each sufficient to establish direct adversity, three additional considerations reinforce the conclusion. I note them here because, while they arguably bear more heavily on the waivability analysis under Rule 1.7(b) than on the threshold direct-adversity determination, they underscore that the a

VII. Conclusion For the reasons set forth above, I conclude that the Firm's proposed representation of Metropolitan Transit Development Corp. in Matter No. 1031-00001 would be directly adverse to Pinnacle Workforce Analytics, Inc. within the meaning of Illinois Rule of Professional Conduct 1.7(a)(1) on three independently sufficient grounds: (i) Pinnacle's status as a named "responsible party" and likely co-responden

VIII. Appendices Appendix A: Party Relationship Chart The following diagram summarizes the relationships among the principal parties and their respective counsel referenced in this memorandum: Contractual privity: MTDC ⇄ Pinnacle under the Master Software License and Services Agreement dated June 15, 2021 (five-year initial term; $8,700,000 total initial-term value). Pending proceedings implicating both MTDC and Pinn

1. Ethics Analysis: Illinois Rule of Professional Conduct 1.7(b) — Waivability Assessment for Proposed Representation of MTDC (prepared by Nadia Petrov; supervised by Devon Archer; May 13, 2024).

2. Ethics Analysis: Illinois Rule of Professional Conduct 1.9 — Former-Client Considerations (prepared by Nadia Petrov; supervised by Devon Archer; May 13, 2024) — included for completeness only, as Pinnacle remains a current client.

3. Ethics Analysis: Imputation Under Illinois Rule of Professional Conduct 1.10 and Screening Considerations (prepared by Nadia Petrov; supervised by Devon Archer; May 13, 2024).

4. Confidential Information Inventory — Pinnacle Workforce Analytics, Inc., Matter No. 1031-00001 (prepared by Priya Subramaniam under the supervision of Jonathan Mercer; dated May 12, 2024). END OF MEMORANDUM — ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL — DO NOT DISTRIBUTE OUTSIDE THE CONFLICTS COMMITTEE, GENERAL COUNSEL'S OFFICE, AND NAMED RECIPIENTS. Role | Entity | Counsel Prospective Firm Client | Metro