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Drive-thru headset parts maker says Greenberg Traurig, LeClair Ryan law firms cost it $9M settlement

By Dan Churney | Nov 29, 2016

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A suburban electronic parts company is suing Chicago and Virginia law firms for allegedly short-circuiting its defense against a trademark infringement lawsuit, which resulted in $9 million in allegedly unnecessary fees, sanctions and settlement costs. 

R.F. Technologies filed the suit Nov. 21 in Cook County Circuit Court against the Chicago law firm of Greenberg Traurig; the firm of LeClair Ryan, based in Richmond, Va.; and Thomas O’Leary, a lawyer with LeClair Ryan. The plaintiff alleges defendants committed legal malpractice. 

R.F. Technologies, which is based in Buffalo Grove, is run by Bob Noorian. The company markets and sells replacement components for radio headsets used by fast-food restaurant workers staffing drive-through windows. R.F. also repairs such headsets. 

R.F. was sued for trademark infringement and trade dress in 2012 by HM Electronics in U.S. District Court for Southern California. R.F. hired LeClair Ryan and Greenberg Traurig to defend against the suit, with LeClair Ryan serving as primary counsel and Greenberg Traurig handling much of the discovery process. 

A preliminary injunction was instituted against R.F. in October 2013. The injunction placed several prohibitions on R.F., which included barring R.F. from using HM Electronics’ trademark and representing it was endorsed or affiliated with HM. 

The following April, a federal judge found R.F. in contempt for violating the injunction. The judge fined R.F. $2,500 for each day it was in violation and ordered R.F. to pay HM’s legal costs. R.F. was further commanded to fork over any profits it made as a result of disregarding the injunction. 

In the end, R.F. said it was “forced to settle the HM Electronics litigation and paid $9,000,000 to do so.” The agreement was “far in excess” of R.F.’s insurance policy limits and would not have been settled for that amount, but for the blunders of its attorneys, according to the allegation of R.F. 

R.F. alleged its legal team’s miscues were many. 

LeClair Ryan and Greenberg Traurig allegedly failed to properly advise R.F. throughout the case. As examples, the firms allegedly did not advance “appropriate” arguments against the injunction, and, after the injunction was in place, never gave a “comprehensive explanation” of the injunction.

Further, both firms allegedly did not produce documents, as required during the discovery process, and failed to review documents that were produced, to make sure the documents were in compliance with requests and court orders. The firms also allegedly did not tell R.F. of the importance of preserving certain documents. These alleged failures resulted in motions to compel, monetary sanctions and extra attorney fees. 

LeClair Ryan, in particular, failed to seek more time to comply with discovery and never discussed settlement “opportunities,” R.F. alleged. 

The fees charged by defendants were “unnecessary,” with Greenberg Traurig’s fees going beyond unnecessary and reaching into the “excessive,” R.F. alleged. 

R.F. Technologies is represented by Konicek & Dillon, of suburban Geneva. A status hearing is set for Jan. 19 before Cook County Circuit Judge John C. Griffin.

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Organizations in this Story

Greenberg Traurig, LLPKonicek & DillonLeClairRyan