A Chicago federal judge has refused to toss a legal malpractice suit lodged by the owner of a suburban electronics company against a Virginia law firm, saying the company has plausibly claimed the lawyers’ alleged missteps caused the company to pay out a $9 million settlement.
The Feb. 12 ruling was issued by U.S. District Judge Sara Ellis. Ellis' decision favored Babak “Bob” Noorian, who runs R.F. Technologies, in his action against his former attorney, Thomas O'Leary, and O'Leary's firm, LeClair Ryan, of Richmond, Va.
Peter D. Sullivan | Hinshaw & Culbertson LLP
R.F. Technologies, of Buffalo Grove, 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 to defend against the suit. During the case, a judge found R.F. violated a preliminary injunction. As a consequence, the judge sanctioned the company, ordered it to pay a fine and HM's legal costs, as well as to fork over any profits made by disregarding the injunction.
R.F. blamed LeClair Ryan for not properly advising the company regarding 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 R.F. contended it would not have settled for that amount, but for the alleged blunders of its counsel, especially in connection with the discovery process.
R.F also alleged it was charged “unnecessary” fees.
R.F sued its legal team for malpractice in 2016 in Cook County Circuit Court. The case was moved a few months later to federal court, where LeClair Ryan asked Judge Ellis to dismiss the matter, claiming R.F. lodged the suit with “unclean hands.”
To advance this argument, LeClair Ryan pointed to the sanctions directed against R.F. in the infringement suit. However, Ellis refused to consider the sanctions, saying the sanctions are not part of R.F.'s complaint against LeClair Ryan. Besides, LeClair Ryan themselves acknowledged the sanctions order was eventually vacated as moot.
LeClair also argued R.F. failed to show the company would have won the infringement case, but for LeClair's alleged negligence. Ellis found that, given the sanctions order, it is a “plausible claim that they were forced to settle with HME for more than they would have had discovery moved forward according to the Southern District of California's procedures.”
With LeClair Ryan's dismissal motion denied, a preliminary settlement discussion between the parties was set for Feb. 26.
R.F. also sued the Chicago firm of Greenberg Traurig, which served as secondary counsel to R.F. Court records indicate R.F. settled with the firm in late spring 2017.
R.F. Technologies is represented by attorneys Andrew Cook and Amir Tahmassebi, of the firm of Konicek & Dillon, of suburban Geneva and Robert P. Cummins, of the firm of Norman, Hanson & DeTroy, of Portland, Maine.
LeClair Ryan and O'Leary are defended by attorneys Peter D. Sullivan and Leigh C. Bonsall, of the Chicago firm of Hinshaw & Culbertson.