Tuesday, March 31, 2009

Response to a Question from ChessDiscussion.com

I've been participating in the dialog at ChessDiscussion.com.  I received the following question, which I thought was interesting:

"Since you're an attorney, would you recommend Goichberg and Hall to continue these multiple lawsuits based on what's known so far?"

I drafted a response, but decided that it would probably give the moderator a heart attack, so I will post my response here:

Complex question, and one that is difficult to answer based on the information available publicly. Because there are 5 separate lawsuits, it is really 5 different questions (although the Sloan and Parker lawsuits are, for purposes of this analysis very similar).  

I should also include a lawyerly disclaimer. The following is strictly my personal opinion. I do not represent, and have not represented, any party to any of the pending litigation. I can also only rely on such documentation that has been made public. I also have been following USCF's various adventures in litigation as a hobby only. (Memo to self: Must get life. Must get out more often.) While I have had the chance to read many of the various filings, I have not had a chance to review supporting law, and I do not claim any familiarity with the law of Texas, California, or Illinois. I have also not had the time or the inclination to do a detailed, point by point analysis of all the various allegations. With that said:  

1. The Sloan and Parker suits really aren't within USCF's control. USCF is on the defense, and the defense is being handled by the insurance company. USCF really shouldn't interfere in those suits, which may disappear in the natural course of events.  

2. The Texas action filed by Ms. Polgar is also, to a great degree, out of USCF's hands because USCF is the defendant. Now the USCF has filed a third-party action against Mr. Truong, and I have serious doubts about the wisdom of bringing him into the action. I am, at this point, generally supportive of a vigorous defense of this action, by USCF and its directors.  

a. Ms. Polgar's allegations pertaining to the Mottershead report have an obvious and glaring fundamental flaw: The Motorshead report is all about Mr. Truong, not Ms. Polgar. The Answers filed by the defendants pounded on that flaw repeatedly. 

b. Some of the acts alleged to be performed by Mr. Lafferty, Mr. Mottershead and Mr. Bogner are highly unlikely to be imputed to USCF. 

c. I find the allegations of a grandiose conspiracy to be inherently unlikely.  

3. As far as the California action is concerned, I don't have enough information to assess how strong this case is or isn't. That requires technical evidence and expertise that isn't publicly available. I also have serious doubts as to what can be gained from that litigation ultimately, and whether those gains will be worth the financial investment.  

4. As far as the Illinois action, the advisability of that action splits into two parts: (a) the removal of Mr. Truong and (b) the removal of Ms. Polgar.  

The advisability of pursuing Mr. Truong's depends primarily on the analysis of the Mottershead report. If you believe the Mottershead report, then Mr. Truong should not be a director of USCF -- not because of the Sloan and Parker suits, but because of the danger of persons suing USCF who, unlike Parker and Sloan, had reputations that could be damaged.  

The advisability of removing Ms. Polgar is much less clear to me. I do have a serious problem with her suing USCF for ungodly amounts of money. If it is proven that she posted confidential USCF material on the web, I also have a real problem with that. On the other hand, Ms. Polgar has so much to offer chess that I would much prefer that a way could be found that the litigation could settle and the could remain on the board.

Tuesday, March 24, 2009

Litigation Update

There have been developments since my last update.

In the Texas action, the Court ruled on the pending preliminary motions, ordering Sloan to replead, and ordering Polgar to replead so the court could understand her claims of jurisdiction against Bogner, Lafferty, Mottershead, and Chess Magnet Schools.  Although the Court noted that the plaintiff's allegations were "lacking and a poor pleadings style", the judge did not order repleading of the allegations against USCF and the other defendants.

After the judge's rulings, the defendants filed answers.  USCF filed a "third-party complaint" against Paul Troung.  While I can certainly understand the desire to bring Truong into the case, I am not sure that the third-party complaint is procedurally appropriate, and I think it undercuts one of the best defenses to GM Polgar's action:  that the Mottershead report was about Truong, not her.

GM Polgar filed an Amended Complaint, which went considerably beyond just making jurisdictional allegations against the various defendants.  If I have the energy or inclination, I will analyze this complaint in detail in a separate post.

Answers have been filed.  The non-Texas defendants have again moved to dismiss based on lack of jurisdiction.

In San Francisco, GM Polgar is moving to dismiss or transfer the action to Texas.  Those Motions are set form Mid-April.  I would  be very surprised if the Motion to Dismiss was granted.  I would be much less surprised if the Motion to Transfer was granted, just because the judge doesn't seem to like the case much.

In Illinois, GM Polgar and Mr. Truong have appeared, and removed the matter to Federal Court. USCF has moved to remand the matter to State Court, filing a very well written brief.  I expect USCF's motion to be successful, and the matter will be remanded to state court.

Sunday, March 8, 2009

Most Of Us Only Want

“Most of us only want” seems to be a continuing battle cry from those in USCF leadership to justify their ongoing lobbying. Because of this USCF governance can be viewed as a saga of a handful of individuals who put their personal interests or beliefs above nonprofit best practice or the interest of the organization. We have the appearance that our leaders often focus on trying to promote what they personally feel the purpose of the USCF should be but not what it actually is.

It is important to note that nonprofit corporations are organized to achieve specific objectives or purposes, which are generally set forth in the organization's by-laws and charters. Adherence to the purposes of the organization is critical as they form the basis for the corporation's tax exemption and, thus, its status as a nonprofit entity.

It appears many in USCF leadership only seem to state what they feel the interests of the membership are, but never ask the general membership. Two key concepts underlying Six Sigma are a focus on the customer and a fact based management style. Accordingly, the best way to discover what the membership values most is to ask them. Too often board members unilaterally decide what is best for the USCF membership. If one's primary focus is really on the membership than you ask or confirm with that membership what you should do on their behalf. The greatest defect is failing to deliver what the membership wants. Ultimately to be successful organization must align itself to the wishes of its owners – the dues paying membership.