Saturday, July 25, 2009

Litigation Update -- In which the parties start using live ammo.

It had been some time since my last update on the pending litigation, so I might as well bring us up to date:

The Illinois litigation:

The federal court, as predicted, held that there was no federal question and remanded the case to state court. Now that the matter is back in state court, I suspect the information about it will be less generally available as state court dockets are much less web accessible, in most jurisdictions.

Texas Litigation:

USCF's attempt to add Truong as a third-party defendant, was shot down in flames. It was a bad idea strategically and procedurally, and the Court struck it down on procedural grounds.

There has also been an extensive amount of discovery jousting. The issues under dispute include whether USCF would need to produce documents regarding their communications with law enforcement and the allegedly stolen emails. The court reviewed the documents in camera, and then ruled that the documents should not be produced. There has been a great deal of briefing about the allegedly stolen emails and the appropriateness, or lack thereof, of using the crystaltech dvd obtained through discovery. (Polgar's counsel is apparently taking the position that merely opening the case of the crystal tech dvd will lead to dire consequences, including criminal penalties, civil liability, and the bubonic plague.)

Kronenberger and his firm have moved for summary judgment as to the allegations against it. Having reviewed the briefing, I think that the Motion has an excellent chance of being granted. I initially found the allegations against the law firm to be laughable, and I don't see anything in the briefing to change my opinion. One interesting note in the entire fight is that Polgar is attempting to use the allegedly stolen emails in an attempt to defeat the motion. (Needless to say, USCF's attorney has a problem with this.)

Kronenberger has been deposed. Other than some sock puppet on Chess Discussion talking about Kronenberger's lack of experience, nothing has emerged as to the deposition. It has also been alleged that Truong was trying to surreptitously record the deposition with his laptop. If so, that's a remarkably bad idea. Polgar was also deposed. Amusingly, posts appeared on her blog during the deposition, which led to her admitting that Truong was authorized to post on her blog in her name.

In San Francisco:

Mediation was held in July. It was at a lunch break in the mediation that the Secret Service appeared to arrest Gregory Alexander, which, no doubt, did little to put the parties in a conciliatory mood.

Polgar has filed Motions to Disqualify Kronenberger and a Motion for Summary Judgment based on the corporate authorization issue. Both have been briefed, but the hearings have been delayed to allow for mediation. I don't see either motion as being likely to succeed. The motion to disqualify in particular, just looks like a transparent attempt to heap mud on opposing counsel.

Meanwhile, the board has begun proceeding to revoke the membership of Truong and Polgar. This motion has been timed so as to allow an immediate appeal to the delegates at the annual meeting. Frankly, this looks like creating more issues than it will solve, but we'll have to see how it plays out.


  1. Hey Wick, thanks for posting these updates. I spent a lot of time on the 2007 elections...though the unseating of Sloan was a good step, replacing him with Truong was fraught with danger from the beginning. Polgar was a high-risk/high-reward proposition; under different circumstances it might have turned out well. But her loyalty to her hubby was greater than her loyalty to the USCF when things went bad. I do not think ill of her for wanting to support Paul, but when your loyalty to the org that you serve has been compromised, you should really step back and let someone else serve instead...

    Anyway, thanks!
    Chris Falter

  2. I think Judge Patel had it right when she told the parties that having spouses on the same board was a very, very bad idea.

  3. Revoking the USCF memberships of Truong & Polgar, however justifiable in the abstract, seems both strategically and tactically stupid to me.

    Isn't the Illinois litigation the cleanest route to remove them from the board?

    But hey, I'm not longer a member: no need to listen to me.

  4. Revoking their memberships allowed a substantive discussion of the claims of wrongdoing against them with the Delegates, in an ordered (Roberts Rules of Order) hearing. They were represented by experienced counsel, and yet the Delegates approved the Board action of removal. I think it was the cleanest route - and state courts are generally unwilling to intervene in these corporate matters if/when proper procedures are in place and have been followed.

  5. Randy:

    My primary concern about the membership revocation strategy was that a substantial portion of the delegates would have procedural objections to the strategy. Leading the delegates seems sort of like herding hyperactive crickets. That concern has now been obviated.