United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
ROSS UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiffs Phyllis Schlafly
Revocable Trust and Eagle Trust Fund's Motion for Leave
to Substitute Corrected Exhibit and Motion to Seal (Doc. 25),
Motion for Leave to File Amended Complaint (Doc. 45), and
Second Motion for Temporary Restraining Order and Preliminary
Injunction (Doc. 46). Also before the Court are Defendants
Anne Cori, Eunie Smith, Cathie Adams, Carolyn McLarty, Rosina
Kovar, and Shirley Curry's (collectively,
“Defendants”) Motion to Dismiss or, in the
Alternative, for Stay (Doc. 16). For the following reasons,
the Court will grant Plaintiffs' Motion for Leave to File
Amended Complaint (Doc. 45), deny their Second Motion for
Temporary Restraining Order and Preliminary Injunction (Doc.
46), and grant in part and deny in part their Motion for
Leave to Substitute Corrected Exhibit and Motion to Seal
(Doc. 25). Moreover, the Court will deny as moot
Defendants' Motion to Dismiss or, in the Alternative, for
Stay (Doc. 16). Finally, the Court will direct the parties to
show cause, in writing and within thirty (30) days, why this
proceeding should not be stayed pending the resolution of two
other lawsuits that could resolve potentially dispositive
issues in this case.
Background and Facts
People and Entities Involved
Schlafly was a conservative political activist, and she
founded several non-profit entities to further her causes.
Her non-profit entities included the Phyllis Schlafly
Revocable Trust (“the Trust”), the Eagle Trust
Fund, the Eagle Forum, the Eagle Forum Education and Legal
Defense Fund (“Education and Legal Defense
Fund”), and Phyllis Schlafly's American Eagles
(“PSAE”). John Schlafly, Bruce Schlafly, and Anne
Cori are three of Phyllis Schlafly's adult children; they
have held leadership positions with her non-profit entities
and have been active in furthering her causes (Docs. 1 at
¶¶2-8, 33; 45.2 at ¶¶1-5).
Eagle Forum is a non-profit corporation organized under the
laws of Illinois, and it is tax-exempt under 26 U.S.C. §
501(c)(4) (Docs. 7.7 at 9; 45.2 at ¶12). Phyllis
Schlafly formed the Eagle Forum to advance her conservative
activism on a national level, and to further the notion that
citizen-volunteers, through rigorous advocacy, can influence
government policies on federal, state, and local levels (Doc.
7.7 at 9).
Schlafly formed the Trust in 1997 (Docs. 1 at
¶¶2-3; 49.6 at 3). It is undisputed that, after
Phyllis Schlafly's death, John Schlafly became the sole
trustee of the Trust; and as such, he is authorized to bring
this suit on its behalf (Docs. 1 at ¶2; 45.2 at ¶1;
49.6 at 5). According to Plaintiffs, Phyllis Schlafly
transferred her personal intellectual property to the Trust
during her lifetime; and any of her intellectual property
rights that were not transferred to the Trust during her
lifetime poured into the Trust according to the terms of her
last will and testament (Doc. 45.2 at ¶1).
Eagle Trust Fund publishes a newsletter titled The
Phyllis Schlafly Report, conducts research relating to
political science and national defense, distributes
educational materials, and supports other goals in its
trustees' discretion (Docs. 1 at ¶4; 45.2 at
¶2). John Schlafly and Bruce Schlafly are successor
trustees of the Eagle Trust Fund, and its sole members (Doc.
45.2 at ¶6). According to Plaintiffs, the Eagle Trust
Fund, as amended, is the “custodian” of much of
Phyllis Schlafly's intangible personal property (Docs.
1at ¶5; 45.2 at ¶2, 56, 154, 216). The Education
and Legal Defense Fund is organized under Illinois law, and
is tax-exempt under 26 U.S.C. § 501(c)(3) (Doc. 45.2 at
Martin was President of the Eagle Forum until April 11, 2016;
he is currently President of the Education and Legal Defense
Fund (Doc. 22.3 at 6). According to Plaintiffs, before her
death, Phyllis Schlafly “personally endorsed” Ed
Martin to serve as President of the Eagle Forum, the
Education and Legal Defense Fund, and PSAE, a Virginia
non-profit entity led by former Eagle Forum directors and
officers who are loyal to John Schlafly and Ed Martin (Doc.
45.2 at 4).
months leading up to Phyllis Schlafly's death, John
Schlafly and Anne Cori disagreed as to the positions they
believed Phyllis Schlafly and the Eagle Forum should have
taken on certain political issues, most notably the issue of
which candidate to endorse in the 2016 U.S. Republican
Presidential Primary (Docs. 7 at 5-6; 45.2 at
¶¶38-39, 117). John Schlafly is loyal to Ed Martin;
and Anne Cori has aligned with her co-Defendants.
Collectively, Defendants represent a majority of the members
of the Eagle Forum Board of Directors (“the Eagle Forum
Leading up to this Case
April 11, 2016, Defendants, as majority members of the Eagle
Forum Board, voted to remove Ed Martin as President of the
Eagle Forum; according to Plaintiffs, Defendants also voted
to remove John Schlafly as Director and Treasurer of the
Eagle Forum (Docs. 22.3 at 12-13; 45.2 at ¶6).
April 22, 2016, Phyllis Schlafly executed an Amendment to and
Restatement of the Trust (“April 22 Restatement”)
(Docs. 7.7 at 16-44; 49.6 at 82-110). As relevant, the April
22 Restatement removed Anne Cori as a co-trustee of the
Trust, leaving only Phyllis Schlafly and John Schlafly as its
co-trustees (Doc. 49.6 at 5, 104).
April 22, 2016, Defendants herein, in their capacities as
majority members of the Eagle Forum Board of Directors, filed
an action against Ed Martin and John Schlafly in the Circuit
Court for the Third Judicial Circuit in Madison County,
Illinois, see Cori v. Martin, No. 2016MR000111 (Ill.
Cir. Ct. Oct. 20, 2016) (“the Madison County
case”) (Doc. 22.3). In the Madison County case,
Defendants herein seek, among other things, a declaration
that their April 11, 2016 vote was effective to oust Ed
Martin from the Eagle Forum Board. On April 29, 2016, the
Madison County Court entered a TRO that, inter alia, required
John Schlafly and Ed Martin to give Defendants access to the
Eagle Forum headquarters and all Eagle Forum property (Doc.
7.10 at 40-42). On May 26, 2016, Phyllis Schlafly executed a
First Amendment to the April 22 Restatement (“May 26
Amendment”) (Doc. 49.6 at 111-117).
August 24, 2016, Defendants filed an action, on behalf of the
Eagle Forum, against PSAE in the U.S. District Court for the
Southern District of Illinois (“the SDIL case”),
see Cori v. Phyllis Schlafly's American Eagles,
3:16CV946-DRH-RJD (S.D. Ill.). In the SDIL case, Defendants
herein, in their capacities as the majority members of the
Eagle Forum Board, allege that PSAE has converted its assets;
infringed upon its service marks, tradenames, and trademarks;
engaged in unfair competition; diluted its brands, names, and
marks; and committed cyberpiracy (Amended Complaint (Doc. 40)
in the SDIL case).
August 31, 2016, Phyllis Schlafly executed a Second Amendment
to the April 22 Restatement (“August 31
Amendment”) (Docs. 49.6 at 118-122). As relevant, the
August 31 Amendment provides as follows:
All of [Phyllis Schlafly's] copyrights, moral rights,
intellectual property rights, and trademark rights, whether
statutory or common law, including the use of eagle emblems
in connection with her work, [her] post mortem right of
publicity, including [her] interest in her name, persona, and
likeness, the right to license such rights in all media now
known and hereafter invented, and right to take any and all
actions necessary or desirable to protect and enforce such
interests, shall be given to the Trustees of the PHYLLIS
SCHLAFLY ROYALTY TRUST II, created by a Trust Agreement dated
August 31, 2016, to be held and administered as a part of
such trust estate.
(Id. at 118-119).
October 20, 2016, the Madison County court entered an amended
TRO, suspending John Schlafly from the Eagle Forum Board,
enjoining him from accessing Eagle Forum property, and
granting Defendants temporary sole control of and possession
over all Eagle Forum property (“Madison ...