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Phyllis Schlafly Revocable Trust v. Cori

United States District Court, E.D. Missouri, Eastern Division

November 15, 2017

PHYLLIS SCHLAFLY REVOCABLE TRUST, et al., Plaintiffs,
v.
ANNE CORI, et al., Defendants.

          MEMORANDUM & ORDER

          JOHN A. ROSS, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on its April 27, 2017 Order to Show Cause why this matter should not be stayed pending the resolution of the Madison County case and St. Louis County probate case. (Doc. 59). Plaintiffs and Defendants filed responses, and the matter is ripe for disposition. For the reasons set forth below, this matter will be stayed.

         BACKGROUND

         This lawsuit was brought by Plaintiffs Phyllis Schlafly Revocable Trust, Eagle Trust Fund, and Eagle Forum Education and Legal Defense Fund against Defendants Anne Cori, Eunie Smith, Cathie Adams, Carolyn McLarty, Rosina Kovar, Shirley Curry, Jane or John Does 1-5, and Eagle Forum.[1] The parties in this matter are embroiled in numerous lawsuits in this district and other state and federal courts. The Court has previously set forth a detailed record of the proceedings between the parties. Therefore, the Court will only discuss the cases pertinent to its analysis.

         Madison County case

         On April 22, 2016, the Majority 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 first amended complaint, [2] the Majority Directors assert breaches of fiduciary duty; aiding and abetting these breaches of fiduciary duty; civil conspiracy; equitable action for accounting; action to compel access to books and records; declaratory judgment that, inter alia, the actions taken at an April 11, 2016 Board Meeting removing Ed Martin as president were lawful; and injunctive relief.

         On April 29, 2016, the Madison County Court entered a TRO that, inter alia, required John Schlafly and Ed Martin to give the Majority Directors access to the Eagle Forum headquarters and all Eagle Forum property. (Doc. 7.10 at 40-42). On 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 the Majority Directors temporary sole control of and possession over all Eagle Forum property (“Madison County TRO”). That property included the eagleforum.org domain name and website and the list of 14, 000 active Eagle Forum members and the contact list of 41, 000 emails used by Eagle Forum for mass emails.

         Thereafter, Eagle Trust Fund and Eagle Forum Education and Legal Defense Fund removed the action from Madison County to the U.S. District Court for the Southern District of Illinois based on the federal claims of trademark and copyright infringement. (Cori, et al., v. Edward R. Martin, Jr., et al., 3:17-cv-590-DRH-RJD (S.D.IL. filed June 2, 2017), Doc. 1). On June 9, 2017, the Majority Directors filed a motion to remand, asserting that while the amended complaint involved federal claims, the nature of the claims is ownership of intellectual property, which they contend is a question of state law. (Id. at Docs. 19, 22). No ruling has been made on the motion to remand.

         On August 7, 2017, Eagle Trust Fund and Eagle Forum Education and Legal Defense Fund filed a counterclaim against the Majority Directors. (Id. at Doc. 55). The counterclaim alleges copyright violations, trademark infringement under the Lanham Act, 15 U.S.C. §1125, and violations of the Defend Trade Secrets Act, 18 U.S.C. § 1836, regarding the Eagle Marks;[3]the Phyllis Schlafly registered word mark; Eagle Design Mark # 1;[4] Eagle Design Mark # 2;[5]The Phyllis Schlafly Report; various Eagle website entities, emails services, and web servers, including EagleForum.org and PhyllisSchlafly.com; the Schlafly Database; Phyllis Schlafly's name, image, and likeness; and various publications displayed on EagleForum.org. Plaintiffs also seek a declaratory judgment regarding validity and effect of licensure; a declaratory judgment that Defendants have no legal rights, title, or interests in the Schlafly Database, derivative mailing lists, donor lists, data subsets, EagleForum.org, or PhyllisSchlafly.com; and a permanent injunction enjoining Defendants from using the above-referenced intellectual property or accessing, using, or disclosing to third parties the Schlafly Database.

         St. Louis County probate case

         On March 20, 2017, Anne Cori filed a Petition in the Probate Division of the Circuit Court for the County of St. Louis, Missouri (“St. Louis County probate case”), seeking to set aside two amendments to the Phyllis Schlafly Revocable Trust, one dated May 26, 2016 (“May 26 Amendment”) and another dated August 31, 2016 (“August 31 Amendment”). (Doc. 49.6). The May 26 Amendment reduced Anne Cori's share in the trust by all “lawsuit related costs” incurred by Plaintiffs in the Madison County lawsuit, or any matter related to that litigation. The August 31 Amendment transferred all of Phyllis Schlafly's copyrights, moral rights, intellectual property rights, and trademark rights, and her interest in her name, persona and likeness, to the Phyllis Schlafly Royalty Trust II.

         In the St. Louis County probate case, Cori alleges that when Phyllis Schlafly signed the May 26 and August 31 Amendments, she lacked testamentary capacity and was subject to undue influence by John Schlafly and others (Doc. 49.6 at 9-11). She also alleges that John Schlafly has breached his fiduciary duties as sole trustee of the Trust by using Trust assets to pay legal fees he has incurred in the Madison County case, the Southern District of Illinois case (discussed below), and/or this case (Id. at 11-12).

         Southern District of Illinois American Eagles case

         On August 24, 2016, the Majority Directors, on behalf of Eagle Forum, filed an action against Phyllis Schlafly's American Eagles (“PSAE”) in the U.S. District Court for the Southern District of Illinois (“the SDIL American Eagles case”), Cori v. Phyllis Schlafly's American Eagles, 3:16-CV-946-DRH-RJD (S.D. IL Filed August 24, 2016). In the SDIL American Eagles case, the Majority Directors allege that PSAE has converted its assets; infringed upon Eagle Forum service marks, tradenames, and trademarks; engaged in ...


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