[CCWG-ACCT] Continued Counsel Dialogue

Fri Oct 2 18:37:05 UTC 2015

I appreciate the spirit of transparency in which this memo was shared.

However, upon initial reading, and now re-reading, it is not at all the type of legal memo I expected, one citing statute and case law for its positions.

It is really more of a lobbying document, and if I received a document like this in a different context (e.g., in regard to an issue being considered by Congress) my presumption would be that the client had told its counsel that it was unwilling to negotiate on a matter and that they were therefore instructed to prepare the strongest possible memo justifying that intransigent position.

In regard to its substance, a few select comments:

·         “CCWG Counsel has not identified exemplars where organizations comparable to ICANN (e.g., with many stakeholders) have instituted and successfully operated under the proposed SMM” – there are no organizations comparable to ICANN, much less ones operating via the MSM. It’s a unique entity.

·         “CCWG Counsel has given little consideration to the need to test such a transformation of ICANN’s governance structure against the potential adverse effects it may have, including risks of capture, and whether this can be accomplished in the limited time available to meet a September 2016 transition”—I’m not sure that is true, given the extensive stress testing that has been performed. But once the CCWG figures out what it will propose post-LA, that will likewise need stress testing and lots of other adjustments to the current proposal. Making the September 2016 deadline was going to be a challenge even if a plan was approved by the Chartering Organizations in Dublin, and now that  it’s clear that is completely off the table a more realistic deadline might be September 2017 (aside: when I see the proposals to add more time to an already crushing CCWG schedule in Dublin I worry about group burnout and poor decisions being made in haste and exhaustion).

·         “proponents of the CCWG’s Proposal minimize or ignore the fact that the shift to the SMM would place a significant amount of power in the hands of individuals and stakeholders that hold no fiduciary obligations to ICANN or the global stakeholder community. These individuals and stakeholders are free to act in their personal interest and are not required to make decisions based on what is best for ICANN, the ICANN community, and the global public interest. The result would be that a limited number of SOs and ACs (which could change over time) would have ultimate power over ICANN for significant matters with literally no accountability, producing exactly the opposite result that the community now seeks, i.e., “power without accountability.” Any shift of authority to the SOs and ACs should be accompanied by a commensurate level of accountability” – I have no objection to the exploration of accountability mechanisms for the single member. But the allegation that its constituent parts would act in their own personal interests seems vastly overblown, as it presumes a common interest when in fact they have widely divergent interests and perspectives. That fractionalization of the single member is a form of accountability, as is the fact that its relationship with the Board would be largely reactive.

·         “If the Board is found to have violated a Fundamental Bylaw, the Board is required to remedy that violation, within the Board’s discretion. If the Board fails to remedy a violation, the claimant may enforce the arbitration decision in the California courts.” – this just emphasizes that the MEM is of much narrower scope than the SMM in omitting Articles of Incorporation and ordinary Bylaws from the scope of arbitral matters. As for the remedy being tempered by the Board’s discretion, that’s a loophole you could drive a fleet of trucks through.

·         “The binding arbitration decision can be enforced by a California court even if the Board asserts that compliance with an arbitration decision would force the Board to violate its fiduciary duties. If the Board raised such a “defense,” the court would evaluate that claim and, within its discretion, would accept or reject it. If the “fiduciary duty defense” was rejected (which, practically speaking, is likely), a court order would issue compelling ICANN to comply with the arbitration decision.” – I don’t buy the argument that the fiduciary duty defense would be likely to fail if it had merit. If it lacked sufficient merit it should fail.

·         “Regardless of the thresholds required for the Sole Member to exercise a statutory power, such thresholds only constrain the ability of the Sole Member to exercise the statutory power; the actual power cannot be restricted, so there remains a risk that the power will be exercised.” – This seems to concede that procedural hurdles to exercising specific statutory powers could constrain their exercise. What specific statutory power provided by California law is the focus of counsel’s concern?

·         “Thus, statutory rights exist, no matter the voting threshold necessary to exercise those rights, and with no corresponding mechanism to ensure that the SOs and ACs that direct the Sole Member are accountable to ICANN or the global public interest, the existence of such rights constitutes a significant shift in ICANN’s governance.” – Well, isn’t a significant shift in ICANN’s governance the whole point of this accountability exercise?

I haven’t commented on every aspect of the memo and will await what will surely be a fine and comprehensive response by the CCWG’s counsel. But, while it certainly raises some issues worthy of further consideration, its tone and substance do little to move the ball forward toward constructive compromise.

Yes, it is certainly possible that ICANN’s  SOs and ACs may change over time, but is it really likely that the majority will “act in their personal interest” and act in concert to make decisions that are in opposition to “what is best for ICANN, the ICANN community, and the global public interest”? That would require a cast of individuals widely divergent from those who presently engage with ICANN. And if that unlikely turn of events did occur, exactly what horrible deeds would they be able to commit? Can we please have some specific examples of what harms and outrages a renegade single member might actually engage in, as opposed to fear-mongering without examples?

In other words, let’s stress test this memo. And let’s start requesting that specific examples rather than generalized threats be cited.

But, more important, can we please have a more constructive and less adversarial approach? In the end, to get an acceptable deal, everyone will need to compromise. Or there won’t be any transition and the MSM will have suffered a major and perhaps fatal blow that could pave the way for multilateral control of the DNS. In that scenario there are no winners within ICANN corporate or community.

Best to all

Philip S. Corwin, Founding Principal
Virtualaw LLC
1155 F Street, NW
Suite 1050
Washington, DC 20004
202-559-8597/Direct
202-559-8750/Fax
202-255-6172/cell

Twitter: @VlawDC

"Luck is the residue of design" -- Branch Rickey

From: accountability-cross-community-bounces at icann.org [mailto:accountability-cross-community-bounces at icann.org] On Behalf Of Grace Abuhamad
Sent: Friday, October 02, 2015 12:39 AM
To: Accountability Cross Community
Subject: [CCWG-ACCT] FW: Continued Counsel Dialogue

Dear all,

Attached please find a memo that Jones Day lawyers just sent to Sidley and Adler to respond to some of the characterizations of Jones Day's advice.

This memo is being forwarded to the CCWG-Accountability for transparency.

This memo was also circulated to the ICANN Board after it was sent to CCWG-Accountability's Counsel.

—Grace

Begin forwarded message:
From: Kate Wallace <kwallace at jonesday.com<mailto:kwallace at jonesday.com>>
Date: October 1, 2015 at 8:49:24 PM PDT
To: "Gregory, Holly" <holly.gregory at sidley.com<mailto:holly.gregory at sidley.com>>, "Rosemary E. Fei" <rfei at adlercolvin.com<mailto:rfei at adlercolvin.com>>
Cc: Lizanne Thomas <lthomas at jonesday.com<mailto:lthomas at jonesday.com>>, <jlevee at jonesday.com<mailto:jlevee at jonesday.com>>, "Kevin B Espinola" <kbespinola at jonesday.com<mailto:kbespinola at jonesday.com>>, John Jeffrey <john.jeffrey at icann.org<mailto:john.jeffrey at icann.org>>, <samantha.eisner at icann.org<mailto:samantha.eisner at icann.org>>
Subject: Continued Counsel Dialogue
Dear Holly and Rosemary,

In an effort to continue our dialogue, please see the attached document responding to some of the issues raised in the slides you distributed on 29 September 2015.

Thanks,
Kate

Kate Wallace
Partner
JONES DAY® - One Firm Worldwide℠<http://www.jonesday.com/>
555 S. Flower Street, 50th Floor
Los Angeles, California 90071
Office +1.213.243.2536
kwallace at jonesday.com<mailto:kwallace at jonesday.com>

==========
This e-mail (including any attachments) may contain information that is private, confidential, or protected by attorney-client or other privilege.  If you received this e-mail in error, please delete it from your system without copying it and notify sender by reply e-mail, so that our records can be corrected.
==========
________________________________
No virus found in this message.
Checked by AVG - www.avg.com<http://www.avg.com>
Version: 2015.0.6140 / Virus Database: 4419/10680 - Release Date: 09/22/15
Internal Virus Database is out of date.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://mm.icann.org/pipermail/accountability-cross-community/attachments/20151002/6d49bda5/attachment.html>