[CCWG-ACCT] Blog post on the Accountability work headed to Dublin

Tue Oct 13 18:04:43 UTC 2015

Regarding the question below about delegating a Community rejection of a budget to binding arbitration, I also note an excerpt from one of the recent Sidley memos which opines that in the absence of a statutory right (e.g. that conferred by a CA membership corporation which relieves the directors of fiduciary duties with respect to powers reserved to the members), DIRECTORS MAY NOT DELEGATE DECISIONS REQUIRING EXERCISE OF THEIR CORE FIDUCIARY DUTIES TO AN ARBITRATION PANEL.  HERE IS THE EXCERPT FROM THE LEGAL MEMO MATHIEU DISTRIBUTED EARLIER TODAY AND IS ATTACHED AGAIN – see page A-2

A board may not submit exercise of “core” fiduciary duties to arbitration.
As noted above, California law requires “[e]ach corporation [to] have a board of
directors” that exercises the powers of the corporation and each director acts as a fiduciary of the
corporation. Cal. Corp. Code § 5210. “The board may delegate the management of the activities
of the corporation to any person or persons, management company, or committee however
composed, provided that the activities and affairs of the corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the board.” Id. (emphasis
added). The California courts have not determined the precise limits of the italicized text, but
with respect to for-profit corporations, the California Supreme Court has held in Wells Fargo
Bank v. Superior Court, 811 P.2d 1025, 1033 (Cal. 1991) (en banc), that “a board of directors
has no power to delegate the performance of its basic powers and functions, particularly its
statutory prerogatives, in the absence of express statutory authority.”

So it would be good to know if Jones Days believes the Board can submit authority over the budget and authority over the strategic and operating plans (as required by the CWG-Stewardship) to binding arbitration as is suggested by the MEM proposal and by Fadi’s chart.

PLEASE NOTE I PERSONALLY BELIEVE IT IS HIGHLY UNLIKELY THAT AN ARBITRATION ORDER FOUNDED ON A PROCESS THAT VIOLATES STATUTORY LAW PROHIBITING DELEGATION OF FIDUCIARY DUTY WOULD BE ENFORCEABLE IN COURT.  (This is not a legal opinion.)

Anne

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Anne E. Aikman-Scalese, Of Counsel

Lewis Roca Rothgerber LLP

One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611

(T) 520.629.4428 | (F) 520.879.4725

AAikman at lrrlaw.com<mailto:AAikman at lrrlaw.com> | www.LRRLaw.com<http://www.lrrlaw.com/>

From: Aikman-Scalese, Anne
Sent: Tuesday, October 13, 2015 10:40 AM
To: 'Greg Shatan'; avri doria
Cc: Accountability Cross Community
Subject: RE: [CCWG-ACCT] Blog post on the Accountability work headed to Dublin

Greg – I thought Larry just said – “Get consensus and hurry up.”   The Board has not actually followed the procedure specified in the Charter for notifying the CCWG that it believes the proposal is “not in the global public interest”.  I suppose they may do so if the CCWG-Accountability does not accept their counter-proposal.   I don’t know how they send a letter to NTIA disagreeing with the CCWG-ACCT recommendation without formally following the procedure below first.  But maybe they already did?  Did someone hear of a 2/3 majority Board vote that the CCWG Proposal is not in the global public interest?  Is that where we are headed if the processing of public comment does not result in the structure the Board desires?  (So much for the MSM.)

So when out next report comes out, it is presumed the Board may say it has not yet followed the procedure below and would then, at that point in the future, take a vote requiring 2/3 majority and then notify the CCWG?

Phil Corwin’s prior post repeated here:

“Finally, on the matter of the “global public interest”, points #2 & 3 of the CCWG Charter states:
2.            If the Board believes it is not in the global public interest to implement a recommendation from the Cross Community Working Group on Enhancing ICANN Accountability and Governance (CCWG Recommendation), it must initiate a dialogue with the CCWG. A determination that it is not in the global public interest to implement a CCWG Recommendation requires a 2/3 majority of the Board.
3.            The Board must provide detailed rationale to accompany the initiation of dialogue. The Board shall agree with the CCWG the method (e.g., by teleconference, email or otherwise) by which the dialogue will occur. The discussions shall be held in good faith and in a timely and efficient manner, to find a mutually acceptable solution.”

[cid:image001.gif at 01D105A6.EF50E060]

Anne E. Aikman-Scalese, Of Counsel

Lewis Roca Rothgerber LLP

One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611

(T) 520.629.4428 | (F) 520.879.4725

AAikman at lrrlaw.com<mailto:AAikman at lrrlaw.com> | www.LRRLaw.com<http://www.lrrlaw.com/>

From: accountability-cross-community-bounces at icann.org<mailto:accountability-cross-community-bounces at icann.org> [mailto:accountability-cross-community-bounces at icann.org] On Behalf Of Greg Shatan
Sent: Monday, October 12, 2015 7:30 PM
To: avri doria
Cc: Accountability Cross Community
Subject: Re: [CCWG-ACCT] Blog post on the Accountability work headed to Dublin

Lurking behind all this (in my mind) is Larry Strickling apparently saying that he does not want to receive a proposal that does not have the support of the Board.

That would make any proposal sent with a lack of support from the Board a non-starter.

I could be misremembering, but I don't think I'm far off.

On Mon, Oct 12, 2015 at 10:05 PM, avri doria <avri at ella.com<mailto:avri at ella.com>> wrote:
Agreed.

The biggest threat to the model is showing icann to have been a broken implementation.

avri

Sent from a T-Mobile 4G LTE Device

-------- Original message --------
From: Phil Corwin <psc at vlaw-dc.com<mailto:psc at vlaw-dc.com>>
Date:10/12/2015 9:43 PM (GMT-05:00)
To: Paul Rosenzweig <paul.rosenzweig at redbranchconsulting.com<mailto:paul.rosenzweig at redbranchconsulting.com>>, 'Bruce Tonkin' <Bruce.Tonkin at melbourneit.com.au<mailto:Bruce.Tonkin at melbourneit.com.au>>, 'Accountability Cross Community' <accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>>
Cc:
Subject: Re: [CCWG-ACCT] Blog post on the Accountability work headed to Dublin

+1

The original impetus of this whole transition effort was to save the MSM as embodied within ICANN in the wake of the Snowden revelations.

The MSM is weakened, not saved, by rejecting and rewriting its output.

Philip S. Corwin, Founding Principal
Virtualaw LLC
1155 F Street, NW
Suite 1050
Washington, DC 20004
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Twitter: @VlawDC

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

-----Original Message-----
From: accountability-cross-community-bounces at icann.org<mailto:accountability-cross-community-bounces at icann.org> [mailto:accountability-cross-community-bounces at icann.org<mailto:accountability-cross-community-bounces at icann.org>] On Behalf Of Paul Rosenzweig
Sent: Monday, October 12, 2015 9:18 PM
To: 'Bruce Tonkin'; 'Accountability Cross Community'
Subject: Re: [CCWG-ACCT] Blog post on the Accountability work headed to Dublin

And that, it seems to me, Bruce, is at the nub of the problem.  In theory, the Board has committed to transmitting whatever the CCWG submits, but in reserving the right to negate what has been submitted with its own comments (which would, in effect, kill any proposal) it takes away with the left hand what it gives with the right.  It is, as EL says, now down to who blinks first, it seems.

More to the point however, whenever the Board says the first part ("we will submit whatever we get") without also saying the second part ("but we reserve the right to countermand that submittal with comments") it is misleading.  Many in the community read the "we will submit" as an endorsement of the CCWG process without limitation.  Leaving out the critical limitation makes statements incomplete and adversely effects communication and expectation.  Thus, the Board's promise in Buenos Aires was read as more palliative than it actually is because of its reserved powers.

In addition, when someone (like Senator Thune) asks the question from a practical perspective ("will the board accept") then leaving out the caveat is an omission that affirmatively obscures the reality.

And then, there is the last sadder point:  Which is that the Board's reservation of a right to comment even after it participates in the process and, hypothetically, has the community reject its concerns reflects a distrust of the MSM and a paternalistic attitude that suggests to me all sorts of inadequacies.  If the Board's conclusion is true, then ICANN is not fit for the transition.  If it is false, then the Board misreads the community badly.  Either prospect is daunting

Paul

Paul Rosenzweig
paul.rosenzweig at redbranchconsulting.com<mailto:paul.rosenzweig at redbranchconsulting.com>
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VOIP: +1 (202) 738-1739<tel:%2B1%20%28202%29%20738-1739>
Skype: paul.rosenzweig1066
Link to my PGP Key

-----Original Message-----
From: Bruce Tonkin [mailto:Bruce.Tonkin at melbourneit.com.au<mailto:Bruce.Tonkin at melbourneit.com.au>]
Sent: Saturday, October 10, 2015 9:21 PM
To: Accountability Cross Community
<accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>>
Subject: Re: [CCWG-ACCT] Blog post on the Accountability work headed to
Dublin

Hello Mike,

>>  Are you going to forward them promptly, or follow the Charter and the
Resolution of 10/16/14?

We will do both.

If there is any disagreement - we will include that in a note to the NTIA
along with the ICG and CCWG Proposals, and then initiate a dialogue with the
CCWG.   We will advise the NTIA of the outcome of any such process.   The
NTIA could either wait for the process to conclude, or it could be that the
NTIA decides that the area of disagreement is not material to the IANA
stewardship.   I don't wish to speculate, that is for the NTIA to decide.
The aim clearly is to develop a proposal that has broad support, and avoids
the need for any follow on process.

Regards,
Bruce Tonkin

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