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<p class="MsoNormal"><span style="color:#1F497D">Holly, I disagree that the key assessment would the merits of any claim as ultimately determined. I believe the risk to the ICANN Community Powers process is the cost of litigation in defending against such
a claim (the Big Chill) and the possible interruption to the community enforcement process as outlined via the four steps. If insurance is available to SOs/ACs to guard against that risk, it would be very good to know that.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Many spurious and very expensive claims have been directed toward ICANN itself in the past. I don’t see why this is considered so unlikely in relation to the director removal process by SOs and ACs. It may
also be that the Board must ultimately take the action to officially remove and so they would also likely be named and could even be enjoined pending a hearing.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Anne<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">Anne E. Aikman-Scalese, Of Counsel</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">Lewis Roca Rothgerber LLP</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">(T) 520.629.4428 | (F) 520.879.4725</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="color:black"> </span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Gregory, Holly [mailto:holly.gregory@sidley.com]
<br>
<b>Sent:</b> Monday, December 14, 2015 1:47 PM<br>
<b>To:</b> Aikman-Scalese, Anne; 'Steve DelBianco'<br>
<b>Cc:</b> gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Rosemary Fei (rfei@adlercolvin.com); Thomas Rickert; ipc_accountabilityct@icann.org; 'Gomes, Chuck' (cgomes@verisign.com); Rosemary Fei (rfei@adlercolvin.com); Sidley ICANN CCWG; ICANN@adlercolvin.com;
accountability-cross-community@icann.org<br>
<b>Subject:</b> RE: CCWG - ACCT - Recommendation 4 - Community Powers<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">Anne, the difficulty I have with your formulation of the first question is that it is “possible” for many invalid claims to be stated in a legal complaint but the key assessment is whether there is any legal
risk attached to a claim. No need to research whether it is “possible.”<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">HOLLY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"> </span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">GREGORY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
Partner<br>
<br>
</span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Sidley Austin LLP</span></b><b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D">+1 212 839 5853<br>
<a href="mailto:holly.gregory@sidley.com" title="Click to send email to Gregory, Holly">holly.gregory@sidley.com</a><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D"> </span><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Aikman-Scalese, Anne [<a href="mailto:AAikman@lrrlaw.com">mailto:AAikman@lrrlaw.com</a>]
<br>
<b>Sent:</b> Monday, December 14, 2015 3:29 PM<br>
<b>To:</b> Gregory, Holly; 'Steve DelBianco'<br>
<b>Cc:</b> <a href="mailto:gregshatanipc@gmail.com">gregshatanipc@gmail.com</a>; 'Phil Corwin';
<a href="mailto:cwilson@21cf.com">cwilson@21cf.com</a>; Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Thomas Rickert;
<a href="mailto:ipc_accountabilityct@icann.org">ipc_accountabilityct@icann.org</a>; 'Gomes, Chuck' (<a href="mailto:cgomes@verisign.com">cgomes@verisign.com</a>); Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Sidley ICANN CCWG;
<a href="mailto:ICANN@adlercolvin.com">ICANN@adlercolvin.com</a>; <a href="mailto:accountability-cross-community@icann.org">
accountability-cross-community@icann.org</a><br>
<b>Subject:</b> RE: CCWG - ACCT - Recommendation 4 - Community Powers<o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D">If the Chairs want to certify the legal questions, I think these would be:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="margin-left:1.0in;text-indent:-.25in;mso-list:l0 level1 lfo2">
<![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">1.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Is it possible for a Director to bring suit for libel, slander, or other causes of action during the community enforcement removal process or thereafter based on the “written justification” laid out
by the SO/AC and/or oral statements made during the required conference calls in the Community enforcement process?<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="margin-left:1.0in;text-indent:-.25in;mso-list:l0 level1 lfo2">
<![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">2.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Could a Director seek injunctive and/or declaratory relief to interrupt the community enforcement process toward removal? If so, would SOs/ACs and officers who are sued be required to mount their own
defense? How expensive would this be?<o:p></o:p></span></p>
<p class="MsoListParagraph" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="margin-left:1.0in;text-indent:-.25in;mso-list:l0 level1 lfo2">
<![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">3.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Is there insurance coverage available for SOs/ACs and their officers in relation to possible suit by a director in jeopardy of being removed or who has been removed from the Board? If so, how expensive
is it?<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D">These are not questions about how likely the action is to occur. That does not really figure into the “chilling effect” that is of concern when the officer of an SO or AC is drafting
the “written justification” and/or encouraging open discussion in the required (and recorded for posterity) conference call.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D">Anne<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">Anne E. Aikman-Scalese, Of Counsel</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">Lewis Roca Rothgerber LLP</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:.5in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Gregory, Holly [<a href="mailto:holly.gregory@sidley.com">mailto:holly.gregory@sidley.com</a>]
<br>
<b>Sent:</b> Monday, December 14, 2015 1:14 PM<br>
<b>To:</b> Aikman-Scalese, Anne; 'Steve DelBianco'<br>
<b>Cc:</b> <a href="mailto:gregshatanipc@gmail.com">gregshatanipc@gmail.com</a>; 'Phil Corwin';
<a href="mailto:cwilson@21cf.com">cwilson@21cf.com</a>; Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Thomas Rickert;
<a href="mailto:ipc_accountabilityct@icann.org">ipc_accountabilityct@icann.org</a>; 'Gomes, Chuck' (<a href="mailto:cgomes@verisign.com">cgomes@verisign.com</a>); Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Sidley ICANN CCWG;
<a href="mailto:ICANN@adlercolvin.com">ICANN@adlercolvin.com</a><br>
<b>Subject:</b> RE: CCWG - ACCT - Recommendation 4 - Community Powers<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal" style="margin-left:.5in"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="color:#1F497D">We must await further direction from the co-chairs whether this is something that they would like research on under California law<o:p></o:p></span></p>
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<b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">HOLLY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"> </span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">GREGORY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
Partner<br>
<br>
</span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Sidley Austin LLP</span></b><b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D">+1 212 839 5853<br>
<a href="mailto:holly.gregory@sidley.com" title="Click to send email to Gregory, Holly">holly.gregory@sidley.com</a><o:p></o:p></span></p>
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<p class="MsoNormal" style="margin-left:1.0in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Aikman-Scalese, Anne [<a href="mailto:AAikman@lrrlaw.com">mailto:AAikman@lrrlaw.com</a>]
<br>
<b>Sent:</b> Monday, December 14, 2015 3:03 PM<br>
<b>To:</b> Gregory, Holly; 'Steve DelBianco'<br>
<b>Cc:</b> <a href="mailto:gregshatanipc@gmail.com">gregshatanipc@gmail.com</a>; 'Phil Corwin';
<a href="mailto:cwilson@21cf.com">cwilson@21cf.com</a>; Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Thomas Rickert;
<a href="mailto:ipc_accountabilityct@icann.org">ipc_accountabilityct@icann.org</a>; 'Gomes, Chuck' (<a href="mailto:cgomes@verisign.com">cgomes@verisign.com</a>)<br>
<b>Subject:</b> RE: CCWG - ACCT - Recommendation 4 - Community Powers<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal" style="margin-left:1.0in"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">Holly – I would tend to agree if in fact the SO or AC could remove a director without cause and did not have to state its reasons, but the community process requires this and it is discussed
fully throughout four steps of the Community process to director removal. The SO or AC must state “written justification”, to which the Board has now added its “Clear Rationale” comment.
<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">One need only look at the differences of opinion that arose with respect to .africa to understand that a stated reason for removal which has a “written justification” or Clear Rationale
from the SO/AC standpoint could easily form the basis of a suit by a director. It does not require much by way of theory for a plaintiff’s lawyer to allege claims of libel and even irreparable harm.
<u>The SO/AC would likely need legal advice just to draft the “written justification.”</u>
<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">Again, I do not think indemnification represents a reasonable risk to ICANN as a corporation. The risk should be limited by contract when directors take office. Directors should not
be suing the SO/AC and/or its officers for removal. Otherwise, the ultimate enforcement mechanism in the Sole Designator Model is not effective.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">You may not have seen this fact situation occur. That does not mean it would not occur at ICANN. We have some fairly feisty folks in our midst. The risk of suit is of course much
higher than the risk of success on the merits. I would say it is hard to measure in dollars the potential damage to an individual associated with being removed from the ICANN Board with “written justification”. It could be a pretty good strategy for
a director who wants to interrupt the Community Enforcement process. He or she may also have the full support of other Directors willing to testify.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">Anne <o:p>
</o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:9.0pt;color:black">Anne E. Aikman-Scalese, Of Counsel</span></b><span style="color:#1F497D"><o:p></o:p></span></p>
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<div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal" style="margin-left:1.0in"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Gregory, Holly [<a href="mailto:holly.gregory@sidley.com">mailto:holly.gregory@sidley.com</a>]
<br>
<b>Sent:</b> Monday, December 14, 2015 12:43 PM<br>
<b>To:</b> Aikman-Scalese, Anne; 'Steve DelBianco'<br>
<b>Cc:</b> <a href="mailto:gregshatanipc@gmail.com">gregshatanipc@gmail.com</a>; 'Phil Corwin';
<a href="mailto:cwilson@21cf.com">cwilson@21cf.com</a>; Rosemary Fei (<a href="mailto:rfei@adlercolvin.com">rfei@adlercolvin.com</a>); Thomas Rickert<br>
<b>Subject:</b> RE: CCWG - ACCT - Recommendation 4 - Community Powers<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal" style="margin-left:1.0in"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D">Anne, My sense is that the concerns you raise present an extremely low risk of suit – and hence low risk of indemnification and cost of indemnification. In my many years of corporate
governance practice I cannot recall a lawsuit for libel or defamation by a director in an instance of removal. But we can research under California law if the co-chairs certify. Also, I am not aware of any theory of libel or defamation that would give rise
to injunctive relief delaying such removal where the designator has the right to remove with or without cause as here. Again, we have not researched this specific point under California law but will do so if certified. Holly
<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:1.0in"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">HOLLY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"> </span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">GREGORY</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
Partner<br>
<br>
</span><b><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:#1F497D">Sidley Austin LLP</span></b><b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D"><br>
</span></b><span style="font-size:9.0pt;font-family:"Arial","sans-serif";color:#1F497D">+1 212 839 5853<br>
<a href="mailto:holly.gregory@sidley.com" title="Click to send email to Gregory, Holly">holly.gregory@sidley.com</a><o:p></o:p></span></p>
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