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This is Becky Burr's support for her claim, backed by the RySG, that the ICANN Bylaws change related to Reconsideration Requests reduced the accountability protections of the IRP.
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<div>Begin forwarded message:</div>
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<span style="font-family:'Helvetica'; font-size:medium; color:rgba(0, 0, 0, 1.0);"><b>From:
</b></span><span style="font-family:'Helvetica'; font-size:medium;">"Burr, Becky" <<a href="mailto:Becky.Burr@neustar.biz">Becky.Burr@neustar.biz</a>><br>
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<span style="font-family:'Helvetica'; font-size:medium; color:rgba(0, 0, 0, 1.0);"><b>Subject:
</b></span><span style="font-family:'Helvetica'; font-size:medium;"><b>Bylaws amendment</b><br>
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<span style="font-family:'Helvetica'; font-size:medium; color:rgba(0, 0, 0, 1.0);"><b>Date:
</b></span><span style="font-family:'Helvetica'; font-size:medium;">November 19, 2013 6:23:36 PM GMT-03:00<br>
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<span style="font-family:'Helvetica'; font-size:medium; color:rgba(0, 0, 0, 1.0);"><b>To:
</b></span><span style="font-family:'Helvetica'; font-size:medium;">Paul Diaz <<a href="mailto:pdiaz@pir.org">pdiaz@pir.org</a>>, "<a href="mailto:bcute@pir.org">bcute@pir.org</a>" <<a href="mailto:bcute@pir.org">bcute@pir.org</a>><br>
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<u><span style="font-size: 11pt; ">Summary</span></u><span style="font-size: 11pt; ">. The 11 April 2013 Bylaws amendment replaced the substantive requirements of its Articles of Incorporation and Bylaws with California’s “Deferential Business Judgment Rule”
as the yardstick against which Board Actions should be measured in an IRP. In ICANN’s own words, this standard would require IRP Panelists to dismiss IRP Requests unless the claimant can prove that the Board’s decision involved “fraud, bad faith, overreaching
or an unreasonable failure to investigate material facts.” See<span class="Apple-converted-space"> </span><i>ICM v. ICANN</i>, ICANN’s Response to Claimants Memorial on the Merits, §128. <o:p></o:p></span></p>
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<u><span style="font-size: 11pt; ">Discussion</span></u><span style="font-size: 11pt; ">. The Bylaws amendment, adopted by the Board without discussion on 11 April 2013, significantly narrows the scope of the IRP and profoundly diminishes the measure of accountability
it provides. Under the new standard, ICANN will not be held accountable for any violation of its Bylaws unless the claimant in an IRP can prove that the violation was the result of “fraud, bad faith, overreaching or an unreasonable failure to investigate
material facts.” As ICANN staff is well aware, there is no credible basis for arguing that this change preserves – let alone expands – accountability protections. <o:p></o:p></span></p>
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<span style="font-size: 11pt; ">The Pre-Amendment Bylaws provided that request for independent review: <o:p></o:p></span></p>
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<i><span style="font-size: 11pt; ">shall be referred to an Independent Review Process Panel ("IRP Panel"), which shall be charged with comparing contested actions of the Board to the Articles of Incorporation and Bylaws, and with declaring whether the Board
has acted consistently with the provisions of those Articles of Incorporation and Bylaws.<span class="Apple-converted-space"> </span></span></i><i><span style="font-size: 11pt; "> </span></i><span style="font-size: 11pt; "> <o:p></o:p></span></p>
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<span style="font-size: 11pt; ">The Amended Bylaws contain the following new language: <o:p></o:p></span></p>
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<i><span style="font-size: 11pt; ">The IRP Panel must apply a defined standard of review to the IRP request, focusing on:<span class="Apple-converted-space"> </span></span></i><a name="IV-3.4a"></a><i><span style="font-size: 11pt; ">did the Board act without
conflict of interest in taking its decision?;<a name="IV-3.4b"></a><span class="Apple-converted-space"> </span>did the Board exercise due diligence and care in having a reasonable amount of facts in front of them?; and<a name="IV-3.4c"></a><span class="Apple-converted-space"> </span>did
the Board members exercise independent judgment in taking the decision, believed to be in the best interests of the company.<o:p></o:p></span></i></p>
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<span style="font-size: 11pt; background-color: white; background-position: initial initial; background-repeat: initial initial; ">This new language is a restatement of California’s “Deferential Business Judgment Rule.” Under that rule, a California court
will protect individual directors from liability for Board actions “even if a reasonable person would have acted differently, provided the board acted (i) in good faith, (ii) in the best interests of the association, and (iii) upon reasonable investigation<i>.<span class="Apple-converted-space"> </span></i></span><i><span style="font-size: 11pt; "><a href="http://www.davis-stirling.com/tabid/835/Default.aspx"><span style="color: windowtext; text-decoration: none; ">Lamden
v. La Jolla Shores</span></a></span></i><span style="font-size: 11pt; background-color: white; background-position: initial initial; background-repeat: initial initial; ">, (1999) 21 Cal.4th 249.</span><span style="font-size: 11pt; "><span class="Apple-converted-space"> </span> The
Business Judgment Rule, however,<span class="Apple-converted-space"> </span><span style="background-color: white; background-position: initial initial; background-repeat: initial initial; ">"provides protection from personal liability for the<span class="Apple-converted-space"> </span><i>individual
directors</i><span class="Apple-converted-space"> </span>of a non-profit [ ] association. It does not follow and is not true that the same rule of judicial deference will also automatically provide cover to the entity itself.</span>” <span class="Apple-converted-space"> </span><i>Ritter
and Ritter v. Churchill,<span class="Apple-converted-space"> </span></i><span style="background-color: white; background-position: initial initial; background-repeat: initial initial; ">(2008) 166 Cal.App.4th 103</span> <o:p></o:p></span></p>
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<span style="font-size: 11pt; ">ICANN urged the Panelists in ICM v. ICANN to evaluate the Board’s liability under the deferential business judgment rule. In ICANN’s view, ICM claims should be dismissed unless it could prove that the Board’s decision reflected
“fraud, bad faith, overreaching or an unreasonable failure to investigate material facts.” See ICANN’s Response to Claimants Memorial on the Merits, §128. <o:p></o:p></span></p>
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<span style="font-size: 11pt; ">A majority of the Panel rejected firmly rejected ICANN’s argument. Instead, it conducted a de novo review of the facts, and applied the Bylaw requirements without significant deference to the Board. The Majority declared that
ICANN is bound by its<span class="Apple-converted-space"> </span></span><span style="font-size: 11pt; ">Articles of Incorporation and Bylaws, which “require ICANN to carry out its activities in conformity with relevant principles of international law,” and<o:p></o:p></span></p>
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<span style="font-size: 11pt; ">do not specify or imply that the International Review Process provided for shall (or shall not) accord deference to the decisions of the ICANN Board. The fact that the Board is empowered to exercise its judgment in the application
of ICANN’s sometimes competing core values does not necessarily import that that judgment must be treated deferentially by the IRP. In the view of the Panel, the judgments of the ICANN Board are to be reviewed and appraised by the Panel objectively, not deferentially.<span class="Apple-converted-space"> </span><i>The
business judgment rule of the law of California, applicable to directors of California corporations, profit and nonprofit, in the case of ICANN is to be treated as a default rule that might be called upon in the absence of relevant provisions of ICANN’s Articles
and Bylaws and of specific representations of ICANN – as in the RFP – that bear on the propriety of its conduct.</i><span class="Apple-converted-space"> </span><i>In the instant case, it is those Articles and Bylaws, and those representations, measured against
the facts as the Panel finds them, which are determinative.<span class="Apple-converted-space"> </span></i></span><i><span style="font-size: 11pt; "> <o:p></o:p></span></i></p>
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<div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Cambria; "><span style="font-size: 9pt; font-family: Arial, sans-serif; ">J. Beckwith Burr<o:p></o:p></span></div>
<div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Cambria; "><b><span style="font-size: 9pt; font-family: Arial, sans-serif; color: rgb(6, 134, 88); ">Neustar, Inc. /</span></b><span style="font-size: 9pt; font-family: Arial, sans-serif; "> Deputy
General Counsel and Chief Privacy Officer<o:p></o:p></span></div>
<div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Cambria; "><span style="font-size: 9pt; font-family: Arial, sans-serif; ">1775 Pennsylvania Avenue NW, Washington, DC 20006<o:p></o:p></span></div>
<div style="margin: 0in 0in 0.0001pt; font-size: 11pt; font-family: Cambria; "><span style="font-size: 9pt; font-family: Arial, sans-serif; color: rgb(6, 134, 88); ">Office</span><span style="font-size: 9pt; font-family: Arial, sans-serif; ">: + 1.202.533.2932 <span style="color: rgb(6, 134, 88); "> Mobile</span>:
+1.202.352.6367 <span style="color: rgb(6, 134, 88); ">/ <a href="mailto:becky.burr@neustar.biz" style="color: purple; ">becky.burr@neustar.biz</a> /<span class="Apple-converted-space"> </span><a href="http://www.neustar.biz">www.neustar.biz</a></span></span></div>
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