[CCWG-ACCT] FW: Townhall meeting follow-up

Tue Jun 23 17:55:29 UTC 2015

I am most familiar with the California Attorney General's practices. I can confirm that while the CA AG has broad *statutory* authority to intervene, in practice that office will only engage if a substantial waste or diversion of charitable assets or criminal activity  may be involved.  Merely failing to follow procedures in the bylaws will not be of interest to the AG.

The AG has a form for filing complaints that is available to anyone with concerns about any charity formed or operating in California.

I hope that is helpful.

Rosemary

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On Jun 23, 2015, at 2:38 PM, Edward Morris <egmorris1 at toast.net<mailto:egmorris1 at toast.net>> wrote:

Becky,

I can add a real life example to support your view. When we hit a brick wall on TM50, which involved allegations of multiple Bylaws violations, I informally asked the AG's office whether they would be willing to investigate and litigate on our behalf. Although willing to investigate it was clear that even if our allegations were found to be true they did not rise to the level that would prompt AG involvement. We clearly need something more.

Best,

Ed

Sent from my iPhone

On Jun 23, 2015, at 1:04 PM, Burr, Becky <Becky.Burr at neustar.biz<mailto:Becky.Burr at neustar.biz>> wrote:

The authority of the AG to step in may be broader, but as a practical matter, it is my impression that this authority is usually used to address corruption and other various actions that are – or resemble – criminal behavior. I don’t think it is a meaningful source of enforcement for the issues that we are worried about.

J. Beckwith Burr
Neustar, Inc. / Deputy General Counsel and Chief Privacy Officer
1775 Pennsylvania Avenue NW, Washington, DC 20006
Office: + 1.202.533.2932  Mobile:  +1.202.352.6367  / becky.burr at neustar.biz<mailto:becky.burr at neustar.biz> / www.neustar.biz<http://www.neustar.biz>

From: <Drazek>, Keith Drazek <kdrazek at verisign.com<mailto:kdrazek at verisign.com>>
Date: Tuesday, June 23, 2015 at 10:36 AM
To: Keith Drazek <kdrazek at verisign.com<mailto:kdrazek at verisign.com>>, "Rosemary E. Fei" <rfei at adlercolvin.com<mailto:rfei at adlercolvin.com>>, Accountability Community <accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>>
Subject: Re: [CCWG-ACCT] FW: Townhall meeting follow-up

To clarify….when I say “the public,” I include the ICANN community if the ICANN community did not have standing of its own.

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 Drazek, Keith
Sent: Tuesday, June 23, 2015 10:00 AM
To: Rosemary E. Fei; Accountability Cross Community (accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>)
Subject: Re: [CCWG-ACCT] FW: Townhall meeting follow-up

Thanks very much, Rosemary.

A follow-up question:  How and when would the California state attorney general decide to engage? Is there a way for the public to trigger an action or investigation?

Thanks,
Keith

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 Rosemary E. Fei
Sent: Tuesday, June 23, 2015 9:37 AM
To: Accountability Cross Community (accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>)
Subject: [CCWG-ACCT] FW: Townhall meeting follow-up

I would add that state attorneys general are generally empowered to enforce against directors violations of the bylaws that breach their fiduciary duties or cause the corporation to use its assets outside its charitable purposes.

I would also add that if bylaws violate the corporate law or the corporation’s own Articles of Incorporation, the board’s duty is to follow the statute or the Articles, not the bylaws.

Rosemary

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 Holly Gregory
Sent: Tuesday, June 23, 2015 4:19 AM
To: Chris Disspain; Malcolm Hutty
Cc: accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>
Subject: Re: [CCWG-ACCT] Townhall meeting follow-up

Chris, that is an accurate clarification.

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________________________________
From:accountability-cross-community-bounces at icann.org<mailto:accountability-cross-community-bounces at icann.org> on behalf of Chris Disspain
Sent: Tuesday, June 23, 2015 06:14:45 AM
To: Malcolm Hutty
Cc: accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>
Subject: Re: [CCWG-ACCT] Townhall meeting follow-up
Malcolm,

We have been told that the Board of an
organisation with no members has a fiduciary duty to the company that
takes precedence over the Bylaws: if the Board decides that it is in the
best interests of the corporation to defy the bylaws, then defying them
is their legal duty.

With respect I think that is too simplistic a statement to describe what is a more complicated situation. One of the 3 legs of fiduciary duty of charitable corporation like ICANN is the duty of obedience. The duty of obedience is the duty to remain faithful to and pursue the goals of the organization. In practice, the duty of obedience requires the decision maker to follow the governing documents of the organisation and laws applicable to the organisation. Bylaws are governing documents.
It would be correct to say that where there are no members or designators there is a challenge in enforcing where the Board does NOT follow but it is incorrect to say that the Board can legally ignore its by-laws.

Cheers,

Chris

On 23 Jun 2015, at 20:01 , Farzanh <farzaneh.badii at gmail.com<mailto:farzaneh.badii at gmail.com>> wrote:

Thanks Malcolm, I can't agree more  ! I have been battling with serious existentialist questions since there has been a shift to a soft approach to accountability. We certainly need to emphasize how the new model can give us effective and  enforceable mechanisms! enforcement mechanisms can also be deterrent mechanism ! The farther we r from enforcement mechanisms the less deterred are the decision makers to make decisions against the community wishes !
On Jun 22, 2015, at 6:43 PM, Malcolm Hutty <malcolm at linx.net<mailto:malcolm at linx.net>> wrote:

On 22/06/2015 17:52, Seun Ojedeji wrote:
- Enforceability solutions other than membership:
Considering the complications relating to the various membership models
that has been suggested, there is obvious need to consider what is
achievable within the current structure and i think everything is
achievable except enforceability.

I completely agree with David McAuley's reply on this point.

Unfortunately, if you achieve "everything except enforceability", you
achieve nothing more than a clarification of your request. You do not
achieve accountability, only a clear statement of what you would like
ICANN to do. The decision rests elsewhere.
So it seem to me that we will already have some enforceability without
actually requiring membership since an organisation board is required to
obey/comply with its bylaw. So if the bylaw says; before you can do xyz,
it needs to go through abc process, why would the board not follow/obey
those direction as defined in the bylaw?

There are many reasons why things go wrong in this world. But I do not
want to suggest anything you may find fanciful or improbable or, worse,
that could be interpreted as attacking our honourable current Board members.

So for now, let's just say that the Board might believe they were
following the bylaws even if they were not. It is possible to err.

Beyond that though, is the problem Becky identified earlier: it seems
you are mistaken when you say that an organisation's board is required
to obey/comply with its bylaws. We have been told that the Board of an
organisation with no members has a fiduciary duty to the company that
takes precedence over the Bylaws: if the Board decides that it is in the
best interests of the corporation to defy the bylaws, then defying them
is their legal duty. Only by creating a membership (whether through
Empowered SOs, UAs, Open Membership, or some other approach) can we
raise up the bylaws to something the Board must honour in the way you
assume they already must.

Incidentally, I don't blame you at all for not realising this: I didn't
either, and was quite surprised to be told it. But the legal advice
being what it is, we must act accordingly.

--
          Malcolm Hutty | tel: +44 20 7645 3523
 Head of Public Affairs | Read the LINX Public Affairs blog
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