[atrt2] Fwd: Bylaws amendment
Alan Greenberg
alan.greenberg at mcgill.ca
Wed Nov 20 03:14:19 UTC 2013
Ahhh! Somehow I had gotten the idea that Becky's
concern was with how the Reconsideration Bylaws
were changed, but it is the rules on the Independent Review of Board Actions.
Alan
At 19/11/2013 05:55 PM, Paul Diaz wrote:
>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.
>
>
>Begin forwarded message:
>
>>From: "Burr, Becky" <<mailto:Becky.Burr at neustar.biz>Becky.Burr at neustar.biz>
>>Subject: Bylaws amendment
>>Date: November 19, 2013 6:23:36 PM GMT-03:00
>>To: Paul Diaz
>><<mailto:pdiaz at pir.org>pdiaz at pir.org>,
>>"<mailto:bcute at pir.org>bcute at pir.org" <<mailto:bcute at pir.org>bcute at pir.org>
>>
>>Summary. The 11 April 2013 Bylaws amendment
>>replaced the substantive requirements of its
>>Articles of Incorporation and Bylaws with
>>Californias Deferential Business Judgment
>>Rule as the yardstick against which Board
>>Actions should be measured in an IRP. In
>>ICANNs own words, this standard would require
>>IRP Panelists to dismiss IRP Requests unless
>>the claimant can prove that the Boards
>>decision involved fraud, bad faith,
>>overreaching or an unreasonable failure to
>>investigate material facts. See ICM v. ICANN,
>>ICANNs Response to Claimants Memorial on the Merits, §128.
>>
>>
>>Discussion. 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.
>>
>>
>>The Pre-Amendment Bylaws provided that request for independent review:
>>
>>
>>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.
>>
>>
>>The Amended Bylaws contain the following new language:
>>
>>
>>The IRP Panel must apply a defined standard of
>>review to the IRP request, focusing on: did the
>>Board act without conflict of interest in
>>taking its decision?; did the Board exercise
>>due diligence and care in having a reasonable
>>amount of facts in front of them?; and did the
>>Board members exercise independent judgment in
>>taking the decision, believed to be in the best interests of the company.
>>
>>
>>This new language is a restatement of
>>Californias 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.
>><http://www.davis-stirling.com/tabid/835/Default.aspx>Lamden
>>v. La Jolla Shores, (1999) 21 Cal.4th
>>249. The Business Judgment Rule, however,
>>"provides protection from personal liability
>>for the individual directors 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. Ritter and Ritter v. Churchill, (2008) 166 Cal.App.4th 103
>>
>>
>>ICANN urged the Panelists in ICM v. ICANN to
>>evaluate the Boards liability under the
>>deferential business judgment rule. In ICANNs
>>view, ICM claims should be dismissed unless it
>>could prove that the Boards decision reflected
>>fraud, bad faith, overreaching or an
>>unreasonable failure to investigate material
>>facts. See ICANNs Response to Claimants Memorial on the Merits, §128.
>>
>>
>>A majority of the Panel rejected firmly
>>rejected ICANNs 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
>>Articles of Incorporation and Bylaws, which
>>require ICANN to carry out its activities in
>>conformity with relevant principles of international law, and
>>
>>
>>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 ICANNs 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. 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
>>ICANNs Articles and Bylaws and of specific
>>representations of ICANN as in the RFP that
>>bear on the propriety of its conduct. 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.
>>
>>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 /
>><mailto:becky.burr at neustar.biz>becky.burr at neustar.biz / www.neustar.biz
>
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