Sorry I previously replied to the wrong chain with this comment so am reposting:
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 |
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Lewis Roca Rothgerber LLP |
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One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611 |
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(T) 520.629.4428 | (F) 520.879.4725 |
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From: Aikman-Scalese, Anne
Sent: Tuesday, October 13, 2015 10:07 AM
To: 'Ron Baione'; Nigel Roberts; paul.rosenzweig@redbranchconsulting.com; accountability-cross-community@icann.org
Subject: RE: [CCWG-ACCT] Need for clarity on enforcement mechanisms for Dublin
Ron,
I personally think there is still a great deal of confusion about how some of the competing proposals for structure would operate in practice. I think that
Steve’s idea about comparison of the enforceability aspect of the proposals for each model is a great idea whether or not we follow “Plan B”.
I also think we need a visual representation of the timelines associated with each of the three enforcement mechanisms, as stated on the call. For example,
it is very unclear to me how the Community exercises budget authority as required by the CWG-Stewardship in the context of binding arbitration. Here is why:
1.
Alan brought up the MEM does not specify a level of consensus. I read the proposal from the Board as requiring full consensus of all SOs and ACs.
I brought this up as a question – that is, what is the Board’s definition of consensus in the MEM proposal from the very beginning. Of course as Alan points out, we have the same question as to defining consensus depending on how many SOs and ACs participate
– in the CMSM proposal.
2.
Assuming for the moment that consensus is reached on a budget rejection by the Community, it is not at all clear to me how that process evolves in
the context of binding arbitration. Under the MEM, are we saying the Community sends the question of whether it is entitled to reject a budget to a panel of arbitrators to determine? Are we saying that under the CMSM, the budget is at that point rejected
by the Community on notice to the Board and the Board has to go “back to the drawing Board” to submit another budget. What budget applies during the long process of binding arbitration?
This all points out that there are numerous questions raised by the Board’s proposal that we will have to take the time to carefully sort out – but it certainly
would be appropriate to identify various timelines associated with the three models shown in Steve DelBianco’s chart and to create a visual representation of those timelines in relation to the questions Steve has asked for the six points. This is partly a
legal question regarding how soon enforcement action takes effect. It is also a Community question regarding the commencement of deliberations on whether or not to take action, convening Community Forum, convening designators, etc.
Sidley memo says we already have a designator model, although not a sole designator model. WE DO NEED THEIR ANALYSIS, HOWEVER, OF THE TIMING TO IMPLEMENT
AN ENFORCEMENT ACTION ONCE THE COMMUNITY HAS DETERMINED VIA CONSENSUS (HOWEVER THAT IS ULTIMATELY DEFINED) THAT IT WILL INDEED TAKE ACTION TO ENFORCE THE POWER.
It is tough to have new ideas when you are not even able to correctly evaluate those that have already been proposed. I volunteer to help work on timelines
if others think this is appropriate.
Anne
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Anne E. Aikman-Scalese, Of Counsel |
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Lewis Roca Rothgerber LLP |
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One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611 |
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(T) 520.629.4428 | (F) 520.879.4725 |
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From:
accountability-cross-community-bounces@icann.org [mailto:accountability-cross-community-bounces@icann.org]
On Behalf Of Ron Baione
Sent: Tuesday, October 13, 2015 9:26 AM
To: Nigel Roberts;
paul.rosenzweig@redbranchconsulting.com;
accountability-cross-community@icann.org
Subject: Re: [CCWG-ACCT] Need for clarity on enforcement mechanisms for Dublin
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This is a general question to the group, in your view, what percentage of responses to this email list contain new ideas for real progress and what percentage of responses are clarifications and confusion on what ICANN's situation currently
is? Is it that we are so far along in the process that the only thing to do is wait on the ideas already proposed? I expected people on the list to be saying, "lets try it this way" or "what about this idea", I haven't seen that said once.
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From:
Nigel Roberts <nigel@channelisles.net>;
To: Paul Rosenzweig <paul.rosenzweig@redbranchconsulting.com>; <accountability-cross-community@icann.org>;
Subject: Re: [CCWG-ACCT] Need for clarity on enforcement mechanisms for Dublin
Sent: Tue, Oct 13, 2015 7:32:05 AM
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It's not for me to interpret the Joint Statement as I was no part of its
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