There are two questions here, and they should be viewed separately. One question is how likely it is that a non-frivolous suit could be brought by a Board member being recalled. I think the chances of that are actually quite small, and that this threat is being massively overblown, but that is the wrong point to spend time on. The other question is how easy it would be to eliminate this threat, regardless of how unlikely or far-fetched it really is. I think the answer to that is that it would be quite easy to do, through use of a "pre-service letter" or other binding agreement preventing Board members from filing suit arising from their recall. This is where we should concentrate our efforts. If we want to take time to debate whether or not the scenarios involving litigation by a recalled Board member are realistic or credible, I'll wade into that debate. But we have very little time and much more significant issues to spend our time on. In the end it doesn't matter, if the threat can be eliminated easily. Greg On Mon, Dec 14, 2015 at 10:39 PM, Greg Shatan <gregshatanipc@gmail.com> wrote:
I made an inquiry of one of the Board members -- ICANN does not currently use Director Service letters.
Greg
On Mon, Dec 14, 2015 at 7:55 PM, Aikman-Scalese, Anne <AAikman@lrrlaw.com> wrote:
Thanks Holly and Rosemary. We are still trying to locate a Director Service letter – even just to determine whether they ever agree that CA law governs when they sign on.
Anne
*Anne E. Aikman-Scalese, Of Counsel*
*Lewis Roca Rothgerber LLP*
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*From:* Gregory, Holly [mailto:holly.gregory@sidley.com] *Sent:* Monday, December 14, 2015 5:42 PM *To:* Rosemary E. Fei; Aikman-Scalese, Anne; 'Steve DelBianco'
*Cc:* gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Thomas Rickert; ipc_accountabilityct@icann.org; 'Gomes, Chuck' ( cgomes@verisign.com); Sidley ICANN CCWG; ICANN-Adler; accountability-cross-community@icann.org *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
Agreed
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*From:* Rosemary E. Fei *Sent:* Monday, December 14, 2015 06:41:09 PM *To:* Aikman-Scalese, Anne; Gregory, Holly; 'Steve DelBianco' *Cc:* gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Thomas Rickert; ipc_accountabilityct@icann.org; 'Gomes, Chuck' ( cgomes@verisign.com); Sidley ICANN CCWG; ICANN-Adler; accountability-cross-community@icann.org *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
Questions 1 and 2 might be re-directed at whether a director can be enforceably bound to an agreement not to bring such suits or seek such relief, such as in a pre-service letter, rather than (or in addition to) researching whether such suits and relief are possible. To Anne’s point, claims without any legal basis can still be made in court, so perhaps the focus should be on how quickly and easily they will be dismissed. An enforceable agreement would go a long way in that direction, which would be reassuring for SO/AC actors, but also a strong disincentive for directors being removed to bring a claim at all.
The last question could be directed to ICANN’s insurance carrier, or other carriers who may offer such coverage, rather than legal counsel. We can do the research if directed, but I don’t think our legal expertise is needed to be able to do that work.
Rosemary
Rosemary E. Fei Adler & Colvin 235 Montgomery Street, Suite 1220 San Francisco, CA 94104 415/421-7555 (phone) 415/421-0712 (fax) rfei@adlercolvin.com www.adlercolvin.com
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*From:* Aikman-Scalese, Anne [mailto:AAikman@lrrlaw.com <AAikman@lrrlaw.com>] *Sent:* Monday, December 14, 2015 12:29 PM *To:* Holly Gregory; 'Steve DelBianco' *Cc:* gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Rosemary E. Fei; Thomas Rickert; ipc_accountabilityct@icann.org; 'Gomes, Chuck' ( cgomes@verisign.com); Rosemary E. Fei; Sidley ICANN CCWG; ICANN-Adler; accountability-cross-community@icann.org *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
If the Chairs want to certify the legal questions, I think these would be:
1. 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?
2. 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?
3. 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?
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.
Anne
*Anne E. Aikman-Scalese, Of Counsel*
*Lewis Roca Rothgerber LLP*
*One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611*
*(T) 520.629.4428 <520.629.4428> | (F) 520.879.4725 <520.879.4725>*
*AAikman@lrrlaw.com <AAikman@lrrlaw.com>** | www.LRRLaw.com <https://urldefense.proofpoint.com/v2/url?u=http-3A__www.lrrlaw.com_&d=CwMGaQ&c=Od00qP2XTg0tXf_H69-T2w&r=1-1w8mU_eFprE2Nn9QnYf01XIV88MOwkXwHYEbF2Y_8&m=trlTGCn494B2WVzErbucQz6en49m-qs150hXbEVNqPs&s=ZgQQyaP1W9CyE30YnuM1f1ve1enoUE3pRQCjlalpACs&e=>*
*From:* Gregory, Holly [mailto:holly.gregory@sidley.com <holly.gregory@sidley.com>] *Sent:* Monday, December 14, 2015 1:14 PM *To:* Aikman-Scalese, Anne; 'Steve DelBianco' *Cc:* 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 *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
We must await further direction from the co-chairs whether this is something that they would like research on under California law
*HOLLY* *GREGORY* Partner
*Sidley Austin LLP* +1 212 839 5853 holly.gregory@sidley.com
*From:* Aikman-Scalese, Anne [mailto:AAikman@lrrlaw.com <AAikman@lrrlaw.com>] *Sent:* Monday, December 14, 2015 3:03 PM *To:* Gregory, Holly; 'Steve DelBianco' *Cc:* gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Rosemary Fei (rfei@adlercolvin.com); Thomas Rickert; ipc_accountabilityct@icann.org; 'Gomes, Chuck' (cgomes@verisign.com) *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
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.
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. *The SO/AC would likely need legal advice just to draft the “written justification.”*
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.
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.
Anne
*Anne E. Aikman-Scalese, Of Counsel*
*Lewis Roca Rothgerber LLP*
*One South Church Avenue Suite 700 | Tucson, Arizona 85701-1611*
*(T) 520.629.4428 <520.629.4428> | (F) 520.879.4725 <520.879.4725>*
*AAikman@lrrlaw.com <AAikman@lrrlaw.com>** | www.LRRLaw.com <https://urldefense.proofpoint.com/v2/url?u=http-3A__www.lrrlaw.com_&d=CwMGaQ&c=Od00qP2XTg0tXf_H69-T2w&r=1-1w8mU_eFprE2Nn9QnYf01XIV88MOwkXwHYEbF2Y_8&m=-r-X1vqLqfFo7wDtSJ7AQkHOsUyJczd-GcHxg4tVr_4&s=vqBDgdI1aOR4vc8v3l4jKLsfuSCdEocU8QaPE3RstAA&e=>*
*From:* Gregory, Holly [mailto:holly.gregory@sidley.com <holly.gregory@sidley.com>] *Sent:* Monday, December 14, 2015 12:43 PM *To:* Aikman-Scalese, Anne; 'Steve DelBianco' *Cc:* gregshatanipc@gmail.com; 'Phil Corwin'; cwilson@21cf.com; Rosemary Fei (rfei@adlercolvin.com); Thomas Rickert *Subject:* RE: CCWG - ACCT - Recommendation 4 - Community Powers
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
*HOLLY* *GREGORY* Partner
*Sidley Austin LLP* +1 212 839 5853 holly.gregory@sidley.com
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