Re: Incorporating DNSO?

Kent Crispin (kent@songbird.com)
Wed, 23 Dec 1998 23:40:30 -0800


On Thu, Dec 24, 1998 at 01:45:38PM +1200, Joop Teernstra wrote:
> >
> >That is, there is no need for the DNSO corporation to protect itself;
> >just its members.
> >
> Hello Kent,
>
> Was this the consensus reached in Monterrey? To minimize the target by not
> having a fighting fund?

Minimizing the target was discussed, and pretty much agreed to. I
just looked -- Glen's paper isn't on the dnso web site, maybe we can
get a copy somewhere. Anyway, the original proposal in the paper was
that there should be something like a $10,000,000 legal reserve.
However, experienced lawyers in the crowd were pretty definite that
havng a large legal reserve would trigger all kinds of lawsuits
looking for "deep pockets" full of money.

> And then fold and re-constitute?

Fold and re-constitute was never discussed, because we were
operating under the model that the DNSO would exist within ICANN's
corporate umbrella.

> It does have the
> somewhat sleazy appearance of a company going bankrupt and re-forming with
> the same shareholders a week later.

I would be happy to find another mechanism. But individuals in the
DNSO clearly need liability protection.

[...]

> Depending on the decisionmaking that follows, I do not quite see how
> members of a merely advisory body can incur civil liabilities by making
> unpopular "decisions."
> Perhaps ICANN's latest change of hart has made this whole point moot.

I don't think so. Civil liability depends on the decision of a
jury, generally. There are thousands of cases where a jury makes a
completely outrageous award. Frequently these get overturned on
appeal, but sometimes they don't.

But more to the point, you have to spend the money to defend
yourself, no matter what.

[...]
> >Confusing political accountability with civil liability would be a
> >profoundly terrible mistake for us to make. >
> Agreed. My post brought up both. They should not be confused.
> However, legitimacy of governance rests on wide acceptance.
>
> >It is an unfortunate
> >reality that there are genuinely conflicting points of view involved.
> >That means that there will *always* be some unhappy people. If the
> >DNSO/ICANN have no shield against lawsuits they will be completely
> >and utterly paralyzed -- and then they will be sued for not doing
> >anything. Without liability shields that means that each individual
> >member of the DNSO is personally liable.
>
> Since you are talking about DNSO/ICANN as a policymaking body you may as
> well address both the political accountability issue and the civil
> liability issue.

I'm sorry, we are at cross purposes. I don't think of the DNSO as a
regulatory body at all, and I don't believe I said it was. In fact,
it was you who made that assumption.

Let's review: the discussion was concerning incorporation of the
DNSO. You responded to Amadeu's message by saying.

"Amadeu, you have touched upon something fundamental. Governance
and avoiding liability for decisions does not go together very
well."

Please note that this statement implies that the DNSO/ICANN is
involved in governance.

I pointed out that in fact, governance and avoidance of civil
liability (at least in the US) go together very well indeed. It is
frequrently *very* difficult, if not impossible, to sue government
agencies, by design -- they need to be insulated from civil liability
in order to do their jobs.

Pointing out this error in your statement does not in any way imply
that I think that ICANN/DNSO are governance bodies, and in fact, I
think that if ICANN gets into a long term position of being a
governance body disaster will be the inevitable result. (*)

> You address only the latter. If the DNSO is to have a political role, this
> is improper.

It is my intention to address only the latter. As I said, it is you
who assumes governance is an issue. It may be, but that is not my
model of ICANN or DNSO.

Nor do I want to discuss my model of ICANN, to tell you the truth.
At this point in time I am focussed on the practical issue of
creating a DNSO.

> >The will of a majority of Internet stakeholders is absolutely
> >worthless as a legal defense. And you will need real dollars to pay
> >your defense lawyers. Suppose *everybody* but NSI wants a certain
> >policy. NSI claims that policy would damage its business, and sues
> >ICANN and DNSO. If ICANN/DNSO ignore the suit, NSI will get a
> >summary judgement. If they fight the suit, it costs significant
> >money. The suit will be decided on the basis of the relevant laws,
> >not the will of the majority.
> >
>
> O.K. I see what you mean. Let me rephrase what I mean. NSI or any other
> party may claim that ICANN/DNSO policy damages it's business, but that in
> itself would not give rise to a civil liability. A suit can be fought with
> confidence, if ICANN/DNSO would have a legitimate mandate to formulate such
> policy.

1) "Legitimate mandate" is a term too vague to be of any legal use.
You need to know precisely what laws you are going to base your
defense on.

2) If you are fighting a suit "with confidence" you have already lost.
Fighting lawsuits costs lots of money. A company like NSI can
afford to spend millions of dollars, but a small non-profit cannot.

> If the outcome of the suit would be that predictable, it is not likely that
> it would be brought in the first place.

1) It's not predictable;
2) even if it were, juries make unpredictable awards in
"predictable" cases *all the time*.

> >The bylaws of ICANN only are at issue if the California Attorney
> >General brings suit against the corporation for not meeting the
> >standards of a California non-profit. You as an individual can't sue
> >ICANN because ICANN doesn't follow its bylaws; you can only sue ICANN
> >if ICANN causes you some damage.
> >
> >You don't sue General Motors because their bylaws say that they
> >should produce good cars -- you sue them because you were damaged by
> >their actions. The bylaws of General Motors are almost totally
> >immaterial in such a suit.
> >
> An example of damage would be a deletion of a Domain from the database
> based on policy.
> Because ICANN/DNSO are not in the business of producing cars, but of DNS
> governance, the bylaws *are* of critical importance, also in a civil suit.

Eh? You bring suit because of real or imagined damage you have
suffered. You can't go to a judge and say "I admit that ICANN has
caused me no harm whatsoever, but they aren't following their bylaws,
so I want a million dollars." There has to be some harm. Nor can you
go to a judge and say "ICANN caused me $10 worth of damage, but they
aren't following their bylaws, so I want a million dollars".

> >> On the other hand, the present incorporators can be held liable for
> >> creating bylaws that could be called a "racket".
> >
> >In general, no, they can't. The ICANN bylaws could state that the
> >ICANN directors personally owned the moon, or that 3 == 5. That
> >doesn't make them own the moon, or 3 == 5. The existence of flaws in
> >the bylaws doesn't give *anyone* standing to sue the corporation,
> >except (in the case of a California Public Benefit Corporation) the
> >Attorney General of the State of California.
> >
> Sorry Kent, I don't agree here. Because of the effective monopoly control
> that ICANN will have, liability for both the bylaws and policy goes far
> beyond AG oversight. IMHO.

"Liability for the bylaws" is an oxymoron. If ICANN (or NSI or
Microsoft) is a monopoly, then of course the DoJ can go after them on
anti-trust grounds. That has to do with actions, not bylaws. ICANN
could have the following in it bylaws "Yes, YES, we are a monopoly
and we are going to do the following terrible 50 monopolistic things:
1),...", and DoJ wouldn't do a thing. It's only when they *do*
something monopolistic that it matters. [I suppose that the bylaws
that indicated clearly a plan to do illegal things could be used to
show intent. However, we are a long way from anything like that.]

Anyway, my understanding of the California Public Benefit
Corporation model is that it doesn't generally have members, it is
designed to be doing things for the general public, and this
justifies the AG standing in as a surrogate for the public, to deal
with cases where the directors are not following the bylaws. Note
that in this case the AG would go after the directors, not the
corporation.

Perhaps someone well versed in this area of the law could correct my
misconceptions?

(*) [But there is a subtlety here -- there are a couple of prelimary
decisions that ICANN must make to clear the governance issue away,
and those few decisions will have a major impact, and probably provoke
the vast majority of lawsuits. After that I think things will simmer
down a *great* deal.]

-- 
Kent Crispin, PAB Chair				"Do good, and you'll be
kent@songbird.com				lonesome." -- Mark Twain