8 CORPORATION, ET CETERA.

10 MY NAME IS JEFFREY LE VEE, FROM JONES, DAY. I

11 REPRESENT INTERNET CORPORATION FOR ASSIGNED NAMES NUMBERS.

12 LET ME INTRODUCE TO YOU THE OTHERS THAT ARE

13 ACCOMPANYING ME TODAY: MY PARTNER ELWOOD LUI; AND MY

14 COLLEAGUE COURTNEY SCHABERG; AND MY CLIENT, MR. TOUTON, WHO

15 IS VICE PRESIDENT AND GENERAL COUNSEL OF ICANN, AND FOR TWO

16 DECADES A MEMBER OF THE CALIFORNIA BAR.

18 CINDY COHN, OF ELECTRONIC FRONTIER CORPORATION.

19 I REPRESENT AUERBACH TODAY. WITH ME IS MY CO-COUNSEL JAMES

20 TYRE, AND MR. AUERBACH IS PRESENT IN THE COURTROOM TODAY.

22 READ THE COURT'S TENTATIVE?

25 NEED TO TAKE CARE OF THE FORMALITIES WITH RESPECT TO THE

26 EVIDENCE, SO IF YOU ALL WANT TO SIT DOWN YOU ARE WELCOME TO

27 DO SO.

28 WE HAVE CROSS-MOTIONS FOR SUMMARY JUDGMENT FILED

1 BY THE PETITIONER AND RESPONDENT. THE PETITIONER'S REQUEST

2 FOR JUDICIAL NOTICE IS GRANTED. THE RESPONDENT'S

3 DECLARATIONS OF MAY 20TH OF LYNN, CERF, TOUTON AND EXHIBITS

4 THERETO, AND THE JULY 15TH - AND THOSE ARE FILING DATES THAT

5 I'M REFERRING TO - SUPPLEMENTAL DECLARATIONS OF LYNN AND

6 TOUTON KNOW AND EXHIBITS THERETO ARE ADMITTED IN EVIDENCE BY

7 REFERENCE SUBJECT TO EVIDENTIARY RULINGS, WHICH I WILL BE

8 MAKING IN A MOMENT.

9 THE AUERBACH DECLARATION FILED MAY 21ST AND THE

10 SECOND DECLARATION FILED JULY 15TH AND EXHIBITS THERETO 1

11 THROUGH 32 ARE ADMITTED IN EVIDENCE BY REFERENCE. THE

12 RULINGS ON THE OBJECTIONS TO THE LYNN DECLARATION, TOUTON

13 DECLARATION AND CERF DECLARATION ARE AS FOLLOWS: ON THE LYNN

14 DECLARATION, OBJECTIONS 1, 2 AND 3 ARE OVERRULED; OBJECTION

15 4 TO PARAGRAPHS 29 THROUGH 32; AND 5, WHICH ALSO IS TO 29;

16 AND 6, WHICH IS TO PARAGRAPH 32, ARE SUSTAINED.

17 I DON'T REALLY THINK THAT MR. DAVIDSON'S

18 COMPLIANCE WITH ANY REQUIREMENTS IS PARTICULARLY RELEVANT

19 HERE. AND OBJECTION 7 TO PARAGRAPHS 33 THROUGH 36, THE

20 VOTING RECORD OF MR. AUERBACH, THE OBJECTION IS GOING TO BE

21 SUSTAINED. I DON'T THINK IT'S PARTICULARLY RELEVANT. IF I

22 WERE TO CONSIDER IT, I WOULDN'T GIVE THAT ASPECT MUCH

23 WEIGHT.

24 I THINK THE FACT THAT SOMEONE DOESN'T VOTE

25 CONSISTENTLY WITH THE MAJORITY DOESN'T IN ANY WAY REALLY

26 MEAN THAT PARTICULAR RULES AND REGULATIONS AND POLICIES

27 DEALING WITH AVAILABILITY OF RECORDS ARE VALID OR INVALID.

28 IN FACT, IT LOOKS TO ME LIKE MR. AUERBACH WAS ELECTED AT

1 LARGE BECAUSE HE DID HAVE SOME CRITICISMS AND HAD SOME

2 OBJECTIONS TO THE WAY THE RESPONDENT WAS OPERATING. IF HE

3 HADN'T HAD THAT, HE MIGHT NOT HAVE EVEN BEEN ELECTED, AND HE

4 WAS SUPPOSED TO BE REPRESENTING THOSE INTERESTS, AND IT'S

5 ONLY REASONABLE, AND ONE WOULD SUPPOSE HE WOULD OBJECT

6 AGAINST THE MAJORITY ON SOME OF THESE.

7 AND BESIDES, IF THE MAJORITY COULD CENSOR THE

8 LONE DISSENTER, THAT GOES AGAINST ANY INTERPRETATION OR

9 POLICY IN THE CALIFORNIA CODE WHICH ALLOWS DIRECTORS ACCESS

10 TO THESE CORPORATE RECORDS.

11 NOW, GOING ON TO THE TOUTON DECLARATION,

12 OBJECTION 9, SUSTAINED; OBJECTION 10 AND 11 ARE AGAIN THE

13 VOTING RECORDS, SUSTAINED. OBJECTION 12, 13 ARE SUSTAINED;

14 14, 15, OVERRULED. ON THE CERF DECLARATION, OBJECTION 16 IS

15 SUSTAINED.

16 I THINK THAT TAKES CARE OF THOSE RULINGS.

17 NOW, HAVING RULED ON THESE DECLARATIONS AND

18 OBJECTIONS, UNLESS ANYONE ELSE HAS ANY EVIDENTIARY MATTERS

19 THAT THE COURT MAY HAVE OVERLOOKED, WE'LL PROCEED TO THE

20 MERITS.

22 WE HAVE CROSS-MOTIONS, BUT IN VIEW OF YOUR

23 TENTATIVE IT SEEMS TO ME WE BEAR THE BURDEN OF GOING FIRST.

26 OPINION DOES ZERO IN VERY MUCH ON ABSOLUTELY THE CORRECT

27 DOCUMENTS AND ABSOLUTELY THE CORRECT LEGAL ISSUES. AND WHAT

28 I WOULD LIKE TO DO THIS MORNING, WITH YOUR INDULGENCE, IS TO

1 ADDRESS OUR VIEW OF WHAT THOSE DOCUMENTS AND LEGAL ISSUES

2 ARE, AND GIVE YOU OUR VIEW AS TO WHY YOUR TENTATIVE, WITH

3 SOME MODIFICATIONS, SUPPORTS CLEARLY A PROTECTIVE ORDER IN

4 THIS CASE; AND WHY ALSO, IN OUR VIEW, FRANKLY, ICANN'S

5 MOTION SHOULD BE GRANTED WITH VERY MINOR ADJUSTMENTS IN THE

6 COURT'S ANALYSIS. AND I'D LIKE TO GO THROUGH THAT IF I

7 COULD.

8 THE ISSUE, IT SEEMS TO ME, IS NOT ABOUT WHETHER

9 MR. AUERBACH IS OR SHOULD HAVE BEEN INSPECTING ICANN'S

10 DOCUMENTS. AND JUST TO BE CLEAR I'M GOING TO GO THROUGH ONE

11 OR TWO PIECES OF EVIDENCE THAT MAKES THAT VERY CLEAR. THE

12 PARTIES HAVE NOT HAD A DISPUTE ABOUT A RIGHT TO INSPECTION.

13 ICANN INVITED MR. AUERBACH TO ITS OFFICES FOR THE PURPOSES

14 OF AN INSPECTION. THE DISPUTE IS THE EXTENT TO WHICH AN

15 INDIVIDUAL DIRECTOR HAS THE ABILITY TO TAKE COPIES OF

16 CONFIDENTIAL DOCUMENTS AND, ON HIS OWN, USING HIS OWN

17 JUDGMENT AND DISREGARDING THE VIEWS OF THE CORPORATION, POST

18 THOSE DOCUMENTS ON THE INTERNET OR DO WHATEVER THE INSPECTOR

19 MIGHT WISH TO DO.

20 AND WHAT I WILL DO TODAY IS SHOW YOU TWO

21 SPECIFIC PIECES OF EVIDENCE THAT WE BELIEVE MAKE IT CLEAR

22 THAT THE DISPUTE THAT THE PARTIES HAVE JUSTIFIES AT LEAST AT

23 A MINIMUM A PROTECTIVE ORDER IN THIS CASE, WHICH YOUR HONOR

24 IS CLEARLY AUTHORIZED TO DO, BOTH BY THE STATUTE --

26 MY MIND THAT I SHOULD HAVE A PROTECTIVE ORDER, I CERTAINLY

27 CAN DO THAT UNDER THE STATUTE. AND THE MAIN QUESTION HERE,

28 OF COURSE, WAS SHOULD ANY KIND OF ORDER GRANTING THEIR

1 MOTION BE MADE.

2 AND OF COURSE I THINK WE HAVE TEN MONTHS HERE

3 WHERE REALLY HE WASN'T ALLOWED TO SEE ANYTHING BECAUSE OF

4 THIS EXCUSE THAT WE DON'T HAVE ANY -- YOU KNOW, THIS

5 ORGANIZATION HAS BEEN GOING ON SINCE '98, AND STILL NOTHING

6 IN TERMS OF ACCESS.

7 I MEANT TO ASK YOU A QUESTION, AND I DON'T WANT

8 TO INTERRUPT YOU, BUT IT CAME TO ME.

9 THIS AUDIT COMMITTEE, WHAT DOES IT CONSIST OF AS

10 FAR AS THE MEMBERSHIP?

12 DIRECTORS. THERE ARE FOUR DIRECTORS, I BELIEVE; MAYBE

13 THREE.

15 AT A SINGLE RECORD BEFORE THIS CAME UP?

17 INSPECTION REQUEST --

19 COMMENTARY, SEEMS TO ME, TO HAVE COMPLETELY IGNORED

20 EVERYTHING FOR FOUR YEARS.

22 I THINK MR. AUERBACH WOULD AGREE WITH THIS - ICANN HOLDS

23 QUARTERLY MEETINGS. THERE'S A TREMENDOUS AMOUNT OF

24 INFORMATION PUSHED TO EACH OF THE DIRECTORS, AND A NUMBER OF

25 DECISIONS MADE. AND SO WHILE YOU ARE CORRECT, THERE HAD

26 BEEN NO -- OTHER THAN MR. DAVIDSON, WHO DID MAKE AN

27 INSPECTION REQUEST AND DID IN FACT COME AND INSPECT - NO

28 OTHER DIRECTOR HAD MADE A REQUEST AS SUCH. HOWEVER, THERE'S

1 AN ENORMOUS AMOUNT OF INFORMATION THAT IS COMMUNICATED TO

2 THESE DIRECTORS, AND THEN QUARTERLY THE DIRECTORS ASSEMBLE

3 IN PLACES ALL OVER THE WORLD.

4 THE LAST SEVERAL MEETINGS HAVE BEEN MOSTLY

5 OUTSIDE OF THE UNITED STATES, BUT THERE ARE ALSO MEETINGS,

6 TYPICALLY IN LOS ANGELES, WHERE ICANN IS BASED. SO I THINK

7 IT'S FAIR TO SAY THAT THE DIRECTORS VIEW THEMSELVES AS

8 RECEIVING AN ENORMOUS AMOUNT OF INFORMATION AS OPPOSED TO

9 JUST SITTING BACK AND DOING NOTHING. WE HAVEN'T BRIEFED

10 THESE ISSUES AND HAVEN'T PRESENTED YOUR HONOR WITH A RECORD

11 ON THAT. IF IT WERE IMPORTANT TO YOUR HONOR, I COULD

12 PRESENT YOUR HONOR WITH FILE DRAWERS, LITERALLY, OF

13 INFORMATION THAT HAS BEEN COMMUNICATED TO THE DIRECTORS. AND

14 THEN THE DIRECTORS HAVE AN E-MAIL LIST WHO THEY COMMUNICATE

15 AMONG ONE ANOTHER ALL THE TIME.

16 SO I DO THINK THE DIRECTORS TAKE THEIR

17 RESPONSIBILITIES EXTREMELY SERIOUSLY AND SPEND PROBABLY MUCH

18 MORE TIME THAN THEY HAD EXPECTED TO SPEND FOR VOLUNTARY

19 SERVICE. NONE OF THE DIRECTORS IS PAID OTHER THAN THE CHIEF

20 EXECUTIVE OFFICER, WHO IS AN EX OFFICIO DIRECTOR.

22 IT'S ALSO THE CASE THAT THE AUDIT COMMITTEE MEMBERS ARE

23 ENTITLED TO RELY UPON THE WORK OF THE OUTSIDE CONSULTANT,

24 AND THERE IS AN OUTSIDE CONSULTANT AVAILABLE.

26 TO ME THAT TAKING ONE'S DUTIES AND RESPONSIBILITIES

27 SERIOUSLY MEANS OCCASIONALLY CHECKING ON A COUPLE OF THINGS

28 YOURSELF INSTEAD OF RELYING ON JUST THE OUTSIDE. THAT'S WHY

1 SOMEONE COMES IN FROM THE OUTSIDE, SO THAT THEY WOULD LOOK,

2 BECAUSE SOME PEOPLE THINK THAT MAYBE SOMEONE SHOULD LOOK AT

3 MORE THAN WHAT HAS BEEN GOING ON AND JUST RELYING ON THE

4 OUTSIDE.

5 ALL RIGHT. I'M SURE THEY HAVE PLENTY OF

6 INFORMATION TO LOOK AT. I DON'T HAVE ANY QUALMS ABOUT

7 THAT. I DON'T THINK THERE'S ANY DOUBT ABOUT THAT. THE

8 QUESTION IS, SHOULD ONE, IF THEY ARE INTERESTED IN CHECKING

9 OUT THINGS THEMSELVES, SHOULD THEY BE ABLE TO DO THAT. DO

10 THEY HAVE TO WAIT TEN MONTHS TO EVEN GET CLOSE TO --

12 WHAT THE OTHER DIRECTORS DO, THESE BOARD MEETINGS I

13 MENTIONED ARE HELD IN GHANA AND IN EGYPT AND ALL OVER THE

14 WORLD.

17 THE ACTUAL BOARD MEETING ITSELF OCCURS OVER THE COURSE OF A

18 DAY, BUT THE BOARD MEMBERS TYPICALLY ARE PRESENT AT

19 COMMITTEE MEETINGS AND ALL SORTS OF OTHER INTERNATIONALLY

20 BASED MEETINGS THAT LEAD UP TO THE ICANN MEETING. SO

21 CANDIDLY THE COMMITMENT OF A ICANN DIRECTOR FAR SURPASSES

22 THE COMMITMENT OF MOST TYPICAL CORPORATE DIRECTORS BECAUSE

23 THEY LITERALLY ARE SPENDING MORE WEEKS A YEAR IN ADDITION TO

24 THE TIME THAT IS SPENT BETWEEN THE MEETINGS RECEIVING THE

25 INFORMATION, PARTICIPATING IN CONFERENCE CALLS AND SO FORTH.

26 SO I REALLY DO WANT TO ASSURE YOUR HONOR THAT

27 THE MEMBERS OF THIS BOARD TAKE THEIR RESPONSIBILITIES QUITE

28 SERIOUSLY. AND HAVING ATTENDED SOME OF THOSE MEETINGS, I

1 CAN TELL YOU THAT THE INTERACTION IS VERY INFORMED FROM MY

2 BASIS, FROM MY STANDPOINT.

3 IF I CAN TURN BACK TO THE SPECIFIC ISSUES, FIRST

4 JUST A NOTE ABOUT WHAT ICANN IS. WE TOUCH UPON IT ON THE

5 EARLY PAPERS, AND IT GETS LOST LATER. ICANN IS FORMED IN

6 1998, AS YOUR HONOR HAS MENTIONED, BY TRULY A COALITION OF

7 DIFFERENT TYPES OF ENTITIES THAT USE THE INTERNETS -

8 BUSINESS, TECHNICAL, ACADEMIC AND USER COMMUNITIES, AS WE

9 CALL THEM. THE REASON THAT ICANN WAS FORMED IS THAT FROM

10 ITS ORIGINS, WHEN IT WAS CALLED SOMETHING OTHER THAN THE

11 INTERNET AND WORLDWIDE WEB, THE UNITED STATES GOVERNMENT,

12 ORIGINALLY THE DEPARTMENT OF DEFENSE, NOW THE DEPARTMENT OF

13 COMMERCE, IS THE ENTITY THAT HAS -- THAT ADMINISTERS ALL

14 ASPECTS OF THE INTERNET. AND IN 1997 AND 1998

15 PRESIDENT CLINTON ISSUED EXECUTIVE ORDERS IN ESSENCE THAT

16 MANDATED THE ATTEMPT TO PRIVATIZE WHAT IS NOW DONE THROUGH

17 THE UNITED STATES GOVERNMENT.

18 AND ICANN'S FORMATION WAS IN RESPONSE TO THAT,

19 AND IT THEN ENTERED INTO A SERIES OF AGREEMENTS WITH THE

20 DEPARTMENT OF COMMERCE, WHICH STILL TO THIS DAY SUPERVISES

21 EVERYTHING ICANN DOES, AND MANY THINGS THAT PEOPLE ASSUME

22 ICANN -- THAT ICANN ACTUALLY DOES, WHAT ICANN DOES IS MAKE

23 RECOMMENDATIONS TO THE DEPARTMENT OF COMMERCE PURSUANT TO

24 THESE AGREEMENTS, AND IT'S THE DEPARTMENT OF COMMERCE THAT

25 ULTIMATELY MAKES THESE DECISIONS.

26 ICANN HAS TODAY 18 BOARD MEMBERS. ONE OF THE

27 MEMBERS RECENTLY RESIGNED. USED TO BE 19. AND EXACTLY

28 TWO-THIRDS OF THOSE BOARD MEMBERS RESIDE OUTSIDE OF THE

1 UNITED STATES. SO WE DO HAVE A VERY UNIQUE CORPORATION IN

2 THAT REGARD. AND, AS WE POINTED OUT IN OUR PAPERS, THE

3 DIRECTORS ARE ELECTED THROUGH A MYRIAD OF MEANS - SOME

4 THROUGH THE VOTING THAT CAUSED MR. AUERBACH TO BE ELECTED,

5 SOME THROUGH SUPPORTING ORGANIZATIONS AND TECHNICAL

6 COMMUNITIES THAT NOMINATE AND THEN SELECT DIRECTORS. IT'S A

7 VERY BROAD PROCESS, AND, AS WE'VE SAID, ICANN IS A

8 NOT-FOR-PROFIT CORPORATION BASED IN CALIFORNIA, IT WAS

9 REGISTERED IN CALIFORNIA, AND ITS ONLY OFFICE IS IN MARINA

10 DEL REY.

11 SO THE REASON WE'RE HERE, OF COURSE, IS THAT ONE

12 OF ICANN'S DIRECTORS MADE AN INSPECTION REQUEST, AND WHAT

13 I'D LIKE TO DO FIRST IS SKIP TO THE LETTER THAT YOUR HONOR

14 ACTUALLY REFERENCES IN YOUR TENTATIVE. AND I HAVE

15 HIGHLIGHTED THAT LETTER, IF I MAY HAND COPIES TO COUNSEL AND

16 TO YOUR HONOR.

17 THIS IS EXHIBIT 10 TO MR. LYNN'S DECLARATION.

18 IT'S THE OCTOBER 5, 2001, LETTER FROM MR. LYNN TO

19 MR. AUERBACH, WHICH ITSELF IS THE CULMINATION OF SEVERAL

20 EXCHANGES. AND WHAT I WOULD LIKE TO DO VERY BRIEFLY IS RUN

21 THROUGH THIS LETTER BECAUSE THIS I THINK IS THE MOST

22 IMPORTANT LETTER SAVE MAYBE ONE OTHER IN THE RECORD.

23 IF YOU WILL NOTE IN THE FIRST PARAGRAPHS,

24 MR. LYNN, WHO IS RESPONDING TO MR. AUERBACH'S REQUEST, SAYS

25 THAT THE PROCEDURES THAT HE FOLLOWS ARE THE ICANN

26 PROCEDURES. AND I'M GOING TO GIVE THAT TO YOUR HONOR NEXT.

27 WE'LL LOOK AT THOSE. THEN IN THE PARAGRAPH NUMBERED 1,

28 MR. LYNN SAYS, THE MATERIALS WILL BE MADE AVAILABLE FOR YOUR

1 INSPECTION AT ICANN'S OFFICES IN MARINA DEL REY. HERE ARE

2 THE DATES, HERE ARE THE TIMES; AND, FRANKLY, IF THESE DATES

3 AND TIMES AREN'T CONVENIENT FOR YOU, LET US KNOW WHAT IS.

4 SO RIGHT HERE, YOU ARE RIGHT, THERE WAS SOME

5 DELAY IN GETTING THE PROCEDURES ENACTED, BUT THE INSPECTION

6 THAT MR. AUERBACH WANTED TO HAVE COULD HAVE BEEN HAD NINE

7 MONTHS AGO.

8 NOW I'LL COME TO WHETHER YOUR HONOR THINKS THAT

9 THE PROCEDURES WERE APPROPRIATE OR NOT.

11 AS LONG AS IT'S CONDITIONED ON SIGNING ON THE BOTTOM OF THIS

12 LETTER. THERE'S ABSOLUTELY NO JUSTIFICATION, NO EXCUSE, NO

13 RIGHT FOR THAT KIND OF THING, SEEMS TO ME. SO THIS REALLY

14 IN MY MIND IS NOT PARTICULARLY -- DOESN'T REALLY EQUATE WITH

15 SAYING, OKAY, HERE IT IS UNDER THE PROCEDURES, THIS IS WHAT

16 WE'RE GOING TO MAKE AVAILABLE FOR YOU.

17 GO AHEAD.

19 BE SURE -- THE SITUATION WE WOULD BE IN HAD MR. AUERBACH

20 SIGNED THE LETTER, HE WOULD HAVE MADE HIS INSPECTION, HE

21 WOULD HAVE SEEN THAT ICANN WOULD HAVE DESIGNATED SOME

22 DOCUMENTS AS CONFIDENTIAL.

23 AND I WANT TO BE VERY CLEAR. MR. AUERBACH HAS

24 ASKED FOR, FOR EXAMPLE, CORRESPONDENCE WITH ICANN'S LAWYERS,

25 HE HAS ASKED FOR THEIR GENERAL LEDGER, HE'S ASKED FOR A

26 SERIES OF DOCUMENTS THAT UNDOUBTEDLY MAY BE SUBJECT TO THE

27 ATTORNEY-CLIENT PRIVILEGE AND OTHER CONFIDENTIALITY CONCERNS

28 OR PRIVACY CONCERNS.

1 I DON'T THINK MR. AUERBACH DISPUTES THAT. THE

2 ISSUE IS WHO BEARS THE BURDEN OF TRYING TO DO SOMETHING

3 ABOUT IT. SO HE WOULD HAVE SEEN ICANN'S DESIGNATIONS, AND

4 UNDER THESE PROCEDURES HE WOULD HAVE SAID, I OBJECT TO YOUR

5 DESIGNATION, AT WHICH POINT THE BOARD CONSIDERS HIS

6 OBJECTION AND MAKES A DECISION. AND IF HE'S NOT HAPPY WITH

7 IT HE HAS AVAILABLE FOR HIM JUDICIAL REVIEW.

9 BETWEEN, WHICH, IN MY VIEW, INSTEAD OF BEING HELPFUL, SIMPLY

10 DELAY THE PROCESS AND, OF COURSE IN THIS CASE, COULD DELAY

11 IT UNTIL SUCH TIME WE WIND UP WITH THE SITUATION YOU SEE IN

12 SOME OF THESE CASES.

14 JUMPING AROUND, BUT TRYING TO BE RESPONSIVE TO YOUR HONOR.

15 THE CASE LAW YOUR HONOR CITES ARE CASES WHERE THE

16 CORPORATION REFUSED IN ITS ENTIRETY TO PERMIT AN INSPECTION;

17 SIMPLY SAID, "I'M SORRY. THANK YOU FOR YOUR REQUEST. WE

18 WILL NOT PERMIT YOU TO REQUEST."

19 THAT'S NOT THIS CASE. THIS CASE IS, "COME IN

20 AND INSPECT, AND THEN WHEN YOU HAVE ISSUES AS TO HOW WE

21 HAVE, FOR EXAMPLE, DESIGNATED OR YOU HAVE ISSUES YOU WANT

22 ELECTRONIC COPIES OF A PARTICULAR DOCUMENT, WE'D LIKE TO

23 SORT THAT OUT WITH YOU THEN." AND THE NOTION THAT A COURT

24 HAS A STATUTORY ABILITY TO ENACT A PREROGATIVE ORDER WE

25 ISSUE --

27 DIFFERENCE WITH THE COURT PUTTING ON CONDITIONS AND THE

28 MAJORITY OF A BOARD DEPRIVING THE MINORITY OF THE KIND OF

1 ACCESS THAT THE LEGISLATURE HAS SAID IT'S ENTITLED TO. BIG

2 DIFFERENCE IN MY MIND.

3 IS THERE A SINGLE CASE THAT YOU CITED THAT EVEN

4 INTIMATES THAT THE BOARD CAN PUT ON THOSE CONDITIONS THAT

5 THE JUDGE MIGHT ON APPROPRIATE JUDICIAL REVIEW.

7 I'LL TELL YOU WHY. I BELIEVE THAT IT WOULD BE ROUTINE FOR A

8 CORPORATION LIKE ICANN OR, FRANKLY, ANY LARGE CORPORATION

9 WITH DIRECTORS ALL OVER THE COUNTRY, TO HAVE A PROCESS THAT

10 IS DOCUMENTED. AND WHERE I HEAR THE COURT DISAGREEING WITH

11 WHAT ICANN'S VIEW IS, IS WHETHER THESE RESTRICTIONS ARE

12 SOMEHOW ACTUALLY RESTRICTING RIGHTS OR WHETHER THEY ARE A

13 PROCESS.

14 ICANN VIEWS ITS INSPECTION PROCEDURES, WHICH IS

15 THE THIRD DOCUMENT I WAS GOING TO HAND TO YOU, AS A

16 PROCESS. IT DOES NOT VIEW THEM AS RESTRICTED RIGHTS, WHICH

17 IS WHY WHEN MR. AUERBACH LAID OUT WHAT HE WANTED TO SEE, THE

18 OCTOBER 5 LETTER FROM MR. LYNN, WHICH I HANDED TO

19 YOUR HONOR, SAYS, "OKAY, COME IN AND INSPECT." THE CASE

20 LAW -- WE SHOULD HAVE SAID, "NO. NO INSPECTION UNTIL YOU

21 FILE SUIT AND WE HAVE A JUDGE DETERMINE VIA A PROTECTIVE

22 ORDER HOW YOUR INSPECTION IS GOING TO GO."

23 AND THAT IS WHAT THE CHANTILES CASE AND HAVLICEK

24 CASE STAND FOR. YOU'RE RIGHT. IT'S NOT A SITUATION WHERE

25 THE CORPORATION TRIED TO BE FLEXIBLE. IN THOSE CASES THE

26 CORPORATION SAID, "ABSOLUTELY NOT. WE'LL SEE YOU IN

27 COURT."

28 INSTEAD, WHAT ICANN TRIED TO DO, THUS FAR MAYBE

1 NOT DOING SO WELL, ICANN TRIED TO SAY, "WE WANT TO BE

2 REASONABLE. WE WANT TO GIVE YOU THE RIGHT OF INSPECTION."

3 THE RIGHT OF INSPECTION IS IN ICANN'S BYLAWS. IT'S

4 SOMETHING ICANN AFFIRMATIVELY ASSERTS AS A RIGHT FOR ITS

5 DIRECTORS.

6 THE ISSUE THEN IS WHAT IS THE SEQUENCE. IS THE

7 SEQUENCE GOING TO BE MR. AUERBACH CAN COME IN AND LOOK AT

8 ICANN'S DOCUMENTS AND THAT THERE ARE NO RESTRICTIONS AS TO

9 WHAT IS PLACED ON HOW HE CAN USE THE DOCUMENTS?

10 THAT'S WHY I JUST HANDED YOUR HONOR THE OCTOBER

11 15TH LETTER, WHICH IS EXHIBIT 11. THIS IS MR. AUERBACH'S

12 LETTER, WHICH I HAVE HIGHLIGHTED. LET ME, IF I MAY, POINT

13 YOUR HONOR TO THE TWO HIGHLIGHTED PORTIONS TWO-THIRDS OF THE

14 WAY DOWN THE FIRST PAGE.

15 HE SAYS: I HAVE NO OBJECTION TO THE

16 DOCUMENT, WHICH IS THE INSPECTION PROCEDURES,

17 TO THE EXTENT IT ESTABLISHES AN UNDERSTANDING

18 REGARDING WHAT ARE REASONABLE TIMES AND PLACES

19 FOR DIRECTOR INSPECTION. INDEED, I'M GLAD

20 THAT THE CORPORATE MANAGEMENT HAS SET FORTH

21 WHAT THEY BELIEVE CONSTITUTES REASONABLE TIMES

22 AND PLACES.

23 THEN WE SKIP TO THE BOTTOM. HIS CONCERN IS THAT

24 ICANN IS GOING TO DESIGNATE DOCUMENTS AS CONFIDENTIAL, SO HE

25 WRITES.

26 YOUR LETTER IMPOSES VAGUE OBLIGATIONS

27 OF CONFIDENTIALITY ON MY USE OF WHATEVER IT

28 IS I MIGHT SEE, BUT THE DECISION AS TO WHAT

1 MATERIAL IS CONFIDENTIAL, AND CONFIDENTIAL

2 FROM WHOM, AND HOW I MAY USE SUCH MATERIALS

3 IS NOT IN YOUR DISCRETION. IT IS SUBJECT TO

4 MY OWN DISCRETION, CAREFULLY EXERCISED AS

5 DIRECTOR AND AS DEFINED AND LIMITED SOLELY BY

6 THE LAWS OF CALIFORNIA AND THE UNITED STATES.

7 SO MR. AUERBACH'S POSITION IS, I - NOT THE

8 CORPORATION, NOT THE BOARD, NOT ANY OTHER ENTITY - I GET TO

9 DECIDE WHETHER I GET TO TAKE A LETTER FROM A LAW FIRM TO

10 ICANN, CLEARLY SUBJECT TO THE PRIVILEGE, AND POST THAT

11 LETTER ON THE INTERNET.

12 NOW, I KNOW MR. AUERBACH APPARENTLY HAS

13 CLAIMED - I'D LOVE TO HAVE HIS COUNSEL RECLAIM IT

14 TODAY - THAT HE HAS NO SUCH INTENTIONS, BUT THE FACT THAT HE

15 WRITES THE LETTER THAT SAYS THAT I HAVE THIS RIGHT, AND IN

16 MY JUDGMENT, ON BEHALF OF ICANN, I DON'T THINK THAT'S THE

17 LAW --

19 TAKE THAT STATEMENT BY ITSELF AND SAY THAT IT MEANS WHAT YOU

20 ARE SAYING THAT IT MEANS. I THINK WHAT WE'RE SAYING AND

21 WHAT THIS LETTER MEANS IN THE ENTIRE CONTEXT IS THAT - EVEN

22 THIS VERY SENTENCE - IS THAT HE HAS OBLIGATIONS AS A

23 DIRECTOR OF CONFIDENTIALITY, FIDUCIARY DUTIES AND SO ON,

24 THAT HE INTENDS TO LIVE UP TO THOSE; HE DOES NOT INTEND TO

25 VIOLATE THEM; BUT THE COMPANY HAS NO RIGHT TO ADD ANYTHING

26 ON ITS OWN OR MAKING HIM SIGN PIECES OF PAPER TO RECONFIRM

27 THAT. AND, YOU KNOW, THAT IS WHAT I THINK HE'S SAYING.

28 NOW, MAYBE I'M MISINTERPRETING HIS LETTERS AND

1 HIS STATEMENTS, BUT SEEMS TO ME HE'S NOT SAYING THAT HE CAN

2 JUST GO AHEAD AND PUT ANYTHING THAT HE THINKS -- NOT THAT HE

3 THINKS, THAT HE WOULD LIKE TO PUT ON THE INTERNET, THAT HE

4 CAN DO THAT. HE IS AT LEAST ACKNOWLEDGING THAT HE HAS SOME

5 DUTIES.

6 NOW, WHETHER HE MIGHT OR MIGHT NOT VIOLATE THOSE

7 DUTIES, WE NEVER KNOW. THERE ARE PEOPLE OUT THERE WHO

8 VIOLATE THEIR DUTIES, AND WE SEE THAT HAPPENING TOO. BUT

9 AT ANY RATE I DIDN'T QUITE INTERPRET THE STATEMENT EXACTLY

10 THE WAY YOU JUST SAID, AND NOW OF COURSE I'VE READ IT AS

11 WELL.

12 GO AHEAD.

14 THIS STATEMENT AT THE BOTTOM OF EXHIBIT 11 FROM MR. LYNN'S

15 DECLARATION, I INTERPRET THIS STATEMENT AS FUNDAMENTALLY AT

16 ODDS WITH THE LAW. AND I APPRECIATE THAT WE ARE IN A

17 DISAGREEMENT, BUT IF THE CORPORATION HAS DESIGNATED A

18 DOCUMENT AS CONFIDENTIAL, MY VIEW IS THAT AN INDIVIDUAL

19 DIRECTOR DOES NOT HAVE THE RIGHT TO SIT DOWN AT HIS DESK AND

20 SAY, "OKAY, I KNOW I HAVE TO BE A GOOD FIDUCIARY. LET ME

21 LOOK AT THIS DOCUMENT. THE CORPORATION HAS DESIGNATED IT AS

22 CONFIDENTIAL." I READ IT, I READ IT. I KNOW WHAT

23 CALIFORNIA LAW PROVIDES. AND MR. AUERBACH IS A LICENSED

24 LAWYER, AND HE SAYS TO HIMSELF, "I'M SORRY. I DISAGREE WITH

25 THE CORPORATION'S DETERMINATION OF CONFIDENTIALITY. I NOW

26 AM FREE --"

28 THERE. I DON'T QUITE READ IT THAT WAY, BUT AT ANY RATE GO

1 AHEAD AND --

3 HAND UP THE LAST OF THE THREE DOCUMENTS I WANTED IN FRONT OF

4 YOU, YOUR HONOR HAS SEEN THIS BEFORE, AND YOU QUOTE FROM IT

5 IN YOUR TENTATIVE. THESE ARE THE PROCEDURES INVOKED. AT

6 THE END OF THE DAY I DO THINK THIS IS WHERE YOUR HONOR AND I

7 CAN AT LEAST TENTATIVELY HAVE DISAGREED AS TO WHETHER THESE

8 TWO PAGES ACTUALLY WERE STRICT RIGHTS.

9 IF I MAY, VERY BRIEFLY, IN PARAGRAPH 1 THE

10 PROCEDURES EXPLAIN THAT THEY ARE DESIGNED TO BALANCE THE

11 DIRECTOR'S INTEREST IN INSPECTION AND THE CORPORATION'S

12 INTERESTS, AND THEY DO NOT INTEND -- THEY DO NOT DIMINISH,

13 IN THE LAST LINE, A DIRECTOR'S RIGHT TO INSPECT, AS

14 REFLECTED IN CALIFORNIA LAW, WHICH IS WHY WE'RE HERE, AND

15 THE BYLAWS.

16 AND THEN IT SETS FORTH WHAT THE BYLAWS SAY ON

17 INSPECTION, WHICH IS CONSISTENT WITH CALIFORNIA LAW. THEN

18 IN PARAGRAPH 2 IT SAYS, IF YOU WOULD LIKE TO INSPECT OUR

19 RECORDS, PLEASE PUT IT IN WRITING.

20 AND PARAGRAPH 3, IT SAYS, WITHIN TEN DAYS OF OUR

21 GETTING YOUR LETTER WE WILL LET YOU KNOW WHEN YOU CAN

22 INSPECT, WHICH IS WHAT MR. LYNN DID. IF YOU TURN TO THE

23 SECOND PAGE, PARAGRAPH 4, THIS RELATES TO INSPECTION OF

24 PROPERTY, AND NOT BEFORE YOUR HONOR. PARAGRAPH 5 AND

25 PARAGRAPH 6, I BELIEVE, ARE THE MOST IMPORTANT PARAGRAPHS.

26 PARAGRAPH 5 SAYS THAT IF THE CHIEF EXECUTIVE

27 OFFICER IN CONSULTATION WITH THE GENERAL COUNSEL DETERMINES

28 THAT THE RECORDS - PARAPHRASING NOW - DETERMINING THAT THE

1 RECORDS THAT HAVE BEEN REQUESTED INVOLVE ISSUES OF

2 CONFIDENTIALITY, PRIVILEGE AND PRIVACY, AS HAS HAPPENED

3 HERE, THE CHIEF EXECUTIVE OFFICER IS SUPPOSED TO TELL THE

4 DIRECTOR, WHICH IS WHAT MR. LYNN DID. AND HE SAYS -- AND

5 THEN IF THE DIRECTOR ACCEPTS THE RESTRICTIONS, AND THE

6 RESTRICTIONS BEING THAT I'M GOING TO TELL YOU IF THERE ARE

7 ANY PROPOSED RESTRICTIONS ON YOUR USE AND ACCESS - WHICH

8 MEANS, I WANT YOU TO ASK ME FIRST, ME, THE CORPORATION

9 BEFORE YOU POST IT ON THE INTERNET - IF THE DIRECTOR ACCEPTS

10 BY COUNTER-SIGNING, WE'RE DONE. THE INSPECTION OCCURS.

11 MR. AUERBACH DID NOT DO THAT. THAT'S WHY WE'RE HERE.

12 THEN IN PARAGRAPH 6, IF THE DIRECTOR IS

13 DISSATISFIED WITH THE CEO'S DETERMINATION, THE CEO IS

14 SUPPOSED TO SUBMIT A REQUEST TO THE AUDIT COMMITTEE OF THE

15 BOARD -- OF THE CORPORATION FOR RESOLUTION. THAT DID HAPPEN

16 HERE. THE AUDIT COMMITTEE DETERMINED THAT MR. LYNN'S LETTER

17 OF OCTOBER 5 WAS REASONABLE. AND THEN IF THE DIRECTOR

18 DISAGREES WITH THE AUDIT COMMITTEE'S RESOLUTION, THE

19 DIRECTOR IS SUPPOSED TO APPEAL THAT DECISION TO THE

20 CHAIRMAN, AND SO THE WHOLE BOARD CAN DETERMINE.

21 THAT DID NOT HAPPEN HERE. MR. AUERBACH RECEIVED

22 THE AUDIT COMMITTEE'S RESPONSE, AND FOUR MONTHS LATER, WITH

23 NO OTHER COMMUNICATION BETWEEN MR. AUERBACH AND THE BOARD,

24 MR. AUERBACH FILED HIS LAWSUIT.

25 THAT'S IT. THESE PROCEDURES THAT I'VE JUST READ

26 BEFORE YOU, THERE ARE NO OTHER RESTRICTIONS. THERE'S

27 NOTHING IN THESE TWO PAGES THAT SAY WE WILL NOT GIVE YOU

28 DOCUMENTS, OR WE WILL NOT GIVE YOU CONFIDENTIAL DOCUMENTS,

1 OR WE'RE GOING TO RESTRICT ANY OF YOUR USE OF THOSE

2 DOCUMENTS. SO I THINK THE PROCEDURES THEMSELVES SIMPLY

3 PROVIDE FOR A PROCESS.

4 THAT TAKES US BACK, THEN, TO THE OCTOBER 5

5 LETTER PURPORTING TO IMPLEMENT THE PROCEDURES AND WHETHER

6 THAT LETTER IS UNDULY RESTRICTIVE OF MR. AUERBACH'S RIGHTS

7 AS A DIRECTOR. AND I AGREE WITH YOUR HONOR THE LETTER DID

8 ASK MR. AUERBACH TO COUNTER-SIGN TO ACKNOWLEDGE THE TERMS OF

9 THE LETTER, THE FURTHERANCE OF HIS DUTIES AS A DIRECTOR. AND

10 THE LETTER DID PUT HIM IN A POSITION TO HAVE TO SAY, I AM

11 NOT SATISFIED -- I HAVE NOW CONDUCTED MY INSPECTION, THE

12 WHOLE PURPOSE OF THIS, AND I AM NOT SATISFIED WITH YOUR

13 DETERMINATIONS OF CONFIDENTIALITY, OR, I AM NOT SATISFIED

14 THAT I'VE REQUESTED A PARTICULAR FILE IN ELECTRONIC FORM AND

15 THAT YOU ONLY WANT TO GIVE IT TO ME IN PAPER FORM, OR THAT

16 YOU DON'T WANT TO GIVE ME A CERTAIN DOCUMENT AT ALL.

17 WITHOUT GETTING SPECIFIC, BECAUSE THAT'S NOT

18 BEFORE YOUR HONOR, SOME OF THESE DOCUMENTS ARE INCREDIBLY

19 CONFIDENTIAL, AND THEY ARE EXTREMELY PRIVILEGED. THEY

20 INCLUDE THE SORTS OF LEGAL OPINIONS -- AND THERE'S PERSONNEL

21 FILES. I MEAN, THERE'S A LOT OF STUFF. AND AS I SAID

22 BEFORE, WE'RE NOT REALLY DEBATING WHETHER THEY ARE

23 CONFIDENTIAL BECAUSE MR. AUERBACH HAS NOT SUGGESTED THAT

24 THEY ARE NOT. HE KNOWS THEY ARE. THAT'S WHY HE WANTS

25 THEM.

26 AND SO THE ISSUE IS REALLY THE ONUS. DO WE GIVE

27 MR. AUERBACH THE RECORDS, CLOSE OUR EYES AND HOPE FOR THE

28 BEST? IS THAT WHAT CALIFORNIA LAW PROVIDES, OR CAN A

1 CORPORATION, ALWAYS HAVING THE BURDEN ON IT - WE RECOGNIZE

2 THAT THAT'S WHAT THE STATUTE SAYS, THAT'S WHAT THE HAVLICEK

3 CASE SAYS. WE KNOW WE BEAR THE BURDEN - CAN A CORPORATION

4 SAY YOU'VE GOT ACCESS TO ALL THE DOCUMENTS BUT BEFORE YOU DO

5 CERTAIN THINGS WITH CERTAIN OF THE

6 DOCUMENTS --

8 THIS LETTER SPECIFIC DOCUMENTS THAT HE'S GOING TO HAVE TO BE

9 CONCERNED ABOUT? IT DOESN'T GIVE ANY IDEA WHETHER OR NOT

10 THE CORPORATION IS CLAIMING THAT ALL OF THEM ARE, WHICH ONES

11 ARE, OR ANYTHING AT ALL. THAT'S SOMETHING THAT'S STILL TO

12 BE DETERMINED DOWN THE LINE.

14 YOUR HONOR, I PERSUADED MR. TOUTON TO START OUR REPLY BRIEF

15 WITH THE ISSUE OF RIPENESS BECAUSE I BELIEVE VERY STRONGLY

16 THAT YOUR HONOR DOESN'T KNOW WHETHER THE PARTIES ARE GOING

17 TO HAVE DISAGREEMENT ON CONFIDENTIALITY.

19 CORPORATION COULD TAKE FOREVER EXCLUDING A DIRECTOR FROM

20 GETTING HIS RIGHTFUL INSPECTION BY SETTING UP PROCEDURES

21 SUCH AS ARE HERE, AND THAT'S WHY I THINK THE CALIFORNIA LAW

22 HASN'T SAID THAT THE CORPORATION, THE BOARD OF DIRECTORS,

23 CAN PRECLUDE OR PLACE CONDITIONS ON OTHER MEMBERS SEEING

24 DOCUMENTS, BECAUSE INDEED IT CAN BE STRETCHED OUT.

25 TOOK TEN MONTHS TO DO THE RULES HERE. WE'LL

26 ALREADY SPEND THE NEXT SEVERAL MONTHS BEFORE WE'RE HERE. AND

27 I GUESS COME NOVEMBER MR. AUERBACH PROBABLY HAS BEEN

28 LEGISLATED OUT OF A POSITION HERE.

1 ANYWAY, BE THAT AS IT MAY, I THINK THIS CASE

2 REALLY POINTS UP THE PROBLEM, AND WHAT YOU JUST SAID POINTS

3 IT UP MORE ACUTELY THAN EVER BECAUSE WHAT IT MEANS IS THE

4 MAJORITY CAN ALWAYS PRECLUDE THE MINORITY FROM SEEING

5 ANYTHING BASED UPON THE CONFIDENTIALITY OF CONTENTION. AND,

6 AS I SAY, IN THIS LETTER IT DOESN'T GIVE YOU ANY REAL

7 UNDERSTANDING, AT LEAST DOESN'T GIVE ME UNDERSTANDING AS TO

8 EXACTLY WHICH THINGS ARE SO CONFIDENTIAL.

10 CLEAR FOR THE RECORD.

12 TELL FROM THIS, EVERYTHING COULD BE VIEWED CONFIDENTIAL BY

13 THE COMPANY.

15 NOT BE ABLE TO SEE A SINGLE DOCUMENT. JUST TO BE CLEAR,

16 BECAUSE, YOUR HONOR'S LAST STATEMENT SUGGESTED --

19 IN PARAGRAPH 2 ICANN SAYS, MR. LYNN SAYS, THE MATERIALS WILL

20 BE MADE AVAILABLE FOR YOU ON THESE DAYS.

23 ALL OF THEM.

25 WHICH ONES ARE GOING TO BE CONFIDENTIAL. IT MAY BE ALL.

27 OF THE MATERIAL YOU HAVE REQUESTED FOR REVIEW CONTAINS

28 NON-PUBLIC AND CONFIDENTIAL INFORMATION. IN MAKING THIS

1 INFORMATION AVAILABLE TO INSPECTION ICANN PROPOSED TO GIVE

2 HIM EVERY SINGLE DOCUMENT.

5 THINK MR. AUERBACH AND HIS COUNSEL HAVE EVER READ THE LETTER

6 THAT WAY.

7 AT NO TIME DID ICANN EVER PROPOSE THAT IT WOULD

8 NOT PERMIT MR. AUERBACH TO SEE A SINGLE PIECE OF PAPER OR

9 DOZENS OF PIECES OF PAPER.

11 PAPER, BUT YOU HAVE THIS TERMINOLOGY, MUCH OF THIS IS. SO

12 IT'S NOT IDENTIFIED.

14 NATURE OF WHAT HE WAS REQUESTING, SO WHAT WE SAID THEN WAS,

15 AFTER YOU HAVE REVIEWED THE CONFIDENTIAL INFORMATION --

18 IT.

20 HE WOULD HAVE DONE -- GIVEN THE LIST THAT WE HAVE THAT HE

21 MADE, WHAT WOULD HE BE GIVEN WITHOUT --

23 YOUR HONOR. THERE WAS NOT A SINGLE PIECE OF PAPER UNDER

24 THIS --

26 SIGNING THE LETTER AND DOING ALL KINDS OF OTHER THINGS. NOT

27 WITHOUT THE CONDITIONS. HE'S NOT GOING TO GET ONE THING

28 WITHOUT THE CONDITIONS.

2 THE LETTER WE WIND UP IN COURT.

4 EVEN TOLD THE COMPANY WHETHER OR NOT IT'S CLAIMING

5 CONFIDENTIAL AS TO EVERY PIECE OF PAPER, OR WHATEVER "MUCH

6 OF IT" MEANS.

8 REVIEW THESE DOCUMENTS, AND BECAUSE MANY OF THE DOCUMENTS

9 YOU HAVE REQUESTED ARE CONFIDENTIAL, THEN WE'RE GOING TO

10 GIVE YOU THE DOCUMENTS, BUT IF YOU THEN HAVE -- WE'RE

11 BASICALLY TALKING ABOUT USE RESTRICTIONS. WE'RE NOT TALKING

12 ABOUT ACCESS. AND THAT'S WHY, YOUR HONOR, WHEN WE TALK

13 ABOUT THE CASE LAW, YOU ASKED ME A QUESTION TEN MINUTES

14 AGO, WHAT COURT ALLOWS THE CORPORATION TO DO THIS.

15 IF YOU LOOK AT HAVLICEK AND CHANTILES, THE

16 CORPORATIONS IN THOSE CASES APPARENTLY VIEWED THEMSELVES AS

17 HAVING THE ALTERNATIVE OF NO INSPECTION OR FULL INSPECTION.

18 AND SO THEY OPTED FOR NO INSPECTION, AND THE COURT THEN

19 IMPOSED JUST AND PROPER CONDITIONS.

20 WE COULD HAVE SAID TO MR. AUERBACH, THE

21 DOCUMENTS YOU ARE REQUESTING ARE CONFIDENTIAL IN MANY

22 RESPECTS. HE ASKS FOR, FOR EXAMPLE, THE FILE THAT CONTAINS

23 INFORMATION FROM MY LAW FIRM. I DON'T WANT TO PERSONALIZE

24 IT, OBVIOUSLY, BECAUSE I DON'T THINK IT'S PERSONAL, BUT IF I

25 SEND A LETTER TO MR. [TU/] TO KNOW, THAT'S PRETTY LIKELY TO

26 BE SUBJECT TO THE ATTORNEY-CLIENT PRIVILEGE. AND SO THE

27 CORPORATION THEN -- WE'RE IN A CONUNDRUM, IF THAT'S WHAT THE

28 LAW IS. THE CONUNDRUM IS MAYBE I SHOULD HAVE SAID, "I'M

1 SORRY, MR. AUERBACH, YOU CANNOT GET ACCESS TO ANY OF THE

2 DOCUMENTS. SUE US."

3 WE COME IN, WE CAN ASK YOUR HONOR FOR A

4 PROTECTIVE ORDER THAT ACCOMPLISHES THE JUXTAPOSITION OF THE

5 RELATIVE RIGHTS HERE, GIVES FULL INSPECTION, PERHAPS WITH A

6 SPECIAL MASTER TO DETERMINE WHAT DOCUMENTS ARE CONFIDENTIAL

7 AND SHOULDN'T BE POSTED ON THE INTERNET, WHAT DOCUMENTS

8 ARE. THAT CLEARLY WAS ONE ALTERNATIVE, AND AT LEAST AS I

9 READ YOUR HONOR'S TENTATIVE AGAIN, I WAS SORRY THAT'S NOT

10 THE ALTERNATIVE WE WANT.

11 BUT WE VIEW ICANN AS HAVING DONE SOMETHING MUCH

12 MORE REASONABLE. ICANN DID NOT SAY, YOU CAN'T COME IN.

13 ICANN SAID, YOU CAN COME IN, YOU CAN LOOK AT EVERYTHING, AND

14 THEN LET'S DECIDE IF WE HAVE A DISPUTE. AND THEN IF WE HAVE

15 A DUTY, WE'VE NARROWED WHAT THE DISPUTE IS ABOUT. AND WE

16 CAN THEN PRESENT TO YOUR HONOR THE SPECIFIC ISSUE: OKAY,

17 I'VE NOW GOT A MEMO FROM A LAWYER TO THE CORPORATION OR TO

18 THE BOARD. CAN MR. AUERBACH - AND WE'VE DESIGNATED THIS IS

19 PRIVILEGED AND CONFIDENTIAL - MUST MR. AUERBACH RESPECT THAT

20 DESIGNATION. AND THE SPECIAL MASTER OR MAYBE YOUR HONOR, IF

21 YOUR HONOR HAS THAT KIND OF PATIENCE, WOULD GO THROUGH EACH

22 DOCUMENT.

24 SITUATIONS IT'S MORE QUICK TO DO IT YOURSELF. BUT LET ME

25 ASK YOU THIS, WHY COULDN'T ICANN SIMPLY HAVE SAID, OKAY, WE

26 WILL GIVE YOU THIS, THIS, AND THIS, BUT THIS WE DESIGNATE

27 CONFIDENTIAL BEFOREHAND, BEFORE LETTING THEM GO THROUGH ALL

28 OF IT. THEN WE CAN COME HERE AND STILL DEAL WITH THOSE

1 THINGS, BUT WE HAVEN'T WASTED ALL OF THIS TIME AND EFFORT,

2 WHICH IN ESSENCE PUTS IN MY VIEW THE DISSIDENT OR MINORITY'S

3 RIGHTS, WHICH I THINK CALIFORNIA LAW IS INTENDED TO PROTECT.

5 THE DIRECTOR, RATHER THAN SAYING, AS YOUR HONOR IS

6 SUGGESTING, HERE IS THE PILE THAT YOU ASKED FOR THAT'S NOT

7 CONFIDENTIAL. WE'RE NOT GOING TO GIVE YOU THIS PILE. SUE

8 US FOR THAT PILE.

9 WE SAID, TAKE BOTH PILES AND LOOK AT THEM.

11 YOU THAT HALF OF THAT STUFF YOU CAN'T HAVE, AND THEN YOU CAN

12 GO TO COURT AFTER YOU'VE GONE THROUGH THE TWO OTHER STEPS,

13 TO SEE THE COMMITTEE AND THE C.E.O. AND EVERYBODY ELSE

14 APPROVES.

17 THESE KINDS OF ADMINISTRATIVE REMEDIES THAT ARE DRAGGED OUT

18 IN FACT PUTS A TREMENDOUS BURDEN ON THE REQUESTING PARTY,

19 WHO SHOULDN'T HAVE THIS BURDEN.

21 FOLLOW HAVE A PRETTY TIGHT TIMETABLE. I AGREE, YOUR HONOR,

22 IT'S BEEN A LONG TIME SINCE THE BEGINNING OF MR. AUERBACH

23 BECOMING A DIRECTOR UNTIL TODAY, BUT HAD MR. AUERBACH

24 CONDUCTED THE INSPECTION, GRANTED AFTER COUNTER-SIGNING THE

25 LETTER, HE THEN IS GRANTED THE INSPECTION, AND THE AUDIT --

26 HE PREPARES AN APPEAL. THE AUDIT COMMITTEE HAS 20 DAYS. HE

27 CAN APPEAL TO THE BOARD. IN MY OWN JUDGMENT, YOUR HONOR, WE

28 WOULD HAVE RESOLVED OR NOT RESOLVED THE DISPUTES A LONG TIME

1 AGO.

3 ITS POSITION, PRESUMABLY. BY THE WAY, WHAT ABOUT THE

4 VALIDITY OF THESE RULES? WHAT IS THERE IN THE -- IN

5 ANYTHING, BYLAWS OR WHATEVER, THAT GIVES THE AUDIT COMMITTEE

6 AND WHOEVER ELSE PARTICIPATED IN THIS THE RIGHT TO

7 PROMULGATE THESE RULES?

9 CORPORATIONS CODE, BECAUSE THE CHIEF EXECUTIVE OFFICER IS

10 DELEGATED SPECIFIC RESPONSIBILITIES TO RUN THE DAY-TO-DAY

11 MANAGEMENT OF THE CORPORATION, OUR VIEW WAS THAT THE CHIEF

12 EXECUTIVE OFFICER ACTUALLY COULD HAVE SET FORTH WHAT AGAIN

13 WHAT WE VIEW AS PROCEDURES.

15 TYPE ACT THAT'S NOT DAY-TO-DAY. IT'S REALLY SORT OF A

16 LEGISLATIVE TYPE OF THING THAT DETERMINES HOW A CERTAIN KIND

17 OF SITUATION IS GOING TO BE HANDLED FOREVER.

18 MR. DIRKSEN: WELL --

21 COMMITTEE. AND, YOU ARE RIGHT, THE AUDIT COMMITTEE DID NOT

22 THEN ASK FOR THE BOARD'S DETERMINATION. I WILL SAY,

23 OBVIOUSLY BECAUSE I'M HERE, THAT THE BOARD DOES BELIEVE THAT

24 THE PROCEDURES THAT WERE PROMULGATED WERE REASONABLE. THEY

25 HAVE AUTHORIZED ME TO DEFEND THE SUIT.

26 AND THEIR CONCERN AND MY CONCERN, JUST TO GIVE

27 YOU AN EXAMPLE, WHICH WE ALLUDED TO IN THE PAPERS AND I

28 ALLUDED TO RIGHT WHEN I STARTED HERE, IF WE'RE IN A POSITION

1 BECAUSE WE HAVE 12 DIRECTORS WHO RESIDE OUTSIDE OF THE

2 UNITED STATES THAT WE HAVE NO PROCEDURES, DIRECTOR CALLS ON

3 TUESDAY AND SAYS I'M IN TOWN, I'D LIKE TO SEE THE DOCUMENTS

4 TODAY. THE DIRECTOR COMES IN, TAKES THE DOCUMENTS, MAKES A

5 BUNCH OF COPIES, GETS ON THE NEXT PLANE TO BRAZIL, GHANA,

6 KOREA, JAPAN - THAT'S WHERE THESE DIRECTORS ARE FROM - ICANN

7 THEN, UNDER THE ORIGINAL PROPOSAL THAT MR. AUERBACH HAD

8 PRESENTED TO US, WHICH WAS, I'LL GIVE YOU SEVEN DAY'S NOTICE

9 THAT I'M GOING TO HAVE A VIEW OF CONFIDENTIALITY DIFFERENT

10 THAN YOURS. I WANT TO MAKE A DOCUMENT PUBLIC. YOU

11 DESIGNATE IS AS CONFIDENTIAL. I'M HOLDING A COPY OF IT.

12 YOU'VE GOT SEVEN DAYS. THE CLOCKS ARE RUNNING.

13 I'LL TELL YOU WHAT I THEN HAVE TO DO IN SEVEN

14 DAYS. CALIFORNIA LAW APPLIES. ICANN IS WITHIN THIS

15 COUNTY. I HAVE TO RUN IN AND GET YOUR HONOR'S T.R.O. I

16 THEN HAVE TO GO TO GHANA, BRAZIL, KOREA OR WHATEVER AND HOPE

17 THAT I CAN THEN ENFORCE THAT T.R.O.

19 DON'T NEED TO BE THERE. I THINK THAT THE REASONABLE TIME

20 AND PLACE RESTRICTIONS ARE NOT AT ISSUE HERE AT ALL. I

21 THINK THERE CAN BE REASONABLE TIME AND PLACE RESTRICTIONS,

22 AND I DON'T KNOW THAT SIMPLY HAVING TO MAKE RECORDS

23 AVAILABLE FOR INSPECTION AUTOMATICALLY MEANS THAT EVERYTHING

24 CAN BE COPIED. WE HAVEN'T GOTTEN TO THAT, AND THAT'S WHERE

25 WE GET TO THE PROTECTIVE ORDER, YOU KNOW, AS I INDICATED IN

26 MY TENTATIVE, THAT OBVIOUSLY THERE MIGHT VERY WELL NEED TO

27 BE SOME KIND OF PROTECTIVE ORDER.

28 BUT AT ANY RATE, I THINK THAT THAT IS NOT HARDLY

1 AN EXCUSE FOR NOT MAKING GENERAL, ROUTINE, LEGITIMATE LIKE

2 LEDGER AND THINGS LIKE THAT AVAILABLE TO THE DIRECTOR.

3 SEEMS TO ME THERE SHOULDN'T BE ANYTHING TO HIDE IN THESE

4 LEDGERS. THERE SHOULDN'T BE ANYTHING TO HIDE IN THESE

5 LEDGERS. WHY IS THAT SO SECRET?

7 SO CLEAR. THE ISSUE IS NOT WHETHER THERE'S ANYTHING TO HIDE

8 FROM MR. AUERBACH. ICANN OFFERED TO GIVE MR. AUERBACH

9 ACCESS TO EVERY SINGLE DOCUMENT HE REQUESTED. THE ISSUE IS

10 USE. AND SO IF I COULD -- I'VE TAKEN A LOT OF YOUR TIME, SO

11 LET ME CLOSE ON THE SUBJECT OF THE PROTECTIVE ORDER.

12 ICANN LOOKED AT THE LAW, LOOKED AT THE CASES

13 YOUR HONOR CITED, AS I SAID BEFORE, AND SAID, TRUE, THOSE

14 STATUTES AND THE CASES TALK ABOUT THE COURT ISSUING A

15 PROTECTIVE ORDER. THE HAVLICEK CASE IS QUITE CLEAR ON THAT,

16 TO HAVE JUST AND REASONABLE RESTRICTIONS ON DIRECTOR USE.

17 ICANN TRIED TO FORM, THROUGH IT'S PROCEDURES, RESTRICTIONS

18 THAT IT THOUGHT WERE LESS INTRUSIVE THAN THOSE THAT HAD BEEN

19 ADOPTED BY THE COURTS.

20 AND WE SAID TO ICANN, YOUR CHOICE, AS I SAID

21 BEFORE, IS, DENY ACCESS ENTIRELY, IN WHICH CASE WE GET AN

22 EARLY COURT DATE BEFORE YOUR HONOR; OR HAVE A PROCEDURE

23 WHERE INDIVIDUAL DIRECTORS CAN COME IN, CAN LOOK, CAN MAKE

24 REQUESTS. AND WHEN THERE ARE DISAGREEMENTS, THEN WE CAN

25 LITIGATE OVER A NARROWER BODY SO THAT WE DON'T HAVE TO HAVE

26 A COMPLETE DENIAL WHICH THEN IS FOLLOWED BY OUR REQUEST TO

27 YOU FOR SPECIAL MASTER - WHICH INCIDENTALLY ICANN WILL PAY

28 FOR IF YOUR HONOR ORDERS - THAT BECAUSE WE THOUGHT THAT WAS

1 A MORE COMPLICATED PROCEDURE THAN WHAT WE HAD PROPOSED.

2 IF YOUR HONOR BELIEVES THAT OUR INSPECTION

3 PROCEDURES ARE FLAWED, THEN I WOULD ASK -- I WOULD SAY TWO

4 THINGS: FIRST, WE DID FEEL THAT WHAT WE WERE DOING WAS

5 SPECIFICALLY AUTHORIZED, THAT IF PROCEDURES COULD BE

6 JUDICIALLY IMPOSED, THAT IT WAS REASONABLE FOR A CORPORATION

7 TO TRY TO DO SOMETHING ALONG THOSE LINES IN LIEU OF A

8 COMPLETE DENIAL. IF THAT'S NOT THE CASE, IT'S JUST SIMPLY

9 NOT THE CASE.

10 SECOND, WE ARE PREPARED TO, IF YOUR HONOR IS

11 WILLING, TO -- WE'VE ALWAYS BEEN PREPARED TO TURN OVER ALL

12 OF THE RECORDS THAT HAVE BEEN REQUESTED. WE WOULD ASK

13 YOUR HONOR TO ASK THE PARTIES TO CONSULT REGARDING THE

14 APPOINTMENT OF A SPECIAL MASTER SO THAT IF MR. AUERBACH

15 SAYS, "I SEE THAT YOU HAVE DESIGNATED A DOCUMENT AS

16 CONFIDENTIAL. I DISAGREE," ICANN THROUGH A VERY QUICK

17 PROCESS CAN EXPLAIN TO THE SPECIAL MASTER ITS REASONS FOR

18 DESIGNATING THAT DOCUMENT AS CONFIDENTIAL. MR. AUERBACH CAN

19 EXPLAIN HIS REASONS TO DISAGREE. AND WE CAN APPROACH THIS

20 ON A DOCUMENT-BY-DOCUMENT BASIS.

21 WHAT WE HAD ORIGINALLY PROPOSED PUTS THAT WITHIN

22 THE CORPORATION. AND WHAT I HEAR YOUR HONOR SAYING IS THAT

23 IS NOT SATISFACTORY.

25 SEEMS TO ME THAT AN AWFUL LOT OF THESE SHOULD NOT BE

26 DESIGNATED CONFIDENTIAL THAT ANYONE SHOULD HAVE TO LOOK AT

27 BEFORE THE DIRECTOR LOOKS AT. FOR EXAMPLE, THE GENERAL

28 LEDGER, CHART OF ACCOUNTS, DAILY TRANSACTIONS JOURNAL - WHY

1 SHOULD ANYBODY EVEN BE LOOKING AT THAT STUFF? WHEN YOU

2 FINALLY GET TO SOMETHING THAT YOU DO BELIEVE IS

3 CONFIDENTIAL, THAT SHOULD BE DESIGNATED CONFIDENTIAL. IF

4 THERE IS SUCH AN AMOUNT OF PAPERWORK THAT I CANNOT DO IT, I

5 WILL DESIGNATE A SPECIAL MASTER. IF THERE ISN'T, AND I CAN

6 MANAGE TO DO IT, I'LL DO IT MYSELF. I DO AN AWFUL LOT OF

7 THESE MYSELF FOR VARIOUS REASONS. MANY TIMES IT'S MORE

8 EFFICIENT.

9 BUT BE THAT AS IT MAY, IT MAY BE IN THIS CASE

10 THAT SO MUCH STUFF IS DESIGNATED CONFIDENTIAL THAT IT MIGHT

11 BE REASONABLE TO APPOINT A SPECIAL MASTER, BUT I'M NOT GOING

12 TO DO THAT UNTIL WE HAVE AT LEAST SOME KIND OF CLAIM AS TO

13 WHAT IS IN THAT CATEGORY. BECAUSE IT SEEMS TO ME THAT A

14 DIRECTOR, AS A GENERAL RULE, UNDER THE LAW SHOULD BE

15 ENTITLED TO LOOK AT MOST OF THE CORPORATE RECORDS WITHOUT

16 HAVING TO GO FOR A SPECIAL MASTER TO DECIDE ON IT OR TO A

17 COURT TO DECIDE ON IT. THEY HAVE A RIGHT TO IT UNDER THE

18 STATUTE.

19 AND IF YOU ARE GOING TO HAVE SOME RECORDS, A

20 CERTAIN NUMBER THAT ARE NOT AVAILABLE IN YOUR VIEW WITHOUT

21 REVIEW BY SOMEBODY ELSE, THEN YOU WILL HAVE TO OR SHOULD, AT

22 LEAST, SEEMS TO ME, DESIGNATE WHICH ONES ARE THOSE. AND IF

23 THOSE ARE SO EXTENSIVE THAT THEY CANNOT BE HANDLED BY THE

24 COURT, I WILL APPOINT A SPECIAL MASTER, OF COURSE, AND I

25 SUPPOSE BOTH SIDES SHOULD HAVE AN INPUT AS TO WHO THAT

26 PERSON SHOULD BE AND HOW HE'S GOING TO GET PAID FOR, OR SHE.

28 LETTER -- ACTUALLY, THE DATES WE PROPOSED WERE OCTOBER 19,

1 18, 22, 23. WE WERE PREPARED TO PUT INTO A CONFERENCE ROOM

2 EVERY SINGLE PIECE OF PAPER THAT MR. AUERBACH HAD REQUESTED.

3 AND I APOLOGIZE THAT I CANNOT TELL YOU TODAY EXACTLY WHICH

4 OF THOSE RECORDS WERE CONFIDENTIAL. THAT WAS NOT REALLY AN

5 UNDERLYING PART OF THE ARGUMENT. MR. AUERBACH HAS NEVER

6 DEBATED THE FACT THAT HE UNDERSTOOD THAT AT LEAST SOME OF

7 THOSE RECORDS WERE CONFIDENTIAL AND SUBJECT TO THE

8 PRIVILEGE.

9 I'M NOT TELLING YOUR HONOR THAT THE GENERAL

10 LEDGER IS NECESSARILY CONFIDENTIAL. I WILL SAY TO

11 YOUR HONOR THAT WE DON'T -- ICANN POSTS ON ITS WEBSITE, I'M

12 GOING TO GUESS NOW, IN EXCESS OF 90 PERCENT OF THE LETTERS

13 IT RECEIVES. IT POSTS ON THE WEBSITE, FRANKLY, EVERYTHING

14 ABOUT THIS LITIGATION. BETWEEN OUR WEBSITE AND

15 MR. AUERBACH'S WEBSITE, YOU CAN GET IT ALL. IT POSTS ON THE

16 WEBSITE ALL OF ITS CORPORATE MINUTES. ICANN IS REQUIRED BY

17 THE U.S. GOVERNMENT IN ESSENCE TO BE A VERY OPEN

18 CORPORATION. WHAT WE'RE TALKING ABOUT ARE THOSE MATERIALS

19 THAT HAVEN'T BEEN POSTED, BECAUSE IF THEY HAVE BEEN POSTED

20 MR. AUERBACH HAS THEM --

22 OBVIOUSLY.

24 THAT ICANN HAS DETERMINED IT WOULD HINDER ICANN TO HAVE OUT

25 IN THE PUBLIC. AND IF WE ARE OVERINCLUSIVE, THEN THAT WOULD

26 BE WRONG ON OUR PART TO BE SO OVERINCLUSIVE, BUT I'M JUST SO

27 UNCOMFORTABLE WITH THE COURT HAVING DETERMINED THAT WE WOULD

28 HAVE BEEN OVERINCLUSIVE BECAUSE NO ONE KNOWS THAT. WE NEVER

1 GOT TO THE POINT WHERE WE SAT DOWN AND PUT THE DOCUMENTS ON

2 THE TABLE.

4 THAT HE MADE, SEEM TO ME THE INITIAL INQUIRIES WHICH WERE

5 SORT OF GIVEN SOMEWHAT SHORT SHRIFT AND SO ON, IN MARCH OF

6 2001 AND SO ON THAT HE MADE CONCERNING FUNDS OF THE DMSO AND

7 SO ON, SEEMS TO ME THEY WERE PROPER, LEGITIMATE INQUIRIES.

8 AND IT SEEMS TO ME THAT INFORMATION AT LEAST AS TO THOSE

9 INQUIRIES SHOULD BE PUBLIC INFORMATION.

10 I MEAN, WHAT'S CONFIDENTIAL ABOUT THAT? I MEAN,

11 IF YOU ARE NOT IN A POSITION TO TELL ME WHICH OF THESE ITEMS

12 ARE CONFIDENTIAL OR WHICH, AT LEAST -- OBVIOUSLY, I GUESS

13 THE ATTORNEY-CLIENT PRIVILEGE EVERYBODY CAN ASSUME THAT

14 THERE IS SOMETHING THERE THAT WOULD BE CONFIDENTIAL, BUT

15 OTHER THAN THAT I FAIL TO SEE -- THIS IS A NONPROFIT PUBLIC

16 CORPORATION.

19 MUCH EVERYTHING THAT IT'S DOING, AND NOT JUST WHAT IT WANTS

20 TO PUT ON THE INTERNET EITHER. SO THAT'S WHAT THE

21 DIRECTOR'S OBLIGATIONS ARE. SEEMS TO ME THEY ARE NOT JUST

22 TO THE CORPORATION PER SE, BUT ALSO TO THE PUBLIC AND THE

23 COMMERCE DEPARTMENT, OBVIOUSLY, AS WELL. AS YOU POINTED

24 OUT, YOU KNOW, THEY ARE SORT OF, I GUESS, A PARTY IN A SENSE

25 AS WELL.

26 SO ANYWAY, I GET A VERY DISTINCT SENSE FROM

27 READING EVERYTHING HERE THAT THERE HAS BEEN AN EFFORT HERE

28 TO TRY TO PUT THIS OFF AS MUCH AS POSSIBLE AND TO MAKE IT AS

1 DIFFICULT AS POSSIBLE. AND I DON'T REALLY SEE HOW ANYTHING

2 IS BEING EXPEDITED THROUGH THESE PARTICULAR PROCEEDINGS.

3 MAYBE THROUGH SOME PARTICULAR CONTEXT AND SOME OTHER SETUP

4 IT MIGHT WORK, BUT I DON'T SEE THE CASE LAW THAT, FIRST OF

5 ALL, ALLOWS DIRECTORS TO IMPOSE RESTRICTIONS ON OTHER

6 DIRECTORS' ACCESS.

7 AND SECONDLY, THE SPECIFICS HERE SEEM TO ME, AS

8 FAR AS WHAT IS REQUIRED HERE TO GET TO THE RECORDS, IT

9 MILITATES AGAINST WHAT THE LAW PROVIDES IN THAT REGARD.

10 ALL RIGHT. GETTING BACK --

14 OFF OF, WHICH IS ON PAGE 9 OF MR. AUERBACH'S MEMORANDUM IN

15 SUPPORT OF HIS MOTION --

17 USED THAT.

21 IS GENERAL LEDGER, WHICH IS ESSENTIALLY CHART OF ACCOUNTS,

22 TRANSACTION JOURNAL ACCOUNT BALANCES. THESE ARE NOT THINGS

23 THAT CORPORATIONS POST ON THE INTERNET. THEY ARE THINGS

24 THAT DIRECTORS SHOULD LOOK AT. I DON'T HAVE ANY QUALMS

25 ABOUT THAT.

27 LOOK AT THOSE.

2 AT THEM.

4 THE DELAY, THAT'S ONE ISSUE. I'M CERTAINLY PREPARED TO

5 ADDRESS THAT.

7 ELSE HERE, IN MY VIEW.

9 OCTOBER 5, "COME LOOK AT THE DOCUMENTS ON THESE FOLLOWING

10 DATES," THAT WAS INCLUDING THE GENERAL LEDGER. SO

11 MR. AUERBACH WAS GOING TO SEE IT ALL. AND WE'VE NEVER ONCE,

12 THERE ISN'T A SINGLE PIECE OF PAPER - I'VE BROUGHT A LOT OF

13 BINDERS WITH ME TODAY - THERE ISN'T A SINGLE PIECE OF PAPER

14 WHERE ICANN EVER SAID AS TO THAT PIECE OF PAPER OR THAT

15 CATEGORY OF PIECES OF PAPER, "I'M SORRY, YOU CAN'T LOOK AT

16 IT."

19 CHANTILES AND HAVLICEK.

21 COURSE, ONE OF THOSE WAS THE VOTING RECORDS. SO IT WAS VERY

22 EASY TO DEAL WITH.

24 GOING TO SKIP OVER TO ITEM FOUR. WITH RESPECT TO ICANN'S

25 LAW FIRM, ENGAGEMENT LETTERS, CONFLICT NOTICES, WAIVERS; AND

26 THEN ITEM 4D, DETAILED INVOICES FROM THE LAW FIRM SINCE THE

27 INCEPTION OF THE CORPORATION. OF COURSE THOSE DOCUMENTS ARE

28 PRIVILEGED.

2 NECESSARILY PRIVILEGED?

4 TO EXPLAIN WHAT I DID --

6 THAT'S -- FIRST OF ALL, LET ME SAY THAT I VERY RARELY SEE

7 BILLS THAT ARE VERY SPECIFIC ON THAT, ON ANYTHING THAT

8 ANYBODY DOES. AND I REVIEW THESE MYSELF. I AGAIN LOOK AT

9 THEM MYSELF. I LOOK AT THEM VERY CLOSELY FOR VARIOUS

10 PURPOSES, AND I VERY RARELY SEE SOMETHING THAT TRULY CONVEYS

11 AN ATTORNEY-CLIENT TYPE OF INFORMATION. BUT LET'S ASSUME IT

12 DOES. THAT, OF COURSE, CAN BE REMOVED; BUT IT SEEMS TO ME

13 THAT THE BILLS PER SE, GENERALLY SPEAKING, ARE NOT

14 NECESSARILY COVERED BY THE ATTORNEY-CLIENT PRIVILEGE. THEY

15 MAY BE, AGAIN, AS YOU SAY, DEPENDING WHAT'S IN THERE AND SO

16 ON, BUT THE AMOUNTS AND SO ON, THE DIRECTOR SHOULD KNOW HOW

17 MUCH IS BEING SPENT ON LAWYERS FEES.

19 DIRECTOR DOES KNOW -- AND I SEE THAT I'M SWIMMING UPSTREAM

20 HERE SO I'M NOT GOING TO SWIM TOO MUCH HARDER FOR TOO MUCH

21 LONGER, AND I APOLOGIZE IF I'M REPEATING MYSELF, BUT I JUST

22 WANT TO MAKE IT SO CLEAR THAT MR. AUERBACH MADE A REQUEST TO

23 SEE MY LAW FIRM'S BILLS AND THE GENERAL LEDGER, AND ICANN IN

24 RESPONSE SAID, "COME IN AND LOOK AT IT." ICANN NEVER SAID,

25 "DON'T LOOK AT A PIECE OF PAPER. WE'RE NOT GOING TO GIVE IT

26 TO YOU."

27 AND SO I TRULY HAVE ALWAYS VIEWED THIS DISPUTE

28 AS A MATTER OF DO I GIVE THE DOCUMENTS AND HOPE THAT THE

1 DIRECTOR RESPECTS THE DETERMINATIONS BY THE CORPORATION OF

2 PRIVILEGE, ET CETERA, ET CETERA. WITH NO RESTRICTIONS, NO

3 LETTERS, NO SEVEN PARAGRAPHS OF WHAT THE PROCEDURES WOULD

4 BE, THE DIRECTOR MAKES A REQUEST. IT CAN BE ORAL. HE WANTS

5 TO COME IN, SHE WANTS TO COME IN. AND THEY LOOK AT THE

6 DOCUMENTS, THEY TAKE THE COPIES, AND WE WISH FOR THE BEST.

7 OR WITH RESPECT TO THESE TYPES OF CATEGORIES,

8 DOES THE LAW PERMIT A CORPORATION -- WE DON'T SEE

9 MICROSOFT'S LAW FIRM'S LETTERS OUT IN THE PUBLIC OR IBM'S

10 GENERAL LEDGER IN THE PUBLIC. WE JUST DON'T SEE THAT.

12 LOOK AT THEM.

14 GIVEN THAT OPPORTUNITY MANY TIMES.

16 CORPORATION, BECAUSE THIS IS A NONPROFIT PUBLIC CORPORATION.

17 VERY DIFFERENT ANIMAL, SEEMS TO ME. YOU DO HAVE A DUTY TO

18 THE PUBLIC, INTERNATIONAL PUBLIC IF YOU WILL, NOT ONLY THE

19 UNITED STATES, I GUESS, SINCE THIS IS AN INTERNATIONAL

20 ORGANIZATION. AND IT'S VERY DIFFERENT THAN MICROSOFT. SO

21 THAT THE PUBLIC INTEREST AND PUBLIC RIGHT IS PROBABLY

22 SOMEHOW BROADER THAN YOU DO HAVE WHERE IT MAY BE JUST A

23 PRIVATE CORPORATION.

24 OF COURSE, WHERE YOU HAVE A PUBLICLY HELD

25 CORPORATION THAT MAY NOT BE THAT MUCH DIFFERENT, BUT IN ANY

26 CASE --

28 BUT I DON'T SEE NOT-FOR-PROFIT CORPORATION GENERAL LEDGERS

1 THAT ARE POSTED ON THE INTERNET. I DON'T EVER SEE LAW FIRM

2 BILLS OF PUBLIC, PRIVATE, OR SOLE PROPRIETORSHIPS POSTED ON

3 THE INTERNET. ALL THOSE CORPORATIONS HAVE DIRECTORS. ALL

4 THOSE DIRECTORS HAVE THE RIGHT TO INSPECT. WE BELIEVE 100

5 PERCENT --

7 SEEMS TO ME.

9 COMPANY.

11 ME, IN THESE RULES, AMONG OTHERS.

13 BECAUSE I DO THINK THAT THESE RESTRICTIONS WERE -- DID NOT

14 IN FACT TIE MR. AUERBACH'S HANDS IN ANY RESPECT THAT

15 VIOLATED CALIFORNIA LAW. I THINK THAT THE RESTRICTIONS SET

16 FORTH ONLY PROCEDURES TO TRY TO HAVE DISPUTES RESOLVED. I

17 THINK THAT THE CORPORATION ACTED IN GOOD FAITH, OFFERED TO

18 GIVE HIM EVERYTHING. YES, IT TOOK NINE MONTHS; YES, WE DID

19 HAVE A CEO CHANGE-OUT DURING THAT TIME; YES, THERE WERE

20 OTHER REASONS WHY DIRECTORS HAD NEVER INSPECTED THE

21 CORPORATION'S DOCUMENT, BECAUSE FRANKLY, AS I SAID, THESE

22 DIRECTORS ARE INUNDATED WITH PAPER, AND THEY SEE WHAT THE

23 CORPORATION DOES.

24 AND ICANN VIEWED WHAT IT WAS PROPOSING AS LESS

25 RESTRICTIVE THAN WHAT THE LAW WOULD HAVE PERMITTED IT TO DO,

26 WHICH WAS TO SAY, "NO, AS TO CATEGORY 4 WE'RE NOT GOING TO

27 GIVE IT TO YOU. SUE US."

28 AND I DON'T BELIEVE THAT ASKING ICANN TO

1 ASK -- BY HAVING ICANN ASK A DIRECTOR TO SIGN A PIECE OF

2 PAPER THAT SAYS A PROCESS THAT WILL BE FOLLOWED, CULMINATING

3 IN JUDICIAL REVIEW -- I DON'T SEE HOW THAT CAN BE LESS

4 REASONABLE OR LESS JUST THAN FOR ICANN TO HAVE SAID, "I'M

5 NOT GOING TO GIVE IT TO YOU AT ALL UNTIL YOU SUE US." AND

6 THAT'S EXACTLY WHERE WE ARE TODAY.

9 SWIMMING POSITION, I'LL KEEP THIS SHORT.

11 CHANGES.

13 WE THINK YOUR HONOR HAS ZEROED IN EXACTLY ON THE

14 QUESTION HERE IN THIS CASE, AND THAT QUESTION IS WHO GETS TO

15 DECIDE THE CONDITIONS UNDER WHICH A DIRECTOR GETS TO INSPECT

16 AND COPY CORPORATE DOCUMENTS.

17 STATUTORY SCHEME AND THE CASES ARE CLEAR THAT

18 THE CORPORATION DOESN'T HAVE THE UNILATERAL ABILITY TO

19 DELAY, DENY OR CONDITION THE RIGHT TO INSPECT IN COPYING.

20 THE COURT MAY DO SO UNDER A PROPER PROTECTIVE ORDER, AND I'M

21 SURE WE'LL GET TO THAT SHORTLY, BUT ICANN DOESN'T HAVE THE

22 UNILATERAL ABILITY TO DO WHAT IT TRIED TO DO HERE TO

23 MR. AUERBACH. AND WHAT IT TRIED TO DO WAS TO CONDITION

24 ACCESS UNDER THE TERM OF PROCESS. AND I THINK YOUR HONOR

25 HAS CORRECTLY RECOGNIZED THAT THE PROCESS HERE WAS JUST

26 PRETTY MUCH A COVER FOR THE DELAY THAT I SUSPECT THEY HOPED

27 WOULD EXTEND LONGER THAN MR. AUERBACH'S TENURE ON THE BOARD,

28 WHICH WE BELIEVE ENDS SEPTEMBER 30TH OF 2002 AT THE SHANGHAI

1 MEETING.

2 THERE'S NO QUESTION THAT ICANN IS A CALIFORNIA

3 CORPORATION HERE. IT CHOSE THAT FORM, AND THUS IT'S BOUND

4 BY CALIFORNIA CORPORATE LAW. THE FACT THAT IT HAS A RATHER

5 STRANGE HISTORY OF COMING INTO BEING DOESN'T CHANGE ITS

6 LEGAL DUTIES AND DOESN'T CHANGE ITS GOVERNANCE STRUCTURE,

7 AND THE STATUTORY SCHEME IS VERY CLEAR THAT IT'S GOVERNANT

8 STRUCTURE IS AT THE TOP WITH ITS BOARD OF DIRECTORS.

10 DO HAVE CASES THAT RECOGNIZE THAT IF INDEED THERE'S EVIDENCE

11 THAT A DIRECTOR MIGHT BE MISUSING DELIBERATELY CONFIDENTIAL

12 INFORMATION, THAT INDEED THAT'S GOOD REASON FOR TAKING THE

13 POSITION THAT WE'RE NOT GOING TO GIVE YOU THESE RECORDS.

15 THINK THAT'S ACTUALLY --

17 CONCERNED ABOUT, IS MR. AUERBACH.

19 SKELETONS, BUT THEY HAVEN'T RAISED ANY EVIDENCE MR. AUERBACH

20 IS INTENDING TO DO ANYTHING IMPROPERLY WITH CONFIDENTIAL

21 INFORMATION. IN FACT, EVEN THE SENTENCE MR. LE VEE POINTED

22 OUT IN THE OCTOBER 15TH, 2001, LETTER FROM MR. AUERBACH THAT

23 HE SAYS HE THINKS IS A COMPLETE MISSTATEMENT OF THE LAW,

24 THAT THE DECISION ABOUT WHAT MATERIAL IS CONFIDENTIAL AND

25 CONFIDENTIAL FROM WHOM IS SUBJECT TO MY OWN DISCRETION

26 LIMITED SOLELY BY THE LAWS OF CALIFORNIA AND THE UNITED

27 STATES.

28 I ACTUALLY THINK THAT IS EXACTLY A CORRECT

1 STATEMENT OF THE LAW. MR. AUERBACH'S FIDUCIARY DUTIES AND

2 THE LIMITATIONS ON WHAT HE CAN DO WITH CONFIDENTIALITY ARE

3 COMPLETED LIMITED BY THE LAWS OF THE STATE OF CALIFORNIA.

4 AND HE HAS REPEATEDLY STATED, EVEN IN THIS VERY LETTER, THAT

5 HE WILL ABIDE BY THOSE DUTIES. THEY DON'T HAVE ANY EVIDENCE

6 THAT HE'S NOT GOING TO ABIDE BY HIS DUTIES, AND THEY

7 CERTAINLY HAVEN'T PRESENTED THE KIND OF CASE --

9 HAVEN'T SEEN ANYONE SAY, "I'M GOING TO VIOLATE MY DUTIES."

10 AND THAT'S NOT SOMETHING WE'RE GOING TO SEE. BUT THE

11 QUESTION IS, IS THERE ENOUGH HERE IN THE CONTEXT OF WHAT HAS

12 BEEN PROVIDED AND ALSO IN HIS POSITION WITH RESPECT TO THE

13 RECORD AVAILABILITY AND SO ON THAT MIGHT RAISE SOME

14 QUESTIONS, SOME BONA FIDE QUESTIONS, AS TO WHETHER HE MIGHT

15 OR MIGHT NOT MISUSE THESE.

17 THERE IS A CLEAR AND VOLUMINOUS EVIDENCE THAT MR. AUERBACH

18 WAS SPECIFICALLY ELECTED TO TRY TO BRING A REFORM AGENDA TO

19 THIS ORGANIZATION. THAT'S WHY HE WAS VOTED IN.

21 EARLIER.

23 INTO AN ARGUMENT FOR WHY MR. AUERBACH CAN'T BE TRUSTED WITH

24 CONFIDENTIAL DOCUMENTS. AND I DON'T THINK IT TRACKS.

25 THERE'S NOTHING MR. AUERBACH HAS EVER DONE OR EVER SAID HE'S

26 GOING TO DO THAT INDICATES HE'S GOING TO DO ANYTHING

27 IMPROPER WITH CONFIDENTIAL DOCUMENTS. AND THEY TRIED TO USE

28 THIS CHIMERICAL FEAR AS AN EXCUSE TO CONDITION HIS ACCESS IN

1 SUCH A WAY THAT I SUBMIT IS REALLY DENYING HIM ACCESS. CALL

2 IT A CONDITION, CALL IT A DENIAL. NEITHER OF THEM IS

3 ACCEPTABLE UNDER CALIFORNIA LAW FOR THE CORPORATION TO DO

4 IT.

5 I DON'T THINK THEY HAVE MADE THEIR CASE THAT

6 MR. AUERBACH IS A TREMENDOUSLY -- IS LIKELY TO VIOLATE HIS

7 CONFIDENTIAL DOCUMENTS. WHAT THEY HAVE INDICATED IS THAT

8 IT'S POSSIBLE MR. AUERBACH WILL EMBARRASS THEM BECAUSE HE'LL

9 FIND THINGS IN THEIR CORPORATE RECORDS THAT THEY WOULD BE

10 EMBARRASSED TO HAVE THEIR DIRECTORS SEE, AND POSSIBLY THAT

11 HE'LL FIND SOME NONCONFIDENTIAL INFORMATION IN THE RECORDS

12 THAT THEY WILL BE EMBARRASSED TO HAVE THE PUBLIC SEE.

13 BUT THEY ARE A PUBLIC, NONPROFIT BENEFIT

14 CORPORATION, AND HE IS THE MEMBER OF THE BOARD OF

15 DIRECTORS. THAT IS EXACTLY HIS ROLE, IS TO SERVE AS

16 OVERSIGHT FOR MANAGEMENT.

18 NOT SO MUCH CONCERNED ABOUT THE ACTUAL SOMEONE SITTING DOWN

19 THERE, A DIRECTOR SITTING DOWN, GOING THROUGH THESE RECORDS,

20 EVEN MAKING NOTES. I THINK IT BECOMES A VERY DIFFERENT KIND

21 OF SITUATION WHEN ONE STARTS MAKING COPIES, WHOLESALE COPIES

22 OF ALL RECORDS. EVEN IF ONE DOESN'T NECESSARILY GO ON THE

23 INTERNET AND PUT THESE NOW ON THE INTERNET AND SO ON, AS

24 SOON AS COPIES ARE STARTED TO BE MADE AND DELIVERED ALL OVER

25 THE WORLD -- AND OBVIOUSLY, IF YOU DELIVER THEM TO SOMEONE

26 IN CALIFORNIA WHO IS NOT IN MARINA DEL REY, YOU ALSO HAVE TO

27 GIVE THEM TO SOMEONE IN CHILI OR WHEREVER ELSE THESE

28 DIRECTORS MIGHT BE.

1 AND ONCE YOU START SENDING AROUND COPIES OF WHAT

2 MIGHT TRULY BE CONFIDENTIAL RECORDS, QUITE APART FROM ANY

3 INTENTIONAL EVEN WRONGDOING, THERE IS A TREMENDOUS,

4 TREMENDOUS CHANCE OF AT LEAST THE MATERIAL BECOMING PUBLIC

5 IN SOME WAY OR ANOTHER.

6 I DON'T ALSO THINK THAT THE CODE, WHEN IT GIVES

7 THE DIRECTORS A BROAD ABILITY TO INSPECT, CONTEMPLATES THAT

8 THEY ARE GOING TO BE GETTING COPIES OF IT REGARDLESS OF

9 WHETHER THEY LIVE IN MARINA DEL REY OR NOT. AND THE ACCESS

10 THAT IS CONTEMPLATED, SEEMS TO ME, IS FAIR, COMPLETE ACCESS

11 AS NECESSARY FOR A DIRECTOR TO PERFORM HIS OR HER FUNCTIONS.

12 DOESN'T SEEM TO ME THAT COPYING EVERYTHING, ALL OF THESE

13 LEDGERS AND ALL OF THESE MATERIALS, IS REQUIRED TO DO THAT

14 JOB.

15 AND SO ANY ORDER THAT THIS COURT WOULD MAKE, ANY

16 OF THESE CASES, IS GOING TO TAKE THAT INTO CONSIDERATION.

17 AND PARTICULARLY THIS DAY IN AGE WHERE IT IS SO EASY TO JUST

18 MAKE MULTIPLE COPIES OF EVERYTHING. AND, YOU KNOW, MAYBE

19 THE DIRECTOR, ONCE HE HAS A COPY HE GOES OUT ON THE BEACH

20 AND LEAVES THIS STUFF ON THE BEACH AND FORGETS A PAGE.

21 MAYBE HE'S SITTING ON A PLANE AND FORGETS SOMETHING ON A

22 PLANE. THESE THINGS CAN HAPPEN. MAYBE HE MAKES AN EXTRA

23 COPY TO TAKE ALONG SOMEPLACE, AND THERE IS NOW ANOTHER COPY

24 FLOATING AROUND.

25 AND I'M NOT TALKING ABOUT JUST THIS CASE. I'M

26 TALKING ABOUT GENERALLY LOOKING AT THE REALITIES OF THESE

27 MATTERS. I KNOW THAT WHEN I HAVE THINGS THAT I THINK ARE

28 VERY SIGNIFICANT, OR AT LEAST IN MY MIND, I DON'T EVEN TAKE

1 PLEADINGS OUTSIDE THE COURTROOM OR -- I SHOULDN'T SAY

2 OUTSIDE THE COURTROOM. OUTSIDE THE CHAMBERS. BUT IT'S SO

3 EASY ONCE YOU START MAKING JILLIONS OF COPIES FOR EVERYBODY,

4 AND WE HAVE, WHAT, 19 DIRECTORS ALTOGETHER, 12 OF THEM

5 OUTSIDE OF THE UNITED STATES. WELL, I DON'T THINK THAT'S

6 WHAT'S INTENDED EITHER.

7 SO IN TERMS OF THE LIMITATIONS OR PROTECTIVE

8 ORDERS, I THINK THAT WHAT REALLY NEEDS TO BE FOCUSED IN ON

9 HERE IN THIS PARTICULAR CASE IS NOT THE ACCESS, BUT THE

10 COPYING ASPECTS MORE SO THAN THE REVIEW ASPECTS. AND IT

11 SEEMS TO ME THAT THE REVIEW ASPECTS -- OF COURSE, COUNSEL, I

12 WILL HEAR FROM YOU SPECIFICALLY WHAT YOU THINK OUGHT TO BE

13 DONE WITH RESPECT TO THE REVIEW ASPECTS, BECAUSE IT SEEMS TO

14 ME THAT THE RESPONDENTS ARE ALSO CONCERNED ABOUT

15 MR. AUERBACH JUST LOOKING AT THESE RECORDS, WHETHER OR NOT

16 HE'S ACTUALLY GIVEN COPIES, AND STILL VIOLATING HIS

17 CONFIDENCE. AND IF THERE IS THAT CONCERN, WE NEED TO

18 DISCUSS IT FURTHER.

19 IT DOES SEEMS TO ME THAT HE'S NOT ENTITLED TO

20 GET COPIES OF EVERYTHING FOR THE REASONS THAT I DON'T THINK

21 THE CONFIDENTIALITY COULD TRULY BE PROTECTED, PARTICULARLY

22 IN THIS KIND OF CONTEXT, IF INDEED YOU START COPYING 19

23 COPIES OF EVERYTHING.

25 FOR THE THINGS THEY ARE NOT GOING TO DESIGNATE AS

26 CONFIDENTIAL HE OUGHT TO BE GIVEN COPIES. HE'S A BOARD OF

27 DIRECTORS. HE HAS FIDUCIARY DUTIES, AND IT'S NOT FAIR TO

28 FORCE HIM TO COME DOWN AND SPEND A WEEK IN MARINA DEL REY.

2 TO BE READING THESE THINGS, AND HE WANTS TO LOOK AT THEM,

3 WHAT IS SO UNFAIR TO SPEND A WEEK IN MARINA DEL WAY.

5 HAVE BOARD OF DIRECTORS IN GHANA. THE BURDEN YOU ARE GOING

6 TO PLACE ON THE BOARD OF DIRECTORS TO EXERCISE THEIR RIGHT

7 OF OVERSIGHT IS THEY HAVE TO AFFORD TO COME TO CALIFORNIA

8 AND HOLE UP FOR AS LONG AS IT TAKES TO REVIEW THESE

9 DOCUMENTS, INCLUDING THEIR ADVISERS.

11 TREMENDOUS FINANCIAL BURDEN AS WELL, IN ADDITION TO WHATEVER

12 ELSE. IN ANY CASE, I DON'T THINK THAT'S WHAT'S CONTEMPLATED

13 BY THE LAW AS FAR AS GIVING DIRECTORS RIGHTS TO INSPECT ARE

14 CONCERNED. AND I DON'T THINK YOU HAVE TO MAKE 19, 21, 23

15 COPIES JUST BECAUSE EVERY DIRECTOR WOULD LIKE TO HAVE A

16 COPY.

17 IF INDEED THERE IS A NEED TO COME, AND SOMEONE

18 FEELS THAT THERE IS A NEED TO COME AND LOOK, THEY CAN COME

19 AND THEY CAN LOOK. AND THEN IF THERE ARE PORTIONS OR MAYBE

20 A PART THAT NEEDS TO BE COPIED, THAT MAY BE A DIFFERENT

21 STORY, BUT I DO NOT SEE MAKING A BLANKET ORDER HERE THAT'S

22 GOING TO IMPOSE ON ICANN THE DUTY TO MAKE COPIES OF

23 EVERYTHING THEY HAVE EVERY TIME A DIRECTOR WANTS TO SEE

24 SOMETHING.

26 MAJORITY OF THESE DOCUMENT ARE IN ELECTRONIC FORM, AND

27 THERE'S NO PHYSICAL COPIES OR COSTS OR BURDEN. THEY USE

28 PEACH TREE ACCOUNTING SOFTWARE. IT'S ALL ELECTRONIC. THEY

1 CAN DOWNLOAD IT TO A DISK OR E-MAIL IT TO MR. AUERBACH IN AN

2 ENCRIPTED FORM TODAY. THEY HAVE A BOARD LIST. IT WILL TAKE

3 ONE E-MAIL TO SEND TO ALL BOARD MEMBERS. I DON'T THINK THAT

4 IT IS A BURDEN ON THE ORGANIZATION. IN FACT, I THINK TO A

5 CERTAIN EXTENT IT COULD BE ARGUED IT'S MORE OF A BURDEN ON

6 THE ORGANIZATION TO HAVE A BOARD MEMBER HOLED UP THERE FOR A

7 WEEK LOOKING OVER EVERYBODY'S SHOULDER, REQUESTING COPIES

8 AND ACCESS TO THINGS THAN IT WOULD BE FOR THEM TO E-MAIL OUT

9 THE INFORMATION TO THE BOARD MEMBERS. I THINK THE BURDEN ON

10 BOTH SIDES WOULD ACTUALLY BE LESS.

12 THAT YET, THAT EVERY LEDGER HAS TO BE KEPT IN ENOUGH COPIES,

13 WHETHER IT BE ON A DISK OR OTHERWISE, FOR EVERY DIRECTOR TO

14 HAVE IT ACCESSIBLE AT THEIR HOME OR WHEREVER ELSE THEY ARE.

15 IT MAY BE THAT SOME DAY THE LAW WILL REQUIRE THAT, BUT I

16 THINK AT THIS POINT IT HASN'T. IT'S A RIGHT TO INSPECT AND

17 COPY. I THINK IT CONTEMPLATES COPYING MAYBE APPROPRIATE

18 PORTIONS, BUT NOT COPYING EVERYTHING.

20 THINK THAT -- I DON'T THINK THE BURDEN ON ICANN IS

21 SIGNIFICANT, BUT ESPECIALLY IN THIS PARTICULAR INSTANCE

22 WHERE WE KNOW WHAT THEIR ACCOUNTING PROGRAM IS AND WE KNOW

23 IT'S IN ELECTRONIC FORM, I DON'T THINK IT'S UNREASONABLE TO

24 HAVE A PRAGMATIC ORDER THAT SAYS BECAUSE THESE RECORDS ARE

25 EASY FOR YOU TO MAKE COPIES OF, YOU CAN MAKE THE COPIES.

26 AND MR. AUERBACH IS WILLING TO ENTER INTO A

27 PROTECTIVE ORDER THAT WILL BE VERY CLEAR ABOUT THE

28 LIMITATIONS ON WHAT HE CAN DO WITH THE INFORMATION.

2 BE A APPROPRIATE PROTECTIVE ORDER.

4 RESPONSIVE TO MR. AUERBACH'S REQUEST THAT ARE NOT

5 CONFIDENTIAL, THAT -- AND TO THE EXTENT THEY ARE ELECTRONIC,

6 THAT ELECTRONIC COPIES OF THOSE BE GIVEN TO

7 MR. AUERBACH. IF THERE'S NOT A CONFIDENTIALITY OR PRIVILEGE

8 INTEREST THERE'S NO REASON WHY THERE SHOULD BE ANY

9 RESTRICTIONS ON THEM OR WHAT HE DOES WITH THEM.

10 AS FOR THOSE SMALLER, AND I HOPE IT WILL BE

11 SMALLER, CATEGORY OF THINGS THAT ICANN BELIEVES ARE

12 CONFIDENTIAL, I WOULD REQUEST THOSE BE GIVEN -- THAT

13 MR. AUERBACH ENTER INTO AN AGREEMENT THAT SAYS HE WILL NOT

14 PUBLICIZE THE INFORMATION ANY FURTHER THAN HIS GROUP OF

15 ADVISORS WITHOUT GIVING ICANN TEN DAYS' NOTICE, AND WE CAN

16 ALL COME BACK HERE AND SEE YOUR HONOR IF THAT'S THE CASE.

17 THIS IS ALL GOING TO HAPPEN VERY QUICKLY BECAUSE

18 MR. AUERBACH'S TENURE IS ENDING, AND THE CASES ARE QUITE

19 CLEAR THAT HIS RIGHTS WILL APPEAR TO END AT THAT POINT.

20 AND THEN WE'LL GO FORWARD FROM THERE. NOW, I

21 THINK ICANN NEEDS TO GIVE US SOME INFORMATION ABOUT WHAT'S

22 IN ELECTRONIC FORM AND WHAT ISN'T, TO DECIDE WHETHER

23 MR. AUERBACH HAS TO COME TO MARINA DEL REY TO LOOK AT SOME

24 OF THE INFORMATION. BUT AS TO THE NONCONFIDENTIAL

25 INFORMATION, ESPECIALLY IN ELECTRONIC FORM, I SEE NO BASIS

26 FOR REQUIRING HIM TO COME DOWN AND LOOK ON THEIR COMPUTERS

27 AS OPPOSED TO LOOKING ON HIS OWN. THIS IS AN INTERNATIONAL

28 ORGANIZATION THAT'S BASED UPON THE WONDERS OF ELECTRONIC

1 TECHNOLOGY, AND IT STRIKES ME AS SOMEWHAT STRANGE TO REQUIRE

2 A HORSE-AND-BUGGY DOCUMENT REVIEW.

4 THEM. AND I DON'T KNOW OF ANY LAW THAT REQUIRES A COMPANY

5 TO MAKE HARD COPIES, FOR EXAMPLE, OF EVERYTHING THAT THEY

6 HAVE FOR EVERY SINGLE DIRECTOR JUST BECAUSE THEY REQUEST. I

7 SUPPOSE THERE IS A RECOGNITION THAT THEY CAN GET COPIES OF

8 THINGS, BUT I THINK REASONABLY IT WOULD NOT HAVE TO DO 19

9 COPIES OR WHATEVER OF THE SAME RECORDS JUST SO EVERYONE HAS

10 THEM ACCESSIBLE.

12 AUTOMATICALLY. I DO POINT OUT THAT THE CORPORATIONS CODE

13 SECTION SAYS "INSPECT AND COPY ALL BOOKS AND RECORDS"

14 WITHOUT ANY DEFERENCE IN THE TREATMENT BETWEEN THE TWO. THE

15 STATUTE DOESN'T DISTINGUISH BETWEEN INSPECTION AND COPYING,

16 AND I WOULD SUBMIT THAT THE STATUTORY INTERPRETATION OF THIS

17 CREATING A BIG DECISION, A SIGNIFICANT DISTINCTION BETWEEN

18 THE TWO, ISN'T CONSISTENT WITH THE STATUTE.

19 BUT AS I SAID, MR. AUERBACH IS WILLING TO ENTER

20 INTO A PROTECTIVE ORDER WITH REGARD TO CONFIDENTIAL

21 DOCUMENTATION. I DO A LOT OF INTELLECTUAL PROPERTY

22 LITIGATION. WE'RE IN PROTECTIVE ORDERS IN THE VAST MAJORITY

23 OF THE CASES. EXTREMELY CONFIDENTIAL DOCUMENTS GET COPIED

24 AND SENT AND ARE COVERED BY PROTECTIVE ORDERS AND PROTECTED.

25 IN ANY EVENT, IF IT WOULD MAKE YOUR HONOR FEEL

26 BETTER, OUR ORGANIZATION, WHICH HAS ATTORNEY - MY BAR CARD

27 IS AT STAKE - WILL HOLD THE DOCUMENTS SO MR. AUERBACH CAN

28 VISIT THEM IN SAN FRANCISCO RATHER THAN COME DOWN AND CAMP

1 IN MARINA DEL REY IF THAT WILL GIVE YOUR HONOR A GREATER

2 FEELING OF PROTECTION FOR THIS SUBSET THAT ARE MARKED AS

3 CONFIDENTIAL. THAT'S HOW IT'S HANDLED IN MOST LAWSUITS

4 WHERE THERE'S A PROTECTIVE ORDER, AND I THINK IT WOULD BE

5 REASONABLE TO DO THE SAME THING IN THIS INSTANCE.

7 COURSE, POSSIBILITY AS WELL.

10 MASTER.

12 KNOW IS WE DO HAVE A SUPPLEMENTAL LIST OF MATERIALS.

13 MR. AUERBACH REQUESTED THINGS THAT ARE ABOUT 18 MONTHS OLD

14 NOW.

17 WOULD LIKE TO REVIEW.

19 HAND TO US RIGHT NOW?

22 THE HEARING AND TRIAL. SEEMS TO ME IF YOU HAD ANY KIND OF

23 REQUEST TO MAKE, IT SHOULD HAVE BEEN MADE IN WRITING WITH A

24 LIST THAT'S SUBMITTED TO THE OTHER SIDE. I'M NOT GOING TO

25 RULE ON SOMETHING THAT YOU JUST HAND OUT LIKE THAT.

27 TO COUNSEL, BUT WHAT I WOULD LIKE TO MAKE SURE IS THAT THE

28 LIST THAT WAS FOUGHT OVER, THE 18-MONTH-OLD LIST, ISN'T THE

1 SUM TOTAL OF MR. AUERBACH'S INSPECTION AND COPYING RIGHTS.

3 OTHER THAN WHAT'S BEFORE ME. HE HAS WHAT RIGHTS HE HAS WITH

4 RESPECT TO ANYTHING, BUT I'M ONLY GOING TO RULE ON WHAT'S

5 BEFORE ME.

8 MIDDLE OF A HEARING AND SAY, OH, WE WANT THIS ADDITIONAL

9 STUFF, JUST LIKE THAT. TOTALLY IMPROPER.

11 ABOUT WHETHER --

13 ABOUT. THIS HEARING IS A HEARING WHERE BOTH SIDES HAVE HAD

14 AN OPPORTUNITY TO RESPOND TO EACH OTHER'S CONTENTIONS. THIS

15 HEARING IS NOT ABOUT SOMEONE PULLING OUT SOMETHING OUT OF

16 THEIR POCKET AND THEN SAYING, OH, THIS IS IN ADDITION WHAT

17 WE WANT TO TALK ABOUT AND DEAL WITH. IT'S UNFAIR TO THE

18 OTHER SIDE, COMPLETELY UNFAIR.

19 AND YOU'VE HAD PLENTY OF TIME, TEN MONTHS, TO IN

20 FACT DECIDE - I SUPPOSE MR. AUERBACH HAS - WHAT ELSE HE

21 WANTED. SO WE'RE JUST GOING TO -- AS FAR AS THIS COURT IS

22 CONCERNED, MY ORDER IS GOING TO DEAL ONLY WITH WHAT IS

23 BEFORE ME PROPERLY.

26 BELIEVES OUGHT TO BE THE APPROPRIATE PROTECTIVE ORDER. BY

27 THE WAY, THE COURT'S RULING IS GOING TO BE IN ACCORDANCE

28 WITH THE TENTATIVE. THE COURT DOES FIND THAT THE RULES THAT

1 HAVE BEEN PROMULGATED DO IN ESSENCE, AT LEAST IN THE CASE,

2 AS APPLIED, DEPRIVE HIM OF HIS RIGHT TO GET THE RECORDS THAT

3 HE'S ENTITLED TO GET UNDER THE LAW. AND SO THE QUESTION IS

4 ONLY GOING TO BE ON WHAT BASIS.

6 WE UNDERSTAND COMPLETELY YOUR FEELING ON THE

7 INFORMATION. TURNING NOW TO THE COMMENTS COUNSEL JUST MADE,

8 I THINK IT'S ABSOLUTELY IMPORTANT THAT THE INSPECTION BE

9 DONE AT THE CORPORATE OFFICES. MR. AUERBACH IS A DIRECTOR

10 OF THE CORPORATION. HE ACCEPTED THE RESPONSIBILITY.

11 VIEWING THE RECORDS IN THEIR HARD COPY FORM IN THE OFFICES

12 OF THE CORPORATION IS THE MOST EXPEDITIOUS WAY TO HANDLE

13 THAT, AND WE'LL MAKE THAT PREPARATION AS SOON AS POSSIBLE.

14 ON THE ISSUE OF THE PROTECTIVE ORDER, I THINK

15 IT'S PREMATURE. WE HAVE TO FIGURE OUT BETWEEN US WHETHER OR

16 NOT THERE'S GOING TO BE A DISPUTE BEFORE INVOLVING YOU IN

17 THAT DISPUTE.

19 OBVIOUSLY, MR. LUI, JUSTICE LUI, IF THERE IS ANY FURTHER

20 DELAY, IF THERE IS ANY FURTHER DELAY AT ALL, EVEN NOW - YOU

21 KNOW, OBVIOUSLY, YOU CAN APPEAL ANY RULING I MAKE, AND

22 PROBABLY ANY APPEAL IS GOING TO MAKE THIS WHOLE THING MOOT

23 BECAUSE OF THE FACT THAT BY THE TIME, YOU KNOW, IT TAKES

24 AWHILE TO DO THESE THINGS ON APPEAL. AND I'M NOT GOING TO

25 ALLOW FOR ANY KIND OF DELAY WHATSOEVER. I'M GOING TO MAKE

26 AN ORDER RIGHT NOW WHICH WILL PROVIDE THAT EITHER HE'LL BE

27 MADE AVAILABLE CERTAIN RECORDS THAT ARE NOT GOING TO BE

28 CLAIMED CONFIDENTIAL, AND THE ONES THAT ARE CLAIMED

1 CONFIDENTIAL ARE GOING TO BE MADE AVAILABLE UNDER CERTAIN

2 ORDERS.

4 MY -- WHAT WE'RE ASKING FOR IS THAT THE ORDER PROVIDE US FOR

5 TO PROVIDE HARD COPIES, NOT ELECTRONIC COPIES, HARD COPIES

6 OF THESE DOCUMENTS.

8 ME THAT THE NONCONFIDENTIAL ONES AT THIS POINT, GIVEN THE

9 SHORT PERIOD OF TIME THAT IS LEFT HERE -- AND I'M THINKING

10 IN TERMS OF JUST THIS CASE BECAUSE IT MIGHT BE DIFFERENT IN

11 ANOTHER CASE, BUT HERE IS A DIRECTOR WHO HAS FOR TEN MONTHS

12 NOT GOTTEN ANYTHING, AND NOW HE'S BEEN PUT THROUGH ALL THESE

13 RULES THAT HE'S SUPPOSED TO BE FOLLOWING BEFORE HE'S GOING

14 TO BE GETTING ANYTHING. I THINK THAT THOSE RECORDS WHICH

15 ARE NOT CONFIDENTIAL HE OUGHT TO BE ABLE TO GET ELECTRONIC.

16 THOSE ELECTRONIC RECORDS, HE OUGHT TO BE ABLE TO GET DISCS

17 OR WHATEVER FORM YOU CAN PROVIDE THEM IN. THAT'S THE ONLY

18 WAY HE'S GOING TO BE ABLE TO SEE ANYTHING BEFORE HIS TIME

19 EXPIRES.

20 AND THEN ON THE CONFIDENTIAL, I'M SURE THERE

21 WILL BE ENOUGH MARKED CONFIDENTIAL THAT, YOU KNOW, THEN

22 THOSE CAN BE DEALT WITH A LITTLE DIFFERENTLY.

24 NOT EXPEDITE THINGS. THINGS THAT ARE IN HARD COPY NOW THAT

25 ARE AVAILABLE FOR INSPECTION THIS MOMENT, TO BE PUT IN

26 ELECTRONIC FORM WOULD TAKE MORE TIME.

28 ELECTRONIC FORM. AT LEAST, COUNSEL WAS REPRESENTING THERE

1 ARE RECORDS THAT ARE IN ELECTRONIC FORM.

3 SOME ARE NOT.

5 FORM. WE'RE TALKING ONLY ABOUT THOSE THAT ARE IN ELECTRONIC

6 FORM. THOSE WHICH ARE IN ELECTRONIC FORM RIGHT NOW AND

7 WHICH ARE NOT CONFIDENTIAL, WHY SHOULD THEY NOT BE GIVEN TO

8 HIM ON A DISK?

11 HERE, I UNDERSTOOD.

13 CONFIDENTIAL I DON'T THINK WE'RE REALLY DEBATING ABOUT, AND

14 I APOLOGIZE IF WE'VE GOTTEN TO THAT SUBJECT BECAUSE, BASED

15 ON YOUR HONOR'S TENTATIVE AND FINAL DECISION, WE WILL NOT

16 OBJECT TO THAT.

17 THE DOCUMENTS THAT ARE CONFIDENTIAL AND THE

18 DOCUMENTS THAT ARE NOT PRESENTLY IN ELECTRONIC FORM -- FOR

19 EXAMPLE, I CAN TELL THAT YOU MY LAW FIRM DOES NOT SEND

20 ELECTRONIC COPIES OF OUR BILLS. THEY ARE SPECIFICALLY

21 REQUESTED. WE CAN TAKE THE TIME TO CONVERT THEM INTO

22 ELECTRONIC OR WE CAN PUT THEM INTO A CONFERENCE

23 ROOM.

24 WHAT JUSTICE LUI WAS SUGGESTING IS THAT IT WOULD

25 ACTUALLY BE FASTER TO MAKE THEM AVAILABLE IN OUR CONFERENCE

26 ROOM IN MARINA DEL REY, WHICH IS WHAT WE HAVE TRIED TO DO,

27 BUT HAD SOME DISAGREEMENT AS TO THE PROCEDURES.

1 CLEAR. MY ORDER IS THAT AS FAR AS ANY ELECTRONIC

2 NONCONFIDENTIAL RECORDS ARE CONCERNED - ELECTRONIC,

3 NONCONFIDENTIAL -

8 YOU HAVE SOMETHING TO SAY BEFORE, GO AHEAD.

11 IT IS ORDERED THAT THOSE SHALL BE PROVIDED TO -- HOW QUICKLY

12 CAN THEY BE PROVIDED?

14 I WAS GOING TO ADDRESS. WE WILL THIS AFTERNOON COMMUNICATE

15 YOUR HONOR'S DECISION TO THE BOARD. BECAUSE OF THE TIME,

16 ABOUT TWO-THIRDS OF THE BOARD MEMBERS WILL BE ASLEEP, AND WE

17 WILL HAVE TO CONVENE A TELEPHONE CONVERSATION OF THE BOARD

18 TO GET DIRECTION. THERE IS, OF COURSE, THE POSSIBILITY THAT

19 THE BOARD WOULD ASK US TO SEEK FURTHER REVIEW OF

20 YOUR HONOR'S ORDER.

23 PERIOD OF TIME. I'M VERY SYMPATHETIC TO THE TIMING ISSUE,

24 BUT BECAUSE OF OUR -- THE NATURE OF OUR BOARD, A VERY BRIEF

25 PERIOD OF TIME WHERE - SEVEN DAYS - WHERE WE CAN --

27 CIRCUMSTANCES.

2 THERE, AS CLOSELY CONNECTED AS ANYBODY CAN BE. PROBABLY

3 HAVE SOME DIRECT CONNECTIONS THAT THE REST OF US DON'T EVEN

4 HAVE AND KNOW ABOUT.

6 HAVE THE --

8 THE NONCONFIDENTIAL ELECTRONIC RECORDS SHALL BE SUBMITTED TO

9 COUNSEL FOR MR. AUERBACH BY NOON ON AUGUST THE 2ND, FRIDAY.

10 SEEMS TO ME THAT'S NOT -- WE'RE TALKING

11 NONCONFIDENTIAL RECORDS, NOW.

14 NOW WE'RE GOING TO GO ON TO THE NEXT GROUP, THE

15 NONCONFIDENTIAL, NONELECTRONIC RECORDS.

16 NOW, THOSE I'M GOING TO ORDER THAT THOSE BE MADE

17 AVAILABLE AT THE MARINA DEL REY OFFICES AT A TIME MUTUALLY

18 CONVENIENT. AND IF MR. AUERBACH NEEDS COPIES OF CERTAIN

19 PORTIONS, I SUPPOSE HE CAN REQUEST COPIES OF THOSE

20 PORTIONS. I ASSUME YOU CAN AGREE ON MUTUALLY CONVENIENT

21 DATES FOR THAT, WITHIN THE WEEK I ASSUME. YOU WANT TO SEE

22 IT AS QUICKLY AS POSSIBLE.

26 YOUR HONOR, NO.

2 IS THERE A PROBLEM WITH THAT DATE?

4 NO, YOUR HONOR, I DON'T THINK THERE WILL BE A

5 PROBLEM. WE MAY HAVE TO SWITCH ACCOUNTANTS TO ONE THAT'S

6 NOT ON VACATION.

8 WOULD BE CONFIDENTIAL DOCUMENTS OR ONES AT LEAST CLAIMED TO

9 BE CONFIDENTIAL BY THE CORPORATION.

14 PRIVILEGED. I'M USING THE WORD CONFIDENTIAL BROADLY IN THIS

15 SENSE. THE COURT IS GOING TO ORDER THAT THOSE SHALL BE MADE

16 AVAILABLE TO MR. AUERBACH FOR REVIEW AT THE MARINA DEL REY

17 OFFICES, AND -- BY WHAT DATE? SAME DATE, BY NINTH.

20 AND THEY WILL BE MADE AVAILABLE TO HIM SUBJECT

21 TO A PROTECTIVE ORDER. AND I THINK THAT, GIVEN THE

22 SUGGESTION BY THE PETITIONERS AND NOTHING CONTRARY IN

23 ESSENCE BY THE RESPONDENTS IN TERMS OF THE NATURE OF THE

24 PROTECTIVE ORDER, THE COURT IS GOING TO ORDER THAT NO

25 INFORMATION IN THE DOCUMENTS THAT ARE CLAIMED TO BE

26 CONFIDENTIAL, INCLUDING PRIVILEGED, SHALL BE DISCLOSED

27 PUBLICLY BY MR. AUERBACH WITHOUT GIVING AT LEAST TEN DAYS

28 NOTICE TO THE CORPORATION.

1 AND I THINK THAT TAKES CARE OF YOUR CONCERNS.

2 AND IF THERE IS SOMETHING THAT IS PROPOSED TO BE DISCLOSED,

3 YOU CAN COME RIGHT BACK AND WE WILL SEE WHETHER THERE IS A

4 LOT OF IT OR A LITTLE. AND IF THERE'S JUST A LITTLE, I'LL

5 TAKE CARE OF IT MYSELF VERY QUICKLY. IF NOT, THEN WE'LL

6 HAVE TO THINK ABOUT A MASTER. AND I BELIEVE PROBABLY BEFORE

7 APPOINTING A MASTER WILL WANT TO HAVE FAIRLY DETAILED

8 INFORMATION ABOUT WHAT THAT IS WE'RE TALKING ABOUT BECAUSE I

9 ALSO DON'T THINK IT WOULD BE APPROPRIATE, NECESSARILY, TO

10 CLAIM SOMETHING CONFIDENTIAL THAT'S QUESTIONABLY SO. AND IF

11 I CONCLUDE SOMETHING ON ITS FACE IS NOT CONFIDENTIAL, I MAY

12 TAKE THAT INTO CONSIDERATION IN DETERMINING WHETHER OR NOT A

13 MASTER SHOULD BE APPOINTED.

14 ALL RIGHT. THEN, THAT'S THE COURT'S ORDER. IT

15 IS IN ACCORDANCE WITH THE TENTATIVE IN TERMS OF THE SUMMARY

16 JUDGMENT MOTION, AND I'M GOING TO ORDER THAT COUNSEL FOR

17 PETITIONER PREPARE THE PROPOSED JUDGMENT. IT SHOULD INCLUDE

18 A RULING ON THE ENTIRE CASE, NOT JUST GRANTING THE

19 PLAINTIFF'S JUDGMENT, AND IT SHOULD INCLUDE THE DENIAL OF

20 THE DEFENDANT'S SUMMARY JUDGMENT, GRANTING OF THE

21 PLAINTIFF'S, AND THEN THE REST OF IT.

22 AND LET'S HAVE THAT PROPOSED JUDGMENT -- HOW

23 QUICKLY CAN YOU GET THAT DRAFTED?

26 THAN THAT. I WAS HOPING YOU WOULD SAY BY --

28 DO IT BY THE END OF THE DAY AFTER THAT, WEDNESDAY.

2 SERVE IT ON COUNSEL FOR THE RESPONDENT, LODGE IT WITH THE

3 COURT. HOW MUCH TIME FOR OBJECTIONS, IF ANY? I ASSUME IT'S

4 BASICALLY TO THE FORM.

6 DEPOSITION I BELIEVE, FRIDAY AND POSSIBLY MONDAY AND

7 TUESDAY.

10 TO ASK UNTIL EARLIER THE FOLLOWING WEEK.

12 TO HOLD IT UP TO THE FOLLOWING WEEK. NO. OBJECTIONS, IF

13 ANY, I SAID --

15 LODGE?

17 THE END OF THE DAY, BY THE WAY. 4 0'CLOCK TO YOU IS END OF

18 THE DAY ALSO BECAUSE OF THE -- SO 4 0'CLOCK ON THE SECOND,

19 OBJECTIONS IF ANY.

22 TO STIPULATE SERVICE BY FAX?

26 CLARIFICATION, EITHER FROM OPPOSING COUNSEL PREFERABLY, OR

27 FROM THE COURT IF NECESSARY.

28 MR. AUERBACH HAD ALREADY PROPOSED THE NAMES OF

1 ADVISORS TO ACCOMPANY HIM TO ICANN'S HEADQUARTERS FOR

2 PURPOSES OF THIS INFORMATION. WILL COUNSEL STIPULATE THIS

3 LIST MAY INCLUDE MR. AUERBACH'S CURRENT COUNSEL OF RECORD IN

4 THAT MATTER? WE'RE NOT ALL GOING TO DESCEND ON YOU AS A

5 PACK. NEITHER MISS COHN NOR I WERE ON THE LIST BECAUSE WE

6 WERE NOT HIS LAWYERS AT THAT TIME.

9 MIGHT HAVE A DIFFERENT ACCOUNTANT.

13 TO BE OUT OF TOWN IN AUGUST.

15 GOING TO BE HOME NOT WORKING, HOPEFULLY. THE ONLY THING

16 I'VE PUT IN WOULD BE THE WEEK OF THE NINETEENTH.