Re: [Iasa20] AD review of draft-ietf-iasa2-rfc4071bis-04

["Brad Biddle" <[e-mail]>]

Some thoughts on the question Alissa posed to me…

On 13 Feb 2019, at 18:23, Alissa Cooper wrote:

> I have reviewed draft-ietf-iasa2-rfc4071bis-04 in preparation for IETF 
> LC. I have some substantive comments and questions as well as some 
> nits that should be resolved before IETF LC.

[ . . .]

> == Section 4.2 ==
>
> I'm wondering about how the first section of this text squares with 
> what is in the LLC Agreement, in a couple of ways:
>
> (1) The LLC Agreement does not state that the board has duties of 
> loyalty, care, and good faith. I don't know if these are implied, but 
> I think we should hesitate to try to establish these kinds of duties 
> in the RFC if they aren't established in the legal agreements. Would 
> be interested in Brad's opinion on this.

I agree with the general principle that this document should not assert 
that any legal duties or obligations exist that aren’t clearly 
established in the legal agreements. In this particular case however, 
I’m OK with making the statement we have here even though those exact 
words don’t appear in the LLC Agreement. Those duties are imposed by 
Delaware law. I don’t think there is harm — and there may be some 
benefit of clearer expectations and understandings — in explicitly 
stating those duties in this document.

(Possibly of interest: while those duties have long been established as 
applying to directors of traditional corporations, there was a degree of 
uncertainty about if and how they applied to managers of LLCs up until 
2013. Delaware then amended their applicable statutes to clarify that 
these duties do apply to LLC managers, as a default rule. See 
<https://www.dlapiper.com/en/us/insights/publications/2013/08/delaware-amends-its-llc-act--managers-and-contro__/> 
for a short summary.)


> (2) The first bulleted list of responsibilities is overlapping but not 
> the same as the board responsibilities described in 5(d) of the LLC 
> Agreement. That list is:
>
> "The Board will set broad strategic direction for the Company, and 
> will be responsible for adopting an annual budget, hiring or 
> terminating an Executive Director (or amending the terms of their 
> engagement), adopting any employee benefit plans, consulting the 
> relevant IETF communities on matters related to the Company as 
> appropriate, approving any changes to the LLC governance structure, 
> incurring any debt, and approving entering into agreements that that 
> meet a significant materiality threshold to be determined by the 
> Board."
>
> I can understand that there may be additional responsibilities that 
> the community expects of the board that aren't listed in the LLC 
> Agreement (i.e., recruiting new directors). But for the ones that are 
> listed in the LLC Agreement, I think it would be clearer to use the 
> exact same phrasing in both places rather than talking about the same 
> ideas using different words. There is additional wording about 
> transparency in Exhibit A, Section 13.
>
> Similarly, the second bulleted list of responsibilities is a subset of 
> the obligations in Section 11(a) of the LLC Agreement, using slightly 
> different words. I don't understand the motivation for including this 
> list this way. It seems like a reference to 11(a) would be more 
> appropriate.

I agree that tracking to the language in the LLC Agreement, when 
relevant language exists, is the right practice to avoid creating 
ambiguities. While likely not a huge risk — odds of problems arising 
at all are likely low, and the LLC Agreement terms should always be 
definitive when applicable — it’s conceivable that these kinds of 
potential ambiguities could create unnecessary disputes about the scope 
of legal obligations.

Thanks,
Brad
(IETF legal counsel)


Brad Biddle | [e-mail] | +1.503.502.1259 (mobile) | 
http://biddle.law