Hello Folks,

 

I imagine you’ve been expecting some commentary by me on the Day Pitney answers that were distributed last week.  I’d even bet that some of you wonder what took me so long.

The truth is, it has been very difficult to find any new material in their response to which I can offer any revised or refined analysis.  There is no new case law cited.  We can’t fault Day Pitney for this; at this point I think we can assume that none was found because none exists.  So, we are left with the statute as it is written.  On this, Day Pitney didn’t budge much, although they did acknowledge that different interpretations were not unreasonable.  And while I had hoped that they would clarify their reasoning so as to tell us why they think what they think, it unfortunately didn’t happen.

There are a couple of new points in the memorandum which are worth bringing up.  First, Day Pitney did resolve the question of “grandfathering.”  They believe, as was indicted in my first round of comments, that if our Articles and Bylaws were good when drafted or changed, then they are good today.  Incidentally, it is my understanding that the articles were drafted by none other than a partner at Day Pitney.   Can someone out there confirm this?   The second new point is that we aren’t going to lose our charter over this (see page 5 of the memorandum.)   In fact, we don’t even have a real liability problem.

To summarize, we’ve had the Vice Director system for 60 plus years without any fundamental governance issues.  Though it’s never a bad idea to review and discuss, there is absolutely no legal issue, pressing or even trivial, that requires us to make changes.

An aside is now in order.  Rick, Jay, and Chris, and the back bench legal staff, you know this stuff, so you can skip to the next paragraph.

In a common law system like ours, legal interpretation is based on three key items:

In our situation, only one even vaguely useful case has surfaced, that being the Steeneck case that I cited in my memorandum of 2 months ago.  I fear that I did not do a stunningly good job of describing why that case is informative, and Day Pitney did not dig.  As you may recall, in that case the court had to decide whether an “honorary” director had status to bring a court action reserved for directors.  The court spent much of the 11 pages going through the list of things that make someone a director.  My argument, summed up succinctly, is this.  If multiple levels of director were not allowed under CT law, the decision would have been 1 paragraph instead of 11 pages.  Day Pitney missed the point here.  Perhaps excusable, but disappointing.  While my argument is strong enough that I would not be embarrassed to make it in a legal brief, it is certainly not ironclad.

That leaves interpretation to be based primarily on the language of statute, in our case, Connecticut General Statutes Chapter 620 Sections 33-1001 and following (you can easily find them on the web.)  I believe I previously laid out why I think these both permit Vice Directors, and in fact makes them a class of Directors.  The Connecticut act seems to be quite well written, and I don’t believe there are any subtleties in its interpretation.  And here Day Pitney has a problem.

There are many rules, or more properly, heuristics, that courts use to interpret statutes.  For a good summary, have a look at https://www.law.georgetown.edu/academics/academic-programs/legal-writing-scholarship/writing-center/upload/statutoryinterpretation.pdf.   One of the important ways that statutory interpretation is guided is by introductory language in the statute itself.  In our case, the guidance couldn’t be clearer.  33-1001(a), the introductory section of the statute, states in part “no provision of incorporation or bylaw shall be held invalid on the ground that it is inconsistent with such section unless such section expressly prohibits variations therefrom …”  In other words, if it isn’t forbidden, it’s allowed. This is cited by Day Pitney on page two of their latest answer.

And yet, Day Pitney’s interpretation of the statute is riddled with a reliance on the lack of mention of Vice Directors, and on the lack of provisions expressly allowing voting and succession as we are accustomed to do it at the League.  This is not, by the statute’s own words, how the statute was meant to be interpreted.

Additionally, the Day Pitney answer made clear that they knew which questions were from Directors and which were from Vice Directors.  Was is helpful to make that distinction in the questions that were sent?  Like it or not, such behavior feeds the suspicion that Day Pitney had already been cued to the “preferred” answer.