ADR and Governance News from Jim Reiman

January/February 2019

With this being the first Newsletter of 2019, let me wish all a healthy, fulfilling, and profitable new year!

While I eschew personal opinions and anecdotes in this Newsletter, in this issue I’ll make an exception.  My father-in-law, Joseph Levy, Jr., passed last week.  As I’ve been thinking about him, it occurred to me that some of his wisdom would be appropriate to pass on in this this Newsletter. 

Joe was a very successful, self-made, businessman who sat on public and private company boards of directors and was what is today called an “entrepreneur.”  He succeeded in life and business by always following 2 principles:  First, he viewed the world as one full of opportunities.  He never saw problems.  When obstacles or issues arose as they always do, he did not fight them.  Instead, he accepted them and used them as opportunities for improvement or re-direction.  Second, he focused upon, and invested in, people.  Business ideas; numbers – those were important, but people more so!  His greatest lesson to me as a young lawyer and pre-business exec:  “The best deals I ever did were the ones I didn’t do.”  It took me a few years and a good deal of grey hair to fully understand that quip.  I pass it and his other big life-lessons along to you.

Now to the content of this issue of the Newsletter.  As regular readers know, in each issue I present a summary of recent research reports, legal decisions and news articles that I hope my readers will find of interest and worthy of their time to peruse and perhaps download and read in their entirety.  I focus on two areas:  corporate governance and alternative dispute resolution (“ADR”).  Additionally, I include two or three articles concerning matters of general interest in my “Interesting Cases/Articles of the Month” section.

Beginning with Governance, this month I present 3 articles.  The first addresses a new wrinkle in risk assessment and cyber-security insurance.  Next, a discussion of the recent SEC’s decision to issue a no-action letter permitting Johnson & Johnson to exclude a proxy proposal regarding mandatory arbitration of shareholder disputes is presented.  Finally, an interesting piece by UK hostage negotiator Sue Williams is presented, discussing the applicability of her negotiating techniques and skills to those in the boardroom.

For my ADR readers, I present 3 cases.  The first addresses the power of US District Courts to issue subpoenas requiring compliance with discovery demands made by parties engaged in an arbitration.  Spoiler alert:  the Court held that it lacked the power to issue a subpoena.  The second case is an Ohio state court decision which considers the power of an arbitral tribunal to join and consolidate cases.  Finally, a US District Court decision denying a party’s request to file its award confirmation pleadings under seal is presented.

Lastly, I present articles of general interest in my “Interesting Cases/Articles of the Month” section.  Again, 3 articles are presented.  The first discusses a study by the College Board (the organization that writes and administers the SAT and AP exams our children endure) and its findings regarding the two subjects whose mastery are most likely to lead to success in college.  Next, I present a description of the recently enacted California legislation regulating the Internet of Things (IoT).  Finally, an article discussing forum shopping is presented; how plaintiffs can effectively choose the judge to hear their case and potential remedies to the problem.

This Month’s Articles
Corporation Governance

  • War Risk Exclusions Invoked to Thwart Cyber Coverage:  Cyber attacks are on the rise, including those involving actions by nation states.  Mondelez International, Inc. v. Zurich American Ins. Co., recently filed in a Chicago state court, may provide insight about whether insurance companies can invoke the act of war exclusion if a company’s systems are hacked by a foreign power.  Currently, most insurers are covering such losses, but that may be beginning to change.
  • SEC Allows Rejection of Mandatory Shareholder Arbitration:  In response to a shareholder proposal requesting that the board of Johnson & Johnson adopt a mandatory arbitration bylaw, the SEC recently issued a no-action letter allowing Johnson & Johnson to exclude the proposal.  This decision, along with other statements by the SEC, suggest that the agency is not anxious to make changes related to mandatory shareholder arbitration.
  • Hostage Negotiation Skills Provide Lessons for the Boardroom: What can board members learn from hostage negotiations? Take a read and learn tips from Suzanne Williams, a former hostage negotiator at Scotland Yard turned business consultant.

Alternative Dispute Resolution

  • District court holds that USC §1782 does not apply to private international arbitrations: This recent decision in the District Court of South Carolina held that a private arbitral body conducting an arbitration does not qualify as a tribunal for discovery applications under §1782.
  • Consolidation of cases (Ohio): An Ohio appellate court refused to vacate an arbitration award under Ohio’s Uniform Arbitration Act, holding that the arbitration panel did not exceed its authority when it consolidated several cases for discovery and motion practice purposes.
  • Arbitration Awards and Confidentiality Revisited: The Eastern District of Missouri followed the growing trend of requiring public disclosure of arbitral materials despite a confidentiality agreement. However, the court suggested there may be some limits on requirements for public disclosure when arbitral materials are irrelevant to the judicial motion.

Interesting Articles/Cases of the Month

  • The Two Codes Your Kids Need to Know:  Of all the skills and knowledge teenagers are tested for, which are most correlated with success in college and in life?  A recent study found the answer – computer science and the U.S. Constitution. Read on to learn why.
  • First Internet of Things Regulation Passes in California:  In response to a lack of federal regulations of the Internet of Things (IoT), California recently passed the first legislation regulating IoT. This legislation could provide a preview of future regulations intended to manage the risks of our increasingly connected world.
  • Texas’ One-Stop Shopping for Judge in Health Care Case:  A single judge in Texas has heard almost 50% of cases brought by Texas against the federal government since 2015. Take a read to find out how litigants are often legally able to not only forum shop, but also pick their judge.

I hope you find one or more the below articles of interest and this Newsletter worthy of your in-box.

Jim Reiman


Articles / Corporate Governance

War Risk Exclusions Invoked to Thwart Cyber Coverage 
With cyber-attacks on the increase, companies and corporate boards are appropriately increasingly focused on the risk and cyber insurance as a means of mitigating the economic cost of an attack.  With this background, a new wrinkle in the landscape may be developing which I call to my readers’ attention.

Almost all insurance companies have within their policies (not just cyber policies, but all general casualty policies) what is called a “war-risk exclusion.”  While the specific language and terms of the exclusion vary from policy to policy, these clauses generally provide that if a loss occurs as a result of an act of war, the loss is excluded from coverage and claims resulting from the loss will be denied.

As many readers know, I am the chair of an American Bar Association insurance section committee.  Our committee has been following this issue carefully for the past year or so.  Our concern:  if a nation state (Iran, North Korea, China) hacks a company’s system and a loss ensues, is coverage for such loss excluded under applicable war-risk exclusions?  Consider, as reported in the New York Times on February 18,

Businesses and government agencies in the United States have been targeted in aggressive attacks by Iranian and Chinese hackers who security experts believe have been energized by President Trump’s withdrawal from the Iran nuclear deal last year and his trade conflicts with China.

Are such attacks an act of war, and is coverage for a resulting loss excluded?

At each insurance conference that I’ve attended recently, I’ve asked underwriters, brokers, and attorneys representing insurers and insureds about this issue.  Until now, all have related something to the effect that while a “hard” answer will depend on the specific clause and circumstances of a loss, the speaker is not aware of any claim being reviewed or denied based upon the war-risk exclusion.

This may be changing!  In October, 2018 a company filed suit in Chicago, Illinois challenging a denial of a claimed loss based upon the applicable policy’s war-risk exclusion.

In Mondelez International, Inc. v. Zurich American Ins. Co., Mondelez sought $100 million in coverage under its Zurich all-risk property policy for property damage and business interruption losses sustained during a cyberattack it suffered during the summer of 2017.  The insurance expressly covered cyber perils, including “physical loss or damage to electronic data, programs, or software, including physical loss or damage caused by the malicious introduction of a machine code or instruction.”

Zurich denied Mondelez’s claim, invoking the war exclusion. Of note:  the war exclusion in Mondelez’s policy excluded losses for “hostile or warlike action … by any … government or sovereign power … military, naval or air force,” or an agent or authority of the aforementioned entities.

While the outcome is uncertain, the precedent and trend merit close observation.  Ask your risk consultants about this issue and this case!

Joshua Gold, Anderson Kill Policyholder Advisor, “War Risk Exclusions Invoked to Thwart Cyber Coverage: The Shape of Things to Come,” January/February 2019.

SEC Allows Rejection of Mandatory Shareholder Arbitration 
In December 2018, Hal Scott, a Harvard professor and shareholder of Johnson & Johnson, submitted a shareholder proposal requesting that the board adopt a mandatory arbitration bylaw applicable to “disputes between a stockholder and the Corporation and/or its directors, officers or controlling persons relating to claims under federal securities laws in connection with the purchase or sale of any securities issued by the Corporation.”  Additionally, the proposed bylaw prohibitted class actions and included a five-year sunset provision unless re-approved by the shareholders.

In response, Johnson & Johnson tried to exclude the proposal, arguing that the bylaw would violate federal and state law (Rule 14a-8(i)(2)) by weakening “the ability of investors in Johnson & Johnson’s securities to pursue a private right of action under Exchange Act Section 10(b) and Rule 10b-5.”

Johnson & Johnson, which is based in New Jersey, also argued that the proposal would violate state law and submitted a letter from the New Jersey Attorney General.  The letter advised the SEC that adopting the proposal would cause Johnson & Johnson to violate state law because New Jersey law limits the subject matter of corporate bylaws to matters of internal concern to the corporation.   Additionally, the Attorney General asserted that under both New Jersey and Delaware law, forum-selection provisions for federal securities laws do not address matters of internal concern, so any related bylaw provisions are void.

On February 11, 2019, the SEC issued a no-action letter to Johnson & Johnson if it relied on Rule 14a-8(i)(2) (violation of law) to exclude the shareholder proposal requesting adoption of mandatory arbitration bylaws.  In issueing the no-action letter, the SEC relied on the letter from the New Jersey Attorney General, stating “[w]hen parties in a rule 14a-8(i)(2) matter have differing views about the application of state law, we consider authoritative views expressed by state officials….We view this submission [by the New Jersey Attorney General] as a legally authoritative statement that we are not in a position to question.” The SEC did note, however, that in granting the no-action request, it was “not expressing its own view on the correction interpretation of New Jersey law” or if the proposal would violate federal law.

Prof Scott’s response to the SEC decision:  he says that he is weighing his options, including appealing the SEC decision in court.

SEC Chair Jay Clayton issued a statement in support of the staff’s hands-off position, stating that he “agree[d] with the approach taken by the staff to not address the legality of mandatory shareholder arbitration in the context of federal securities laws in this matter,” and pointing to the unsettled and complex nature of the issue. The no-action letter also advised that “[p]arties could seek a more definitive determination from a court of competent jurisdiction.”

Readers may wish to know that rapid action by the SEC seems unlikely as Mr. Clayton has previously stated that mandatory arbitration provisions were “not on [his] list of near-term priorities” and continued debate would “divert a disproportionate share of the commission’s resources” from more pressing issues.  Mr. Clayton has also stated that he wants to avoid a brawl over a subject that would pit business groups against investors and may divide the SEC across partisan lines, as Republicans tend to favor mandatory arbitration.

Additionally, in response to questions by Elizabeth Warren in February 2018 regarding mandatory arbitration provisions, Mr. Clayton stated that he was “not anxious to see a change in the area” and that if the issue came up, “it would take a long time for it to be decided, because it would be the subjected of a great deal of debate . . . this is not an area that is on my list of where we could do better.”  If, in the future, the SEC does make a policy decision on such proposals, Mr. Clayton notes that the decision “should be made by the commission in a measured and deliberative manner.”

Cydney S. Posner, Lexology, “On shareholder proposal for mandatory arbitration bylaw, Corp Fin passes the hot potato,” Feb. 12, 2019.


Dave Michaels and Gabriel T. Rubin, The Wall Street Journal, “SEC Allows Rejection of Mandatory Shareholder Arbitration,” Feb. 12, 2019.


Letter to SEC and shareholder proposal: Letter from Marc S. Gerber to U.S. Securities and Exchange Commission, Skadden, Arps, Slate, Meagher & Flom on behalf of Johnson & Johnson, “Johnson & Johnson – 2019 Annual Meeting Omission of Shareholder Proposal of The Doris Behr 2012 Irrevocable Trust,” Dec. 11, 2018.

Staff No-Action Letter: Letter from U.S. Securities and Exchange Commission to Johnson & Jonson, “Re: Incoming letter dated December 11, 2018,” Feb. 11, 2019.

Chair of the SEC public statement: Chairman Jay Clayton, U.S. Securities and Exchange Commission, “Statement on Shareholder Proposals Seeking to Require Mandatory Arbitration Bylaw Provisions,” Feb. 11, 2019.

Hostage Negotiation Skills Provide Lessons for the Boardroom:
Negotiating with al-Qaeda kidnappers, briefing the government about emergencies, dealing with domestic robberies – Suzanne Williams, the first female head of the hostage crisis unit at Scotland Yard, has dealt with it all. After her retirement following three decades at Scotland Yard, Williams has now started working as an independent consultant.

Although the stresses of office work may seem trivial in comparison to police work, Williams acknowledges that “any job has its stresses.” Still, she sees the similarities, noting that “[y]ou need to be well-prepared, whether you’re talking to some terrorists in Iraq or going into a big meeting.”

Williams’ top tips include first, identify the people who are the “real decision makers,” then knowing what is negotiable, and preparing a second-best scenario to fall back on. Furthermore, she advises using surprise to your advantage, such as “springing meetings on bosses at a moment when they seem unoccupied.”

Williams also provides advice for specific situations.  For example, when preparing for salary negotiations, Williams advises researching statistics, calculating averages, and making sure your pitch is evidence-based rather than impassioned.  Williams says “[y]ou need to make clear this is a serious discussion, not a water-cooler conversation.”

When dealing with a manager who relies upon “hostile silence” in response to requests for pay increases, Williams advises not feeling the need to fill every silence, but rather  asking direct questions to force a response, such as “what are you thinking about?” or “have I stunned you?”.

Recently, the Brexit negotiations have been an especially common topic. Williams disagrees that a compromise is always the best outcome because this can mean neither party gets what they want.  She states she thinks negotiations to leave the EU should have been handled by a cross-party team and criticizes British politicians for being naive about what could happen.

On a personal note, I’ve gotten to know Sue and hold her in the highest regard.  She’s a frequent guest lecturer at the Oxford Programme on Negotiation of which I’m privileged to be a part of the faculty, and her talks are always insightful and spot-on.  I’m always impressed by the lessons that board directors and corporate executives can take from her experiences – our and her experiences at the negotiating table are not as dissimilar as first appear.

Helen Warrell, Financial Times, “Hostage negotiation skills provide lessons for the boardroom,” Jan. 6, 2019. 


Articles / Alternative Dispute Resolution

District Court Holds That §1782 Does Not Apply To Private International Arbitrations:
In re Servotronics arose from an arbitration related to a fire at a Boeing Corporation facility in Charleston, South Carolina.  While Boeing was testing a plane, a fire occurred in the plane’s engine which resulted in several million dollars of damage to the plane and Boeing test facility.  The engine was manufactured by Rolls-Royce and comprised a valve manufactured by Servotronics.  Boeing sought compensation for the damages from Rolls-Royce, who had settled Boeing’s claim.  Rolls-Royce then demanded indemnity from Servotronics, which demand Servotronics refused claiming that it was not at fault for the fire or loss.   

Rolls-Royce and Servotronics had a prior agreement requiring use of arbitration to resolve any disputes, and agreed to arbitrate in London.  During the course of the arbitration, Servotronics sought the deposition of three Boeing employees residing in Charleston, the location of Boeing’s facility and the fire.  Boeing refused to voluntarily produce the witnesses, hence Servotronics filed an action in the US District Court in South Carolina seeking to compel discovery for use in a foreign proceeding pursuant to 28 U.S.C. §1782.  The District Court denied Servotronics application.

§1782 allows a District Court to order a person who resides in the Court’s district to provide testimony or documents to be used in a proceeding in a foreign tribunal.  While a court has “wide discretion” in applying §1782, “[w]hen considering a discovery application under § 1782, the district court should keep in mind the statute’s ‘twin aims of providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.’”

When exercising its discretion, a court must engage in two inquiries.  First, the court must determine if it has authority to grant the application, and then it must determine whether to exercise its discretion and permit the discovery.

A court has authority to grant a §1782 application when –

(1) the person from whom discovery is sought resides or can be found in the district where the application is made; (2) the discovery is for use in a proceeding before a foreign tribunal; and (3) the application is made by a foreign or international tribunal or any interested person.

In Servotronics, the Court held the first and third requirements were clearly met because all three of the Boeing employees Servotronics sought to depose lived in South Carolina and Servotronics was an interested party because it was a party to the arbitration. Therefore, the issue in the case was whether the private arbitral body conducting the arbitration qualified as a “tribunal” under §1782.

The Second and Fifth Circuits previously held that “private arbitral bodies do not fall within the ambit of §1782.” The Supreme Court subsequently interpreted §1782 in the case Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which led to disagreement in lower courts about whether §1782 covers private arbitration.

The Servotronics court here determined that the Intel decision did nothing to alter the Second and Fifth Circuit precedent, noting that “[s]tretching the language of Intel to apply to private arbitration is simply too far of a reach absent more explicit language from Congress or the Supreme Court.”  Therefore, the court held that private arbitral bodies do not constitute “tribunals” and thus do not fall within the reach of §1782.   As such, the court did not have authority to grant Servotronics’ application.

Full decision: In re Servotronics, Inc., No. 2:18-mc-00364-DCN, United States District Court of the District of South Carolina Charleston Division, Nov. 6, 2018.

Marilyn Batonga and Grant Hanessian, Lexology, “U.S.: District court holds that Section 1782 does not apply to private international arbitrations,” Feb. 5, 2019.

Consolidation of cases (Ohio):
Consolidation and joinder of multiple cases in arbitration is becoming more common given arbitral institution rule changes expanding the scope of tribunals’ consolidation powers under applicable rules.  The case presented in this issue, Parker v. Dimension Serv. Corp, concerns a domestic dispute which arose out of claims against Dimension by car dealers who argued that Dimension failed to make payments as required under their Profit Share Agreements (“PSA”).

The car dealer claimants filed a demand for consolidated arbitration because they were each pursuing claims for additional payments pursuant to identical agreements. The arbitration panel held that the six claimants’ claims would be consolidated for discovery and motion practice purposes. The panel stated that the same language in each of the PSAs granted the panel broad authority. Furthermore, the panel held that “this is a proper case for consolidated discovery and motion practice based in part on the principle that arbitration is intended to be an efficient, timely, and cost-effective alternative to litigation.”

However, the consolidation for discovery and motion practice purposes did “not prevent separate, individual evidentiary presentations as to defenses or claims.” Furthermore, Dimension could petition the panel to request a separate hearing for any individual claimant. After the panel granted relief to the car dealers, the car dealers filed an application for an order confirming the final arbitration award, while Dimension filed a motion to vacate the award. The trial court granted the motion to affirm and denied Dimension’s motion to vacate the arbitration award, holding that the arbitration panel did not exceed its authority with respect to the consolidation.

On appeal, Dimension raised four assignments of error related to the consolidation, arguing that the trial court erred in finding that the arbitration panel could properly consolidate the claims. Dimension argued:

  1. Parties must expressly consent to consolidation pursuant to the Supreme Court’s decision in Stolt-Nielsen S.A. v. AnimalFeeds Internatl. Corp., 559 U.S. 662 (2010).
  2. The arbitration panel exceeded its authority because the language of the arbitration agreements did not grant the panel authority to consolidate.
  3. The arbitration panel did not have the authority to consider consolidation because Ohio law (R.C. 2712.52) requires that a petition, along with proof of unanimous consent to consolidation, must be filed with the courts to consolidate separate arbitration claims.
  4. The arbitration panel did not have the authority to consolidate because the consolidation question is a threshold arbitrability question reserved for the courts.

The court overruled all four of Dimension’s assignments of error.

With respect to Dimension’s first argument, the court distinguished the present circumstances from those in Stolt-Nielsen, which specifically applied to class actions. The court explained that class-action arbitrations are “fundamentally different from bilateral action arbitrations” because in class-actions, the arbitrator’s award “no longer resolves a single agreement, but instead resolves many disputes between hundreds or perhaps even thousands of parties” and the arbitrator’s award “adjudicates the rights of absent parties” as well as parties to a single arbitration agreement. Here, the actions were consolidated only for the limited purposes of discovery and motion practice.  Additionally, the panel expressly permitted Dimension to request a separate hearing for any individual claimant, but Dimension did not make any such requests and waited over five months to object to the consolidation.

Secondly, the arbitrators did not exceed their authority by consolidating the actions because, based on the broad authority in the PSAs, these cases were proper for consolidated discovery and motion practice as an efficient, timely, and cost-effective alternative to litigation” because the contracts were identical and defense were likely identical.

Third, the court held that Ohio R.C. Chapter 2712, requiring a petition and proof of unanimous consent to consolidation, did not apply here because these facts “do not involve international commercial arbitration.”

Fourth, the court stated that “Federal Circuit Courts of Appeal have consistently held that the matter of consolidation is not a threshold question of arbitrability for a court to decide, but, rather, is a matter of procedure for the arbitrator.” The court distinguished the present circumstances from precedent that involved a motion to stay litigation already pending in court, a party who was not a party to the arbitration rider, and an issue not within the scope of the arbitral issues.

Dimension also argued that the trial court failed to consider that evident partiality existed that required vacation of the arbitration of the award. However, the court overruled these assignments of error because “the evidence in support of Dimension’s position is indirect and tenuous, at best, to prove arbitrator partiality.” The court also overruled assignments of error related to alleged miscalculations, noting that “[a] trial court may not review an arbitration award and vacate it based on a factual disagreement.”

Thus, the court overruled all of Dimension’s assignments of error and affirmed the trial court’s decision.

Full decision: Parker v. Dimension Serv. Corp., Docket 17AP-860 2018-Ohio-5248, Court of Appeals of Ohio, Tenth Appellate District, Dec. 27, 2018.


Arbitration Awards and Confidentiality Revisited:
One of the most common (and erroneous) statements regarding arbitration is that such proceedings are confidential.  They are not!  Rather, they are private.  The difference is significant, and is often exposed when a party seeks to confirm or enforce an award.  Such is what occurred in the case presented, CCA Sports v Dogra.

CAA Sports and defendant Ben Dogra underwent arbitration to resolve a dispute involving Dogra’s termination.  CAA Sports then sought to vacate the arbitration award and filed an action to seal the arbitration award and supporting documents from public view pursuant to a confidentiality provision in the employment agreement, noting concern about past and future media attention surrounding the case.

CAA Sports argued that the employment agreement’s confidentiality provision required the arbitration to be confidential.  Dogra argued that the confidentiality provision only applied to the arbitration, not subsequent court filings to vacate or affirm the arbitration award.

The court adopted Dogra’s narrow reading of the agreement, noting: “[t]here are no clear indications” that the confidentiality for the arbitration should extend to a judicial review of that arbitration.  Furthermore, the “long-standing presumption of public access to litigation in the courts” supported disclosure.

The court stated that here, there was “no suggestion that the arbitration award and supporting materials contain personal identifying information, implicate innocent third parties, or contain routinely protected information such as trade secrets or proprietary data.”  CAA Sports’ concern about avoiding media attention was “patently insufficient to justify overriding the strong presumption of public access.”  Additionally, the court noted that “courts routinely reject arguments that arbitration awards and supporting documents should be sealed merely to honor the parties’ underlying confidentiality agreement related to their arbitration.”  The court echoed Judge Easterbrook of the Seventh Circuit, who stated “[p]eople who want secrecy should opt for arbitration. When they call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials.” Therefore, the court denied CAA Sports’ motion to seal the documents.

However, the court suggested some limits may apply as the court granted CAA Sports’ motion requiring the parties “to consult [each other] before placing additional arbitration materials on the public record” with respect to materials from the arbitration with no relevancy to the action to vacate the award. The court stated that if the parties continued to disagree over what materials should come before the court, they could move for further relief. This may limit the need for public disclosure of some arbitration briefs, depositions, testimony, and the like if both parties agree they have limited relevance to the court proceeding.

Readers should note that experienced arbitrators are cognizant of the issues exposed by this decision and that procedures exist that a tribunal may employ to facilitate confidentiality if such is the desire of the parties.

Full decision: CAA Sports LLC v. Dogra, No. 4:18-cv-01887-SNLJ, United States District Court for the Eastern District of Missouri, Dec. 20, 2018.


Larry P. Schiffer, Lexology, “Arbitration Awards and Confidentiality Revisited,” Jan. 9, 2019.


Articles / Interesting Case of the Month

The Two Codes Your Kids Need to Know:
What do computer science and the U.S. Constitution have in common?  Findings of a recent study by the College Board, best known for administering the SAT exam, suggest that the ability to master these “two codes” are the most important skills and knowledge correlated with success in college and in life.

Why are these codes most important? The author, after conversations with the president and chief of global policy at the College Board, hypothesizes that:

if you want to be an empowered citizen in our democracy . . . you need to know how the code of the U.S. Constitution works. And if you want to be an empowered and adaptive worker . . . able to shape the world around you, and not just be shaped by it – you need to know how computers work and how to shape them.

The College Board echoes these sentiments, noting that young people who master computer science “will be more prepared for nearly every job.”   Furthermore the Constitution is America’s “foundational code . . . the indispensable guide to our lives as productive citizens.”

As a result of these findings, the College Board has been adapting the SATs and Advanced Placement (“AP”) exams to focus on these two areas.  For example, the College Board completely revamped its AP Computer Science courses and exams.  The new exam focuses on the principles of computer science, not just learning to code.

The College Board also revised the AP U.S. Government and Politics course.  In light of the current political climate, the president of the College Board, David Coleman, sought to answer the question of “[w]hat can we do to help replace the jeering with productive conversation?” The College Board views the First Amendment as “lay[ing] the foundation for a mature community of conversation and ideas.” Such knowledge is especially vital with the growing perception that technology and democracy are in conflict, in light of events such as Facebook’s involvement in the 2016.

In order to address these and other concerns, the new AP government course focuses on fifteen key Supreme Court cases and nine foundational documents, showing how the Constitution establishes the structures of the government. Additionally, one of the reading comprehension passages on the SAT is from an important democratic document, such as the Constitution or a presidential speech.

These, and other changes, will help implement the motto of Stefanie Sanford, the College Board’s chief of global policy – “‘[k]nowledge, skills and agency’ — kids learn things, learn how to do things and then discover that they can use all that to make a difference in the world.” The “two codes” initiative will not our benefit our children, but also provides good recommendations for anyone seeking to become a more informed citizen.

Thomas L. Friedman, The New York Times, “The Two Codes Your Kids Need to Know,” Feb. 12, 2019.


First Internet of Things Regulation Passes in California:
Our world is becoming increasingly connected, with everyday devices like thermostats and doorbells connected to the internet.  Until recently, there has not been any legislation regulating the Internet of Things (IoT).  However, this may be beginning to change, with California recently implementing a bill regulating IoT devices.

The bill applies to “any device, or other physical object that is capable of connecting to the Internet, directly or indirectly, and that is assigned an IP or Bluetooth address.”  This includes items such as thermostats, devices such as the Amazon “Echo” or Google “Home,” fitness trackers, refrigerators, security cameras, and even automobiles.

Manufacturers of these connected devices will be required to implement “reasonable” security features.  Determination of reasonableness will depend upon the device’s nature and function as well as the information collected by, contained in, or transmitted by the device.  Further, each connected device must have a password to authenticate new users. The purpose of the regulations is to protect the device and information it contains from unauthorized access, destruction, use, modification, or disclosure.

Notably, exceptions are available for entities and businesses covered by the Health Insurance Portability and Accountability Act (HIPPA) and “any connected device the functionality of which is subject to security requirements under federal law, regulations or guidance promulgated by a federal agency pursuant to its regulatory enforcement authority.”  The legislation does not contain a private right of action, but rather gives government officials enforcement activity.

The new law, which has since been signed by California’s governor, will take effect on January 1, 2020.

Richard P. Lawson, Lexology, “First Internet of Things Regulation Passes in California,” Oct. 4, 2018.


California Senate Bill No. 327, “Information privacy: connected devices,” Sept. 28, 2018.


Texas’ One-Stop Shopping for Judge in Health Care Case:
In deciding to file their lawsuit in Fort Worth, Texas, lawyers challenging President Barack Obama’s health care law essentially chose their own judge. Why?  Because Judge Reed O’Connor is the only active judge in the Fort Worth Division of the Federal District Court for the Northern District of Texas.

Since 2015, Judge O’Connor has heard almost half of Texas’s suits against the federal government filed in Texas federal court. This includes numerous impactful cases related to benefits for married same-sex couples, restroom access for transgender students, and challenges to the healthcare laws.

This judge shopping goes beyond forum shopping, which is not only legal but a common occurrence in litigation.   Where litigants can file their cases in any division, if there are only one or two judges they are essentially able to select their own judge.  For example, a recent study found that in at least 81 divisions in 30 district courts, one or two judges hear all of the division’s cases.  The result:  plaintiffs can effectively “judge shop.”

Scholars have noted that these procedures “allow politically motivated litigants to pick their judges, the judiciary risks enabling rather than combating the growing view that judges are mere political actors,” and posing a risk to the notion of an independent judiciary.

Can anything be done to stop this judge shopping? One possible model, already utilized in a few courts, is to make exceptions for politically charged cases and assigning them at random across all of the district’s judges instead of guaranteeing the judge in the division hears the case.  Notably, no congressional action is needed as courts have great discretion in deciding how to allocate cases within their districts. Thus, a “simple memo from the chief judge” could change the assignment procedure.

Back in 2016, the Chief Judge in the Northern District of Texas took a small step in attempt to constrain Judge O’Connor by announcing she would randomly be assigned 15% of the civil cases filed in the division. However, this change seems to have had minimal effect as Texas filed two subsequent cases against the federal government in another division, where Judge O’Connor is the only active judge.

Adam Liptak, The New York Times, “Texas’ One-Stop Shopping for Judge in Health Care Case, Ballot Breakdown,” Dec. 24, 2018.