ADR and Governance News from Jim Reiman

September 2018

Friends It’s been some time since my prior Newsletter.  With this issue, I hope to resume my regular summary of articles, research reports, and legal decisions.  As regular readers know, I focus on two areas:  corporate governance and alternative dispute resolution (“ADR”).  Additionally, I include an article or two concerning matters of general interest in my “Interesting Cases/Articles of the Month” section.  Given the lengthy hiatus since my last issue, I’ve included a couple of additional articles this month.  I hope you find one or more of them of interest.

Before summarizing the articles presented in this issue, a couple of announcements:  On April 30th, I was elected the Chairperson of the governing board of the North America Branch of the Chartered Institute of Arbitrators.  I’ve been involved in the leadership of this professional organization for the past couple of years, primarily leading their training programs, so I was deeply honored to be asked to assume the chairperson’s role.  Other recent professional accomplishments:  I’ve also been elected chairperson of an American Bar Association’s section committee dedicated to dispute resolution of insurance matters, and I’ve been accredited as an International Meditator by CEDR – the Centre for Effective Dispute Resolution, the leading independent commercial ADR provider in Europe and one of the largest and leading ADR organizations internationally.  This accreditation followed a weeklong course and a rigorous exam.  Additionally, my corporate board work continues as does my negotiation tutoring with the Oxford Programme on Negotiation, so I’ve had a busy several months.

Turning to this month’s articles, included in the corporate governance section is a piece addressing the role of the board in managing corporate culture in the era of the #MeToo movement.  Also included is an article discussing attorney-client privilege when officers and directors discuss matters with in-house counsel, material differences between micro-cap companies’ board practices and governance and those of larger companies, and the recently enacted CLOUD Act, which authorizes the US federal government to seize electronic data stored abroad by a U.S.-based company.

In my alternative dispute resolution section, I present one case and three articles.  The case addresses the right to compel a person who does not sign an arbitration agreement to arbitrate.  The articles discuss what is a reasoned award in arbitration and why the definition matters, the appropriateness of judges (and arbitrators) conducting independent factual research on the internet, and California’s recently enacted statute permitting non-California lawyers to serve as international arbitrators in California.

Finally, in my Interesting Articles of the Month section, I present three pieces.  The first addresses the question:  do cell phones cause cancer (spoiler alert – not likely, but. . . . .).   The second piece relates the Trump administration’s failure to name a science advisor and the impact of that omission.  Finally, I include an article relating the findings of the NASA twins study on the impact of long-term space travel on humans.

This Month’s Articles

Corporate Governance

  • Board Oversight Of Corporate Culture:  Movements such as #MeToo and shareholder actions have placed increased emphasis on corporate boards’ roles in managing corporate culture.  KPMG explored the issues through their Director Roundtable Series.  The included piece reports the thoughts and recommendations of the 500+ directors and business leaders who took part in the roundtables.
  • Attorney-Client Privilege When Communicating with In-House Counsel:   What communications involving in-house counsel are covered by attorney-client privilege?  Presented is an analysis for non-lawyers of the recent case, SodexoMAGIC, LLC v. Drexel University, which offers guidance through ground rules and application to hypothetical emails.
  • Micro-Cap Boards Differ Substantially From Those Of Larger Companies, And Are Often Different Than Commonly Believed:  Presented is a study of 160 micro-cap companies intended to “identify. . .what sets micro-cap companies apart from larger public companies.” Many of its findings “contradict a number of micro-cap misconceptions.”
  • Electronic Data Stored Abroad Now Subject to Federal Seizure: The Clarifying Lawful Overseas Use of Data (“CLOUD”) Act, passed on the eve of a US Supreme Court decision regarding subpoenas served on Microsoft for data stored on Microsoft servers in Ireland (and which raised alarms in Europe and US tech company boardrooms), authorizes the US federal government to seize electronic data stored abroad by a U.S.-based company. While this Act clarifies expectations for companies about what data is covered by U.S. laws, some have criticized the Act for its potential adverse effects on privacy interests.

Alternative Dispute Resolution

  • Can Non-Signatories to an Arbitration Agreement be Compelled to Arbitrate?  Answer:  yes, but not in the case presented.  The Texas Supreme Court this past May held that “no party may be compelled to arbitrate unless they have agreed to arbitrate or are bound by principles of agency or contract law to do so,” or one of 4 other scenarios applies.  The case presented explores this decision.
  • What Is A ‘Reasoned Award’ And Why Does The Definition Matter?: The lack of a “reasoned award” definition in the U.S. Federal Arbitration Act has left U.S. federal courts to grapple with interpreting the term. Without a clear understanding of the elements of a reasoned award, arbitrators’ awards are subject to being vacated or not enforced by courts.
  • Independent Factual Research by Judges Via the Internet: The vast amount of information available on the internet raises ethical questions for judicial notice. This ABA opinion provides useful guidelines for when judges may take judicial notice through online research.  That guidance should be thoughtfully considered by arbitrators.
  • California Reverses Law And Now Allows Non-California Attorneys To Serve As Arbitrators In International Arbitrations: Non-California licensed attorneys can now serve in commercial international arbitrations within the state thanks to newly passed legislation. Benefits of the new law are expected across a variety of industries in California.

Interesting Articles/Cases of the Month

  • Do Cellphones Really Cause Brain Cancer? We Have Answers: The largest ever government study of whether cellphones can cause cancer recently released its findings – which were a mixed bag. Although the government’s official position is that the weight of the evidence shows there is no cancer risk from cellphones, the findings are mixed and there are steps you can take to protect yourself.
  • In the Trump Administration, Science is Unwelcome. So Is Advice: Trump is the first president since 1941 not to name a science adviser. Additionally, multiple agencies have taken actions that could have long lasting effects on scientific research and government priorities.  This is especially worrisome in light of actions such as working towards denuclearization, which involve complex science.
  • NASA Twins Study Confirms Preliminary Findings: In 2016, NASA launched a ground-breaking study comparing what happened to astronaut Scott Kelly, who returned from a one-year mission aboard the International Space Station, to his identical twin brother Mark, who remained on Earth. NASA’s 2018 Investigator’s Workshop relates differences in Scott’s gene expression.

I hope you find one or more of these articles of interest and worthy of your inbox’s space.

Warm regards,

Jim Reiman

Articles / Corporate Governance

Board Oversight Of Corporate Culture

Given the increased publicity surrounding corporate culture’s influence on issues such as sexual harassment and other wrongdoing, and the impact of corporate culture on risk assessment and responses, boards are increasingly expected to understand and when necessary “fix” their corporations’ cultures.  KPMG determined to explore these issues and asked over 500 directors and business leaders to share their thoughts in one of their Director Roundtable Series.  I was privileged to be one of those attending a roundtable, and can relate that the conversation during our roundtable was energetic, wide-ranging, and thought-provoking.

KPMG’s report, which is the “article” presented, compiled and sorted the collective thoughts and recommendations of the roundtables, focusing on the questions:  how corporate boards can “up their game,” and how do boards take a more proactive approach when trying to understand, assess, and shape corporate culture?

The roundtable discussions resulted in four key areas of focus for boards:

  1. Boards need to understand what “culture” is and why it is critical today. Although a board usually does not create culture, it can influence culture. Thus, boards should try to better understand culture in order to know if a company’s culture is helping or hurting it.
  2. Boards should establish clarity on the foundational elements of the company’s culture: zero-tolerance policies as well as behaviors that will help the company excel. Such zero-tolerance policies are especially critical in light of the #MeToo movement. It is also critical to enforce zero tolerance policies consistently at all levels of the organization. The types of behaviors that will help the company excel vary based on the company’s strategy. For example, a heavily regulated company will have different desired behaviors than a company that is trying to disrupt an industry. The board can help influence culture by making culture a priority, modeling the culture, influencing policies, and in selecting the CEO.
  3. Boards must clarify the board’s role in overseeing culture – recognizing that visibility is a major hurdle. A board should regularly assess and monitor corporate values. Because it can be difficult for boards to truly understand the culture on a daily basis, they should consider using multiple methods such as employee surveys, culture-measurement dashboards, site visits, viewing customer complaints, and monitoring social media.
  4. Boards need to assess where culture belongs on the board and committee agendas. Some boards discuss culture as a standalone item, while others integrate discussion about culture in areas such as strategy, risk, compensation policies, and customer service. Such analysis should focus on whether culture is aligned with strategy, how CEO and management view culture, and leadership development.

  KPMG, “Board Oversight Of Corporate Culture,” 2018.


Attorney-Client Privilege When Communicating with In-House Counsel 

It is critically important for directors and business executives to understand that not all communications with their in-house lawyers are protected by attorney-client privilege.  Indeed, many such communications are not protected and will be produced in discovery.  While it’s the job of one’s internal legal team to assure that their executives and directors are aware of which communications are protected and which are not, those on the business side of the table should have a general understanding of where the boundaries exist.

The case and related and article presented offer guidance. The court’s opinion is an easy read and well worth the time for those executives who regularly communicate with in-house counsel, hence a link to the decision is provided in addition to an article appearing in the ABA’s Litigation News which summarizes the decision.

The case arose in the U.S. District Court for the Eastern District of Pennsylvania and involved Drexel University.  The court reviewed 50 internal emails to evaluate whether any of the emails between in-house counsel and the corporation’s executives and directors were protected by attorney-client privilege. It reviewed the applicable law and then set forth a series of hypothetical emails and analyzed whether each was privileged or not, and why.  Its these simple hypotheticals and analysis that is the reason I commend the case to you.

The American Bar Association’s Section of Litigation presented the case to its members in their Litigation News and summarized the court’s analysis in 4 bullet points.  Before relating those, here’s the general legal landscape:  “communications between in-house counsel and the corporate client are protected to the same extent as communications between the corporation and outside counsel.” “Communications with the subordinate of an attorney, such as a paralegal, are also protected by the attorney-client privilege so long as the subordinate is ‘acting as the agent of a duly qualified attorney under circumstances that would otherwise be sufficient to invoke the privilege.”

Pretty straight forward.  However:  “to successfully assert the attorney-client privilege, the corporation ‘must clearly demonstrate that the communication in question was made for the express purpose of securing legal [and] not business advice.”

Josephine M. Bahn, writing in Litigation News, provides the following summary and guidelines:

“Although many communications between in-house counsel and their corporate clients are protected by privilege, . . . those that are merely administrative or deliver business advice as opposed to legal advice are discoverable. The court articulated the following ground rules:

  • A communication with an attorney subordinate such as a paralegal working as an agent for the attorney is privileged, so long as the communication was made “for the express purpose of securing legal not business advice.”
  • A communication with an attorney or subordinate acting in “scrivener-like” capacity is not privileged. This includes exchanges of draft agreements where, for example, an attorney or paralegal merely inserts revisions requested by the client without offering any additional input.
  • A communication between client and counsel in which legal advice is either requested or rendered about the substance of a draft contract or proposed contract language is privileged.
  • Although parts of an email thread may be privileged, other parts may not be privileged, in which case, the privileged portions should be redacted, but the rest of the thread produced.”

 Josephine M. Bahn, American Bar Association, “New Guidance for Privilege Analysis,” August 24, 2018.


SodexoMAGIC, LLC v. Drexel University Civil Action No. 16-5144, United States District Court For The Eastern District Of Pennsylvania, February 23, 2018


Micro-cap Board Governance:  Thoughts for Investors

A new study by the Investor Responsibility Research Center Institute (IRRCi) and Board Governance Research studied 160 micro-cap companies with the goal of “identifying what sets micro-cap companies apart from larger public companies.”  Their findings:  “corporate governance of . . . companies with less than $300 million in market capitalization differs materially from that of their larger brethren.”  Moreover, per Jon Lukomnik, IRRCi executive director:

“The findings contradict a number of microcap misconceptions. For example, these aren’t necessarily young companies with the founder at the helm. Instead, about one-quarter of microcaps have been public for less than five years and only 14 percent of microcap CEOs are the founders.”

Overall, the study found that micro-cap boards “tend to be less diverse and smaller than boards at Russell 3000 companies.” The study found:

  • “The average board size of a micro-cap company covered by the study was 6.9 people, significantly less than the average of 8.9 people across the Russell 3000.”
    • “22% of micro-caps have boards with five or fewer directors”
  • “Micro-cap boards are likely to have fewer sub-committees, which may meet less than once per year. Micro-cap boards, like those of Russell 3000 companies, are likely to have an audit, compensation and nominating and/or governance committee, but are less likely to have finance, technology, or strategy committees.”
  • “Micro-cap boards are less likely to have female directors. 61% of micro-cap companies in the study had all-male boards, as compared to 21% of boards in the Russell 3000.”

Per the press release announcing the study:

“Other key findings of the report include:

    • Only one in seven (14%) of the microcap CEOs studied are the founders of the companies they lead, contrasting the notion that many small companies are founder led start-ups.
    • Only 4% of the microcap companies studied have a majority shareholder who owns 50% or more of shares.
    • Director election standards differ. While the majority (54%) of Russell 3000 companies have adopted majority voting for director elections, only 11% of microcap companies have done so.
    • Microcap directors may have less boardroom experience, as only 17% of them currently serve on the boards of other publicly-traded companies compared to 35% of Russell 3000 directors.
    • Microcap boards have more variability in the number of board meetings held than do larger companies. More microcap boards (24%) held 12 or more meetings as compared to the 17% of the Russell 3000 boards which did so during the study year. On the other hand, microcap boards were also more likely (5%) than Russell 3000 boards (2%) to have held fewer than four meetings that year.”

The study’s findings “contradict a number of micro-cap misconceptions.” For example, “86% of micro-cap companies in the study had been in existence for more than 10 years. Only 14% of the companies were run by a founder-CEO, challenging the notion that micro-caps tend to be young, founder-led companies. Furthermore, 7% of micro-caps in the study had multiple classes of stock and 4% had more than half of the stock owned by one individual.”

 Annalisa Barrett, “Microcap Board Governance,” August, 2018, Investor Responsibility Research Center Institute


  Investor Responsibility Research Center Institute, “New Study Identifies Key Corporate Governance Differences Between Microcap & Larger Companies,”, August 1, 2018


  Ben Ashwell, “Micro-cap Boards Are Smaller And Less Diverse, Study Finds,” IR Magazine, August 6, 2018.


Electronic Data Stored Abroad Now Subject to Federal Seizure

The Clarifying Lawful Overseas Use of Data (“CLOUD”) Act authorizes the US federal government to seize electronic data stored abroad by serving a warrant on a U.S.-based company. The Act also provides procedures for quashing warrants when searches conflict with foreign law.

The Act’s passage resulted from the highly publicized case Microsoft Corp. v. United States in which Microsoft argued that it should not be required to produce data stored abroad in response to a warrant, and, further, complying with such a warrant would impair its and other US companies’ global businesses and potentially conflict with local laws. The Second Circuit agreed with Microsoft.  The case was argued before U.S. Supreme Court and a decision was pending when Congress intervened and enacted the CLOUD Act, resolving the matter.

The CLOUD Act has two components. The first part “makes overseas data controlled by a U.S. company subject to criminal warrant.” This bright-line rule makes it clear to companies and individuals that their overseas data is subject to U.S. criminal laws. The second part of the Act allows U.S. and foreign governments to exchange data by entering into executive agreements. Whether this mechanism improves data exchange is still uncertain and will likely depend on how actively the executive branch uses this process.

Some have questioned whether the law effectively balances law enforcement with privacy rights. For example, some are concerned that “[t]he Act grants foreign governments the ability to collect data directly from U.S. companies without requiring a U.S. warrant, in violation of the Fourth Amendment.”

While the precise implications of the CLOUD Act are yet to be determined, a company should “understand what kind of data it has, what data is important or valuable, and to streamline or get rid of anything that isn’t necessary to successfully run or operate the business.”

  Kristen L. Burge, American Bar Association, “Electronic Data Stored Abroad Now Subject to Federal Seizure,” August 18, 2018.


Articles / Alternative Dispute Resolution

Non-Signatories to an Arbitration Agreement:  Can they compel an arbitration?

In Jody James Farms, JV v. Altman Group, Inc., the Supreme Court of Texas ruled that the respondent, a non-signatory party to an arbitration agreement, could not compel a signatory party to arbitrate.

This case involves 4 inter-related parties:  Jody James Farms, JV (“Jody James”), Rain & Hail LLC, the Altman Group, and the Federal Crop Insurance Corporation (FCIC).  Jody James is a farm that grows grain sorghum.  Rain & Hail is an insurance company selling crop insurance through independent insurance agencies.  The Altman Group is an independent insurance agent, and FCIC is a reinsurer.

In the case presented, Jody James purchased a crop insurance policy issued by Rain & Hail.  The Altman Group was the broker for the transaction, and FCIC reinsured the Rain & Hail policy purchased by Jody James.  The FCIC reinsurance policy included an arbitration clause requiring arbitration of disputes between Jody James and Rain and Hail.

Jody James suffered a loss and contacted its agent at the Altman Group.  When the claim was presented to Rain & Hail, they denied the claim “on several bases, including that Jody James ‘failed to provide a timely notice of damage which has resulted in [Rain & Hail’s] inability to make necessary and required loss determinations for indemnity. . . .” As a result of this denial, an arbitration between Jody James and Rain & Hail related to the denial of coverage occurred, with the tribunal ruling in favor of Rain & Hail.  That tribunal concluded:  “Jody James did not ‘timely present[ ] notice of its claim in accordance with the provisions of the crop insurance policy and, further, ‘did not state a presentable loss’ because crops from performing and non-performing farm units were commingled.”

Displeased with this result, Jody James sued the Altman Group and the individual broker with whom they dealt in state court.  The Altman Group moved to compel arbitration under the reinsurance policy, which move Jody James opposed.  The trial court granted the Altman Group’s motion and the matter was then arbitrated.  The Altman Group prevailed in the arbitration and then asked the trial court to confirm the award.  Jody James moved for vacatur.  The trial court ruled for the Altman Group and confirmed the award.  Jody James appealed, and the appellate court affirmed the trial court’s decision.  Proving Jody James’ tenacity, they next appealed to the Supreme Court of Texas.

The Supreme Court of Texas reversed.  They held that while arbitrators have the power to determine their own jurisdiction under the doctrine of Kompetenz-kompetenz,“[d]etermining whether a claim involving a non-signatory must be arbitrated is a gateway matter for the trial court, not the arbitrator, which means the determination is reviewed de novo rather than with the deference that must be accorded to arbitrators.”

The Court next examined the standard of review.  They began by mentioning that the “presumption favors adjudication of arbitrability by the courts absent clear and unmistakable evidence of the parties’ intent to submit the matter to arbitration.”  Continuing, the Court stated:

“Arbitration is a matter of contract, and that which the parties agree must be arbitrated shall be arbitrated.  A presumption favors adjudication of arbitrability by the courts absent clear and unmistakable evidence of the parties’ intent to submit that matter to arbitration.  The unmistakable clarity standard follows ‘the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration’ and protects unwilling parties from compelled arbitration of matters they reasonably expected a judge, not an arbitrator, would decide.” 

A key fact in the Jody James case was that the Altman Group was not a signatory to any contract containing an arbitration agreement:  “The involvement of a non-signatory is an important distinction because a party cannot be forced to arbitrate absent a binding agreement to do so.  The question is not whether Jody James agreed to arbitrate with someone, but whether a binding arbitration agreement exists between Jody James and the [Altman Group].”

This last phrase – “whether a binding arbitration agreement exists between Jody James and the [Altman Group]” – is the issue upon which the decision turned.  Indeed, it is important to highlight the irony that the party who had not signed an arbitration agreement (the Altman Group) was seeking to impose arbitration upon a party who had signed an agreement to arbitrate, and that the signing party was held NOT to be required to arbitrate.

The determination of who “is bound by an arbitration agreement” is, as the Texas Supreme Court stated, “normally a function of the parties’ intent, as expressed in the agreement’s terms.”  That said, the Texas Supreme Court set forth “six scenarios in which arbitration with non-signatories may be required:  (1) incorporation by reference, (2) assumption, (3) agency, (4) alter ego, (5) equitable estoppel, and (6) third-party beneficiary.”

The Supreme Court then applied each of the six scenarios to the case before it, and found that none applied hence it reversed and vacated the award.

 James v. Altman Group, Inc., Texas Supreme Court, No. 17–0062, May 11, 2018.


What is a ‘Reasoned Award’ in International Arbitration and Why Does the Definition Matter?

Despite the common requirement of many countries’ arbitration laws and the UNCITRAL Model Law (with amendments adopted in 2006) requirement that an “award shall state the reasons upon which it is based,” no universal definition or standard exists for determining just what is a “reasoned award.”  Odean Volker, in a piece initially published in Law360, attempts to answer the questions:  what is a reasoned award, and why does it matter?

Focusing on US jurisprudence, Volker initially notes –

“The term “reasoned award” is not defined in the [Federal Arbitration Act, (FAA)], and articulating a satisfactory description of the required elements of a reasoned award has been an elusive task. U.S. courts have recognized some surprisingly minimal awards as ‘reasoned’ while, in the name of producing a reasoned award, arbitrators sometimes write many hundreds of pages examining in excruciating detail the parties, their dispute, and the arbitrators’ analysis and decision.”

*     *     *

“Recognizing the lack of a formal definition for ‘reasoned award,’ courts have conceived a reasoned award as one point on a continuum of detail between the extremes of a ‘standard award’ and ‘findings of fact and conclusions of law.’  A standard award requires the least explanation, and simply announces a result without more.  ‘Findings of fact and conclusions of law’ require the most explanation and are subject to the exacting standard applied in the U.S. federal court system.   The Eleventh Circuit described this continuum as a ‘spectrum of increasingly reasoned awards.’  Acknowledging this continuum of detail, the Fifth Circuit explained that a ‘reasoned award is something short of findings and conclusions, but more than a simple result.”

Recognizing that “defining a reasoned award by what it is not or by contrast to the detail of other awards is hardly satisfactory,” the Eleventh Circuit in the decision Cat Chartercontemplated a dictionary definition to describe the elements of a reasoned award:  “Strictly speaking … a ‘reasoned’ award is an award that is provided with or marked by the detailed listing or mention of expressions or statements offered as a justification of an act – the ‘act’ here being, of course, the decision of the Panel.”

The court in Cat Charter relied on this definition when it held that an award that “turned primarily upon credibility determinations” was reasonable. That six-paragraph award simply stated that the claimants proved its claim by “the greater weight of the evidence,” which was enough to understand that the arbitrators found the claimants’ witnesses more credible. “While recognizing that the arbitrators could have provided more explanation, Cat Charter determined that it could not say ‘this statement is devoid of any statements offered as a justification.’” Hence it found the award “reasoned.”

The Second Circuit attempted to refine the description of the elements of a reasoned award in Leeward Construction Co. Ltd. v. American University of Antigua—College of Medicine. There, the court stated that “[a] reasoned award sets forth basic reasoning of the arbitral panel on the central issues before it. It need not delve into every argument made by the parties.”

Why is the definition of a reasoned award important?  [B]ecause an award that falls short of the standard is subject to being vacated by a court.”  Under the FAA, arbitrators can “exceed their powers” by failing “to meet their obligations as specified in a given contract[] to the parties.” Volker gives two examples:  Western Employers Insurance Co. v. Jefferies & Co. Inc., in which the arbitrators rendered their award without findings of fact and conclusions of law as specified in the parties’ agreement, and; Vold v. Broin & Associates Inc. wherein the arbitrator was to provide a “reasoned award,” but only stated itemized dollar amounts allowed for each claim without mention of any contract provisions at issue, legal citations, or evidence.

The definition is even more important in the international context if the arbitration is seated in a jurisdiction which has adopted the UNCITRAL Model Law.  As noted above, this Law requires that the “award shall state the reasons upon which it is based.”  Failure to render a reasoned award might also support an action for non-enforcement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) which provides in Article V(1)(d) that an award need not be enforced if it “was not in accordance with the law of the country where the arbitration took place.”

Volker concludes:  “While the U.S. federal courts have not placed a high bar for judging what is, or is not, a reasoned award, understanding the standard is important. The consequences to both the parties and the arbitrators of ignoring the required form can be severe.”  I agree!

 Odean Volker,, “Odean Volker in Law360: What is a ‘Reasoned Award’ in International Arbitration?,” March 7, 2018.


Independent Factual Research by Judges Via the Internet

The question is often asked:  should (indeed, may) arbitrators conduct independent factual research?  Most arbitrators will answer both the “should” and “may” questions with an emphatic “no!”

The American Bar Association (ABA), in December 2017, issued an ethical opinion on the appropriateness of judges performing internet searches regarding facts addressed in cases before them, and I thought it might be of interest to my readers.  While the rules and guidelines governing the conduct of arbitrators and judges differ, it is often useful for arbitrators to know and reflect upon what is appropriate for judges when determining the appropriateness of their own conduct.  Thus, I’ve included here the ABA’s belief regarding what is appropriate for judges.

A hallmark of the U.S. legal system is the requirement that judges make decisions “based upon evidence presented on the record or in open court, and available to all parties.”  Consistent with the premise, the ABA’s Model Code of Judicial Conduct (the Code) prohibits ex parte communications, or communications made to the judge outside the parties’ presence, except in limited circumstances.  “The ban on ex parte communication ensures that the judge will review and make rulings based only on the facts and evidence presented in the case.” A judge’s independent internet factual research can walk the line between violation and exception to this provision.

Rule 2.9(C) of the Code encompasses an exception to ex parte communications for judicial notice. While not defined in the Code, the ABA uses the definition of judicial notice from the Federal Rules of Evidence for the purpose of this opinion. Federal Rules of Evidence 201(b)(1) and (2) permit “judicial notice of facts which are ‘not subject to reasonable dispute’ because the facts are ‘generally known within the trial court’s territorial jurisdiction.’” Federal Rule of Evidence 201(a) makes the distinction between judicial notice of adjudicative facts as opposed to legislative facts. Adjudicative facts are subject to due process concerns. These facts will determine the outcome of the case as they concern the immediate parties. On the other hand, legislative facts aid judges in questions of law and policy and discretion. Independent judicial research is appropriate for the determination of legislative facts.

To assist judges in understanding when independent factual research is permissible, the ABA provides four guidelines.  Their opinion provides:

“When deciding whether to independently investigate facts on the Internet, the judge should consider:  

1. Is additional information necessary to decide the case?  If so, this type of information generally must be provided by counsel or the parties, or must be subject to proper judicial notice.   

2.  Is the purpose of the judge’s inquiry to corroborate facts, discredit facts, or fill a factual gap in the record?  If the facts are adjudicative, it is improper for a judge to do so. 

3.  Is the judge seeking general or educational information that is useful to provide the judge with a better understanding of a subject unrelated to a pending or impending case?  If so, the inquiry is appropriate.  Judges may use the Internet as they would other educational sources, like judicial seminars and books.  

4.  Is the judge seeking background information about a party or about the subject matter of a pending or impending case?  If so, the information may represent adjudicative facts or legislative facts, depending on the circumstances.  The key inquiry here is whether the information to be gathered is of factual consequence in determining the case.  If it is, it must be subject to testing through the adversary process.” 

In addition to these guidelines, the ABA opinion offers several hypothetical judicial notice scenarios along with analysis. The hypotheticals involve everyday scenarios judges may find themselves in, ranging from judicial notice of business hours posted on Yelp to researching electronic court files.

 American Bar Association, “Independent Factual Research by Judges Via the Internet,” December 8, 2017.


California Now Allows Non-California  lawyers to operate in California widely welcomed  

SB 766, a bill signed into law by California Gov. Jerry Brown in July, reverses a California Supreme Court decision that barred non-California lawyers from serving as arbitrators in California.  Per the new law’s abstract:

“This bill would permit an individual who is not admitted to practice law in California but who is a member in good standing of a recognized legal profession in the United States or a foreign jurisdiction and is subject to effective regulation and discipline by a duly constituted professional body or public authority to provide legal services in an international commercial arbitration or related proceeding. . .”

Prior to the bill’s enactment, a California Supreme Court ruling in 1998 prohibited non-California bar attorneys from appearing for international arbitrations. The new bill removes “an artificial barrier that resulted in many California-based companies having to travel to places like Singapore, London and Hong Kong to arbitrate their disputes,” says a spokesperson from FedArb, an international mediation service provider.

Many welcome the bill’s passing, including Howard Miller, a mediator and arbitrator with JAMS, the largest alternative dispute resolution provider in the world. Miller believes the bill makes sense because California, with one of the largest economies in the world, is already a leader in the “field of ‘alternative dispute platforms.’” The international arbitration business is worth an estimated $1 billion per year in New York, where the benefits also extend to the associated travel and hospitality sectors according to the Economist. Now California has the chance to delve into the international arbitration market and become a major center in the industry.

Miller also explained that to pass the bill “the entire legal profession had to be supportive,” and legislators needed to understand “that international arbitration between commercial companies has nothing to do with the more controversial issue of consumer, or employment, arbitration.” It is also worth noting that SB 766 applies only to commercial arbitration between companies headquartered in different countries rather than investor-state dispute settlement.

 Full text of SB 766


 John Breslin, Northern California Record, “Act allowing foreign international arbitration lawyers to operate in California widely welcomed,” August 27, 2018.


Articles / Interesting Case of the Month

Do Cellphones Really Cause Brain Cancer? We Have Answers:  

The National Toxicology Program recently released results from the largest government study to date on the question of whether talking on a cellphone increases your risk of getting a brain tumor. The study found a small increase in tumors in the hearts and brains of male rats, but no increase in female rats or mice. Although researchers observed some DNA damage, they were not sure if it was connected to radio-frequency radiation (“RF”). Furthermore, rats exposed to RF lived longer than other rats.

Studies about the effects of cellphone usage have been largely inconclusive because it is hard to study, brain tumors take a long time to develop, and it is hard to tell if observations are signs of a real hazard or just random. Furthermore, epidemiological studies have reliability problems, animals and humans absorb different amounts of radiation, and the heat from RF makes it hard to study.

Currently, the U.S. government’s position is that “the weight of the evidence shows there isn’t a cancer risk from cellphones. Nonetheless, given the widespread use of cell phones, many recommend the key to protecting oneself is keeping the phone at a slight distance from one’s body, instead of keeping the device in one’s pants all day.

As an aside, many who read this Newsletter know that I was in the cell phone business for many years and that I follow the industry closely.  I’ve seen some early studies with disturbing results and have heard rumors of other studies whose results have been suppressed (emphasis on “rumors”).  My personal (non-expert) take on the subject:  cell phones are safe as are Bluetooth devices.  However, I believe multi-hour use of Bluetooth headphones or earphones is not wise, and urge my friends to not permit their children to use Bluetooth headphones for extended periods.

 Ryan Knutson, The Wall Street Journal, “Do Cellphones Really Cause Brain Cancer? We Have Answers,” March 8, 2018.


In the Trump Administration, Science is Unwelcome. So Is Advice:  

While I continually strive to exclude my personal political views from this Newsletter, as regular readers know I will, from time to time, relate an article regarding the political landscape that I find particularly interesting or disturbing.  This is one such case.

Donald Trump is the first president since 1941 not to name a science adviser. For example, Trump has worked on trying to negotiate denuclearization without any advisors with knowledge of nuclear science. The White House has declined to comment on suggestions that Trump’s administration has diminished the role of science in policymaking. However, the spokesman for the White House’s National Security Council claims that “the president’s advisers are experts in their fields.”

Trump’s actions have also led to scientists leaving the United States. In 2017, Trump withdrew from the Paris climate agreement. In response, France started the “Make Our Planet Great Again” program, which as of June had funded 24 scientists from the U.S. and elsewhere to conduct research in France.

This marginalization of science extends beyond the White House, with the State Department and Department of Agriculture both lacking chief scientists. The Interior Department, National Oceanic and Atmospheric Administration, and Food and Drug Administration have disbanded advisory committees on subjects such as climate science and food safety.

The (now) former E.P.A. head, Scott Pruitt, not only rolled back dozens of regulations, but also systematically changed how the E.P.A treats science. For example, he proposed regulations limit the types of scientific research that could be used when crafting new public health policies. These new rules would purportedly increase scientific transparency, but could drastically limit the research available to the E.P.A. because health studies often rely on confidential data from individuals.

The Justice Department announced this year that it would no longer use “guidance documents,” which are documents written by experts in other agencies, to enforce laws. Major health and environmental laws such as the Clean Air Act and food safety laws have heavily relied on guidance documents written by scientists at the EPA, FDA, and other agencies. Therefore, some think this new policy will make many of these laws unenforceable, although the Justice Department denies this.

Furthermore, the Department of Agriculture is redefining part of its mission – scientific monitoring of food safety – to emphasize promoting exports of American farm products. Catherine E. Woteki, the former chief scientist at the Department of Agriculture from 2010 to 2017, believes that “putting the management of food safety under the aegis of trade, rather than science ‘undermines the whole history that the U.S. has for science-based standards for food.’”

The Interior Department has worked to fulfill Trump’s campaign promises to open public lands to extract oil, gas, and coal. The agency has stopped studies investigating the health risks to fossil fuel workers, without providing a clear reason. Several Interior Department scientists resigned to protest these actions they perceive as undermining research. Dozens of senior officials were reassigned, in moves that some scientists viewed as retaliatory and intended to undermine the department’s environmental research. In January, the majority of the Interior Department’s National Park System Advisory Board resigned. The former head of the board, Tony Knowles, said that the Interior Department Secretary, Ryan Zinke, “appears to have no interest in continuing the agenda of science, the effect of climate change, pursuing the protection of the ecosystem.”

Government scientists report “feeling a rising indifference to their work, as well as occasional open hostility, which is triggering a brain drain.”

 Coral Davenport, The New York Times, “In the Trump Administration, Science is Unwelcome. So Is Advice,” June 9, 2018.


NASA Twin Study Results 

In 2016, NASA launched a ground-breaking study in the field of genomics with their Twins Study. The study compared what happened to astronaut Scott Kelly, who returned from a one-year mission aboard the International Space Station, to his identical twin brother Mark, who remained on Earth. NASA gathered ten research teams from across the country to discover how spending one year in space affects the human body. The study should prove useful for NASA’s three-year mission to Mars in future.

The study began at NASA’s Human Research Program (HRP) 2017 Investigator’s Workshop (IWS) where the research teams made preliminary findings on what happened to Scott physiologically and psychologically while in space and compared that data to his identical twin brother on Earth. The 2018 IWS corroborated the findings from 2017 with some new observations. An integrated summary publication of these findings will debut later this year along with companion papers.

Researchers learned that spaceflight is associated with “oxygen deprivation stress, increased inflammation, and dramatic nutrient shifts that affect gene expression” by measuring Scott’s metabolites, cytokines, and proteins. Upon his return to Earth, most of the biological changes Scott experienced in space returned to approximately preflight levels. While some changes returned to normal after only hours or days of landing, others remained after six months.

The 7% of Scott’s genes that did not return to normal after his return are what some call the “space gene,” which was alluded to in the 2017 study. This finding suggests potential longer-term changes related to Scott’s immune system, DNA repair, bone formation networks, and respiratory system. But rest assured, Mark and Scott Kelly are still identical twins despite the observed changes in Scott’s gene expression, which reflects how our bodies react to our environment on a molecular level. Psychologically, however, Scott did not experience a reduction in cognitive performance compared to his brother on Earth. Additional details regarding publication of these findings can be found here.

The landmark Twins Study will guide future hypotheses through its application of genomics for years to come as NASA continues to emphasize astronaut health and safety on spaceflight missions.

 Monica Edwards & Laurie Abadie,, “NASA Twins Study Confirms Preliminary Findings,” January 31, 2018.