U.S. dairy farmers and beef producers frequently form cooperatives to purchase and maintain equipment for the artificial insemination of cattle and to hire and train people to be the technicians to perform the insemination. Farmers often believed that some of these technicians were better at their craft than others.
In the 1970s two competitive cooperatives–one based in Minnesota; the other in Wisconsin–were raiding each other’s skilled technicians, and when a technician switched co-ops, many of the farmers would also switch.
These competitive skirmishes ended up in a lawsuit in Minnesota’s federal court.[1] The Wisconsin co=op sued the Minnesota co-op for alleged antitrust violations and other wrongs. Faegre & Benson was retained to represent the defendant, and I was on the team for the case.
The case, as I recall, settled rather quickly.
Before it settled, I attended a meeting of the employees of the Minnesota co-op. One of them told me about awful things that the Wisconsin co-op’s people were saying about them. He then asked, “Is that defecation of character?” suppressing a laugh, I said I did not think so.
[1] See Post: Minnesota’s Federal Court (June 28, 2011).
Girard Henderson was an interesting client of the New York City law firm of Cravath, Swaine & Moore (CS&M), where I was an associate attorney, 1966-70.[1]
His grandfather was a Sandy Hook ship pilot who piloted ships into the City’s harbor and who managed to save a significant amount of money. Henderson’s father invested the inheritance from the grandfather in a New York City warehouse that burned to the ground, and there was a long delay in obtaining payment by an insurance company. As a result, the father went to work as a bookkeeper for the California Perfume Company (CPC) in Suffern, New York and became one of its substantial shareholders.
After Henderson’s father’s death, his mother inherited the CPC stock, and in 1935 she contributed those shares to a newly formed personal holding company, Alexander Dawson, Inc. (ADI) in exchange for all of ADI’s stock. Later, presumably after his mother’s death and after a buyout of his brother, Henderson became the sole owner of ADI.
Prior to 1955, however, he gave 27% of the ADI common stock (and some ADI preferred stock) to his then wife, Theodora Henderson, while Mr. Henderson maintained his personal control of ADI. In 1955 Girard and Theodora separated and later were divorced.
In 1967 Theodora formed her own holding company, Theodora Holding Corporation (THC), and she contributed her ADI common stock to THC in exchange for all of its stock.
In the meantime, in 1939, CPC changed its name to Avon Products, and in 1964 Avon’s stock was listed on the New York Stock Exchange and became a very successful stock with rising prices.
As of September 1968, ADI’s net worth was $150 million with Avon stock comprising 75% of its assets. The other 25%, pursuant to a diversification policy, was invested in other stocks and several small companies.
World's Fair, New York City
One such company was the Underground World Home Corporation that promoted such homes as safe places in the event of a nuclear attack by the USSR. It had a demonstration home at the 1964 New York City’s World Fair. Henderson also had his own underground home in the Rocky Mountains near Denver; its underground swimming pool had a mural of the New York City skyline on the east wall and one of the San Francisco skyline on the opposite wall. As of September 1968, ADI also had invested $14 million in silver bullion and Swiss francs that were stored in a vault under the airport in Zurich, Switzerland.
Court of Chancery, Wilmington, DE
In or about September 1968 THC commenced a stockholders derivative lawsuit against ADI, Henderson and another corporate officer. The complaint alleged mismanagement regarding these non-Avon investments and corporate contributions to the Alexander Dawson, Inc. Foundation. As ADI was a Delaware corporation, the case was filed in the Court of Chancery in Wilmington.
The case went to trial in 1969. It was the first trial in which I participated. I was “second chair” to Cravath partner, Jack Hupper. I handled the exhibits and other papers and did not say one word on the record. But at least I was in court observing the trial and seeing how it was done.
In September 1969 the court issued its decision. It noted that after trial the plaintiff had withdrawn its claims regarding silver bullion and other ADI investments made at Henderson’s direction, including the Underground World Home Corporation. Instead the plaintiff after trial had limited itself to claims regarding ADI’s purchase and sale of a seat on the New York Stock Exchange (NYSE) and the ADI charitable contributions to the Foundation. The court upheld the validity of the charitable contributions, but concluded that Henderson had used corporate funds for his personal benefit with respect to the NYSE seat and, therefore, had to account to ADI for any profit on the sale of the seat and on brokerage commissions.
I do not remember any of the substantive or procedural details of the trial, but I do remember that just before trial Henderson broke a leg in a New York City taxi accident. When he testified at trial, the broken leg in a cast had to be elevated on a makeshift pedestal.
I also recall that before trial Henderson had to delay a trip from the West Coast to New York City to meet with Mr. Hupper and me because he was hosting a special dinner with Rudy Vallée, a famous crooner in the 1920s through the 1940s.
Silver bullion
Nor can I forget that Henderson and ADI kept some of their records in an informal office in a small house in a New York City suburb on the west side of the Hudson River. One day I drove there over the George Washington Bridge to find relevant documents. I was surprised to find a bar of silver bullion at the back of one of the file drawers.
[1] This account is based on memory and Theodora Holding Corp. v. Henderson, 257 A.2d 398 (Del Ct. Ch. 1969). See also Post: Lawyering on Wall Street (April 14, 2011).
At its May 1999 Commencement Exercises, Grinnell College, my alma mater, granted me the honorary degree, Doctor of Humane Letters.
The citation said that I had “discovered a way to integrate his professional life as an attorney with his spiritual life and his desire to ‘do good.’ In the midst of a prestigious legal career, [he] found ‘a reawakening of [his] spiritual life’ through tireless pro bono work on behalf of clients in need of political asylum in the United States. . . . A 1989 trip to El Salvador to learn more about conditions there was, for him, a ‘spiritual journey.’ Despite the horrendous suffering he witnessed, [he] found himself uplifted and transformed by the faith and hope of the Salvadoran people. . . . Of this work, he says, ‘it provides a deeper sense of satisfaction of really helping someone.'”[1]
I responded with these words to the new graduates:
Listen to your life. To your successes and joys. To your disappointments and pain. To the strangers you encounter on the road to your Jericho.
As you listen and reflect, hopefully with the support of a community of faith, attempt to discern how God is present and active in your life. Then allow yourself to be nudged down paths that are consonant with God’s will for your life.
Thirty-eight years ago when I was at my Grinnell commencement, I was convinced that all that mattered were intellect, rationality, logic, knowledge and hard work, all of which were challenged and enhanced by my being a member of this academic community. I had persuaded myself that religion and spirituality were antiquated superstitions of no use to a liberally educated, intelligent person.
I eventually learned otherwise, but it took a long time.
[1] See Post: My Christian Faith (April 6, 2011); Post: Minneapolis’ Westminster Presbyterian Church (April 6, 2011); Post: The Parable of the Prodigal Son and His Older Brother (April 20, 2011); Post: The Sanctuary Movement Case (May 22, 2011); Post: Becoming a Pro Bono Asylum Lawyer (May 24, 2011); Post: My Pilgrimage to El Salvador, April 1989 (May 25, 2011).
[2] These comments were inspired by my own life and by the words of Frederick Buechner, an author and Presbyterian pastor, in Now and Then: A Memoir of Vocation (1990): “Listen to your life. See it for the fathomless mystery that it is. In the boredom and pain of it no less than in the excitement and gladness: touch, taste, small your way to the holy and hidden heart of it because in the last analysis all moments are key moments, and life itself is grace.” (See also George Connor, Listening to Your Life: Daily Meditations with Frederick Buechner (1992).) Recently I have encountered another book with the same theme by Parker Palmer, Let Your Life Speak: Listening for the Voice of Vocation (1999). (See Post: Westminster Town Hall Forum: Krista Tippett (July 26, 2011).)
Detail-obsessive lawyers like to cite to specific pages in legal materials that support their factual or legal assertions. Sometimes court rules require them to do so.
When the legal material appears in multiple versions, there is a similar desire to cite to the pages in the original version. As a result, publishers of the subsequent versions developed a practice of including the page numbers in the original version in addition to the page numbers of the subsequent versions. This practice became known as “star pagination.”
Blackstone's Commentaries
This practice is believed first to have been used for the later editions of Sir. William Blackstone’s treatise, Commentaries on the Laws of England. It was first published in four volumes in 1765-1769, was long regarded as the leading work on the development of English law and played an important role in the development of the American legal system.[1]
West's National Reporter System
In the U.S.’s pre-computer days, our court decisions were printed in books, the most popular of which for lawyers were published by West Publishing Company (West) of St. Paul, Minnesota.[2] These books were known as the National Reporter System, and the published court opinions also included editorial enhancements by West that summarized and classified key points on law in those opinions. Over time, these reporters became the de facto (and sometimes de jure) official sources for U.S. judicial opinions.[3]
As a result, when computerized legal databases and services became available, there was a desire, if not a market need, for the providers of those services to have star pagination of judicial opinions in their databases to the previous reports of those decisions in the National Reporter System.
One of the first computerized legal research services was LEXIS in 1973 from Mead Data Central, Inc. (MDC) of Dayton, Ohio. At first it only had materials of two states (Ohio and New York) online, but by 1980 it had materials from all the states and federal government.[4]
In June 1985 MDC announced that it was adding star pagination to the LEXIS service. This new feature would consist of “the addition of the official page cites to the full text of online case law material.” This would eliminate the physical necessity of referring to the volumes of the National Reporter System publication in which the reports appeared.[5]
In response, West sued MDC for copyright infringement in Minnesota’s federal court.[6] MDC retained Faegre & Benson to defend the case with the assistance of MDC’s Wall Street lawyers (Sullivan & Cromwell), and I was a member of the Faegre team for the case.
The initial skirmish of this war between the two major competitors in the then new field of computerized legal research was West’s application for a preliminary injunction to ban LEXIS’ star pagination to West publications while the litigation proceeded to trial. I argued this motion for MDC. Unfortunately the court granted the preliminary injunction. The court by Judge James Rosenbaum held that the page numbers and arrangement of cases were within the scope of protection of West’s copyrights, that the proposed star pagination by MDC infringed those copyrights and went beyond fair use and that a preliminary injunction was warranted based upon likelihood of success on the merits, irreparable harm, balance of harms and the public interest.[7]
MDC exercised its right to an immediate appeal of the granting of the preliminary injunction to the U.S. Court of Appeals for the Eighth Circuit. This time, a Sullivan & Cromwell partner argued the case for MDC. Unfortunately the result was the same. The Eighth Circuit, 2 to 1, affirmed the preliminary injunction.[8] The U.S. Supreme Court thereafter denied permission to bring the issues before that Court.[9]
Later, without Faegre’s participation and according to press reports, MDC and West entered into a settlement agreement that ended the litigation and that granted MDC a license to include star pagination in LEXIS along with West’s corrections to judicial opinions for an annual licensing fee of $50,000.[10]
In the mid-1980’s Sentry Insurance A Mutual Company (Sentry) of Stevens Point, Wisconsin, and the parent of The Sentry Corporation, sold its Australian operations to an Australian insurance company. Thereafter the Australian buyer alleged that the financial statements for the purchased operations were materially overstated.
Federal Courthouse, Sydney, AustraliaCourthouse, Stevens Point, WI
This set the stage for a conflict and battle between the Federal Court of Australia and the state courts of Wisconsin. It is an illustration of the unnecessary disputes that can be generated by litigation over international commercial disputes and that would not exist in an agreed-to international arbitration.[1]
In 1987 the Australian insurance company (the buyer) commenced a lawsuit in the Federal Court of Australia against The Sentry Corporation (the seller) and Peat Marwick Mitchell & Co. (PMM), an Australian accounting firm, for money damages caused by those alleged material financial misstatements. The Sentry Corporation made a cross claim against PMM in that case, and the case was scheduled to commence trial in Australia in October 1990.
In October 1988 Sentry commenced a lawsuit in Wisconsin state court in its home town of Stevens Point against KPMG Peat Marwick, the U.S. affiliate of PMM, relating to these issues. In January 1990 Sentry amended its complaint to add PMM (the Australian accounting firm) as a defendant, and I was retained as PMM’s attorney.
My first maneuver was a motion to dismiss the Wisconsin complaint for lack of personal jurisdiction over the Australian accounting firm[2] and alternatively to stay or postpone the Wisconsin case until the prior Australian litigation was resolved.
Before the Wisconsin dismissal and stay motion was decided, however, the plaintiff (Sentry) noticed the oral depositions of nine PMM auditors to be taken for the Wisconsin case in Sydney, Australia. While such depositions are common practice in U.S. civil litigation, they are not in Australia and most other countries, and PMM and I believed that such depositions were a tactical move by Sentry to gain an unfair advantage in the Australian litigation. Therefore, we moved the Wisconsin court to prohibit the depositions, but the Wisconsin court denied the motion.[3]
I, therefore, went to Sydney to prepare the Australian auditors for their depositions and to defend those depositions, but after I was there, PMM requested the Australian court to issue an injunction against the depositions taking place on Australian soil. The Australian court granted that injunction. Thus, the depositions did not take place in Sydney.
Later, after my return to the U.S., the Wisconsin court denied PMM’s motion to dismiss for lack of personal jurisdiction and granted Sentry’s motion to strike that defense to the Wisconsin plaintiff’s claims.[4]
PMM then sought and obtained permission to take interlocutory appeals (immediate appeals before final judgment) to the Wisconsin Court of Appeals from the denial of PMM’s motion to bar the depositions and from the denial of its personal jurisdiction motion and defense.
Before the Wisconsin appeals were argued and decided, however, trial of the Australian case commenced. Contrary to Australian and U.S. general practice, the Australian insurance company’s expert witness was called as the first witness (instead of waiting until all the fact witnesses had testified) and was demonstrated not to have expertise on at least some of the subjects of his proposed testimony. As a result, the plaintiff’s barrister had a nervous breakdown. This triggered the collapse of the Australian plaintiff’s case and a truly global settlement that ended all of the litigation.
I should add that as I did not have much to do in Australia for the Wisconsin case after the Australian court enjoined the depositions. I thus had some time for personal pleasure.
Sydney Opera House
I attended a production of “Aida” at the spectacular Sydney Opera House and saw many interesting sights in that great city.
Heron Island, Great Barrier Reef
I also went scuba diving near Heron Island on the Great Barrier Reef. I flew from Brisbane, Australia to Heron Island by helicopter and saw large triangular manta rays in the water from the air. In the hotel on the Island a male nurse from Melbourne, Australia and I formed an unbeatable team in an international game of Trivial Pursuit.
Qantas 747
My return 14-hour flight to Los Angeles on Qantas Airlines was rescheduled, and much to my consternation the only available seat was in the smoking section. I was told not to worry because I probably could be re-seated on the plane itself. That happened. I got a very comfortable and quiet seat in the upper deck of the 747.
My Australian adventure was over. Thereafter I often referred to this Australian jaunt as the best business trip I ever took.
[1] See Post: Resolving Disputes between Manufacturers and Distributors/Dealers (Aug. 9, 2011); Post; International Commercial Dispute Resolution (Aug. 11, 2011).
[2] See Post: The Personal Jurisdiction Requirement in Civil Litigation in U.S. Courts (Aug. 8, 2011).
[3] Order, Sentry Ins. v. KPMG Peat Marwick, No. 88-CV-481 (Wis. Cir. Ct. Portage Cty, May 24, 1990).
[4] Decision and Order, Sentry Ins. v. KPMG Peat Marwick, No. 88-CV-481 (Wis. Cir. Ct. Portage Cty, June 28, 1990).
As previously noted, I have a strong professional preference for mediation and arbitration as methods for resolving disputes between manufacturers and distributors or dealers.[1] This assumes that the parties have tried and failed to resolve their disputes through direct negotiation, which is the least expensive and least time-consuming method and which enhances the possibility of amiable future relationships.
The reasons for preferring negotiation, mediation and arbitration hold as well for commercial disputes between entities in different countries.
Mediation (or conciliation as it is called in the international arena) where a neutral third-party assists the disputants in trying to settle their disputes is the first option after negotiation. This was my preferred dispute resolution method because it empowered the parties themselves to settle their disputes, because it opened the way for creative solutions that were not possible in court or in arbitration and because it was the least expensive option.[2]
Only if mediation (or conciliation) failed, would such a contractual provision call for submitting the dispute to arbitration under one of several general sets of arbitration rules where the arbitrator resolves the dispute. Arbitration was preferred to court litigation because the former eliminated the expensive pre-trial discovery and other processes of the court and because the parties participated in selecting the arbitrator who was seen as a safer decider than an unknown judge or jury. On the other hand, the costs of international arbitration are significant, especially with three arbitrators from different countries and international travel.[3]
Moreover, there are additional reasons why arbitration is a preferred method for international commercial dispute resolution. First, there is fear of prejudice against the foreigner by a court or jury of another country. But such fear is less with an arbitrator or arbitrators that the sides help to choose. Second, there is a multilateral treaty that makes arbitration awards (the final decision in an arbitration) easier to enforce in other countries.[4] In contrast, it is more difficult to enforce one country’s courts’ final judgments in other countries. This is very important. For example, an arbitration award or a court judgment might hold the defending corporation (the respondent or defendant) liable to the complaining corporation (claimant or plaintiff) for $1 million for breach of contract, and most of the respondent or defendant’s assets might be in a different country than where the arbitration or litigation took place.
At Faegre & Benson, I frequently drafted dispute resolution provisions for international contracts prepared by other lawyers in the firm. In addition, I was counsel for two foreign companies in international arbitration proceedings under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).[5] Each of these cases illustrated interesting facets of such proceedings.
Turkish distributor vs. U.S. (Minnesota) manufacturer.
In the first case, I represented the Turkish terminated distributor of medical devices that were manufactured by a Minnesota company. Their written agreement, written by Minnesota lawyers, called for Minnesota law as the governing law and arbitration in Minnesota under the UNCITRAL Arbitration Rules with three arbitrators and with English as the language of the arbitration.
Under Article 5 of the UNCITRAL Rules there are three arbitrators unless the parties agree to have only one arbitrator. When there are three arbitrators, the claimant (here, the Turkish company) selects the first arbitrator; the respondent (here, the Minnesota company) picks the second; and then these two arbitrators select the third and presiding arbitrator. Although the first two arbitrators are selected by the two parties, the arbitrators are to be independent, not representatives or advocates for the parties that selected them.
My Turkish client and I thus had to go first in selecting an arbitrator. My ideal candidate was a Minnesota lawyer from Turkey who was bilingual in English and Turkish and who knew Turkish business customs and circumstances, but not surprisingly I could not find such a person. I then called the Turkish consulate in Chicago and Embassy in Washington, D.C. for recommendations for such an arbitrator. I eventually found a U.S. (and Turkish) lawyer in New York City who was born in Turkey, who was bilingual and who knew its business customs and circumstances, and the Turkish company appointed him as arbitrator. The Minnesota company then appointed a professor from a Minnesota law school as the second arbitrator. The two of them then appointed a retired chief justice of the Minnesota Supreme Court as the third and presiding arbitrator.
IDS Center, Minneapolis
The hearings were held in a conference room of the Minneapolis office of the presiding arbitrator in the IDS Tower and lasted several days. The Minnesota company was represented by its in-house lawyer and two lawyers from its outside law firm while I was by myself for the Turkish company. (This was a role reversal for me.) The atmosphere was tense in the conference room. The husband of the couple who owned the Turkish company had been an arbitrator in his own country where things were handled much differently, and yet he enjoyed the battle in the Minneapolis conference room. His wife who was also involved in the business and was a witness, however, was appalled by the hostile questioning of the other side’s lawyer.
Several weeks after the hearing, I received in the mail the two-page award of the arbitrators requiring the manufacturer to pay a sum of money to the Turkish company. Thereafter the money was paid, and the case was over. My client and I were very pleased.
Under Article 32(3) of the UNCITRAL Arbitration Rules, the arbitrators are required to provide a statement of the reasons for their award unless the parties waive this requirement. In this case, the requirement was waived because a relatively small amount money was claimed and because both sides wanted to avoid the expense of paying for the time of the arbitrators to prepare such a statement of reasons.
U.S. (Minnesota) Buyer vs. Asian manufacturer
In the second case, I was counsel for an Asian manufacturer responding to an arbitration claim for over $26 million for breach of contract and other alleged wrongs. The contract at issue had been prepared by a non-lawyer employee of a Minneapolis foreign-trade consulting firm. It had what I regarded as a very inartful arbitration provision. It called for arbitration under the rules of “the United Nations Uniform Commercial Codes,” which do not exist. Nor did it specify where the arbitration should be held or the number of arbitrators or the language of the arbitration.
The Minnesota company first suggested there be only one arbitrator and that a specified retired Minnesota state trial court judge be that sole arbitrator. Although I had experience before that individual when he was a judge and had full confidence in his ability to be a fair arbitrator in this case, my Asian client did not want to have the case decided by one person from Minnesota. Therefore, I told opposing counsel that we did not agree to only one arbitrator.
Nothing more was heard from opposing counsel, and I thought the case had died on the vine. I was greatly surprised, therefore, when I received a letter from the Permanent Court of Arbitration at The Hague, Netherlands. The letter said that under Article 7 (2)(b) of the UNCITRAL Arbitration Rules, it was the designating authority for appointment of arbitrators when a party defaults in so doing and that the Asian company had defaulted in appointing the second arbitrator. In response, I recited the above history and stated that the Minnesota company had never appointed the first arbitrator and that, therefore, the Asian company had not defaulted. An official at the Permanent Court said I should tell that to the person it was designating as the appointing authority, a barrister in Melbourne, Australia. I reiterated my argument to the barrister to no avail when he appointed the head of an Asian international arbitration center and a former attorney general of that country as the second arbitrator.
Thereafter, these two arbitrators appointed a Danish lawyer from Copenhagen with extensive experience in international commercial arbitration as the third and presiding arbitrator.
On behalf of the Asian company, I filed a motion to dismiss the arbitration as it had never agreed to arbitration under the UNCITRAL Arbitration Rules, and the panel set a hearing in Minneapolis on this motion. Several weeks before the hearing, I was startled to receive a letter announcing the resignation of the second arbitrator (the Asian lawyer). My Asian co-counsel and I then immediately appointed a Queen’s Counsel barrister from London as the second arbitrator. (Later I found out that the Asian arbitrator had resigned because his fellow arbitrators refused to authorize him to fly first class (at substantial expense) to Minneapolis for the hearing.)
The hearing on the dismissal motion was held in Minneapolis, and the panel denied the motion. They did so even though their decision recognized that the “United Nations Uniform Commercial Codes” did not exist and under a strict interpretation, the arbitration clause had no effect. Nevertheless, the order concluded that the clause must be understood as referring to the UNCITRAL Arbitration Rules.
At the same time we also had a dispute as to the venue (or “seat”) of the arbitration due to the inartful arbitration clause’s not specifying such; my side argued for Hong Kong; the other side, London; and the arbitrators decided on London. The arbitrators also decided that the language of the arbitration would be English, which was not specified in the clause, but all agreed to English.)
In U.S. trials and arbitrations, witnesses are cross-examined on inconsistencies, real or apparent, between their testimony at the trial or hearing and prior testimony or statements. However, in this arbitration, the panel told the attorneys it was “not necessary during examination or cross-examination of witnesses for them to examine the witnesses on matters already in the written materials.” This was a surprise for me and a problem in preparing good cross-examination questions.
In the Fall of 1997, the hearings on the merits (or the trial) were held in three different cities. Minneapolis was first for the testimony of certain witnesses. I then flew to the Asian city where my client was located for hearings for the testimony of other witnesses. I then returned to Minneapolis for a brief stay, and then it was on to London.
Law Courts, LondonSt. Paul's Cathedral, London
London was the city for closing arguments. They were held in a conference room of an arbitration center in “legal London,” on the Strand near the Law Courts and the Inns of Court. The attorneys for the Minnesota company went first. Then my Asian co-counsel and I made our arguments.
I prepared for the closing arguments in Faegre & Benson’s London office, which is just several blocks from St. Paul’s Cathedral. Working on a Sunday morning, I could hear the pealing of the Cathedral’s bells and wished that I were in the church, rather than in the office.
Approximately four months later I received the 27-page Award that dismissed all of Claimant’s claims and all of my client’s counterclaims. One of the key points was the conclusion that the Claimant’s predecessor-in-interest and assignor had waived all claims for breach of contract and that its conduct did not fall within the wording of a non-waiver clause in the contract.
Thereafter Claimant submitted a motion for correction and interpretation of that key point, which my client resisted. On the basis of the papers the panel decided, 2 to 1, that there was no need for any interpretation or correction of the Award. At last, the case was over.
Not surprisingly this was not an inexpensive arbitration. In addition to the fees and expenses of each side’s attorneys, the bill of the three arbitrators for their fees and expenses was $302,000 to be split equally by the two parties.
[1] Post: Resolving Disputes between Manufacturers and Distributors/Dealers (Aug. 9, 2011).
[2] One example of rules for this method of dispute resolution is the UNCITRAL Conciliation Rules, which cover all aspects of the conciliation process, providing a model conciliation clause, defining when conciliation is deemed to have commenced and terminated and addressing procedural aspects relating to the appointment and role of conciliators and the general conduct of proceedings. The Rules also address issues such as confidentiality, admissibility of evidence in other proceedings and limits to the right of parties to undertake judicial or arbitral proceedings while the conciliation is in progress. (UNCITRAL, 1980–UNCITRAL Conciliation Rules, http://www.uncitral.org.)
[3] Post: Resolving Disputes between Manufacturers and Distributors/Dealers (Aug. 9, 2011).
[4] The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also called “the New York Convention” or treaty) now has 146 of the 192 U.N. member states as parties, including China, Korea, Japan, India, Indonesia and other major trading partners of the U.S. The treaty requires courts of contracting States to give effect to an agreement to arbitrate when seized of an action in a matter covered by an arbitration agreement and also to recognize and enforce arbitration awards made in other States, subject to specific limited exceptions. (UNCITRAL, 1958–Convention on the Recognition and Enforcement of Foreign Arbitral Awards, http://www.uncitral.org.)
[5] The UNCITRAL Arbitration Rules cover all aspects of the arbitral process, providing a model arbitration clause, setting out procedural rules regarding the appointment of arbitrators and the conduct of arbitral proceedings and establishing rules in relation to the form, effect and interpretation of the award. (UNCITRAL, 1976–UNCITRAL Arbitration Rules, http://www.uncitral.org.)
In the summer of 1956 (before my final year of high school), I visited Harvard, Yale and Princeton Universities and the University of Chicago. I obviously thought that I was qualified at least to apply to these elite institutions. However, my family was of very modest financial means, and I concluded I could not afford to go to any of these institutions. As a result, I never applied to them.
Grinnell College
At the time I also was considering Grinnell College because of its reputation for academic excellence, its small size and its being located in my home state of Iowa. It, however, was more expensive than the state universities in Iowa and thus also probably beyond my family’s financial capacity.
That Fall, however, a high school counselor told me about a competitive full-tuition scholarship at Grinnell College called the George F. Baker Scholarship. I applied for that scholarship, went to the College for an interview and was awarded the Scholarship. This made it financially possible for me to attend Grinnell, and I enrolled the next Fall at the College. Successful academic performance resulted in renewal of the Scholarship for my full four years for total financial aid of $3,700.[1]
George F. Baker
George F. Baker (1840-1931) had no personal connection with Grinnell. He was a U.S. financier and a co-founder of the First National Bank of New York that later became Citibank N.A. He was a director of many corporations and amassed a great fortune.[2]
Baker’s fortune was used to fund his many philanthropic endeavors. He provided much of the original funding for the Harvard Business School and its Baker Library. He also gave the money for the Baker Memorial Library at Dartmouth College, the Baker Field for athletics at Columbia University and many other charitable causes in New York City.[3]
In 1946 the George F. Baker Trust started the George F. Baker Scholarship program that as of 1964 had provided scholarships to some 700 to 800 men at 25 colleges and universities throughout the U.S. This Scholarship program ended in about 1977. The recipients were chosen by these institutions on a highly selective basis.[4]
In or about 1951, the Trust added Grinnell College as one of the institutions participating in the Scholarship program. The Trust gave the College $50,000 to be distributed to outstanding young men who were graduating from high school during the next four years (1951-54).[5] The Trust’s relationship with Grinnell must have been renewed as it was available to me, 1957-61.[6]
[1] Letter, the Trust to Duane Krohnke (May 1, 1976).
[4] Letter, the Trust to Duane Krohnke (Sept. 1964); letter, the Trust to Duane Krohnke (June 25, 1965).
[5] Charles H. Foster, A Quest for Leadership in the Small Town High Schools of America (circa 1951)(Grinnell College brochure written at request of Grinnell College President Samuel N. Stevens).
[6] I have not been able to ascertain the exact period the Baker Scholarships were available at Grinnell.
Since at least the last half of the 20th century, manufacturers of consumer goods typically have gotten their products to the end user in the U.S. via independent distributors and dealers or franchisees. Usually the manufacturers are larger companies while the others are smaller entities. They all have a community of interest in promoting the sales of the products at the highest prices with the greatest profits. But there also is a constant tension and friction between them and the potential for disputes. This is at its worst when the manufacturer terminates the distributor or dealer or franchisee.
I frequently was the attorney for the manufacturer in such termination cases. I successfully represented Chrysler Motors Corporation against a terminated Duluth dealer and Benjamin Moore & Company against a terminated St. Paul distributor.[1] I also was able to obtain judicial reduction of adverse results against a manufacturer and a franchisor that had been represented by other counsel.[2] Three of these four cases started in Minnesota’s federal court (Post: Minnesota’s Federal Court (June 28, 2011).
In addition, I helped to settle other such cases. One was for a Canadian manufacturer of snowmobiles. Another, for a U.S. manufacturer of farm equipment. Both of these cases were in Minnesota’s federal court.
Another type of dispute erupted between Chrysler and its Dodge dealer in St. Paul over the planned relocation of another Dodge dealer from East Lake Street in Minneapolis (the automobile row of the early 20th century) to Roseville, a suburb between the Twin Cities. Under a Minnesota statute that sought to protect existing dealers, the St. Paul dealer sued to block the relocation. The trial court, however, decided in favor of Chrysler, and the appellate court affirmed that result.[3]
Because of the costs and risks of such litigation and because of my interest in Alternative Dispute Resolution, I helped other lawyers in the firm draft dispute resolution provisions for various agreements, including distribution agreements.
Often such provisions would first call for mediation where a neutral third-party assists the disputants in trying to settle their disputes. This was my preferred dispute resolution method because it empowered the parties themselves to settle their disputes, because it opened the way for creative solutions that were not possible in court or in arbitration and because it was the least expensive option. Only if mediation failed, would such a contractual provision call for submitting the dispute to arbitration under one of several general sets of arbitration rules where the arbitrator resolves the dispute. Arbitration was preferred to court litigation because the former eliminated the expensive pre-trial discovery and other processes of the latter and because the parties participated in selecting the arbitrator who was seen as a safer decider than an unknown judge or jury.
From the outside these disputes took the form of a large corporation versus a small corporation. But human beings were involved on both sides. The executives of the manufacturer had made decisions they thought were fully justified, and their careers and compensation conceivably could be affected by the resolution of the conflict. The same was true of those on the other side. Moreover, emotions often were intense in such quasi-divorce situations. In one case, the owner of the dealership sued his own lawyer over the settlement of his case against the manufacturer. Later that owner killed his girl friend and was acquitted on the grounds of insanity. I was worried because he might view me as part of the conspiracy against him.
[1]Piccard Motor Co. v. Chrysler Motors Corp., 940 F.2d 1163 (8th Cir. 1991)(held Minnesota statute requiring manufacturer to pay terminated dealer one-year’s fair rental value of facilities did not apply to dealer that owned the facilities); Elvgren Paint Supply Co. v. Benjamin Moore & Co., 948 F.2d 1082 (8th Cir. 1991)(affirmance of summary judgment for manufacturer’s termination of an at-will distributor).
[2]W.K.T. Distributing Co. v. Sharp Electronics Corp., 746 F.2d 1333 (8th Cir. 1984)(remand to trial court to reconsider award of $300,000 damages); W.K.T. Distributing Co. v. Sharp Electronics Corp., 786 F.2d 898 (8th Cir. 1986)(noting trial court’s reduction of damages from $300,000 to $85,000 after remand, but refusing to make further reduction); Team Central, Inc. v. Teamco, Inc., 271 N.W.2d 914 (Iowa Sup. Ct. 1978)(en banc reduction of adverse judgment from $2,550,000 to $1,500,000).
[3]Wilkins Dodge, Inc. v. Chrysler Corp., 426 N.W.2d 903 (Minn. Ct. App.), pet. for review denied (Minn. Sup. Ct. 1988).
A certain connection between a defendant and the geographical jurisdiction of a court is necessary in order for a civil lawsuit to proceed in the U.S.
This connection exists, for instance, if an individual defendant is served with a summons and complaint while he is in the geographical jurisdiction of the court or if the defendant waives the defense of lack of personal jurisdiction. Similarly there is clearly personal jurisdiction when an individual defendant is a resident of the geographical jurisdiction of the court or a defendant corporation or other business entity was organized under the laws of that jurisdiction or is “doing business” there.
U.S. Supreme Court Building
In addition, there is personal jurisdiction if the defendant has sufficient “minimum contacts” with the forum state, such that summoning the defendant to the forum state would not offend “‘traditional notions of fair play and substantial justice.’ ” This is the U.S. Supreme Court’s articulation of the requirement under the due process clauses of the Fifth and Fourteenth Amendments to the U.S. Constitution. The Supreme Court also has said that a defendant’s “minimum contacts” with the forum must be more than “random,” “fortuitous,” or “attenuated.” Sufficient contacts exist when “the defendant’s conduct and connection with the forum . . . are such that he should reasonably anticipate being haled into court there.” In assessing the defendant’s reasonable anticipation, there must be “ ‘some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum . . ., thus invoking the benefits and protections of its laws.’ ”[1]
This test is the same whether the defendant is from another state in the U.S. or from a foreign country. However, as the United States Supreme Court has stated, “ ‘Great care and reserve should be exercised when extending our notions of personal jurisdiction into the international field.’ ”[2]
Thus, any defense lawyer in a civil case immediately must determine whether personal jurisdiction obviously is established or whether there is a legitimate basis to challenge this requirement by asserting the defense in the answer to the complaint or by moving to dismiss the case before anything else happens.[3]
As a civil litigator, I encountered this issue all the time in my practice. In two cases for foreign clients I obtained dismissal of the complaint for lack of such jurisdiction at the start of the cases.
Fraser Bridge, Delta, B.C., Canada
In one case, my client was a Canadian corporation from Delta, British Columbia that was a subcontractor to a company from the State of Washington that had an agreement with a Twin Cities FM-radio station to provide certain electronic equipment for the station. The equipment was manufactured by the Canadian company and sold to the Washington company that in turn sold it to the radio station. The equipment allegedly did not work properly so the station sued the Canadian company in a Minnesota state court. The trial court granted the motion to dismiss for lack of personal jurisdiction, and the appellate court affirmed. The latter emphasized that the Canadian company never had an office, owned property or filed tax returns in Minnesota, had never had a mailing address or telephone number in this State, and did not negotiate any agreement with the radio station. While the Canadian company, upon request, shipped the equipment directly to the station in Minnesota and later sent a technician to the state to attempt to fix the equipment, hand delivered a part for the equipment to the station and mailed certain drawings of the equipment directly to the station for use by its consultant, these contacts were insufficient to justify jurisdiction.[4]
Singapore skyline
In the other case, my clients were parent and subsidiary companies from Singapore. Again the trial court (Post: Minnesota’s Federal Court (June 28, 2011) dismissed the case for lack of personal jurisdiction, and the appellate court affirmed. The latter court noted that the Singapore subsidiary had sent numerous letters and faxes and made several telephone calls to Minnesota in connection with the contract and that the contract contained a Minnesota choice-of-law provision. In addition, the Singapore subsidiary sent four samples of the product in question to Minnesota. These, however, the court held to be insufficient to justify personal jurisdiction.[5]
The appellate court in this second case concluded by saying that the negotiations, meetings, production, and delivery were all centered in Singapore. The contacts with Minnesota appeared at best as inconsequential rather than substantial under these circumstances. The Singapore subsidiary did not create a substantial connection between itself and Minnesota, it merely engaged in negotiations with a purchaser who happened to reside in Minnesota. Given the nature and quality of the Singapore subsidiary’s contacts with Minnesota, traditional notions of fair play and substantial justice indicated that it would not expect to litigate in the State of Minnesota.[6]
The personal jurisdiction issue is part of the regular tool kit of the trial lawyer and litigator. Yet it is built on the constitutional bedrock of fair play.
In 1996 eleven other former Rhodes Scholars and I were “delegates” to a virtual U.S. constitutional convention.[1]
The other delegates were far more accomplished than I: (1) Samuel Beer, a distinguished author and political science professor at Harvard University;[2] (2) John Brademas, former Member of Congress and President of New York University;[3] (3) Jack Justice, a Philadelphia lawyer;[4] (4) Philip Kaiser, a former U.S. diplomat;[5] (5) Jonathan Kozol, author, educator and activist about children;[6] (6) Jason McManus, a journalist and executive with Time/Life;[7] (7) Larry Sabato, author and professor of government, University of Virginia, and Director of its Center for Politics;[8] (8) Frank Sieverts, a specialist in refugee and relief issues at the State Department for 25 years and later an executive in the Washington office of the International Committee of the Red Cross; [9] (9) Reginald Stanton, a New Jersey lawyer and former state court judge; [10] (10) Lester Thurow, author and professor of management and economics, MIT;[11] and (11) Edwin Yoder, journalist and professor of journalism and humanities, Washington and Lee University .[12]
We first were asked to state in writing what, if any, constitutional changes we would propose in a contemporary constitutional convention. Then we were asked to comment in writing on the others’ suggestions. (This was before the advent of electronic, interactive communications technology with which we are familiar today.)[13]
I made two suggested constitutional changes. One was a federal campaign finance amendment that would assign individual financial contributions to a federal election fund that, in turn, would provide financing to federal election candidates. Such an amendment would overturn the Supreme Court’s interpretation of the First Amendment as protecting money as speech, an amendment needed even more now after the Court’s 2010 decision in Citizens United v. Federal Election Commission. The other suggested constitutional amendment was to increase the term of office of members of the House of Representatives from two to four years with their election the same time as the president. This should result, I said in 1996, in less divided and stalemated government.[14] We could have benefited from such an amendment in 2010.
In my rebuttal, I observed that nearly everyone objected to the idea of holding a real constitutional convention in the late 1990’s, that no one had proposed a radically new concept of a constitution and that everyone had offered ideas for incremental change.[15]
Our most important proposals, I thought, all were designed to facilitate the people’s voice being heard through the electoral process. Three others joined me in suggesting campaign finance amendments. No one suggested term limits for members of the House or Senate, and several wanted repeal of the XXII Amendment that imposed a two-term limit on the president. A number of proposals were made to make changes in the electoral college for the election of the president and vice president. Larry Sabato wanted to make voting in the presidential election mandatory. Two other delegates proposed increasing the Representatives’ term to four years as did I. Some noted the increasing anti-majoritarian nature of the U.S. Senate and suggested reallocating Senate seats from smaller to larger states to remedy that problem, and one “delegate” proposed making ex-presidents ex-officio members of the Senate.[16]
In my rebuttal I disagreed with Jonathan Kozol’s desire for children’s rights amendments. His comments, reminded us, however, I said, of the profound need to counter-balance the voting ranks of the retired people. I, therefore, offered for debate the idea of extending the voting franchise to children of all ages. There were obvious administrative problems that would have to be solved to make that possible.[17]
Interestingly in terms of the political debates of 2011, no one suggested there be a balanced budget amendment. Moreover, John Brademas reiterated his public opposition to such an amendment as “dangerous to national security and the nation’s economy.” This idea and others like it, he said, “attempt to decide current political controversies outside the regular give-and-take of the legislative process. The effect of such proposals is to trivialize the Constitution and diminish respect for its central, fundamental place in the American system of governing.”[18]
[1]A “Virtual” Constitutional Convention, American Oxonian, Fall 1996, at 232.
[2]Samuel Hutchison Beer, Harvard Scholar of British and American Politics, Dies at 97, ces/news/press-releases/beer-04102009.shtml.
