From: "Taylor, Liane R" <[log in to unmask]>
Date: Thu, 18 Sep 2014 15:24:57 +0000

All -

Thanks so much for this interesting discussion. Kevin, this research
is illuminating, especially given the vendor's reasoning, which is
that sovereign immunity allows us to "disregard" the terms of the
agreement. They argue that waiving sovereign immunity is normal when
entering into "private, commercial transactions", and if this weren't
in place, then  "no one would contract with a state institution since
none of the contractual protections would be enforceable." They have
agreed to strike the Waiver of Sovereign Immunity clause, but replace
it with, “This Agreement represents is a private, commercial
transaction entered into between Licensor and Licensee.” We were not
comfortable with this either, and have handed over to our GC, who has,
as expected, stricken this clause, stating that we are a public
entity. They are still in discussion.

I should point out that we learned this is a new license (as of August
2014) and a new GC for the vendor. We are likely one of the first to
negotiate it.

This is a very interesting development in licensing, and I'll be sure
to keep you all apprised.

I'd also like to point out that I received many direct responses, and
most basically said:

1) Never seen this before (one saw it once)
2) Say No
3) Walk Away
4) If you want to negotiate further, give it to your GC

Thanks for all of the responses.

-Liane

Liane Taylor
Interim Head Acquisitions Librarian
Texas State University
[log in to unmask] • 512.245.3009


-----Original Message-----
From: Kevin Smith <[log in to unmask]>
Date: Mon, 8 Sep 2014 12:35:19 +0000

I should probably confess upfront that research on this issue has been
done by a wonderful intern in my office; a young lawyer now in library
school who is much more creative and dogged in her research than I am,
or have time to be.

I actually do not think the status of the treaty organization would
matter very much.  Sovereign immunity is less about who the plaintiff
is than it is about preventing the federal courts from exercise
authority over the states, and especially over state funds.  Citizens
of other states, foreign or domestic, can get jurisdiction in federal
court due to "diversity" -- when the parties are from different
jurisdictions, the federal courts can step in (that is, the plaintiff
can file the case in federal court) to prevent one party from unfairly
benefiting due to "home court advantage."  I am confident that the
same would be true for an international organization; they could get
federal diversity jurisdiction over any defendant that was subject to
the diversity rules.  But state entities are exempted from that kind
of federal jurisdiction.  So if a state is the putative defendant, I
doubt a treaty organization would be able to bring the case in federal
court any more that a citizen from a different state or a different
State could.

The upshot of the research that our intern did is that sovereign
immunity also usually makes it difficult or impossible for a contract
party to compel arbitration, even when the contract with a sovereign
entity provides for such arbitration.  Of particular relevance to the
original question is a case called Memphis Biofuels, LLC v. Chickasaw
Nation Industries (note that these cases often involve Native American
tribal nations, which enjoy similar immunity from the diversity
jurisdiction of federal courts).  Brunner & O'Connor on Construction
Law summarizes the case this way:

"[A] bio-diesel refining company sought to compel arbitration against
a federally-chartered tribal corporation as a result of disputes that
arose out of a diesel fuel and soybean oil supply contract.  The
agreement contain a provision expressly waiving any sovereign immunity
in an arbitration agreement.  While both parties signed the agreement,
the tribal corporations board did not expressly approve the waiver of
immunity.  This proved fatal to the supply company's motion to compel
arbitration."

This summary (the case was from the Sixth Circuit) is instructive to
me in two ways.  First, it confirms that sovereign immunity might
trump an arbitration agreement, even if both sides agreed to the
arbitration in the original contract.  Conversely, it suggests that
agreeing to arbitration may not waive sovereign immunity.  Second,
going back to the original question, the case illustrates that even a
contractual agreement to waive sovereign immunity may not be effective
if it does not come from the proper authority.  Which reinforces, I
believe, my original suggestion to Liane that she consult higher
authority before accepting a contract that purports to do this.

Fun stuff!

Kevin


Kevin L. Smith, M.L.S., J.D.
Director, Copyright and Scholarly Communication Duke University
Libraries Durham, NC  27708 [log in to unmask]

-----Original Message-----
From: <[log in to unmask]>
Date: Fri, 5 Sep 2014 05:36:25 +0000

"The 11th Amendment does explicit deny the federal courts jurisdiction
over suits brought against a state by "citizens or subjects of any
Foreign State"" - in the specific case of working with an
international treaty organisation, I wonder how the law works since,
when I'm at work, I am no longer a citizen or subject of any state, I
am an official of an international treaty organisation and, as such,
have a sort of diplomatic status which comes with various legal
immunities that have been agreed to by the Member states (which, in
the case of the OECD includes the USA). Moreover, since USA is a
member of the OECD (in fact, thanks to JFK, one of our founding
fathers), I'm not sure we are a 'foreign vendor' when operating in any
of the 34 Member countries.

As Kevin says, more research needed - (and no wonder lawyers do well!)

Toby Green
Head of Publishing
OECD


> On 5 Sep 2014, at 01:28, "LIBLICENSE" <[log in to unmask]> wrote:
>
> From: Kevin Smith <[log in to unmask]>
> Date: Thu, 4 Sep 2014 12:40:30 +0000
>
> I am also not sure how relevant this information is to the specific
> question, although it is very interesting.
>
> Just by way of background, sovereign immunity refers to the idea,
> stated in the 11th Amendment to the U.S. Constitution, that the
> federal courts do not have jurisdiction over states or state entities,
> in most cases.  The idea, when the 11th Amendment was adopted, was to
> balance the power of the federal government against the independent
> prerogatives of the states.  The Constitution had struck this balance
> pretty carefully in regard to legislative powers, but an early court
> case (1793) let people to believe that the balance was not properly
> set regarding the judicial power, so the Eleventh Amendment was
> written and adopted.
>
> The 11th Amendment does explicit deny the federal courts jurisdiction
> over suits brought against a state by "citizens or subjects of any
> Foreign State" as well as suits brought by U.S. citizens.  So
> presumably a foreign vendor like OECD would have an interest in a
> waiver that was the same, but not any more urgent, than that of a
> domestic vendor.  In both cases the reason for seeking a waiver would
> be to gain the ability to sue the customer in federal court, for
> alleged violations of federal law or to avoid a "home court advantage"
> in state courts.
>
> Over the years there has been a complex set of rules developed around
> waivers of sovereign immunity.  I can think of four basic ways it can
> be waived.  First, Congress can waive this limitation on the
> jurisdiction of the federal courts, but only in very limited
> situations related to the 14th amendment guarantees of equal
> protection of the law and due process.  In other situations, including
> when Congress tried to waive sovereign immunity in regard to copyright
> or patent claims, the Supreme Court said that it lacked the power to
> do this.  Second, a state can waive its sovereign immunity, either
> explicitly or by taking actions that indicate a waiver, such as
> initiating a lawsuit in federal court itself.  Third, there is the
> exception known as Ex Parte Young (from the Supreme Court case on
> which it is based), which allows a lawsuit against a state or state
> entity in federal court when no monetary damages are sought and the
> only remedy is prospective -- an injunction to stop an ongoing
> violation of federal law.  This is the theory under which the
> publisher's lawsuit against Georgia State University has been
> proceeding.  Finally, there is the possibility that a state entity
> could waive sovereign immunity through a private contract, which is
> what the vendor Liane is working with wants her to do.  I am unaware
> of definitive rules about when and how such private waivers are
> effective, and who has authority to enter such contracts, which is why
> I urged Liane to be careful and seek authorization from a higher state
> authority before agreeing to such a contract.
>
> Sorry if this sounds like a lecture.  I am mostly just organizing my
> own thoughts to consider whether the Eleventh Amendment prevents a
> state entity from agreeing to an arbitration clause.  Both as a matter
> of explicit language and the policy behind the amendment, I do not see
> why a state entity could not agree to binding arbitration.  The only
> difficulty would be those situations where the parties decline to
> accept the decision of the arbitrator.  Such cases usually do then go
> before the federal courts (if federal jurisdiction is otherwise
> established).  So I wonder if agreement to an arbitration clause might
> somehow or sometimes be interpreted as a waiver of sovereign immunity
> by the state or, alternatively, if the other party to such a clause
> (i.e. the international treaty organization in Toby's example) would
> lack a remedy if the arbitration went against it, because it would be
> unable to seek review by the federal courts.
>
> More research is definitely called for.
>
> Kevin
>
> -----Original Message-----
>
> From: <[log in to unmask]>
> Date: Wed, 3 Sep 2014 07:36:12 +0000
>
> I'm not sure if this either helpful or relevant, but if the vendor is
> an international treaty organisation such as the one I work for, the
> OECD, then they will be legally unable to agree to submit themselves
> to any national or state law. This is a challenge for us whenever we
> engage with customers and suppliers because, unless they know us,
> their lawyers will be surprised that such a situation exists. The
> solution is to have an arbitration clause (I can supply a boilerplate
> clause if anyone is interested) - and this is the twist - stating
> clearly where arbitration is to take place. This is because if an
> arbitrator has to seek legal guidance on resolving a dispute, s/he
> will look first to the laws of the place where arbitration is taking
> place. So, if you agree to arbitration in your state and if an
> arbitrator needs guidance, your state's laws will be relevant.
>
> Toby Green
> Head of Publishing
> OECD