A Perpetual Cup for Not So Friendly Competition Between Lawyers – Part 45

“No captain can do very wrong if he places his ship alongside that of the enemy.” Horatio Lord Nelson.

(September 22, 2009) - A major battle, or series of battles, is brewing which will determine whether the Cup will be decided on the water in February or will be tied up in litigation for quite a while. Since the New York Court of Appeals ruled in favor of Challenger Golden Gate Yacht Club (GGYC), GGYC has skirmished with Société Nautique De Genève’s (SNG) over the date of the Match and Custom House Registry (now Certificate of Documentation).

NEWS FLASH – Justice Kornreich has ruled on the CoD issue (today), holding that GGYC need not provide its CoD earlier than two weeks before the first gun of the Match. According to Justice Kornreich, by exercising its rights under the Deed, GGYC is “unsportsmanlike” by reducing an advantage SNG has under the Deed that she just ruled SNG does not have. Go figure.

Those relatively minor engagements are over and an all out fleet engagement is taking shape. Having abandoned the quick orders to show cause that by not allowing reply papers prevented thorough presentations of the issues, GGYC has added an additional law firm, Boies, Schiller & Flexner, and has filed a comprehensive motion on a number of key issues. Looming just over the horizon is an even bigger battle regarding SNG’s exercise of its duty as trustee of the Cup.

To complicate matters, the facts at issue have changed since GGYC filed its motion, which included a branch seeking public disclosure of then secret ISAF-SNG Agreement. Before SNG could even respond, ISAF secured SNG’s agreement to public disclosure of the Agreement as well as some cosmetic changes. (Having moved for public disclosure, I will not be foolish enough to attempt to provide objective, unbiased comment of that phase of the litigation.)

Thus, as in a real battle, the target GGYC was aiming at has gained some camouflage. Nevertheless, the focus of GGYC’s motion is to reargue Justice Kornreich’s July 30, 2009 decision allowing SNG to change the rules at will, to prevent SNG from imposing measurement standards that will DSQ GGYC and to prevent SNG from reading the “not to be exceeded” clause out of the Deed’s treatment of the Challenger’s dimensions provided in the Challenge.

As ‘Buttheads may know, GGYC is also asking ISAF to reconsider its Agreement with SNG. The point of public disclosure of the Agreement was to see what ISAF was up to. Apparently, ISAF had some second thoughts, as the Agreement was cosmetically changed before it was made public. Nevertheless, ISAF has ceded to SNG a disturbing amount of the authority it was delegated by the MNA’s that make up ISAF. The International Jury is so circumscribed as to be a toothless joke unable to grant redress regarding any decision SNG makes as organizing authority. Why ISAF is giving away its authority is hard to understand.

ISAF claims the exclusive right to organize the Cup Match and, if it is thwarted, to ban participating officials and sailors from ISAF sanctioned events. Although those claims may be dubious, because the Cup Match is governed by the Deed and the New York Supreme Court and because sailor bans would have legal problems, if ISAF means what it says, there is no reason to cede any of its authority to SNG. On the contrary, if ISAF really rules the roost, it zealously should be guarding its authority and should be requiring the upmost fairness, without compromise. It should tell both parties that it will run the event according to the Deed, the RRS and its Regs and will measure the boats according to the Deed and ISAF measurement procedures and that is the way it is going to be. Period. End of story. Its failure to do so is a sign of weakness and seriously undermines its claim to authority over the Cup.

GGYC has a number of basic issues to deal with. The first is that Justice Kornreich seems to fundamentally misunderstand the four corners rule the Court of Appeals applied in Mercury Bay and this case. As Justice Kornreich seems to apply the rule, if a matter is specified in the Deed, the Deed governs, and if the Deed is silent anything goes. That is not the way the four corners rule works. Just because the Court of Appeals held in Mercury Bay that vague concepts could not override the specific provisions of the Deed does not mean everything in the sport of sailing goes out the window where the Deed refers to something like rules without explanation or elaboration.

George Schuyler did not create a completely new sport as an exercise of pure fancy. He simply created a specific sailing match within the context of the sport of sailing as he knew it. Yacht clubs had published rules that were only amended when necessary, just as the Deed was amended after Thistle turned out to be longer that planned. That is obviously what he meant when he referred to the defending club’s rules. Changing the rules in the middle of a challenge would have been inconceivable, as Schuyler said when some at NYYC proposed to allow a fleet defense. Unless the Deed specifically allows the defender to change its rules, there is no reason to use the four corners rule to create a match Schuyler never intended. The same goes for measurement and every other aspect of the match not specifically set forth in the Deed.

The reason that rudders and rudder stocks are not measured in determining Load Water Line under the ISAF procedure is simply that the ISAF procedure codifies the way it has always been done, not because ISAF invented a better idea. The reason that has always been the case is because the rudder has no effect on hull speed, so that including it in LWL would throw off the hull speed calculation. Similarly, anyone with access to standard references - or even Wikipedia, which has an excellent article - knows that the Load in Load Water Line means that the vessel is fully laden - at its Plimsoll Line. Otherwise George Schuyler would have specified 90 feet at the Partially Laden Water Line, the So-So Laden Water Line or the Unladen Water Line (UWL). In short, the four corners rule does not impose artificial aphasia upon the Court.

One of the oddities of legal practice is that lawyers have any number of legal rules pounded into them in the first year of law school which are immediately forgotten, if they were ever learned. One rule is that a contract is formed when an offer is accepted and as little as two peppercorns of consideration are exchanged. As a non-lawyer correspondent pointed out, the NOR - in this case the Deed supplemented by the NOR from SNG’s 2007 Annual regatta, as I have previously written - is an offer to enter into a contract. Once accepted by GGYC’s challenge (consideration, which is usually the entrance fee, can almost always be found) the contract is binding on both SNG and GGYC and may only be changed by mutually consent. Thus, SNG cannot unilaterally change the deal at will.

Indeed, in New York contracts that may be materially changed by one party without the other’s consent are not contracts at all. Thus, not only is Justice Kornreich misapplying the four corners rule, she is also misapplying New York contract law. Of course, the idea that SNG can change the rules at will quickly reduces to absurdity. SNG can simply make a rule that flatly provides that GGYC loses. That cannot be George Schuyler’s intent.

While GGYC’s papers may assume a little too much knowledge of the basics of sailboat racing, they present thorough arguments on the RRS and measurement issues. SNG’s papers, on the other hand are curiously lacking in legal horsepower and fire power. Laced with personal attacks and snide comments about GGYC’s sailing ability, they sound like press releases, rather than legal argument. Supreme Court Justice Antonin Scalia, who knows a few things about arguing a case, recently wrote that that sort of thing is “likely to be regarded [by a judge] as an insult [to the judge’s intelligence].” He went on to quote Ninth Circuit Judge Alex Kozinski: “We understand that you have to say all those things to keep your client happy, but we also understand that you know, and we know, and you know we know, that your case doesn’t amount to a hill of beans, so we can . . . flush it . . . .”

Things do not improve very much when SNG gets nearer the point. It argues that imprecise language in an oral directive from the bench regarding the Custom House Registry overrides the “shall not be exceeded” requirement of the Deed regarding the dimensions set forth in the challenge. Thus, based upon Justice Kornreich’s imprecise language, SNG argues that GGYC’s boat must be exactly 90 X 90, no more (which everyone agrees) and, more importantly, no less. Not only is that contrary to the Deed, but it is contrary to the laws of thermodynamics in this universe. Any boat expands and contracts according to the temperature and even, to some extent, the humidity and air pressure. Thus, it would be impossible to build a boat that would be exactly 90 X 90 without specifying the exact temperature, humidity and air pressure as is done with the standard meter measure which is stored in a vault under rigidly controlled conditions.

Of course, the reality is that boats are always built slightly smaller than the limit to be safe. Likewise, SNG’s claim that it is disadvantaged if GGYC’s boat is smaller than 90 X 90 is silly. Virtually everyone knows that, all other factors being equal, hull speed increases as waterline length increases and, thus, a shorter boat is slower. How SNG could be prejudiced if GGYC’s boat is immaterially smaller is not explained. George Schuyler’s concern about Thistle was that it was too long, not too short. Moreover, Schuyler excused Thistle’s extra length and Thistle went on to lose the match anyhow.

Indeed very little is explained as the affidavits submitted by SNG on the motion are almost totally conclusory and do not explain either how the conclusions were arrived at or what the significance of the conclusions might be. The exception is the affidavit of Tom Schnackenberg, which is a collection of random facts having little to do with any point. After rambling through irrelevant rating rules, metre rules and the ACC rule, he states that “there are not many class or rating rules which specify LWL as a measurement.” Ooookay. The only class he can cite that does and includes rudders is model boats, which of course are not exactly directly comparable to these boats. He even discusses the rudder on GGYC’s center hull, even though that was taken off a while ago.

The usual complaint about affidavits is that they are written by lawyers. This one reads like it was not even reviewed by a lawyer. (Whatever you say, Mr. Schnackenberg.) Altogether, SNG’s papers are reminiscent of a flotilla of destroyers coming out a fog bank and finding themselves directly in the path of enemy battleships. The only tactic available is to make smoke and run. SNG makes a lot of smoke. GGYC’s task is to cut through that smoke and score hits.

Because this is a motion, rather than an order to show cause, GGYC gets to submit reply papers to respond to SNG’s arguments. That forces it to make a strategic decision. One approach for GGYC would be to stand back and fight at long range, unwilling to tangle with all of SNG’s arguments for fear of being drawn into a confused and dangerous close quarters fight. Doing so would risk an inconclusive result. The other would be to follow the Nelsonian example and go straight at them with total victory achieved by destroying all opposition being the goal. Given the status quo, it would appear that GGYC has little choice, but only time and GGYC’s reply papers will tell.