April 6, 1999
Mr. Mark Lane
105 Second St., N.E.
Washington, D.C. 20002
re: Liberty Lobby, Inc. v. Todd Blodgett, et al.
Dear Mr. Lane:
I received a copy of your letter of March 31st to Mr. Carto in yesterday’s mail. This copy was mailed to me in a Liberty Lobby envelope post-marked April 1st. I am one of the Board Members of Liberty Lobby.
For the act of merely inquiring of Blayne Hutzel whether we are protected by directors (and officers) insurance, and communicating my concerns to my fellow Board Members, Mr. Carto has
excommunicated me from the Board of Directors.
My response was to immediately answer his March 29th and 30th letters and to request that Chairman Ryan schedule a Special Meeting of this Board to be conducted by telephone conference call. I also prepared a four-page
proposed agenda that addresses the key liability issues facing EACH OFFICER AND DIRECTOR of Liberty Lobby, Inc.
Copies of those documents were mailed to you yesterday, before my copy of your letter to Mr. Carto arrived.
However, nothing has changed the need for this Board to follow through with a telephone conference call Special Meeting of the Board of Directors.
Your self-congratulatory letter was designed to mollify me and the other Board Members.
Mr. Carto admits in his March 29th letter to me that there is no insurance coverage protecting me and the other Board Members. You don’t even address that crucial lack of coverage in your letter!
The only attempt to give us any sense of security is your statement on page two of your letter, fourth paragraph:
I do not plan to file any action against any person that might reasonably result in placing myself, my client or the Board of Directors in jeopardy …
Is this a GUARANTEE that you will defend each director in his or her own domicile in the event that we are individually sued? Is this a GUARANTEE that our individual costs to defend ourselves will be paid by Mr. Carto, Liberty Lobby, Inc., the Institution’s allied foundations, or a successor entity to Liberty Lobby?
Your narrative about the Blodgett matter sounds more like a piece from a supermarket tabloid. The only substantial LEGAL issue that we now know is that Mr. Blodgett allegedly owes Liberty Lobby, Inc. $234,770.83.
The EMOTIONAL issues are obvious.
If Mr. Blodgett has IN FACT taken
funds from Liberty Lobby (especially in the fraudulent manner reference in your letter), then why hasn’t Mr. Blodgett been criminally prosecuted? Why have you failed to seek a criminal prosecution of Mr. Blodgett?
However, if the EVIDENCE does not support a criminal prosecution of Mr. Blodgett, then what FACTS will support a successful civil case against him instead? WHAT WILL THE COSTS TO LITIGATE SUCH A CASE BE? WHAT WILL IT COST LIBERTY LOBBY TO SUBSEQUENTLY LITIGATE EACH DIRECTOR’s DEFENSE IN THE EVENT THE BLODGETT FAMILY COUNTERSUES?
ACTUALLY, WILL THE BANKRUPTCY COURT EVEN ALLOW LIBERTY LOBBY TO SUE MR. BLODGETT? WILL THE COURT ALLOW LIBERTY LOBBY TO DEFEND EACH DIRECTOR INDIVIDUALLY IN HIS OR HER OWN LEGAL DOMICILE?
Your letter fails to address the concept of our individual liability for the corporation’s
Mr. Lane, can you GUARANTEE IN WRITING that we are immune to such individual suits EVEN IF WE RESIGN FROM THE BOARD OF DIRECTORS? Even if the Courts in our respective jurisdictions would eventually dismiss such suits, do you GUARANTEE that you will litigate our individual defenses?
Even a so-called
harassment suit has to be defended!
Your letter just addresses the Blodgett matter. But it is obvious that the Board Members have far wider exposure than just that threatened in the present case.
This is why this Board must meet by telephone conference call — to allow even the infirm (i.e., those whose age or medical status precludes their physical participation) to participate. NO PROXIES.
As for Mr. Carto’s hysterical reaction to my letter to Blayne Hutzel, I want the Board of Directors to decide whether I stay or go. Hence, the additional necessity to meet by telephone conference call. Either this is a viable Board of Directors, or we are a sham. What would a prudent, third party say about Mr. Carto’s
excommunication of a loyal sixteen-year veteran member of the Board — for merely making an INQUIRY and communicating such LEGITIMATE CONCERNS to his fellow Board Members?
Dr. Bradley J. Smith
CC: Board Members & Officers