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 NEWSObservations on the UCITA drafting process By Ed Foster August 18, 2000 1:01 pm PT People keep asking me the same questions -- how did a monstrosity like UCITA come to be? What is this obscure process that created it?
NCCUSL is a group of 350-plus commissioners appointed by their respective states and charged with responsibility for drafting laws that can be adopted uniformly by all the states. The organization has a long and prestigious history, most notably the creation of the Uniform Commercial Code. (The Uniform Commercial Code was created facilitate the laws of interstate commerce) The commissioners are all highly respected individuals, and I have not encountered one whose personal integrity I would question. Yet this is the group who took a software industry wish list and made it a model law that is supposed to be enacted throughout the nation. How is that possible? It's possible because NCCUSL is a stacked deck, one that by its very nature is most easily influenced by the large commercial interests whose mainline business is directly at stake. It's a game the consumer side just can't afford to play. NCCUSL critics have pointed this out before in the context of other UCC articles and uniform laws, but I have to believe it was never so amply illustrated as in the UCITA/Article 2B drafting committee. (UCITA was previously called Article 2B) UCITA is the result of an effort that began more than ten years ago -- by the time the first representatives of consumer interests got to the table in early 1996 (or late 1995, if you count me and my readers), the basic principles of UCITA were already well entrenched in the draft. And each one of them will tell you today that their participation since has at best resulted in only minor improvements. In fact, many felt their participation was counterproductive, as it allowed NCCUSL leadership to claim that consumers had meaningful representation in the drafting process. Just to briefly summarize a few examples of why consumer advocates found their efforts to influence UCITA so futile, in the fall of 1998 Article 2B (as UCITA was then known) drafting committee officials were trumpeting a compromise on one particular issue which had been painstakingly worked out between one consumer advocate and one software company representative. The committee's crowing about this unprecedented development led some publications to state the compromise had been adopted. In fact, in its November, 1998 meeting the committee accepted those portions of compromise the consumer advocate had conceded, while totally rejecting those portions the software publisher had agreed to give in exchange. At its one-day session just before the NCCUSL annual meeting that adopted UCITA in July, 1999, the UCITA committee was presented with proposed changes to the draft by the Recording Industry Association of America, one of the publishing groups that had been voicing strong opposition to UCITA over the past year. The RIAA openly stated they were willing to take a neutral stance on UCITA's enactment if their changes were adopted. Although members of the committee expressed ignorance of just what the RIAA's language actually meant, they did not even bother to get clarification before adopting it all. "The most important thing is the affected industry wants it, so I move we adopt it," one committee member stated. Affected industries could generally get what they wanted from the UCITA/2B committee, but affected customers could not. This was also shown to be true of NCCUSL as a whole a few days later during its annual meeting in a surprising event that did not directly involve UCITA. Another NCCUSL drafting effort is a revision to the existing UCC Article II, the sale of goods law that has stood for half a century and is one of the primary reasons for NCCUSL's lofty reputation. Like UCITA, revised Article II was up for a final vote at the July meeting, and it appeared to be further along in the line-by-line debate of the draft than UCITA when the NCCUSL leadership announced they had decided to halt the debate and postpone a vote on Article II for at least another year. It's difficult to convey how stunned the entire room was by this announcement. Even commissioners who were opposed to Article II expressed shock that the decision had been taken out of their hands by the NCCUSL leadership. Consumer advocates were considerably more distraught, because the Article II revision has been the focus of much of the lobbying efforts that Consumers Union and others could afford. Opponents, which included an imposing list of influential manufacturing associations, believed that the revised Article II draft was too consumer-friendly. But the list of UCITA opponents -- which by the time of the UCITA included attorneys general of half the states -- was an even more imposing one. Yet the NCCUSL leadership chose to kill Article II while allowing the decidedly consumer-unfriendly UCITA to sail through. The clearest demonstration of how NCCUSL is a stacked deck comes from an incident involving the UCITA drafting committee reporter. The very week after NCCUSL approved UCITA, Prof. Ray Nimmer, a University of Houston law professor who served as the UCITA and Article 2B drafting committee reporter throughout its existence, was called as an expert witnesses to testify for Microsoft in a little known federal case it was waging with the IRS over a disallowed tax deduction. As is common with expert witnesses, Nimmer charged Microsoft a fee for his time and expenses based on his standard legal consultant rates. The reporter plays a unique and critical role in the NCCUSL process. He or she is the principal author of the law itself, under the direction of the drafting committee and the state commissioners as a whole. After the draft is approved for distribution to the state legislatures, the reporter writes the Reporters Comments, notes on individual sections of the law often used by judges to help interpret how it should be applied. Perhaps most important, reporters are the subject matter experts, usually hired by NCCUSL specifically because of their expertise in both the law and the current commercial practices the proposed law will cover. Nimmer's expertise is unquestioned -- he is the author of the standard text on computer law. But his name may ring a bell with some longtime InfoWorld readers for another reason, and a handful of you have actually met him. Way back in the fall of 1995, when reader gripes about the "known bug" syndrome first got me involved in what then had just been renamed UCC Article 2B, Nimmer and I arranged several meetings with InfoWorld readers to try to get their feedback into the law. In a sense, he had a mandate to represent InfoWorld readers in the process, as well as others who didn't have a lawyer at the table. When I started hearing rumors about Nimmer testifying for Microsoft, I found it hard to believe. Even after he readily acknowledged it to me, I remained somewhat shocked. Perhaps this is due to the journalist's perspective -- we sometimes get asked to be expert witnesses, too, but it would be a no-brainer for me that I couldn't take a fee from a company I might be writing about the next week. Shouldn't a NCCUSL reporter be held to the same ethical standards as the journalistic variety? In Nimmer's own defense, he points out the issue on which he testified for Microsoft was a fine point of software law history irrelevant to UCITA. If it wasn't Microsoft specifically, he says, probably no one would have perceived his testifying as an issue. And he and his defenders in the NCCUSL leadership argue that, since it is his field of expertise, to say he could have done no legal work for the last ten years for any software company would have been an extreme financial hardship. Even so, shouldn't all participants in the UCITA process at least have been informed what Nimmer was doing? As it was, most participants including many UCITA committee members themselves were not aware of it when they met on July 22nd for their sole day of public input on UCITA. The commissioners who approved UCITA the next week after listening to Nimmer defend the draft in the debates were also not informed -- at least officially -- that he would be working for a company with a big stake in UCITA a few days later. NCCUSL executive director Fred Miller says that Nimmer followed the one disclosure rule the organization has for reporters by clearing it with Miller in the spring when Nimmer was first asked to testify. Miller says he saw little reason to make a big deal out of it since the draft of the law was already close to final form and the issue in the Microsoft case was unrelated. Let me make it clear that I'm certain Ray Nimmer was not influenced by this fee from Microsoft to do something he shouldn't, but that's not the point. The real issue here is the reluctance of NCCUSL's leadership even now to have these relationships openly disclosed. A fair and impartial process requires at least that much. It is indeed hard for NCCUSL reporters, commissioners and officials to avoid having conflicts of interest -- most of them are commercial contract lawyers who have represented many different business clients through the years. And that's the ultimate conflict of interest in having this organization draft this law. There is, after all, only one interest group that will surely benefit from UCITA in the long run, and that's the lawyers who represent big companies. SPONSORED WHITE PAPERS 
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