Kochs File Second Lawsuit Against Cato


Photo by Matt Welch, in a taxi.

The Washington Post reports:

Billionaires Charles and David Koch have filed a second lawsuit against the Cato Institute, marking the newest development in the ongoing battle for control over the libertarian think tank.

According to court documents filed Monday and obtained by The Washington Post, the Kochs are asking the court to invalidate the results of an "improper election" held recently by Cato's board–an action the Kochs refer to as a "Board-packing scheme."

On March 22 Cato's board voted, by a narrow margin of 9-7, to increase the number of seats on the board and to fill those seats with four previous members whom the Kochs had removed earlier in March by exercising their shareholder rights in the organization.

According to the documents, the Kochs argue that, in accordance with Cato's by-laws, the board has neither the power to expand its size, nor the power to fill the seats. […]

The suit names as defendants the Cato Institute and the four reinstated board members: William A. Dunn, John C. Malone, Lewis E. Randall and Donald G. Smith.

Whole thing here; view the court filing here. David Koch sits on The Reason Foundation's Board of Trustees; William Dunn was until recently chairman of that board. Other various conflicts and disclosures can be found in my previous posts on Koch/Cato dispute, here, here, here, and here.

Other recent commentary by the participants:

* At CNN Opinion April 2, Cato Board Chair Robert A. Levy wrote that "Cato must not turn into a tool for Koch."

* In response three days later, the Koch-nominated Cato board member Kevin Gentry wrote that "Koch believes in an independent Cato."

* At National Review April 9, Cato's Gene Healy (a columnist for reason.com) and Jerry Taylor asked "Why are the Kochs after Cato?"

* At Politico today, Cato's Michael F. Cannon penned an "Open letter to Charles & David Koch."

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  1. Don’t you have a book to be pimpin yo?

  2. This is like a bad dream that I can’t wake up from. I think the Kochtopus is in the right here, but people are still going to use this as an excuse to disregard Cato going forward.

    1. I agree that certain people will use the Koch ownership as an excuse to ignore it, but those people never paid attention to CATO out of principle in the first place.

      Cannon’s political piece has this part that is just sad- “Cato’s reputation thus opens doors. It enables us to change minds, rather than merely preach to the choir. Soon after you filed your lawsuit, Ezra Klein, the left-leaning Washington Post blogger, wrote that Cato scholars have changed his thinking in several areas. “I trust Cato,” Klein wrote, something he could not say of other free-market think tanks.

      If you’re worried about getting the nod of approval from folks like Ezra, you’ve already lost the battle.

      1. I think getting respect from your opponents is an extremely worthy goal for a think tank. If they respect you and your factual objectivity within the obvious bounds of your ideology, they are more likely to take your arguments seriously and are forced to defend their own ideologies at a higher bar. If they can’t, that’s how you win people over.

        The alternative is being ignored because you aren’t taken seriously and thus your arguments become essentially preaching to the choir.

        1. If they respect you and your factual objectivity within the obvious bounds of your ideology, they are more likely to take your arguments seriously and are forced to defend their own ideologies at a higher bar.

          This is Ezra Klein we’re talking about. The only reason Klein ever “respects” anything out of CATO is when they agree with him.

          CATO should not be interested in getting “respect” from opponents. They are a think-tank primarily concerned with researching and studying HARD FACTS AND STATISTICS associated with liberty and the free market.

          Those who refuse to understand arithmetic are doomed to talk nonsense, and therefore should not be looked towards for “respect”.

      2. Exactly. I’ve seen how Ezra Klein thinks. If any part of that is attributable to Cato, give the whole damn thing to the Kochs.

        1. Cannon is being extremely naive here. Klein hates the Kochs. He said what he said about how totally awesome Cato is in the hopes that some naif would use it as a stick to beat the Kochs.

          Cannon obliged, thus advancing the agenda of Ezra Klein to neuter any and all opponents of leftism whenever the opportunity presents.

          1. When you’re getting duped by a Ezra fucking Klein…well, it’s time to up your game.

            Take off the dunce-cap and put on your skeptic’s hat, Mr. Cannon. You’ve been warned.

  3. I have come to the conclusion that no-one is in the right on this matter, just varying degrees of wrong. Parsing who is less wrong strikes me as a task best left for sombody who cares.

    I’m still interested in the legalities of the ousting of Murray Rothbard, though.

  4. in accordance with Cato’s by-laws, the board has neither the power to expand its size, nor the power to fill the seats.

    This is typically pretty clear. Any competent corporate lawyer will make sure the division of authority between the board and the members/shareholders is crystal clear in the charter documents.

  5. “…[T]he Kochs are asking the court to invalidate the results of an “improper election” held recently by Cato’s board–an action the Kochs refer to as a “Board-packing scheme.”


  6. Photo by Matt Welch, in a taxi.

    A drive-by shooting?

    1. The Kochs don’t spring for a limousine? Man, the benefit package for working for the Kochtopus seems sub-par.

  7. Handbags at 5 paces.

    C’mon, Kochs. Libertarian in-fighting in public? That’s like giving the mainstream media the gift of a naked Jessica Alba holding a pitcher of beer and a plate of wings.

    1. Agreed. Personally, I don’t give a rat’s ass who’s in the right here. It’s an embarrassment for everyone involved.

      I’m thinking of diverting my Cato contributions toward IJ, where I suspect it’ll do more good anyway.

  8. That open letter from Michael Cannon was pretty amazing except for the unnecessary, integrity-undermining reference to Ezra Klein.

  9. Cato only went downhill since Rothbard left.

  10. Internecine conflicts are the best conflicts.

    I think both sides need to take this private and solve in a way that doesn’t discredit Cato or libertarianisn.

    1. Unfortunately, Pro Lib, they’re arguing about who is in charge. There can be only one, so they’re in court.

      Without flyspecking the charter documents, and based on my experience with nonprofit management (which generally regards shareholders as a nuisance to be ignored if possible, and hoodwinked where necessary), I strongly suspect the Kochs have the better argument here.

      But, who knows?

      1. You really ought to take a look at the charter documents.

        They’re pretty brief.

        1. The document talks about heirs, so I don’t understand why the Kochs are saying that shares can not be inherited.

  11. This is so much fun! I wish I had the popcorn concession for this bitch-slappin’ clusterfuck. I luv, luv, luv the fact that Dave and Charlie want to teach the Cato kids a thing or two about “humility,” a virtue about which they, like all billionaires, are extremely cognizant. See my own brief take, “Cato Cuffs Kochs” here


  12. I look forward to that asshole Julian Sanchez’s resignation.

    Go Kochs!

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