Tag Archives | Chevedden

Investor Response to Chamber: Don’t Gut Rights

Investor Response to Chamber: Letter

Representatives of hundreds of investors with trillions of dollars in assets delivered a letter to the SEC on November 9, 2017, An Investor response to U.S. Chamber’s Proposal to Revise SEC Rule 14a-8 (report).

We noted with interest the November 1, 2017, guidance contained in Staff Legal Bulletin No. 14I. While we are reserving judgment about how the guidance may apply in practice, we are particularly pleased by Director Hinman’s accompanying statement that the guidance is not intended to “make things easier or harder for one side or the other, . . . [but] to improve the process.” We strongly support that goal and plan to actively monitor the SEC staff no-action process during the upcoming proxy season to determine whether the goal was achieved.

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Caterpillar Inc Proxy Voting Guide

Caterpillar Inc Proxy Statement

Caterpillar Inc Proxy Voting Guide by CorpGov.net

Sorry, this Caterpillar Inc Proxy Voting Guide comes late, since tomorrow is the last day to vote unless you attend the annual meeting. Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for heavy and general construction, rental, quarry, aggregate, mining, waste, material handling, oil and gas, power generation, marine, rail, and industrial markets. Caterpillar is one of the stocks in my portfolio. ProxyDemocracy.org had collected the votes of two fund families when I checked and voted on the last day. Their annual meeting is coming up on June 14, 2017.

I voted FOR our proposal to reduce the threshold required to hold a special meeting. See how and why I voted other items below. I voted with the Board’s recommendations 70% of the time. View Proxy Statement via SEC’s EDGAR system (look for DEF 14A). Continue Reading →

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Business Roundtable to SEC: Muzzle Shareholders

proxymonitorsmeasurecsmypropsAs I indicated yesterday, I have been contacted by several reporters for comments on the latest screed from the Business Roundtable seeking to muzzle the rights of shareholders. Although I have much more productive ways to occupy my time, it does make sense for me to provide at least some response, since the Business Roundtable names me among those “pursuing special interests… frequently at a significant cost to the company.”

Their statistics do not come from an objective third party, such as Proxy Insight, but from the conservative Manhattan Institute‘s Proxy Monitor (funded in part by the Koch Family Foundations), covering only 250 out of thousands of American companies. The Business Roundtable titled their report Responsible Shareholder Engagement And Long-Term Value Creation: Modernizing the Shareholder Proposal Process. Don’t be fooled by the numbers they use, claiming few proposals pass. The Business Roundtable doesn’t count proposals that don’t make it to the proxy because proponents and companies have reached agreement. They don’t count proposals filed at the thousands of small companies, which tend to have poorer corporate governance practices. ‘Modernization’ for the Business Roundtable means moving the SEC further and further from its primary mandate of ‘investor protection’ by creating a democracy-free zone for entrenched managers.  Continue Reading →

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Union Pacific Corporation: Proxy Score 50

Union PacificUnion Pacific Corporation (NYSE:UNP) is one of the stocks in my portfolio. Union Pacific is primarily a railroad operator. Their annual meeting is coming up on 5/14/2015. ProxyDemocracy.org had the votes of two funds when I checked and voted on 5/7/2015. I voted with management 50% of the time and assigned Union Pacific a proxy score of 50.

View Proxy Statement. Read Warnings below. What follows are my recommendations on how to vote the Union Pacific 2015 proxy in order to enhance corporate governance and long-term value. Continue Reading →

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eBAY Commits to Gender & Racial Diversity: Issues Remain

eBayNew York State Comptroller Thomas P. DiNapoli and Trillium Asset Management today announced that they have withdrawn the shareholder proposal they filed at eBay Inc. (NASDAQ: EBAY) after the company agreed to revise its Governance Guidelines to include gender and racial diversity among the qualities its seeks in its board members. Several other issues remain on the proxy. Continue Reading →

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Omnicom (OMC) Group Loses to Chevedden: Shareowner Rights Preserved

OmnicomIn a memorandum and order issued yesterday, Judge Louis L. Stanton, of United States District Court for the Southern District of New York, ruled John Chevedden’s motion to dismiss is granted. Omnicom’s motion for summary judgment is denied. “The clerk is requested to enter judgment dismissing the complaint, with costs and disbursements in favor of Mr. Chevedden according to law.” Continue Reading →

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Quick Bites on CorpGov

UnknownDon’t miss the following great reads:

 Activist shareholders’ top priorities for 2014. A must read for directors and shareowners alike. Here’s the first paragraph.

Many of us free ride on actions taken by active, long-term shareholders. These unsung heroes goad managers and boards to reach better decisions, make available desirable employment opportunities and, overall, push them to act like good corporate citizens. These active investors accomplish these things by talking to companies, preparing proxy proposals for all shareholders to consider, and offering recommendations on director elections and company-sponsored proxy measures.

Ralph Ward digs past the standard bullshit in his 2014 Boardroom Insider. Always plenty to chew on in a few short pages. Here’s a tidbit, which I hope will leave you wanting more, which includes more tips than you’ll find in pages and pages of other publications aimed at directors. Continue Reading →

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Biased Ballots: Oshkosh Vote Questioned – Take Action

I found another case of corporate elections where ballot measures failed to be identified “clearly and impartially.” This time at Oshkosh ($OSK). Should we be surprised? Isn’t it time you took a minute out of your day to send a message to the SEC asking for an end to such abuses?

Broadridge claims:

When it comes to proxy ballots, regulations are complex and mailing deadlines are tight. Broadridge helps fulfill regulatory responsibilities efficiently and economically. Broadridge handles the entire process on-line and in real time, from coordination with third-party entities to ordering, inventory maintenance, mailing, tracking and vote tabulation. Continue Reading →

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Netflix: A Candidate for Proxy Access

Netflix Inc. (NFLX),  which has lost half its value in the last two years, adopted an antitakeover plan (poison pill) intended to block activist investor Carl Icahn from expanding his nearly 10% stake. They did so without seeking shareowner approval and the pill may make it harder to find a buyer. Writing for the WSJ, Miriam Gottfried notes, Netflix Pill Should Give Shareholders Pause. Let’s hope shareowners do more than just pause; let’s take action! Continue Reading →

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Gilead Sciences (GILD): How I Voted – Proxy Score 44

Gilead Sciences (GILD) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/10/2012. Voting ends 5/9 on Moxy Vote’s proxy voting platform, which listed 8 “good causes,” but three were consolidations, when I checked and voted on 5/8. ProxyDemocracy.org had 4 funds voting.Gilead scores 44 out of 100, since I voted with management on only 44% of the proxy. Continue Reading →

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Union Pacific (UNP): How I Voted – Proxy Score 13

Union Pacific (UNP) is one of the stocks in my portfolio. Their annual meeting is coming up on 5/10/2012. Voting ends 5/9 on Moxy Vote’s proxy voting platform, which listed nine “good causes,” but three were consolidations, when I checked and voted on 5/7. ProxyDemocracy.org had 1 fund voting.UNP scores 13 out of 100, since I voted with management on only 13% of the proxy. Continue Reading →

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Proxy Access Proposals Challenged: Starting to Post Responses

ISS reported that Textron filed a Dec. 23 no-action petition with the SEC to omit a shareowner proposal from Ken Steiner that seeks proxy access using the model proposal developed by USPX.

This appears to be the first no-action request filed on a proxy access proposal this season. The company asserts that Steiner’s resolution improperly constitutes multiple proposals, is “impermissibly Continue Reading →

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15th Proxy Access Proposal of Season Filed at Nabors

Bermuda-based energy-drilling contractor Nabors Industries Ltd., already being sued by shareowners over executive pay issues now faces a proxy access proposal filed by CalSTRS and nine public pension funds from Connecticut, Illinois, New York and North Carolina. The company’s stock has lost about a quarter of its value this year. According to New York City Comptroller John C. Liu, who submitted the proposal on behalf of the City’s five pension funds,

Expropriating the corporate treasury to fund egregious CEO pay packages at the shareholder’s expense is both a symptom and a consequence of Nabors’ entrenched board. The only way to fix a recalcitrant board is to enable shareholders to elect directors other than those nominated by that same board.

According to a press release from CalSTRS, the funds are part of a larger group of 11 public funds that called upon the Nabors’ board in a September 29 letter (PDF; 61KB) to Continue Reading →

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WSJ Reports Inaccurately on SLAPP Suits

Jessica Holzer, writing for The Wall Street Journal informs readers this morning, Firms Try New Tack Against Gadflies: Corporations Look to Block Shareholder Activists’ Proposals by Challenging the Size of Their Stakes – WSJ.com.

Companies have long viewed shareholder activist John Chevedden as a pain. The retired aerospace worker and his network of like-minded activists are behind more than 100 proposed changes in corporate governance filed each year for other shareholders.

Two companies have found a new way to block his proposals: They successfully sued Mr. Chevedden, arguing he had no right to offer shareholder proposals because he hadn’t proved ownership of enough of their stock.

While Ms. Holzer did some degree of minimal background work in preparing her article, her reporting is neither fair nor balanced. She certainly did not dig beneath the surface. If companies really think RAM Trust Services is falsely reporting Mr. Chevedden’s ownership, why don’t they sue Continue Reading →

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Kinetic Concepts: Victory for Shareowners!

I was about to sit down this morning and write another scathing post on Kinetic Concepts when I learned of their press release announcing they will gradually declassify their board. They gave no reason as to why they took this action just ahead of their annual meeting. Perhaps they looked again at their guiding principles,

We act with integrity and honesty above all, in all that we do.

I e-mailed them to ask why but they have not answered. A more probable cause was the likelihood that shareowners would oust board members currently up for election. The whole episode shows that persistant shareowners can hold board members accountable.

As readers of CorpGov.net may recall, shareowner John Chevedden submitted a proposal to Kinetic Concepts to declassify their board and have all members up for annual election. Kinetic Concepts filed for a no-action letter from the SEC on the grounds that Chevedden had provided insufficient evidence that he owned Kinetic stock. The SEC’s March 21 denial was in line with previous denials at Hain Celestial, Union Pacific, Devon Energy, Prudential, and News Corp where companies had  not met the burden of 14a-8(g). They had not demonstrated they are entitled to exclude these proposals.

Despite denial of their no-action request, Kinetic Concepts sent an April 5 letter to the SEC putting them on notice they would mail their proxy without Mr. Chevedden’s proposal, despite the SEC’s refusal to grant their no-action request.

As justification, Kinetic pointed to a flawed court decision from a suit brought against Mr. Chevedden by KBR. Even a quick glance at page 6 (2011-04-04 KBR Chevedden Docket 24 – Memorandum and Order https://www.corpgov.net/wp-content/uploads/2011/04/2011-04-04-KBR-Chevedden-Docket-24-Memorandum-and-Order.pdf) reveals the judge didn’t base her decision on what is required in order to show evidence of ownership for a 14a-8 proposal. Instead, she based her decision on evidence of ownership requirements adopted in 14a-11, the provisions for placing shareowner director nominees on the proxy. Aside from being on a completely different subject, these rules are not even in effect, but have been stayed because of the lawsuit on the SEC’s proxy access rules.

They made no attempt to exhaust legal remedies. Kinetic simply pointed to the flawed court decision and essentially said, our case is like that case, so we’re not including the proposal from Chevedden.

I wrote several articles warning of dire consequences if Kinetic Concepts was allowed to get away with simply ignoring the law. (SEC: Time to Remove the Gag; Texas Secession Led by Apache, KRB and Kinetic Concepts; Take Action: Sixty Years of ShareOwner Rights at Risk; and Go Directly to Court, Do Not Pass SEC, Prepare to Spend Thousands). Some of these posts also appeared at Shareowners.org and Accountability Central. I also contacted several large funds, unions, proxy advisors and, of course, the SEC.

My experience with the SEC was frustrating. Although I got a sympathetic ear at Corporation Finance, they claimed the case was out of their jurisdiction. I needed to contact Enforcement. Enforcement has no public phone number and the internet forms are not set up to handle complaints on shareowner rights.

It was like writing into a black hole. In my direct experience, nothing seems to come out of Enforcement. As a brief aside, note Broc Romanek’s recent posts at theCorporateCounsel.net: The SEC’s Whistleblower Office Does Not Want To Talk To You and The Bigger Picture: Why Doesn’t the SEC’s Enforcement Division Provide a Phone Number? It turns out that due to a lack of funding the whistleblower office doesn’t exist and the Enforcement Division doesn’t want to talke to anyone.

I don’t know if the SEC took any action at all. However, I do know funds that investigated the issues and spoke to people at Kinetics. The big break for shareowners probably came when ISS and Glass Lewis both recommended voting against board members. The following are extensive quotes from ISS’ advisory:

In this case, while the company cites precedent cases as a reason for excluding the proposal, the company has not received correspondence from the SEC or a ruling from the US District Court stating that the company may exclude Mr. Chevedden’s proposal. Furthermore, the company has not filed a case to the court with regarding this proposal and as such has not fully exhausted its legal remedies in seeking a no action ruling from the SEC. In this instance the company has taken upon itself the role that is reserved for the SEC and the courts and in doing so, has denied shareholders an opportunity to vote on an important issue without the force of law…

ISS also notes that the company is ignoring a proposal to declassify the board, which is a well-accepted governance reform that regularly receives high levels of shareholder support. For instance, in 2010, such shareholder proposals filed at U.S. public companies received an average of 61.1-percent support from votes cast for and against. Furthermore, studies have shown a negative correlation between the existence of a classified board and a company’s value. ISS believes that all directors should be accountable on an annual basis and that a staggered board can entrench management and effectively preclude takeover bids or proxy contests…

By omitting this item despite the SEC’s correspondence stating that it should be included, the company has disenfranchised its shareholders from one of their key entitlements. As owners of the company, shareholders should have the right to judge a shareholder proposal which could affect the governance structure of the company. In this case, by directly disregarding the SEC’s statement confirming that the shareholder proposal should appear on the ballot, the company has intentionally disenfranchised its shareholders and as such, ISS recommends that shareholders WITHHOLD votes from the entire class of directors standing for election at this annual meeting.

Soon after Kinetic Concepts issued their press release indicating they would move to declassify their board, both ISS and Glass Lewis revised their voting recommendations to include voting in favor of all incumbents.

Lesson: Vigilance pays. Had we done nothing, shareowner rights would have been trampled. Thanks to our many readers who took action.

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How To Steal a Corporate Election

http://glynholton.com/wp-content/uploads/2011/04/vif.jpgThere are plenty of ways to steal an election. Some require guns. Others depend on bribes. Perhaps the simplest involve misleading ballots. For its corporate election this year, American Tower Corporation (AMT) has produced a humdinger. Item 04 of their ballot (technically a VIF; I will explain this legal nicety some other time) gives shareowners the option of voting “for,” “against” or “abstain” for the following:

TO CONDUCT AN ADVISORY VOTE ON COMPENSATION

In years past, shareowners have placed similar “say-on-pay” items on other corporations’ ballots. These tended to garner strong support as shareowners, concerned about lavish executive compensation, sought an opportunity to weigh in. But last year’s Dodd-Frank financial reform act mandated say-on-pay votes at all public corporations. So why Continue Reading →

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Go Directly to Court, Do Not Pass SEC, Prepare to Spend Thousands

Here’s a brief note I just sent to the SEC:

Dear Chairman Mary Schapiro and Mr. Greg Belliston:

On April 12 I alerted you to the fact that Kinetic Concepts has said they will exclude a shareowner proposal from Mr. John Chevedden even though the SEC refused to issue them a no-action letter. I warned that if the SEC does not enforce the law and require companies to meet the burden of proof required by 14a-8(g), we should expect a flood of copycats. Today’s bulletin from Duane Morris LLP & Affiliates can be expected to accelerate erosion of the SEC’s authority.

To those of us who believe that shareowners should have the right to submit proxy proposals, I can’t emphasize enough the importance of e-mailing your concerns to the SEC so that we maintain that right.

The title of the above referenced alert from the Duane Morris law firm is “To Seek Exclusion of Shareholder Proposals, Companies May Bypass ‘No-action Letter Request’ and Go Directly to Federal Court.” SEC rules regarding shareowner proposals have been in place since 1942. Is this a right we are willing to lose without a fight? Unless shareowners demand that the SEC take action, we can expect to have to fight our way through the courts each time we submit a proposal.

See Take Action: Sixty Years of ShareOwner Rights at Risk, Texas Secession Led by Apache, KRB and Kinetic Concepts, Apache: Too Big For SEC Rules?, and Will the SEC Enforce Rule 14a-8?.

Send quick e-mails to the Office of Chief Counsel at [email protected] and the Chairman at [email protected]. I also recommend you fill out the complaint form at https://tts.sec.gov/oiea/QuestionsAndComments.html, since this will go to the Division of Enforcement, the office that could take action. Your note could be as simple as the following:

I understand Kinetic Concepts informed the SEC they would exclude a shareowner proposal from John Chevedden even though the SEC rejected a “no-action” request from them on March 21. This company and others taking similar action have not met the burden of 14a-8(g), which required companies to demonstrate they are entitled to exclude proposals.

I believe taking action against Kinetic Concepts should be a high priority for the SEC. Otherwise, a growing number of companies will simply believe they can ignore shareowner resolutions, which form an important cornerstone of corporate governance.

 

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Take Action: Sixty Years of ShareOwner Rights at Risk

Your right to file a proxy without being hauled into court or having your proposal ignored is at risk.  I urge readers to raise the profile of the SEC’s failure to act by sending e-mails to the Office of Chief Counsel at [email protected] and the Chairman at [email protected]. I also recommend you fill out the complaint form at https://tts.sec.gov/oiea/QuestionsAndComments.html, since this will go to the Division of Enforcement, the office that could take action.

As I said in a recent post (Texas Secession Led by Apache, KRB and Kinetic Concepts), Lewis Gilbert was instrumental in winning a formal SEC rule in 1943 that shareowner proposals be included in the proxy. After many challenges, the SEC’s powers were finally sustained in the 1947 case, SEC vTransamerica, when judge John J. Biggs Jr. ruled, “a corporation is run for the benefit of its stockholders and not for that of its managers.”

It took until 1988 for a shareowner proposal by Richard Foley to finally get a majority vote. Rights, which have taken many decades to win could be gone very quickly if we simply do nothing to defend them. The SEC’s rules are not self-enforcing but depend on shareowner vigilance. “All that is necessary for evil to triumph is for good men to do nothing.” While we aren’t sure who said it first, Edmund Burke or Leo Tolstoy, we all know it to be true. Here’s the e-mail I sent:

Dear Chairman Mary Schapiro and Mr. Greg Belliston:

I understand Apache and Kinetic Concepts informed the SEC they would exclude shareowner proposals from Mr. John Chevedden and further that they are going doing so without the SEC issuing letters indicating it would take no-action on such an omission. In fact, Kinetic’s request for a no-action letter was actually denied. These companies have not met the burden of 14a-8(g). They have not demonstrated they are entitled to exclude these proposals. In fact the SEC said as much in letters issued to Hain Celestial, Union Pacific, Devon Energy, Prudential, News Corp and Kinetic Concepts.

I believe taking action against Apache and Kinetic Concepts should be a high priority for the SEC. Otherwise, a growing number of companies will simply believe they can ignore shareowner resolutions, which form an important cornerstone of corporate governance.

Attached is the April 5 letter from Kinetic Concepts putting the SEC on notice that it will mail its proxy without Mr. Chevedden’s proposal on April 15th, despite the previous refusal of the SEC to grant their no-action request.  Apache has already done so. I understand the SEC has a lot of high priority action items but if the SEC doesn’t go after these companies we could see a flood of copycats, with shareowner rights that have been in place since 1947 placed at risk.

I’m surprised the SEC hasn’t at least posted Kinetic’s letter at http://www.sec.gov/divisions/corpfin/cf-noaction/14a-8-incoming.shtml but I guess the letter isn’t a no-action request. Instead, it is a notification of Kinetic’s intent to test the SEC’s willingness to follow-up on staff’s decision not to grant a no-action letter. Does such a decision by SEC staff mean anything or is the SEC too busy to really take shareowner proposals seriously?

Both companies are relying on an flawed court decision from a suit brought against Mr. Chevedden by KBR. Even a quick glance at page 6 (2011-04-04 KBR Chevedden Docket 24 – Memorandum and Order https://www.corpgov.net/wp-content/uploads/2011/04/2011-04-04-KBR-Chevedden-Docket-24-Memorandum-and-Order.pdf) reveals the judge didn’t base her decision on what is required in order to show evidence of ownership for a 14a-8 proposal. Instead, she bases her decision on evidence of ownership requirements adopted in 14a-11, the provisions for placing shareowner director nominees on the proxy. Aside from being on a completely different subject, these rules are not even in effect, but as you know have been stayed.

I urge the SEC to take action immediately or we will all be facing a very messy situation.

Thank you for your consideration.

Your own e-mail and paste to the Division of Enforcement complaint form could be very simple:

I understand Apache and Kinetic Concepts informed the SEC they would exclude shareowner proposals from John Chevedden and further they will do so without the SEC issuing letters indicating it would take no action on such an omission. In fact, the SEC rejected such a request from Kinetic Concepts on March 21. These companies have not met the burden of 14a-8(g). They have not demonstrated they are entitled to exclude these proposals. In fact, the SEC said as much in letters issued to Hain Celestial, Union Pacific, Devon Energy, Prudential, News Corp. and Kinetic Concepts.

I believe taking action against Apache and Kinetic Concepts should be a high priority for the SEC. Otherwise, a growing number of companies will simply believe they can ignore shareowner resolutions, which form an important cornerstone of corporate governance.

For you historians, more information on CorpGov.net by searching cloud tag Apache. Also, there was this great post yesterday from Ted Allen of RiskMetrics, Will the SEC Stop the ‘Texas Secession’? Allen notes, “Corporation Finance staff planned to issue a legal bulletin on proof of ownership before the 2011 proxy season, but reportedly was unable to obtain a consensus among the five commissioners.”

Ted Allen concludes his post with a precautionary note: new guidance from the SEC may not prevent some companies from bypassing the no-action process. “Even if the staff puts out something black and white in a bulletin, companies may continue to delete the proposals and basically dare the commission to take action,” said J. Robert Brown, a securities law professor at the University of Denver.

Brown is right. Only vigilance by shareowners, like the brief e-mails I’m requesting from you today, will help shape SEC priorities so that shareowner proposals don’t become a thing of the past.

Alyce Lomax with the Motley Fool (A Shareholder Battles Rage On, 4/13/2011) writes on these legal challenges and other issues, concluding:

Whatever good might come of this situation, investors should still think twice about buying into any company willing to sue its own investors to keep them from presenting their concerns for a shareholder vote. Management-centric businesses that relegate all other stakeholders to second-class status won’t do your portfolio any favors in the long run, and likely don’t deserve your investing dollars at all. Heck, if they work so hard to shut down shareholder dissent, perhaps they shouldn’t have gone public in the first place.

Shareholders incensed by corporate crackdowns on their rights have many ways to issue a resounding “no.” Vote against outsized executive compensation, sell your stake, or screen out such offenders when searching for stock ideas. Whatever action you take, your rights are always worth fighting for — especially when corporations actively try to make that fight less fair.

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