WASHINGTON and HARRISBURG, Pa. - A number of factors play intowhy the credit union trade associations get involved in litigation,but the top priority is their membership.

"Number one is `What action will most likely get a better resultfor credit unions?'" CUNA General Counsel Eric Richard explained.CUNA tends to get involved in federal courts where there can be alarger impact to head off precedent. In the state courts, it maynot help to have a Washington-based organization involved, but thetrade is typically happy to provide behind the scenesassistance.

He added, "Number two is cost." Richard would not disclose theamount CUNA has expended on the current case percolating inPennsylvania right now over the six-plus county field of membershipapproved as a community charter for Members 1st Federal CreditUnion.

While CUNA, NAFCU, the Pennsylvania Credit Union Association,Members 1st, AmeriChoice, and New Cumberland are all named asintervenors in the suit, Members 1st has its own attorney workingon the case. "We have been agreeing very well. We've been workingvery, very well together," CEO Bob Marquette said. He explainedthat his credit union felt the need to hire its own attorneybecause, in the event the suit was lost, Members 1st has nearlythree years invested in the community and will launch the lachesdefense based on that history of relying on NCUA's originaldecision.

He added that he has been pleased with NCUA's approach in thecase. "I think we have a good shot here," Marquette stated.

"Members 1st has its own counsel, but so far we've been able tostick together on the issues.Since I've been here, CUNA and NAFCUhave always worked well together," Richard added.

Involvement begins with approval from the board of directors theintervenors explained. "Ultimately our board of directors decidedto commit our association with technical support as well asfinancial support," PCUA Senior Vice President of Communicationsand Marketing Mike Wishnow said.

"As the advocate for credit unions in Pennsylvania we supportfirst of all charter options for credit unions and choices forcredit unions in general," he said of the league's involvement.

Richard said they also like to get the impacted credit unionsdirectly involved in the case. AmeriChoice CEO Kip Stecher saidthat while he is not involved in the day-to-day matters of thelegal defense, he is kept apprised of the major goings on.

Richard explained how the intervenors have met and the attorneyshave given them the procedural background to AdministrativeProcedures Act challenges, as the Pennsylvania case is. Few otherthan attorneys are interested in this part, he quipped, but whetherthe agency receives deference impacts the entire rest of the case."If we convince the judge this is a normal APA case and NCUAcomplied, there is a very good chance we will win the case,"Richard stated.

He added that it helps to coordinate some with NCUA and theDepartment of Justice since the briefs permitted are limited andthe agency and the intervenors can make different arguments asnecessary. Additionally, it is good for the credit unions torepresent the practical side of the lawsuit while the agency isrepresenting its regulatory prerogative.

"We obviously talk to the agency, but we're not working withthem.but we're certainly keeping them informed of what we're upto," NAFCU Senior Counsel Carrie Hunt explained.

Paul Lambert, a partner with Bingham McCutchen LLP, has beenrepresenting the credit unions for a long time, including in theAT&T case. Richard explained, "He understands credit unions,understands administrative law very well."

He added, "I don't believe you save money or time or efficiencyor anything else by using cut-rate counsel."

Level of involvement is another consideration. As intervenors,the trade associations and credit unions receive equal treatmentwith NCUA, the original defendant. Other times, the groups canchoose to simply file an amicus brief providing another voice in acase, but not all judges accept these as was the case when theNational Community Reinvestment Coalition sued NCUA for repealingthe Community Action Plan.

Still, in other cases, the parties choose to wait and see whatis going to happen before leaping in as in the current case pendingin Utah where the ABA is challenging the authority of non-multiplecommon bond credit unions to adopt underserved areas.

In Utah, Richard explained, "The spending of money may not haveany impact on the outcome.Right now, it's just a bunch of motionspending and it doesn't feel like the right timing for us." He saidhe expects the new field of membership policy dealing with this tocome out at the June NCUA Board meeting.

Hunt said NAFCU is monitoring the case in Utah, which the judgecould still dismiss. "If they add more credit unions and expand thescope of the case, [greater involvement] is certainly an option,but we'll cross that bridge when we get there."

The case for mootness is "particularly strong" in Utah,according to Richard, since NCUA set the precedent by repealingAmerica First Federal Credit Union's approved underserved area."One of the wonderful things about this job is that credit unionswork together so wonderfully and cooperatively," Richard said.America First gave up its underserved area for the good of thecredit unions as a whole, he noted.

Credit unions also have another advantage in that the bankershave been forced to file "as applied" suits after losing a seriesof cases challenging NCUA's implementation of H.R. 1151. "Sincethen they have been required to bring `as applied' cases, which ismuch more inefficient and costly because it depends on the facts ofeach individual case," Richard explained.

He admitted that the bankers were partly successful in theoriginal Utah suit over America First's community charter becauseit was remanded back to NCUA, but the court did not deny it couldbe a community. However, there is a different history to theMembers 1st suit because NCUA turned down an earlier package andthe six-plus counties represent a smaller percentage of the state'spopulation.

NCUA and the credit unions do not have a harassment claim justyet, but if they win it could set the stage for one, Richard said.If the credit unions lose, it will not be fatal because it willonly apply to that one particular set of facts.

However, cumulatively, the lawyer said, "Clearly it's negativepolitically when we lose a case because it's not just the bankerssaying we're doing something wrong. It's also somebody with somecredibility." NCUA last year lost suits in Texas where itstreatment of credit union conversions to mutual savings banks waschallenged.

"Lawyering in this field has to be three-dimensional," Richardsaid between the law, public relations, and [email protected]