NCUA General Counsel Mike McKenna said in a March 29 legal opinion he disagrees with the $161 million St. Helens Community FCU’s claim that a federal lawsuit filed by a member should be dismissed because it is not within the jurisdiction of federal court.
The letter was submitted by plaintiff Steven Knebel to the court on April 1, along with his response to the St. Helen, Ore., credit union’s motion to dismiss the case, which challenges the vote count taken during a special meeting in September in which members voted to not recall five directors.
Knebel was among a group of members who spearheaded a recall petition in June 2012 to remove the directors over the dismissal of former SHCFCU CEO Jeff Schwarz, and in opposition to a proposed merger with the $152 million Wauna FCU. The merger has since been scrapped.
In the letter, McKenna said state law should not play a role in determining governance issues when the Federal Credit Union Bylaws are clear and unambiguous. The NCUA incorporated the bylaws into its regulations in 2007, in part to clarify the regulator’s authority to take action on bylaw violations.
McKenna also supported Knebel’s primary complaint in the suit, that the 15,285-member credit union counted mailed ballots, a bylaw violation.
The NCUA attorney cited federal bylaws that state any director or committee member can be removed from office by majority vote of members present at a special meeting called for the purpose.
“The use of the phrase ‘present at a special meeting’ precludes the possibility of voting in absentia by mail to remove a director,” McKenna wrote.
He went on to explain that the bylaws require members to hear the recalled volunteer’s position on the matter before voting.
“If voting by mail were allowed in lieu of being present, members would be denied the opportunity to observe the director’s demeanor, hear the director’s defenses, and ask the director questions,” McKenna wrote. “The give and take that is part of being present at a special meeting provides a director with more due process and better informs the membership.”
SHCFCU spokesman Barbara Harris declined comment. Knebel could not be reached for comment Wednesday.