VANCOUVER, Wash. – The ongoing saga of the $700 million Columbia Community Credit Union appeared to draw closer to a close last week as, in two separate events, a Washington appeals court ruled against a members group and the members of the CU appeared to vote against the members group's positions at a special meeting.
The members group, Save CCU, had been formed in the wake of the CU's 2004 attempt to change its charter to that of a mutual bank and an attempt by the members to both recall the board members who approved the conversion attempt and fully discover the details of how the decision had been reached and how much it had cost.
Save CCU initially appeared on a winning course, almost replacing the then-existing board at a special meeting and then putting its own members on both the CU's board and supervisory committees in a series of regular elections. The group appeared to flounder, however, when three of its members that were elected to the board foreswore their membership in the group and appeared to throw in their lot with two remaining board members from the original board.
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One crucial element of the Save CCU split appeared to be the membership group's determination to pursue a lawsuit relating to the ability of CU members to hold board members to a fiduciary responsibility for their actions and to force Columbia to let them see the full documents related to the conversion decision. A lower court judge ruled against the members group, which appealed, and this appeared to spark the three board members departing the group, asserting they could not be board members and members of a group suing the CU.
Since that point, relations degenerated steadily until the minority board members, who are all still active Save CCU members sued the majority board, including the former Save CCU members, alleging that the majority had effectively shut them out and away from the documents they needed to do their job.
The situation was further exacerbated when Save CCU charged that the majority board was trying to keep any other Save CCU members off the board by preventing candidates for board positions from identifying themselves in the voting brochure as Save CCU members. The CU counters that it is merely trying to keep the brochures to a manageable size, given that 17 candidates are running in an upcoming August election. The supervisory committee, dominated by Save CCU members, bucked the board and called a special meeting at which members would vote on the ballot restrictions and other issues.
But the results of the special meeting were not what Save CCU desired. By margins of victory, ranging from 92 to 140 votes, members attending the often acrimonious special meeting rejected three changes that the members' group Save CCU had backed as part of its good governance agenda.
In addition to rejecting the move to allow candidates for board positions to make 500 word statements in the voting brochure, the proposed measures would have prevented the CU from endorsing any candidates and it would have prevented the CU from spending any CU funds on campaigning for candidates.
Save CCU lawyer Doug Schafer cried foul, saying that CU employees provided the margin of victory and that the CU replaced Roberts' Rules of Order with their own to allow the voting to remain open until 3:00 when the majority of employees voted.
Save CCU took another hit last week when the Washington State Appeals Court reaffirmed the lower court's decision on the fiduciary responsibility and document questions.
The three appellate judges agreed that Washington law does not recognize any claims from CU members against directors for breach of fiduciary duty since CU members were judged not to be more than depositors.
The judges split on whether CU members have a right to inspect governance records, with two saying they did not and one, the Chief Justice, dissenting that they do.
All three appellate judges agreed that the trial judge should not have dismissed Save CCU's claim about the term-limited directors and they remanded the case to the trial court to adjudicate the term limits claim. [email protected]
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