DEARBORN, Mich. — Members of the $1.8 billion DFCU Financial who opposed the credit union's previous bid to become a mutual bank have filed suit in state court to force the credit union to hold a special meeting at which some or all of the board members could be recalled.
The three plaintiffs, Richard Sly, Raymond Ward, and Margaret Blohm, are the same three that filed suit previously in federal court, which dismissed the case after the CU argued that the court did not have jurisdiction to hear it.
One of the three, Margaret Blohm, is an organizer with the members' group DFCU Members United, but the group itself is not a party to the suit.
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In their suit, filed Aug.18, the members contend that the CU is violating its own bylaws by refusing to hold the special meeting that 1,700 members petitioned the CU to hold. They also contend that the credit union board failed its fiduciary duty to members when it did not allow them to check board documents in an attempt to check on whether the board had done its due diligence prior to voting for the charter change.
In reaction to hearing that DFCU Financial members have filed a lawsuit against DFCU in Michigan state court, Catherine Roberts, CEO of the $235 million Research FCU and a DFCU member, said the issue is a credit union's board of directors keeping faith with the CU's members.
"I know that at Research Federal Credit Union the board of directors believes that it is our fiduciary responsibility and our obligation to our members to obey our bylaws," Roberts said, adding, "When credit unions fail to honor their own bylaws, as it appears is happening at DFCU, it sets a very dangerous precedent and can result in eroding members' confidence and severely weakening the credit union's governance structure. I hope that the Wayne County Circuit Court seriously considers this action because credit union members need some sort of remedy when their board of directors fails to adhere to their bylaws."
According to documents filed with the court, it appears that the members' case remains largely the same as the one brought earlier in federal court, with the addition of the confidentiality agreement that DFCU insisted its members sign if they would be allowed to view the CU documents they requested and the court decision which dismissed their case from federal court.
Even though the federal court dismissed the case for lack of jurisdiction, supporters of the member's position have noted that the court appeared sympathetic to the members' case.
The credit union has not returned calls for comment on the court actions.
Blohm said the members went back to court in a large part because no other venue remained open to them.
"Somewhere there has to be a court who can hear this and offer a remedy. We are back in court because nobody else has stepped up," Blohm said.
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