VANCOUVER, Wash. — The latest turn in the ongoing leadership struggle at the $726 million Columbia Community Credit Union cut in the direction of reform-minded members last week as a judge put three of their members back on the credit union's board and supervisory committee ballot.
Superior Court Judge Paula Casey issued a preliminary injunction on Sept. 18, which at least temporarily reinstated Cathryn Chudy and Cathryn Edgecomb to the board and Lloyd Marbet to the ballot for the supervisory committee. The credit union had expelled the three, who are leaders in the Save CCU organization, from the credit union in August after asserting that the three had harmed the credit union by participating in a decision by Save CCU to publish an advertisement in May protesting changes the CU made to its voting process.
The judge agreed with the former board members and disagreed with the credit union and Washington State's Department of Financial Institutions. DFI had been named as a defendant in the case and written a brief in support of the credit union's authority to expel the board members.
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The preliminary injunction requires the plaintiffs to put up a $20,000 bond against the possible eventual loss of the case and to recompense the CU for any costs it might incur in following the injunction in the meantime. No court date has been set for full case arguments and the plaintiff's lawyer, Doug Schafer, said the group has asked for support to help it make its bond in as short a time as possible.
The judgment has cramped the credit union's plans for its next elections, as the CU said the judgment came just as the CU had printed its election materials and had them ready to send.
"Since materials were already printed and scheduled to be mailed tomorrow," the CU said in its Sept. 18 statement, "the court decision delays the election timeline. Chudy and Edgecomb's preliminary reinstatements also decrease the number of open board positions from five to three," the CU said, adding: "[t]his preliminary decision was made with limited information and time, however, Columbia's majority board and management strongly feel that once the full merits of the case are duly considered, Columbia will prevail."
In its filing in support of the preliminary injunction requests, Save CCU excoriated the CU's board for the expulsion order, asserting that it was a move not to improve the credit union's governance, but to thwart democracy.
"It is apparent to any objective observer that the actions taken in 2006 by the majority board of Columbia were intended to thwart the effective governance of it by the individuals chosen by its membership," Save CCU argued. "In Columbia's opposition brief, counsel makes references to the 'business judgment rule' as covering their recent actions in removing Columbia's democratically elected officials and preventing Marbet from becoming elected as a director. The business judgment rule was developed by courts to shield corporate directors from liability to their shareholders for their good faith decisions involving transactions of their corporations with third parties. It is consistently held inapplicable to actions taken by corporate directors to impede democratic governance by their shareholders, and such actions are consistently set aside by reviewing courts," Save CCU said. Save CCU did not pick up its previous accusation that Washington DFI had failed to enforce the law regarding the Columbia situation because of a close relationship between Columbia's current CEO, Parker Cann, and the DFI. Cann is a former director of the state agency's credit union division. –[email protected]
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