Legal Sniping Marks Days Leading Up To Columbia Special Meeting

VANCOUVER, Wash. – As the date established for its special meeting drew steadily closer, both the $619-million Columbia Credit Union and the members who seek to recall eight of its board members continued their legal jockeying. The eight board members face possible recall at a special meeting scheduled for 3:00 p.m. on March 28 at the Hudson Bay High School Gym. At press time, lawyers for Save CCU, the organization of members seeking to recall the board members, were before Judge Roger Bennett arguing that he should issue an order preventing Columbia from spending credit union funds to campaign for the incumbent board members. The group made the point in a previous court filing, but hoped Judge Bennett would recognize the pressing nature of this part of their previous case. “Beginning in January and continuing to this date, Defendants have been expending CCCU funds in a costly and aggressive campaign to persuade CCCU members to vote to retain, rather than vote to remove, the directors,” the group argued in its filing. That campaign has included many large or full page display advertisements in The Columbian newspaper, radio broadcast advertisements, multiple direct mailings of campaign literature, direct electronic-mailing of campaign literature, a telephone solicitation campaign, campaign materials posted on the credit union’s Internet Web site, and temporary signs and banners, the group enumerated. Spending credit union money in these ways breaches the board members’ fiduciary duty toward the credit union and its members, the group argued. The credit union has not yet commented on the court action. Calling The Members Save CCU had been pondering the latest move for some time, but the issue gained urgency when it became clear Columbia had contracted with Mellon Investor Services, a branch of the Mellon Financial Corporation, to solicit members by phone to retain the current board. Columbia members have testified to receiving phone calls either in person or on their telephone answering machines with the following message: “Hello, my name is Amber Bauman, I’m calling on behalf of Columbia Credit Union from Mellon Investor Services and I just wanted to make sure you received the material recently sent to you from Columbia Credit Union regarding the upcoming special meeting election that is being held to retain or remove the current board of directors. Your ballot must be received by March 26, 2004, so it is very important for you to vote your ballot to retain the current directors and return it as soon as possible.” If the phone call came to an answering machine, the message promised there would be a return call and urged that other household members who are also Columbia members vote to retain the board. The caller left an 800-number to call for more information. Cathryn Chudy, a CCU member and organizer with Save CCU, also in a sworn statement, said that when she called the 800-number left on her answering machine in a similar call she reached a woman who told her that “a small group wants to overthrow the board and the ballot urges you to vote to retain the board.” When Chudy objected that the ballot did not take that position the young woman repeated the assertion that the ballot encourages retention of the board and directed her to call the credit union for more information on the issue. Columbia declined to return phone calls to Credit Union Times asking for details of what the Mellon contract might cost, but Ken Berstch, an analyst with Moody’s Investor Services who specializes in corporate governance issues, estimated the credit union would likely have had to pay $15,000 to walk in the door. “The way these are generally structured is that there is a flat fee to start out with and then the costs can rise pretty fast from there,” Bertsch explained. Beth Young, senior researcher with The Corporate Library, a firm which specializes in tracking the way corporations govern themselves, agreed but set the figure at between $25,000 and $50,000. “It depends on things like how many members they are calling,” she explained, “and whether or not the question on the ballot is contested or not.” The sorts of activity which have been described would carry the higher price tags, depending on how many credit union members were being called. Columbia has 59,000 members on record with the NCUA and Young said that, by corporate standards, calling them all would represent a significant commitment on Columbia’s part. Trespass Fight Dies Down As this part of the legal fight got hotter, it appeared that a previously contested point might be cooling down. Lawyers for Columbia declined on March 23 to file the case they had prepared asking Judge Bennett to issue a restraining order against Save CCU campaigning on credit union property in favor of the recall. The request for the restraining order had been prepared on March 19, but various delays prevented the case from being heard before March 23, according Save CCU supporters. The credit union’s lawyers declined to file the case on March 23, Save CCU suggested, in part because some board members had been campaigning at the branches over the weekend. “It would have been hard for the credit union to seek an injunction to block us from doing what they had board members out doing,” Chudy observed. -