Judge May Decide Some Key Credit Union Issues In Washington Such As Are Members Owners

VANCOUVER, Wash. – Superior Court Judge Roger Bennett is expected to decide any day whether or not, among other things, five of the nine members of the $619 million Columbia Credit Union’s board are seated illegally as well as whether credit union members in the case have a right to see the records, including the board minutes, of the credit union. The Judge may also decide whether the credit union’s board breached their fiduciary duty to the credit union’s members with the money it spent on the special election at which eight of the board members faced recall. The eight narrowly retained their seats after a mail-in ballot and contentious special meeting on March 28. Judge Bennett heard arguments from the credit union and from the members’ group Save CCU on April 22nd. The still unresolved question of when Columbia will have its annual meeting this year, and how the credit union will handle the reelection campaigns of four of the contested board members, makes the term limits question the most pressing for the judge to resolve. Although the credit union and the Washington State Department of Financial Institutions have met to consider when to hold the annual meeting, they have held off making a final decision awaiting the court’s decision on how many seats might be up for election. Save CCU has argued in its court filings that the five board members have held their seats longer than they should have under a provision of Columbia’s bylaws that was passed in 1998. Under that provision, credit union board member terms were capped at three, three-year consecutive terms. The credit union responds that the bylaw provision was never meant to apply to board members who were seated at the time it passed, but instead to future board members. One aspect of the credit union’s legal position that has drawn some attention has been the suggestion that credit union members have no right under common law to see credit union records, including board minutes, because credit union members are more depositors than they are owners. One of the reasons Judge Bennett should dismiss the CCU suggestion that credit union members should be able to see the records of the credit union, Columbia argued, is because such a right is not explicitly granted within Washington state’s credit union act. “The common law rights of corporate shareholders are not applicable to credit unions. Plaintiffs, as members of the credit union, are depositors, not owners.As `members’ they have only the rights accorded to them under the Credit Union Act,” Columbia added. “The right to inspect credit union records is not among the rights that members of a credit union possess.” The suggestion that even one judge might agree with an argument that credit union members might not own their credit unions in a common law sense got the attention of legal minds in different parts of the industry. Eric Richard, general counsel with CUNA would not comment on a case in which he was not counsel, but he said that as a general rule, the credit union industry has remained firm in its assertion that credit union members have an ownership stake in their credit unions. Stacey Augustine, general counsel of the Washington CU League and one who helped write Washington State’s credit union act, argued that Columbia was not arguing in a general sense that credit union members are not owners. Rather, she contended, the credit union was arguing that credit union members could not look for those rights outside of the Washington state credit union act. “Ownership is one of the basic tenants distinguishing credit unions from other types of financial institutions,” Augustine said. “Members are unequivocally owners. Credit union member have voting rights and rights in liquidation-all hallmarks of ownership. Even the credit union’s web site refers to “member/owners”. Credit unions are “unique creatures of statute.” Credit unions aren’t corporations, they aren’t non-profit corporations. A credit union is just that.a credit union,” she said. Augustine added that she hoped the Judge would not agree with Columbia’s argument because the legislators that drew up the credit union act did not intend to limit members’ rights to only those enumerated in the statute. “That is most certainly not what was intended,” she said. -