PORTLAND, Ore. A lawsuit challenging the legality of last fall’s failed effort to remove five directors at St. Helens Community FCU was switched to state court yesterday, after a federal court ruled it was not the proper venue to hear the case.
“We’re not going away,” Steven Knebel, the plaintiff in the suit, told the Credit Union Journal last night, of efforts to remove the board majority. Knebel said he is also filing an appeal of the federal court ruling dismissing the suit.
Knebel and other dissident members of the credit union claim the board ouster vote allowed mail-in ballots during last September’s special meeting in contravention of the credit union’s own bylaws, which require that only members attending the special meeting may cast a ballot to remove a director. NCUA issued a legal opinion supporting that interpretation of the standard federal credit union bylaw adopted by $160 million credit union.
The effort to remove the five (of seven) directors began a year ago after directors and management denied there were talks to merge St. Helens Community—then struck a deal to combine with the credit union with nearby Wauna FCU (The merger ultimately collapsed). The board recall proceeded with the special September meeting where the credit union—counting mail-in ballots, as well as those voting at the meeting—announced the recall had failed. The actual vote count was never announced.
The U.S. District Court for the District of Oregon rejected Knebel’s suit, claiming a credit union bylaws amount to a contract between the credit union and the member—even if the credit union is federally chartered, like St. Helens Community—and that state court was a more appropriate venue for the dispute.
In the new state suit, Knebel asks the Columbia County Circuit Court to declare the credit union in violation of its own bylaws under Oregon’s Uniform Declaratory Judgment Act.
He asks that the court declares that the “Credit Union’s Bylaws serve as the contract between plaintiff Knebel and the defendant Credit Union.” And that “By soliciting and counting mail-in ballots from members not present at the September 4, 2012 special meeting, the Credit Union has refused to comply with its own Bylaws, thereby breaching its contract with its members, including plaintiff Knebel.”
He asks the court to declare the results of the recall vote void and to count only the votes of the 165 members who attended the special meeting.
