Court Hears Recall Arguments

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A Washington State judge heard arguments from both sides regarding a possible special membership meeting that could result in the recall of the nine board members at Columbia Credit Union, which has sought to convert to a mutual savings bank.

Attorneys for a group of members fighting the conversion and calling themselves "Save Columbia Credit Union" asserted that its petition requesting a special meeting was valid under state law, and that Columbia Credit Union's disregarding of that petition was in violation of the law. "We are asking the court to direct the credit union's secretary to comply with the state statute, set the date of the special meeting, and give members notice of the special meeting," said lead attorney Douglas Schafer.

John Neupert, lead attorney for CCU, argued that the director of the Washington Department of Financial Institutions has the duty to enforce the petition, but has elected not to enforce it. Instead, the director has ordered a vote taken at the CU's annual meeting. "The petition was incomplete because it did not identify replacement candidates," said Neupert. "The petition was not acceptable to the board, and the board correctly discharged its duties."

Neupert also stated members or groups of members have no right to bring a lawsuit against the board.

Schafer responded that the statutes contain no requirement for names of replacement nominees, only notice of which director or directors might be removed. "That is a creative argument and I commend them for it," he said.

Schafer also defended the idea that only the members who attend the proposed special meeting be allowed to vote. "Credit unions are a cooperative society. These people interact, they are not corporate lawyers," Schafer argued. "No proxy is consistent with the credit union movement. People get together for a meeting, discuss the issues and vote."

Both sides expressed optimism after the hearing. Steve Straub, former president and CEO of Columbia CU and spokesperson for the Save Columbia CU, told The Credit Union Journal, "Our case is so strong, and Doug [Schafer] did such a fine job delivering it. It is a simple question: 'Did we follow our bylaws and the law?' And we did. The arguments by the credit union's attorneys clearly were attempts to thwart the process."

Colleen Boccia, a spokesperson for Columbia CU, said the hearing was "nothing unexpected."

"We expect Judge (Roger) Bennett to uphold our decision to deny the unacceptable petition to force a special meeting," she said. "Our board is dedicated to protecting all members' voting rights. Our state regulator and hopefully the Clark County Court will back our decision to move forward with an April 27 annual meeting, which includes a mail-ballot provision to accommodate the greatest number of members."

If the judge denies this motion for a special meeting then four board members' spots will be up for election on April 27. Judge Bennett took the matter under advisement and said he would issue a ruling "relatively soon." Bennett's assistant suggested the judge could hand down his decision early this week.

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