Why SaveCCU is in Court
By Doug Schafer, attorney representing SaveCCU

SaveCCU consists of members of Columbia CU who believe that it should operate as a cooperative governed by its members and their elected directors consistent with its Bylaws and Washington state law.

In February 2004, SaveCCU filed a lawsuit against Columbia CU's directors to force them to comply with its Bylaws. SaveCCU had presented to those directors a petition signed by 3,593 members calling for a special meeting to vote against the Plan of Conversion to a bank and to vote on the removal of the directors who had sought that conversion. In early March 2004, Clark County Superior Court Judge Roger Bennett ordered the directors to hold the special meeting to conduct the removal vote.

The directors then campaigned very heavily, spending credit union funds, to oppose their removal by the members, and they denied SaveCCU an opportunity to communicate with the members the reasons why the directors should be removed. In a very close vote by mail and in-person at the special meeting on March 28, 2004, the directors were not removed.

In mid-March 2004, SaveCCU filed a second lawsuit against the Columbia CU directors to obtain a judicial ruling on several issues of importance to the member governance of Columbia CU. That lawsuit was not against Columbia CU, but court rules required that it be named as a nominal defendant. In that suit, SaveCCU asserted -

Fiduciary Duty Claim - that the directors in 2004 owed a fiduciary duty to Columbia CU's members that barred the directors from using its funds, property, and resources to serve their personal self-interests in retaining their offices, and that they breached that fiduciary duty;

Access to Records Claim - that the directors in 2004 denied Columbia CU members access to records to which the members were entitled, including its Bylaws, records of the years of service of its directors, minutes of board meeting discussions and action on corporate policies and plans, and copies of corporate policies and plans; and they denied SaveCCU a means to communicate with other Columbia CU members about corporate governance matters, including the reasons for removing the directors;

Term Limits Claim - that the Bylaws provision adopted in 1999 that limited directors to three consecutive three-year terms was being violated by several of the directors holding office in 2004;

No Enabling Law Claim - that Washington state law does not permit a state-chartered credit union to convert into a state-chartered bank;

Supermajority Vote Claim - that Washington state law requires that any conversion or merger of a state-chartered credit union must be approved by a two-thirds vote of its members voting on the proposal.

In late December 2004, Judge Bennett dismissed SaveCCU's lawsuit. He ruled that -

Fiduciary Duty Claim - under Washington law, a credit union's directors have no fiduciary duty to its members.

Access to Records Claim - under Washington law, a credit union's members have no right to access the credit union's Bylaws or any of its corporate records.

Term Limits Claim - the Bylaw provision limiting directors to three consecutive three-year terms in office should be applied without counting any director's years in office before its adoption in late 1999, even though it had no "grandfather" clause directing such an application.

No Enabling Law Claim - no conversion was imminent, so he declined to rule on the question of whether Washington state law permits a state-chartered credit union to convert into a state-chartered bank.

Supermajority Vote Claim - no conversion was imminent, so he declined to rule on the question of whether Washington state law requires that any conversion or merger of a state-chartered credit union must be approved by a two-thirds vote of its members voting on the proposal.

Legal counsel for SaveCCU, who has practiced credit union and financial institutions law for over 26 years, feels very strongly that Judge Bennett's rulings are in error. However, there are yet no appellate court opinions in Washington state that squarely address these issues. In the interest of the present and future members of Columbia CU and of the members of all state-chartered credit unions in Washington, these issues should be brought to an appellate court that can make a ruling that will serve as precedent statewide.

Legal counsel for Columbia CU argued to, and apparently persuaded Judge Bennett, that a member of a credit union, unlike a shareholder, has no genuine ownership rights and is merely "a depositor with a right to receive a deposit back." If that is the law (which we believe it is not), then Columbia CU should stop misleading its members with marketing materials calling them its "owners." We believe that Judge Bennett was misled by Columbia CU's lawyers into making erroneous rulings that should be corrected by an appellate court.

Read the Opening Brief filed June 7, 2005 in the Court of Appeals.