No apologies necessary - you are correct, except in calling me Jim Girand's attorney. I am not. I am general counsel for SF Tri Club. The opinion I was rendered was at the request of Mr. Girand - I would have done the same at the request of Mr. Locke, Mr. Weiss, or you. It is my opinion as an attorney and as a USAT member.
But, since you asked, my opinion deals not so much with the election, but with Mr. Grinder's analysis. Mr. Grinder wrote a detailed and well fashioned opinion that concluded that the election process was not in conformity with the process adopted by the USAT. It is that conclusion with which I take objection. Mr. Grinder's opinion (as seen by you) focuses on the following facts:
(1) The USAT board debated and considered various voting procedures, including allowing the ballot to be downloadable from the webiste on a certain date and allowing candidtaes to collect ballots and turn them in themselves.
(2) The board sought legal advice and the opinion rendered stated (I believe) that while not actually wrong or invalid, that allowing candidtaes to collect ballots could be seen as unwise and could be vulnerable to absue.
(3) The board considered this opinion, along with other factors such as past practice, deadlines, faith in the candidtaes' integrity, etc. and reached a majority decision as a result of a board vote to post allow both the downloads and the candidates' collection of the ballots (note - I agree that this later practice, while not illegal, wrong or invalid, is not the most clean).
(4) Based upon this vote, the USAT began to run the election as voted by the board.
(5) At about this time, the USAT secretary sent out draft (remember that word, its important) minutes to the board for review, comment and clarrification before submitting them to board at a later date for ratification.
(6) The minutes contained errors - it incorrectly reversed the result of the votes, stating that both adopted procedures had failed. This was clearly in error and caught by multiple board members including Jim Girand.
(7) Val Gattis, the president, sent an e-mail to all board members pointing out an error and asking them to vote that they agree that it wa sin error. The vote was majoritry - 5 to 2 agrred that the adopted procedures had been adopted and that the minutes were wrong.
(8) So, the election continued per the adopted procedures.
(9) At a later meeting (November I believe) the board was presented the erroneous minutes. Per accepted and proper procedure they adopted the minutes "as corrected" by the e-mail vote triggered by Val Gattis.
Now, back to Mr. Grinder's analysis. In it, he EXPRESSLY states that his opinion is not about the correctness or improperiety of the election procedures. He never got to that point. Mr. Grinder stated that the flawed and incorrect draft minutes should have been followed. He stated that Ms. Gattis' attempt to correct them via e-mail vote did not follow by-law procedure. Here is where I believe the opinion is flawed.
First, the USAT is not bound by DRAFT minutes....especially when the board knowingly is aware that they are wrong. To do so would be foolish and a violation of their duties. Second, while Mr. Grinder may be correct that Ms. Gattis' e-mail discussion did not correct and ratify the minutes....he failed to discuss or even mention the November correction and ratification. The minutes were officially corrected and the procedure used in the election and outlined by the corrected minuted were ratified by the board (not an uncommon corporate procedure).
That is my analysis. Like Mr. Grinder, my opinion does not address the actual procedure (although, my $0.02 is that they are not inherently wrong or invalid, but not the most wise or prudent method to use. That alone does not invalidate their adoption by the board). My analysis deals with the minutes and the board's adherence to the actual vote.
Below, is the text of my analysis:
THE FINDING THAT THE ELECTION PROCESS WAS FLAWED IGNORES THE LAW AND FACTS.
A The election was held pursuant to the valid act and decision
of the USA Triathlon Board of Directors.
Attorney Grinder supports his entire decision upon the fact that the election process held did not reflect an erroneous bullet-point summary of a set of draft minutes. The board of directors are not bound to follow non-binding minutes. They are, however, bound to act as the board voted. “Each corporation shall have a board of directors. The activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.” Note: this almost universal definition of director authority does not reference draft minutes as the source of their power and instructions. Instead, the election process, an activity and affair of the corporation, was to be conducted and exercised under the direction of the board (not draft minutes – erroneous draft minutes at that). The directors were in attendance at the meeting. They knew the outcome of the vote. They knew what they, as directors, had been charged to do. It would not only have been irresponsible of them, it would have been a dereliction of their duties to ignore the binding board vote and act pursuant to knowingly erroneous and non-binding draft minutes. The USA Triathlon then conducted the election according the act and decision of the USA Triathlon Board of Directors. The draft minutes, despite Mr. Grimer’s reliance thereon, were of no authority or weight. The election process was mandated by the board – the vote of the board is the ONLY authority from which the election could flow. “An act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board.” (emphasis added). This universal definition of a director action clearly shows that the decision reached by the board at its properly-called June meeting, by a vote of the majority of directors with a quorum present, is the “act of the board”….not draft minutes. Had the directors disobeyed the vote and knowingly followed draft minutes which incorrectly recorded the “act” and “decision” of the board, they would have been in breach of their fiduciary duties to the corporation and to the USA Triathlon membership.B. The Minutes were in fact correct and ratified as corrected at a subsequent regular meeting
Even assuming, arguendo, that Attorney Grinder’s misplaced reliance upon draft minutes should be afforded some weight, the election was still valid. Attorney Grinder noted that minutes can be altered pursuant to the By-Laws. Per the By-Laws, the secretary, Karen Buxton sent the proposed minutes to the board members for review. Per the by-laws, the board members reviewed the draft minutes (i.e. they had yet to be ratified) and some noted that they incorrectly reflected the discussion and decision held at the June 2003 meeting. Attorney Grinder also notes that the minutes could only be amended pursuant to a special or regular meeting. That is correct. However, they can also only be ratified at such meetings. As such, the erroneous minutes were never ratified and, as such, were not binding. They were an erroneous reflection of conversations.
Further, as a result of the errors contained in the draft minutes, certain board members instituted an e-mail attempt to clarify the minutes. President Val Gattis wrote an e-mail to all disinterested board members to see if they agreed that the minutes were incorrect. The e-mail was titled “VOTE June Board Meeting Clarification”. The responses to this e-mail indicated that the board, as a majority, did agree that the minutes incorrectly reflected the discussion and decisions of the board.
As a follow-up, Val Gattis spoke with the Secretary and Ms. Buxton agreed that the board members were correct and that her minutes were in error. Ms. Gattis then clearly e-mailed the board, explaining that she spoke with the secretary about the minutes and explained to the board that “this is not a new subject or a re-vote”. This is important – the discussion, the e-mail exchange, the show-of-hands of those who noted the error was NOT a re-vote.
Mr. Grinder concludes that, as such, the e-mail did not effectively amend the minutes.[1] Assuming that this is correct, then the draft minutes had, still, not been accepted by the board as correct nor been amended by the board as in error. Accordingly, there was no vote on the minutes. The erroneous minutes still stood and, as of yet, were not ratified or accepted by the USA Triathlon Board. Like any other non-ratified proposal or company business, they were non-binding and of no authority.
However, what Mr. Grinder fails to recognize or discuss is that a subsequent regular meeting of the board of directors was held in November. At the meeting, the minutes of the June meeting were put to a formal ratification vote. The board revisited the erroneous minutes, yet to be ratified, and the held as follows:
“2003 Election Discussion:
There was a heated discussion about how the election process will be handled this year. Karen stated that the integrity of the election process was in jeopardy by allowing candidates to hand out, collect and mail in ballots. Ray and Brad echoed this feeling. Jim Grand stated that this is the way it has been carried out in the past and we should continue to do so. Others felt that the process needed to be reviewed, but not during the current election.
It was then decided how this year’s election will be carried out:
1. The ballot can not be faxed or photocopied
2. Front of Tri Times would have a statement that states this is the election issue!!
3. Ballot will be placed as a PDF on the website that people can download and send back to us. Stamped return address will appear on the backside.
4. Cardboard ballot insert will be placed in USA Triathlon Times.
5. Only members can mail in your ballot.
6. Ken Waugh will conduct a random audit of ballots returned to confirm they completed and sent in their own ballot.
7. Will apply to this year only
In Favor 4; Opposed 2; 4 Abstained. (***This decision was later over-turned during an email vote due to a discrepancy of the notes taken during the meeting).
Meeting
Adjourned: 5:45pm”
While not the most eloquently written memorial, these minutes clearly indicate a re-visit of the June minutes, a contemplation that they were in error, an adoption of the clarification obtained via the e-mail discussion, and a ratification of the minutes as amended to correct the error.
It may be more common for past minutes to be ratified or corrected at the next subsequent meeting, it is not mandatory. Non-ratified minutes may be ratified at a later point in time. Mr. Grinder himself notes that even ratified minutes may be amended at a later date and time. Roberts, Sec. 48.
Accordingly, the minutes, as amended, were in fact ratified at a regular meeting. Thereby, even under Mr. Grinder’s analysis, the USA Triathlon election process was valid and the election results binding.
CONCLUSION
Here, the minutes were erroneous. The minutes were NEVER ratified prior to November. The minutes are not binding until ratified. The board of directors may ONLY act pursuant to the vote. The directors acted as were instructed via the board vote. The minutes were later corrected and accepted as amended. Officers are bound to act as directed by the board. The management of a corporation is controlled by a board vote. Nowhere is there authority that draft minutes trump the legal obligation of corporate officers and directors to abide by a vote passed by the board. In fact, the opposite is true.
Here, the draft minutes were in error. The errors were discussed among an e-mail discussion (fully allowable). The erroneous minutes were later corrected and adopted as corrected. The election was held pursuant to the method as VOTED by the board of directors and reflected in the ratified-as-amended minutes. Now, the valid vote, the corrected minutes and the whole lection is being attacked by a group of losing candidates who have decided that the USA Triathlon membership’s vote should be ignored and are seeking any possible means to try to overturn the election. This is sad and embarrassing. What’s next? Are there hanging chads on the USA Triathlon ballots?
[1] Mr. Grinder concludes that the e-mail vote does not meet the requirements of presence at a meeting. Yet, no court has yet ruled on the use of e-mails at a meeting and in fact, California Corporation Code Section 7211 specifically allows electronic attendance and communication devices. In addition, Mr. Grinder contends that no notice of this “special meeting” was supplied. However, seven board members voted – thereby evidencing their attendance. Attendance at a board meeting constitutes waiver of notice.
Dan: After we are done discussing this issue, perhaps you'd like to open up a forum thread on the position taken by some of our elected USAT directors that USAT members, such as myself, have no right to voice their opinion and that, in fact, such opinions are "not relevant" and that we are "outsider