[Editors note: both lawsuits were funded by social activists with hidden agenda's inconsistent with sound credit union principles.]
Judge Dismisses Anti-conversion Suit Funded by Outsiders
DEARBORN, Mich. (07/27/06) – A federal court ruled that federal credit union bylaws are not enforceable and dismissed a suit brought by members of DFCU Financial challenging the board’s ill-fated attempt to convert the $1.8 billion credit union to a mutual savings bank. In delivering his verdict, U.S. Judge Lawrence Zatkoff said allegations of violations of a credit union’s bylaws do not amount to a matter of law and threw the members’ suit out. “Plaintiffs in the instant case allege no violations of federal law in their complaint, and thus the claim of federal jurisdiction is facially insubstantial,” wrote Judge Zatkoff. [Three] Members of the credit union claimed that directors and management violated DFCU’s own bylaws when they rejected a petition urging a special meeting to recall the entire board of directors. It was the second adverse court decision this week against angry members of a would-be credit union convert. On Tuesday, a state appeals court in Washington ruled that dissident members of Columbia CU did not have a valid claim that directors of the $700 million credit union violated their fiduciary duty when they tried unsuccessfully three years ago to convert that credit union to mutual savings bank. (CU Journal)