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California Corporate Law is Protecting Us Right Now

May 8, 2010

Get an official email from the ICG recently?

The corporate dissolution campaign is continuing to heat up as the election winds to a close. Whether you know it or not, you and I are paying overtime to the Local staff to spend their weekend writing an official position paper about a members-only ballot referendum.

The issue is deceptively simple. Virtually every nonprofit in California is organized in the same way. Corporate law historically has been one of the great engines of prosperity in our society. Look at the chapter headings in the Nonprofit Mutual Benefit Corporations Law, California Corporations Code §§ 77110-8910 which defines and regulates directors (board members), managers, members, assets, mergers, files, records, voting, and the right of members to bring suit. The usefulness of this law for all nonprofits has been tested for over a century.

As I read it, your union leadership is upset because it was unable to quickly hold a video conference to discuss one computer contract over the last six decades. This worry about expense is noble, especially when linked to the shamefully expensive $1.2 million dollar system that, whenever it goes on line, will be little more than a database management system. This was an isolated problem of logistical planning, not corporate law. As a California corporation, the Local has operated its day-to-day business successfully over six decades, long before computers, long before voice mail, long before video conferencing.

No one on the Local staff is an attorney. Although they may play one on TV. I am not surprised they have misrepresented more than a few points of law. Here is my response:

(1) Federal law trumps state law. No one on the staff took Conflicts of Law, one of my stronger classes at The Law School, The University of Chicago where I received my Doctor of Law degree in 1991. Federal labor law rights have not and will not be taken away because the Local is a state corporation.   

(2) If the resolution passes, members will not only lose many specific rights set forth in the state law, they will also lose the benefit of a well-established body of case law that supports and defines their rights.

(3) Corporate lawyers are well-versed in corporate law. At issue are membership rights guaranteed under a state corporations statute. The issue is whether or not to toss these rights aside. This is not a labor law issue.*  The buying bread at a hardware store argument does not apply.

(4) One key issue is that under state law, members have a stake in the assets of a California nonprofit. This, among other assets, means having an ownership interest in the building on Sunset, quite a valuable piece of real estate. If the building ownership is transferred to an association, then the association, not the members, will own the building.

(5) Once long ago, I was at a membership meeting where the president of the IATSE, Walter Diehl, threatened to take over Local 659 (“I’ll put you into receivership!”) when he was displeased with how the staff at the time were running the office. If this were to happen in the future and we were merely an association, the IA might well be able to take over ownership of the building.

(6) “We are a Union, not a corporation” is false reasoning. For almost sixty years the Local has been both. It is not an either/or situation. No such choice needs to be made.

(7) There is a big difference between an attorney for the Local giving his off-the-cuff opinion to the board and that same attorney providing the board with a proper legal opinion, one that would go through each section of the Corporations Code and compare it line by line to the bylaws.

This is an important issue. An open debate for interested members might have been helpful. Perhaps our magazines could have examined both sides. A voter guide providing both pro and con statements could have been sent out with the ballot. That is what happens in all California elections.

For some reason, the leaders and staff at the Local want to ram this decision through without reasoned analysis. They want it to happen now. And they don’t want to have any debate.

So why are members voting on it now? Why are we having this debate in emails and on blogs? Why??

One simple reason: This very referendum is required by the California Corporations Code.

‘Nuf said,

Jeffrey Alan Goldenberg
Camera Assistant
California State Bar No. 168990 (Inactive)
Inactive member of the Colorado State Bar
Retired member of the Illinois State Bar


*By the way, I am a labor lawyer (not currently practicing, so my bar status is “inactive” to keep my dues lower). It was my major field of study in law school. I was Managing Editor of The University of Chicago Legal Forum and published a comment on union arbitration clauses. I was top of my labor negotiations seminar and won the best union contract of the class. I even worked as a clerk for the law firm that represents the producers.

Let me tell you, we’ve been had. Without divulging any confidences, I can say that the AMPTP has played the IATSE like a bad violin for many years. Take the last negotiations which were held: (1) a year before the contract expired, (2) at the rock bottom of an international economic crisis, (3) while the imprudently invested stock portfolio of the health plan was at its lowest, and (4) when unemployment in the industry as a result of the writers and actors strike was at its highest. A year later, when the contract already had been ratified (at the insistence of the administration), many of these factors had improved. We are now stuck with a poor contract negotiated in fear under circumstances most favorable to the producers.

Every negotiation, even during the go-go 1990s, has resulted in give-backs. Remember seniority, first class airfare, night premiums, weekend premiums, gold after 12 elapsed hours, higher meal penalties, and 300 hours each half year to qualify for health care? One of the cornerstones of labor negotiation is to never give back terms and conditions of employment because those hard-fought gains will be lost forever. All you will be left with is an application for COBRA and an impotent Health Care Task Force.

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