Member Expulsion and Discipline

Member Expulsion and Discipline[1]

When Cicero was banished from Rome by Clodius under an enactment prescribing interdiction from water and fire for persons who caused others to be put to death without trial, Cicero was immensely disconsolate and remorseful. For a proud Roman, exile or expulsion from society was anathema as it is to most civilized social beings. Thus, as in Roman society, today exile or expulsion from the company of one’s peers and society is the ultimate penalty for perceived wrongful behavior.

Most private clubs find it necessary to prescribe expulsion for conduct “endangering the good order welfare or character of the club.” In a twist of irony arising out of the Ciceronian exile, however, most clubs afford members accused of egregious conduct an opportunity to be heard in their own defense, before the club determines whether expulsion or some lesser sanction or no sanction, is warranted.

The reported cases involving challenges to the legitimacy of a private club expulsion decision are numerous. In most of them, the club usually prevails based upon the principle judicial inquiry into the suspension or expulsion of a member of an incorporated, private, social club is limited to a determination of whether the club has acted in good faith under the bylaws adopted by it.[2] [T]he courts should not interfere with a club’s authorized, good faith exercise of discretion in disciplining members.[3] In addition to the good faith requirement, there should be a lack of mistake, fraud, collusion, or arbitrariness.[4]

However, where most social and recreational clubs fail to sustain their disciplinary actions when challenged, is in the procedure followed. If the procedure fails to comply with bylaw or other governance strictures or is perceived by the applicable state courts as violating rules of minimum procedural fairness, the courts will hold the decision to expel as illegally imposed. California, for example, requires the disclosure of percipient witnesses, i.e., persons who observed the complained-of conduct.[5] California also holds that consideration of matters not documented in the accused’s membership file and regarding which the accused did not have notice or a chance to respond also deprives the accused of a fair hearing.[6]

California courts have long required minimal due process for expulsion proceedings. The nature of the nonprofit corporation and the extent of the member’s interest involved will determine the minimum standards of notice and hearing which must be followed. (13 Cal Law Revision Com. Rep. (Dec. 1976 pp. 2424-2425.) This requirement of procedural fairness has been an established part of the California common law since before the turn of the century.[7] A member may not be expelled without charges. notice and a hearing.

. . .courts will interfere with the decision of a private association to expel a member “If the rules of the association governing expulsion have not been observed or if the accused member has not been afforded the rudimentary rights which will give him a reasonable opportunity to defend against the charges made.”[8]

We submit these minimum procedural requirements are not unique to California but may and are likely to be followed in other jurisdictions. Thus, in California[9] and numerous other states, the nonprofit corporations codes specify some reasonable procedural fairness requirements. For example, North Carolina provides:

(a) No member of a corporation may be expelled or

suspended, and no membership may be terminated or suspended,

except in a manner that is fair and reasonable and is carried

out in good faith.

(b) Any proceeding challenging an expulsion, suspension, or

termination shall be commenced within one year after the member

receives notice of the expulsion, suspension, or termination.[10]

The Nonprofit Corporations Code of Georgia (and other jurisdictions) are somewhat more specific:

Unless otherwise expressly provided in a corporation’s articles of incorporation or bylaws or, in the case of a corporation in existence before July 1, 1991, by resolution of the directors or members adopted before that date:

(1) No member of a corporation may be expelled or suspended, and no membership or memberships in such corporations may be terminated or suspended except pursuant to a procedure that is fair and reasonable and is carried out in good faith;

(2) A procedure is fair and reasonable when either:

(A) The articles or bylaws set forth a procedure that provides:

(i) Not less than 15 days’ prior written notice of the expulsion, suspension, or termination and the reasons therefor; and

(ii) An opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension, or termination by a person or persons authorized to decide that the proposed expulsion, termination, or suspension not take place; or

(B) It is fair and reasonable taking into consideration all of the relevant facts and circumstances;

(3) Any written notice given by mail must be given by first-class or certified mail or statutory overnight delivery sent to the last address of the member shown on the corporation’s records; . . . .[11]

Statutory and case law minimum fairness procedures should not be confused with substantive constitutional due process. The latter only applies to governmental actions not those of private organizations. Thus, in a Georgia case construing the above code section, a Georgia court stated:

The hearing was conducted without [the plaintiff] having the right to face or cross-examine his accusers, to have counsel present, or to disqualify members of the tribunal whose wives were witnesses at the hearing. Such rights relate to hearings before governmental tribunals, not to private hearings to discipline club members. “[D]isciplinary actions taken by a private, social club against its members are not matters of constitutional law. Appellant’s rights, if any, are governed by the by-laws, which constitute the agreement between the corporation and its members.[12]

The Georgia Code section quoted above is in the nature of a safe harbor provision. However, This leaves an opening for a zealous trial court judge to test the club’s disciplinary procedures against the “safe harbor” procedures in the Code and potentially determine the procedures are not “fair and reasonable” notwithstanding the doctrine of non-interference established by Bartley I. Bartley I was decided before the adoption of O.C.G.A. § 14-3-621 and thus may be held inapplicable as to whether a nonprofit organization’s disciplinary procedures are “fair and reasonable.” Notwithstanding, a later court[13] in addressing O.C.G.A. § 13-4-621, stated: “the statute begins with the proviso: “Unless otherwise expressly provided in a corporation’s articles of incorporation or bylaws. …” The Lodge by-laws covered the procedure for restricting social quarters privileges. Second, the statute by its terms applies to membership expulsion or suspension, not to restrictions of social privileges. Third, the statute only requires that the procedure be fair and reasonable under the circumstances, which it was.”

Other jurisdictions, e.g., Connecticut, require “the acts of members of an association in enforcing the rules of the organization not be unreasonable, oppressive, and wrongful, and call for judicial interference.”[14] The foregoing quotation from a Connecticut court was in the context of an obviously biased board hearing involving a dispute between a club member and the son of a club board member. The court quoted Pinkster cited above in reciting: “whenever a private association is legally required to refrain from arbitrary action, the association’s action must be both substantively rational and procedurally fair.”

However, even the Connecticut court in overturning a private club board decision to expel the member who was caught up in a dispute with the son of a board member expressed concurrence with the Florida view that,-

. . . the courts should leave to the members of a private social club or to the proper board to which the members have lawfully delegated that power, the right to determine whether the action of a member has been such that, in the opinion of such Board, it would interfere with the pleasant, friendly and congenial social relationship between the members. In the absence of a clear allegation and convincing proof, if the case reaches that stage, of fraud or bad faith, the action of the members or duly delegated board should not be reviewed by the courts.[15]

An Ohio case indicates in a dissenting opinion: “Due process must . . . be provided to a member. The process that is due to a grievant member in such circumstances is that which is set forth in the club’s regulations, constitution, and by-laws.”[16] The dissenter disagreed with the majority over whether the club substantially complied with its hearing procedures as set forth in its governing documents.

The lesson to be learned from both a review of the relevant statutes, case law, and our own experience, is the governing documents of the club need to be specific and clear as to what constitutes the nature of procedures for a hearing for disciplinary matters; the procedures must meet whatever statutory test is prescribed for notice and a fair hearing, and the club officers and governing board need to assiduously follow the written procedures. It is only when the club ignores the statutory safe harbor and its own procedures, the club may see its disciplinary decision reversed by the courts or an arbitrator.

Our experience with disciplinary hearings indicates most often the member accused of inappropriate conduct was under the influence of alcohol or other drugs. Perhaps careful monitoring by club officials and strict enforcement of alcohol server rules may reduce the number of disciplinary hearings necessitated by unruly or unseemly behavior.

We recommend clubs adopt and maintain a notice and hearing procedure template to be followed for all disciplinary matters. The template may be embedded in the club rules or adopted as governing board policy. The club’s counsel should be involved in the drafting of the template. The club’s bylaws or rules should specify what appeal if any, is afforded a disciplined member and to whom the appeal lies. It is likely the club will desire any publicity concerning the discipline to be eliminated. Thus, the reason for specifying appeal procedures or stating all decisions of the hearing body are final and non-appealable.

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[1](Literally, deprivation of water and fire), was a measure, in use in ancient Rome, aiming to deprive of citizenship, as a punishment, those found guilty of serious crimes and who were therefore deemed unworthy to continue to be part of the Roman community. This measure, which symbolically deprived the citizen of the fire and of water, deemed essential to the political-religious organization in the city, usually followed the banishment of the offender. http://it.wikipedia.org/wiki/Aquae_et_igni_interdictio.

[2] See e.g., Smooth Ashlar Grand Lodge v. Odom, 136 Ga. App. 812. 814, 222 SE2d 614 (1975).

[3] Bartley v. Augusta Country Club, Inc., 254 Ga. 144, 326 SE2d 442 (1985) [hereafter Bartley I] citing Bartley v. Augusta Country Club; Inc., 166 Ga. App 1 (1983).

[4] Werst v. Three Fires Council of the BSA, 805 N.E.2d 709, 718 (Ill. App. Ct. 2004) [citations omitted].

[5] Aluisi v. Ft. Washington Golf and Country Club, (Super. Ct. No. 450676-2) California Court of Appeal

Fifth Appellate District 95 Daily Journal D A.R. 9238 (1995).

[6] Id.

[7] Id. Citing Pinsker v. Pacific Coast Society of Orthodontists (1974) 12

Cal.3d 541. 553 (1974)

[8] Id. Citing Cason v. Glass Bottle Blowers Assn., 37 Cal.2d 134 (1951)

[9] Cal. Corp. § 7341

[10] N.C. Code § 55A-6-31

[11] GA. Code § 14-3-621.

[12] Rose v. Zurowski, 511 S.E.2d 265, 236 Ga. App. 157 (1999); see also dictum in Atlanta Country Club, Inc. v. Smith, 458 S.E.2d 136, 217 Ga. App. 515 (1995) stating disciplinary matters pertaining to members of nonprofit corporations proceed as a matter of contract to which the principles of constitutional law do not apply [citing Bartley I, supra].

[13] Id.

[14] Sterner v. Saugatuck Harbor Yacht Club, Inc., 450 A.2d 369, 188 Conn. 531(1982).

[15] Id. Citing State of Florida ex rel. Barfield v. Florida Yacht Club, 106 So.2d 207, 211 (Fla.App.1958); see McCune v. Wilson, 237 So.2d 169, 171 (Fla.1970).

[16] Robb v.Chagrin Lagoons Yacht Club, Inc., 75 Ohio St.3d 264, 662 N.E.2d 9 (1996).

Copyright 2021

Fred l. Somers, Jr., P.C

Atlanta, GA 30338