ST. LOUIS – The U.S. District Court for the Eastern District of Missouri recently granted part of the conservative interest group Eagle Forum's motion to dismiss in a suit brought by Andrew Schlafly, a former director who had been ousted nearly two years ago during a special board meeting.
In his Jan. 2 ruling, U.S. District Judge John Ross said Schlafly failed to state a claim and gave Schlafly until Jan. 16 to show cause why the case should not be dismissed for lack of subject matter jurisdiction.
Schlafly, whose mother founded Eagle Forum, filed suit after the forum's board voted to remove him at a special meeting on Jan. 28, 2017. He claims that after the board's vote to remove him, the organization's bylaws were amended to remove the incorporation of Roberts' Rules and adding a provision to allow the board to remove the at-large director, the only director elected by Eagle Forum's membership, without notice to membership.
His suit claims that any changes to bylaws require advance notice in writing and maintains that the changes made at the Jan. 28 meeting were done without proper prior notice. His amended complaint brings two claims of breach of fiduciary over failure to comply with bylaws, which allegedly violates certain membership rights. In the first count he seeks rescission of the bylaws changes and return to Eagle Forum any assets dissipated since the bylaws were changed,
In his second count, he claimed a "side agreement" directors had in changing bylaws disenfranchises members.
Ross held that Schlafly had not stated a claim because there was nothing in the bylaws that entitle a member to notice.
In the second count, Ross held that since the alleged injury is not separate and distinct from that suffered by other shareholders, Schlafly must plead a wrong involving a contractual right of a member, such as the right to vote or to assert majority control, which exists independently of any right of the corporation.