Kurz v. Federation of Pétanque U.S.A.

a judgment entered after the trial court denied their petition for writ of mandate. They sought the writ in order to compel the Federation of Pétanque U.S.A. (FPUSA) to vacate two decisions by FPUSA’s board of directors (Board), made allegedly without a proper hearing, which suspended Kurz and Carter for one year from their positions as FPUSA umpires. As we discuss the issue below in the context of the nature of the nonprofit organization and its disciplinary procedure, we find no merit in plaintiffs’ contentions and affirm the judgment.

Background

FPUSA is a nonprofit sports organization, the purpose of which is to build a national body of affiliated clubs and individuals dedicated to spreading, practicing, and enjoying the game of pétanque.^[1] Membership is open to individuals who reside in the United States. Groups of 10 or more individual members may apply for club membership. Umpires for member clubs, such as Kurz and Carter, are individual members in good standing who are nominated for the position, pass a test, and complete a confirmation process. FPUSA umpires are neither paid nor reimbursed for travel expenses.

An “umpire policy,” adopted by FPUSA in March 2005, provides among other things that “[w]hether officiating or not, every umpire is required to conduct him/herself in a manner that complies with the rules of pétanque and that reflects well on all FPUSA umpires, the organization and the game of pétanque. Noncompliance . . . may be grounds for sanction up to and including loss of the umpire’s license.”

In 2005, the entry forms used in an FPUSA-sponsored tournament in Sacramento county included language prohibiting “smoking and drinking of alcoholic beverages on or off the courts while playing.” On May 12, 2005, Kurz posted a message on an Internet Web site devoted to pétanque enthusiasts worldwide. In the message Kurz quoted the language from the entry form, describing it as a “new policy” of FPUSA, and said he was “curious how this situation is handled in other parts of the Petanque world.” Carter saw Kurz’s message, interpreted the language on the entry form to be inconsistent with existing rules,^[2] and posted a reply. Carter stated FPUSA had not “put out” such a rule. He described it as a “fraudulent statement put on [the entry form] by Frank Pipal, the FPUSA Secretary.” He suggested FPUSA leadership was at fault for allowing the language to be inserted on the entry form, stating that Pipal did “not run the FPUSA, unfortunately, no one does.” Kurz posted a third message in response, creatively describing the entry form language as “kakamania.” He also said that, if Carter were to umpire the tournament, he “strongly encourage[d]” him not to enforce it.

Kurz’s second Internet posting prompted a complaint^[3] from the chairman of the sport committee of FPUSA, Louis Toulon, which he sent to FPUSA president John Holland on May 26, 2005. The complaint was also addressed to several other FPUSA members, including Kurz. Toulon stated that Kurz’s publicly posted remarks were “a possible breach of the umpire code,” citing to the umpire policy quoted above. The following day, Kurz corresponded with Holland, providing an initial statement in his defense. Holland forwarded this response to Gilíes Canesse, chairman of the FPUSA disciplinary committee (Committee), and informed Kurz that the Committee would be reviewing the matter. In early June 2005, Kurz corresponded with Canesse, providing him with letters of support and further statements in his defense.

The Committee subsequently determined that Kurz’s posted message did violate FPUSA’s umpire policy. It reported this determination to the Board, recommending that it suspend Kurz’s umpire credential for one year, and thereafter place him on a two-year period of “umpire probation,” “during which time any misconduct . . . resulting] in a Disciplinary Committee enquiry may be considered cause for permanent revocation of [his] Umpire’s Credential.” On July 13, 2005, the Board adopted this recommendation by a

was being considered. The Committee also informed Carter that it conducted its business by e-mail and that Carter should submit his defense in writing. Further, the Committee “saw no need for further witnesses” since “[t]he internet postings speak for themselves.” On August 7, 2005, Carter submitted to the Committee a formal written response to Rolland’s complaint.

At the end of August 2005, the Committee determined that Carter had violated the umpire policy, reported its determination to the Board, and recommended that Carter receive the same sanction it had imposed on Kurz—a one-year suspension of his umpire credential and a two-year probationary period. By an e-mail message sent September 13, 2005, Pipal notified Carter that the Board had adopted the Committee’s recommendation. Later, he averred that the Board’s vote had been nine to two, with himself and one other Board member abstaining from the vote.

Kurz and Carter filed a petition for writ of mandate in the Sonoma County Superior Court on September 30, 2005, choosing that forum evidently because Pipal was a resident of Sonoma. They alleged that FPUSA, in suspending their umpire credentials, had violated their “common law right of fair procedure” and had improperly sanctioned them for “exercising their right of free speech.” Specific violations of “fair procedure” included the failure of FPUSA to provide Kurz with a written copy of the complaint against him; its improper pursuit of a charge that had not been explicitly included in Rolland’s complaint against Carter; its failure to follow the disciplinary procedures set out in its own bylaws;^[4] its failure to respond to Carter’s requests for clarification of the charges against him; its failure to provide either Kurz or Carter with a formal hearing; its failure to provide a record of the Committee’s proceedings against them; its failure to exclude Canesse, Pipal, Rolland, and several others from the proceedings because of their bias against Kurz and Carter; its pursuit of a pretextual charge against Carter in a proceeding actually motivated by the malice of Pipal, Rolland, and others; its pursuit of sanctions against them merely for exposing the improper promulgation of a false rule, which they were bound to do as umpires; the pursuit of charges that they had violated an “umpire policy” that had not yet been finally adopted until after the complaints against them were

that comply with those specified in Corporations Code section 7341, subdivision (c), in that it failed to follow the disciplinary procedures it had published in the Code of Behavior portion of its bylaws. (See fn. 2, ante.)

The verified petition and answer, taken together, establish that FPUSA is a nonprofit corporation formed in Washington, D.C. FPUSA argues that, as a foreign corporation, it was not subject to the requirements of Corporations Code section 7341. Yet a foreign corporation may be subject to section 7341, as well as other provisions of the Nonprofit Mutual Benefit Corporation Law (Corp. Code, § 7110 et seq.), to the extent it conducts business within California. (See Corp. Code, § 8910.) Since FPUSA failed to raise this argument below, we assume for the sake of argument that Corporations Code section 7341 may apply to FPUSA in an appropriate case.

But this is not such a case. Corporations Code section 7341 applies only when the proposed action is to expel or suspend a member of the corporation, or to terminate or suspend a membership.^[5] (Corp. Code, § 7341, subd. (a).) Kurz and Carter argue, as they did below, that Corporations Code section 7341 should still be applicable because the result of the proceedings against them could have resulted in their suspension or expulsion from membership. The record, however, does not support this argument. With respect to the proceedings against Kurz, the initial complaint sent by Toulon was limited on its face to a charge that Kurz’s Internet posting was a possible breach of the umpire policy. As we have noted, this policy states that any violation “may be grounds for sanction up to and including loss of the umpire’s license.” In Kurz’s case, there is no indication the Committee ever considered any sanction other than the suspension of Kurz’s umpire license.

With respect to Carter, it is true that the initial complaint sent by Holland asked the Committee to consider not only revoking Carter’s umpire credential, but also suspending him “from FPUSA activities for a long time if not forever.” It is also true that, when Carter initially sought clarification of the charges against him, Canesse, responding on behalf of the Committee, quoted bylaws and rules it deemed “relevant” to Carter’s case, and these quoted excerpts suggested the possibility of action suspending or terminating his

membership. Nevertheless, in its message to Carter dated August 4, 2005, the Committee in essence amended and clarified its proposed action, stating that it was considering only the issue whether Carter’s Internet posting violated the umpire policy. It also explicitly stated that it was not considering any sanction that would affect Carter’s membership.

We conclude Corporations Code section 7341 did not govern Kurz’s case, because his rights as a member of FPUSA were never implicated. This section also did not apply in Carter’s case once the Committee notified him that it was not considering any action involving his membership rights.

More importantly, we observe that the trial court found Kurz and Carter “were afforded a fair procedure.” In doing so, it necessarily rejected their argument that FPUSA had violated Corporations Code section 7341. In our view, implicit in this finding is a determination that, even if the proceedings did not comply with the procedural requirements specified in section 7341, subdivision (c), they were nevertheless “fair and reasonable [under] the full circumstances.” (Corp. Code, § 7341, subd. (b).)

The evidence presented in the record, including the facts summarized above, is essentially undisputed^[6] and does not compel the conclusion that either the Committee or the Board conducted its proceedings in bad faith. On the other hand, it does show that both Kurz and Carter received adequate, actual notice of the proposed actions against them, and that both were able to avail themselves of an opportunity to present a written defense. At the time of these proceedings, the procedures set out in the FPUSA bylaws applied only when membership rights were implicated—FPUSA was not bound to follow them in proceedings involving only the suspension of umpire credentials. Moreover, it appears the nonprofit FPUSA, at least at the time of these proceedings, had a limited ability to provide formal hearings in any disciplinary proceeding. The record shows that the Committee and the Board routinely conducted business “via e-mail” because the members of these bodies were far-flung and FPUSA had little income to fund travel expenses.^[7]

On review of the undisputed evidence, we arrive independently at a conclusion in agreement with the trial court’s implicit determination: The proceedings against Kurz and Carter were fair and reasonable under the full circumstances and did not violate Corporations Code section 7341.

C. Common Law Right to Fair Procedure

“The purpose of the common law right to fair procedure is to protect, in certain situations, against arbitrary decisions by private organizations.” (Potvin v. Metropolitan Life Ins. Co. (2000) 22 Cal.4th 1060 , 1066 [ 95 Cal.Rptr.2d 496 , 997 P.2d 1153 ] (Potvin).)^[8] When this common law doctrine applies, a private organization is required to proceed in its decisionmaking process in a manner that is both “ ‘substantively rational and procedurally fair.’ ” (Ibid., quoting Pinsker v. Pacific Coast Society of Orthodontists (1974) 12 Cal.3d 541 , 550 [ 116 Cal.Rptr. 245 , 526 P.2d 253 ].)

As noted above, Kurz and Carter argued below that the common law right of fair procedure applied to the proceedings against them. In reiterating this argument on appeal, they rely chiefly on Ezekial v. Winkley (1977) 20 Cal.3d 267 [ 142 Cal.Rptr. 418 , 572 P.2d 32 ] (Ezekial).

In Ezekial, a licensed physician accepted an offer by a private teaching hospital to enter and participate in its surgical residency program. Successful completion of the program was necessary for the physician to attain the status of a board certified general surgeon. The hospital dismissed the physician from its program without providing any notice or hearing. The physician brought an action seeking, among other things, injunctive relief requiring his reinstatement pending the hospital’s compliance with the common law requirements of “fair procedure.” In reversing a judgment of dismissal, which followed an order sustaining the hospital’s demurrer, the Supreme Court held that the physician had adequately pleaded a cause of action under the “fair procedure” doctrine. (Ezekial, supra, 20 Cal.3d at pp. 269-270, 279.)

In the course of its decision the Supreme Court discussed the development of the “fair procedure” doctrine. It noted the doctrine had been “rather narrowly applied to situations with substantial economic ramifications,” at

least with regard to proceedings in which private organizations had excluded one or more individuals from membership. (Ezekial, supra, 20 Cal.3d at p. 272.) But courts had given the doctrine a “broader application” in cases involving private organizations that had expelled members. (Ibid.) The Supreme Court stated that, in these cases, “[t]he underlying theme ... is that membership in an association, with its associated privileges, once attained, is a valuable interest which cannot be arbitrarily withdrawn.” (Id. at p. 273.) Thus, these decisions “comport[ed] with the broader principle that one on whom an important benefit or privilege has already been conferred may enjoy legal protections not available to an initial applicant for the same benefit.” (Ibid.)

Citing the above quoted language, Kurz and Carter insist that the Supreme Court in Ezekial thereby affirmed a line of expulsion cases in which the need to demonstrate an impaired economic interest was relaxed. They suggest, in other words, that the trial court’s ruling was error to the extent it determined the “fair procedure” doctrine was inapplicable because the proceedings at issue had not “impair[ed] the affected individual’s substantial economic interest.”

First, we observe that this language from Ezekial is mere dicta, in which the Supreme Court is attempting to describe a “theme” underlying its earlier expulsion cases. Elsewhere, the Supreme Court was careful to point out the impairment of a significant economic interest in the case before it. It emphasized that the physician had alleged facts indicating the hospital had “assumed the power to permit or prevent [his] practice of a surgical specialty and to thwart [his] enjoyment of the economic and professional benefits flowing therefrom.” (Ezekial, supra, 20 Cal.3d at p. 274, italics added.) Further, in its later decision in Potvin, the Supreme Court again analyzed two of its earlier expulsion cases, and observed that in each case it had applied the doctrine “to protect the affected member’s property rights.” (Potvin, supra, 22 Cal.4th at p. 1066.)

Even if we accept the dictum in Ezekial—that the common law “fair procedure” doctrine should be applied more broadly in expulsion cases, this is not such a case. As the Supreme Court in that decision said, such broader application is premised on the “valuable interest” in membership rights. (Ezekial, supra, 20 Cal.3d at p. 273.) Here, the action by FPUSA implicated only Kurz’s and Carter’s positions as unpaid umpires.^[9] Kurz and Carter have

not drawn our attention to any authority that has applied the common law “fair procedure” doctrine in any analogous situation, where the private organization’s action has not adversely implicated either an economic interest or a fundamental membership right. (Cf. Kim v. Southern Sierra Council Boy Scouts of America (2004) 117 Cal.App.4th 743 , 747-748 [ 11 Cal.Rptr.3d 911 ] [declining to extend application of the doctrine to a situation in which the alleged detriment suffered was “the absence of the prestige and honor associated with a specific rank in or award conferred by a . . . social organization . . . whose formation and activities are unrelated to the promotion or advancement of the economic or business interests of its members”].) No policy reason or rationale from any case compels us to extend the principle to encompass internal decisions that are unrelated to exclusion or expulsion from membership or that do not adversely impair a member’s economic interest.^[10] Moreover, common sense and judicial restraint would also dictate that a court should not involve itself in internal disciplinary actions of the type involved in this case.^[11] Such determinations are better left to the discretion and expertise of the nonprofit mutual benefit organization’s governing board. Two policy concerns raise a flashing yellow light: judicial attempts to construe laws of private organizations may lead the court into what one law professor characterized as the “dismal swamp,” and also may

lead to the infringement on autonomy for private voluntary organizations. (Berke v. Tri Realtors (1989) 208 Cal.App.3d 463 , 467 [ 257 Cal.Rptr. 738 ].)^[12]

Although we have held that the fair procedure doctrine does not apply to this case, we note that the trial court determined the procedure utilized was fair. We conclude that this ultimate finding includes an implicit determination, not only that the proceedings satisfied the requirements of Corporations Code section 7341, but also that they satisfied the common law “fair procedure” doctrine. Whether a procedure is “fair” under the common law doctrine depends on the particular circumstances and the purpose and nature of the organization. The panoply of due process is elastic and must be understood in the context of the organization, its membership, the discipline to be imposed, and the member’s valuable interest affected by the action. (See Ezekial, supra, 20 Cal.3d 267 .) To be informed of the charges, the proposed disciplinary action, and an opportunity in some manner to present countervailing evidence may satisfy the twin due process requirements of being substantively rational and procedurally fair, as opposed to a full-blown adversarial process with the right to counsel and cross-examination.^[13] Under some circumstances, for example, a mere written response may be deemed fair, as opposed to a formal hearing. (See Ezekial, supra, 20 Cal.3d at p. 279.) In light of the evidence discussed above,^[14] we agree with the trial court’s implicit determination that the proceedings against Kurz and Carter did not violate the common law “fair procedure” doctrine, if that doctrine were applicable.

D. The Entry of Judgment Following Denial of a “Temporary” Writ

The trial court’s hearing on February 17, 2006, was prompted by an order drafted by counsel for Kurz and Carter, which sought issuance merely of a “temporary” or “preliminary” writ of mandate. Kurz and Carter complain that it was therefore improper for the trial court to deny the petition in its entirety after that hearing, and error to enter the subsequent judgment of dismissal. They also suggest the trial court improperly failed to consider the evidence that they submitted in support of the petition, because it never referred to their evidence in its ruling.

We find no merit in these contentions. The proceeding below was consistent with the governing procedural law. The trial court issued an order to show cause. In doing so it clearly treated the order—notwithstanding its incorrect wording—as the functional equivalent of an alternative writ. An alternative writ directs the respondent to perform the act sought to be compelled or else appear and show cause why it has not been performed. (See Code. Civ. Proc., § 1087.) This prompts a return to the petition, which FPUSA duly filed in the form of a verified answer. (Code Civ. Proc., § 1089.) The reply and supporting evidence filed by Kurz and Carter performed the function of countervailing proof. (Code Civ. Proc., § 1091.) At that point, the court had jurisdiction to hear and determine the merits of the petition. (See Bleuel v. City of Oakland (1927) 87 Cal.App. 594 , 600 [ 262 P. 477 ]; see also Code Civ. Proc., § 1090.) It was entitled to do so on the basis of the evidence submitted in the form of declarations. (See Cal. Rules of Court, rule 323.) The court made its determination at the hearing on February 17, 2006, which it denoted in the minutes as a hearing on the petition. The order entered after this hearing made findings and denied the petition. Such an order is typically followed by a judgment of denial. (See Cody v. Justice Court (1966) 238 Cal.App.2d 275 , 277, fn. 1 [ 47 Cal.Rptr. 716 ].) We construe the “Judgment of Dismissal” to be just that—a judgment denying the petition on the merits.^[15]

The court did not err simply because counsel for Kurz and Carter framed the order to show cause as one seeking a “temporary” writ of mandate. Under California law there is no such creature. If Kurz and Carter misunderstood the nature of the order their counsel drafted, due to its incorrect wording, they have shown no prejudice. They submitted evidence in support of the petition. If it was designed only to support the issuance of a “temporary” writ of mandate, Kurz and Carter make no claim that they mistakenly omitted other additional evidence that might have been material to the determination of the petition itself.

As the trier of fact, the trial court was entitled to weigh the evidence and resolve any conflicts. The fact that it did not mention the evidence submitted by Kurz and Carter by no means demonstrates that it improperly failed to consider that evidence. Error must be affirmatively shown. (Consaul v. City of San Diego (1992) 6 Cal.App.4th 1781 , 1792 [ 8 Cal.Rptr.2d 762 ].)