The Association for Los Angeles Deputy Sheriffs (ALADS) represents the more than 7,000 deputy sheriffs working for the Los Angeles County Sheriff’s Department. ALADS has a seven-member board of directors elected by its voting members. The board in turn selects ALADS’s officers from among the board members.
In 2013, the ALADS board selected Armando Macias as president and John Nance as vice-president. Very quickly, some ALADS members became dissatisfied with the leadership of Macias and investigated his qualifications as a director. As it turned out, Macias was ineligible, having failed to attend the bylaws-mandated number of “unit representative” meetings in the prior two years.
After seeking legal advice from an attorney with expertise in corporate law, the board voted to remove Macias from the board and his position as president. Macias did not challenge his removal by seeking arbitration as permitted by the bylaws or by initiating a legal action. But he did not go quietly.
After seeking the advice of a criminal law attorney, Nance, who was acting president, convened a board meeting at which he read a statement declaring that the vote to remove Macias was invalid and Macias was still a director and president. Macias entered the room and announced he was president. Immediately after the board meeting, Macias and Nance held a staff meeting and told the ALADS staff members Macias was still on the board and still in charge. When another director tried to apologize to the staff for the conflict among the directors, Macias and Nance “started yelling over the top of the director, sort of to drown him out, and saying he doesn’t belong here, that kind of thing.”
Things only got worse. Macias and Nance hired a second lawyer, who declared that Macias was appropriately on the board. Macias organized a meeting at which the only individuals present were Macias, Nance, and a third director who supported them. Acting without a quorum, they declared another director ineligible and purported to elect a new director to fill the vacant board position, and hired the criminal law attorney who had been advising them. The attorney wrote the Sheriff’s Department, claiming to be ALADS’s general counsel and acting on behalf of ALADS. Among many other things, he recited allegedly “ultra vires” and unlawful actions taken by the board in removing Macias and warned the Department not to interfere with the internal business of the union.
Macias and Nance then began efforts to obtain $100,000 from ALADS’s bank accounts to use as a retainer for the second of the lawyers they hired. After physically intimidating ALADS’s bookkeeper into providing them with information about ALADS’s bank accounts, they went to Wells Fargo Bank, where Nance withdrew $100,000 from ALADS’s Political Action Committee account. There was no board resolution authorizing withdrawal of the funds, and the check was not signed by ALADS’s treasurer, as required by its bylaws. When ALADS discovered the withdrawal, it unsuccessfully demanded the funds be returned.
Eventually ALADS sued Macias and Nance for breach of fiduciary duty, obtained an injunction requiring the return of the $100,000 and barring them from ALADS’s offices. ALADS then pursued a damages claim against Macias and Nance.
After a bench trial, a trial court awarded ALADS $7.8 million. The Court relied on testimony that the disruption in ALADS resulted in a six-month delay in beginning negotiations, and thus the loss of six months of a retroactive wage adjustment for ALADS members, an adjustment amounting to $7.8 million. After a flurry of post-trial motion, the trial court reversed itself and held that ALADS did not have the requisite “standing” to bring the damages claim on behalf of its members.
The California Court of Appeals reinstated the $7.8 million judgment. The Court relied on a Supreme Court decision that “an association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted, nor the relief requested requires the participation of individual members in the lawsuit.”
The Court found that ALADS met all three tests: “Plainly, the members of ALADS would otherwise have standing to sue in their own right for the loss of their salary increases and, just as plainly, the interest ALADS seeks to protect is germane to the organization’s purpose. ALADS proved its lost compensation damages without calling any individual ALADS member. ALADS relied on lay and expert testimony, which was admitted in evidence without objection, and which the court initially found was sufficient to prove causation and the $7.8 million amount of damages.
“Defendants now tell us ALADS cannot ‘use a formula presented through the testimony of a valuation expert to avoid the third prong of the test.’ We are dumbfounded by this. The short answer to defendants is, that ship already sailed. Defendants made no objection at any time before closing argument to ALADS’s proof in support of the relief requested on behalf of its individual members, and defendants do not claim on appeal there is no substantial evidence to support the award of $7.8 million in lost compensation. By the time the trial had proceeded to closing argument, it was far too late – and it remains far too late – for defendants to say ALADS cannot do what it has already done.”
Association for Los Angeles Deputy Sheriffs, 2021 WL 1711625 (Cal. Ct. App. 2021).
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