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Worldmark, the Club v. Wyndham Resort Development Corp.

August 23, 2010

WORLDMARK, THE CLUB, PLAINTIFF AND APPELLANT,
v.
WYNDHAM RESORT DEVELOPMENT CORPORATION, DEFENDANT AND APPELLANT;
ROBIN MILLER, DEFENDANT AND RESPONDENT; CLARKE WIXON ET AL., INTERVENORS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of Sacramento County, John Anton, Judge. Affirmed as modified. (Super. Ct. No. 34-2008-00025130-CU-PT-GDS).

The opinion of the court was delivered by: Blease, Acting P. J.

CERTIFIED FOR PUBLICATION

The California Corporations Code grants members of a nonprofit mutual benefit corporation the right to inspect and copy, or obtain for a reasonable charge, the record of the names, addresses, and voting rights of the members of the corporation upon 10 business days' written notice, provided it is for a purpose reasonably related to the person's interest as a member. (Corp. Code, § 8330, subd. (a)(1)(2).)*fn1 Such a record may be kept in electronic form. (§ 8320.) A record that is "written" includes an "electronic communication[]" (§§ 5079, 8310) and an electronic communication includes an email. (§§ 5079, 20.)

Appellant Worldmark, the Club (Worldmark) is a California nonprofit mutual benefit corporation owned by its more than 260,000 members. It owns vacation time share resorts throughout North America, including California, and the Pacific. Respondent Wyndham Resort Development Corporation (Wyndham) is an Oregon corporation that manages the operations of Worldmark's resorts pursuant to a management agreement.

A Worldmark member, respondent Robin Miller, invoked section 8330 to demand that Worldmark "make available" to its members a petition proposing amendments to the corporation's by-laws. When Worldmark refused to do so, Miller demanded a right to inspect and copy Worldmark's membership records, including the email addresses of its members, for the purpose of distributing his petition to amend the bylaws. Email is one of the methods that Worldmark uses to communicate with its members. When Worldmark denied the demand, it proposed the use of a third party mail house to send the petition by conventional mail as a "reasonable alternative" that achieved the purpose identified in Miller's demand. (§§ 8330, subds. (b) and (c) and 8331, subd. (a).)

When Miller refused, Worldmark petitioned the superior court to set aside Miller's demand (§ 8331, subd. (a)) on the ground it had satisfied its statutory obligations in proposing an alternative. (§ 8330, subd. (b)(1).) The trial court denied the petition because the alternative was not reasonable as too costly and ordered Worldmark to allow Miller to inspect and copy Worldmark's membership register, including the names, addresses, email addresses, telephone numbers, and voting rights of its members. (§ 8331.) This appeal followed.

Worldmark's primary contention is that there is no statutory authority for the trial court's order requiring it to produce its member email addresses. We shall conclude that the term "members'... addresses," in section 8330, subdivision (a) (1), which a corporation is required to disclose, is sufficiently broad to encompass email addresses in light of the section's purpose and in light of allied sections that allow a corporation to communicate with its members for the purpose of the corporation's business.

We shall modify the trial court's order to provide that the information Miller seeks may be made available to him electronically at his option, that no further written demand is necessary, and affirm the order as modified.

FACTUAL AND PROCEDURAL BACKGROUND

Worldmark is a California nonprofit mutual benefit corporation. It is owned by its more than 260,000 members. Worldmark owns vacation timeshare resorts in California and throughout North America and the Pacific. Worldmark members own credits, rather than a fractional ownership interest in a particular resort.

Wyndham is an Oregon corporation that manages the operations of Worldmark's resorts pursuant to a management agreement. All of Worldmark's properties were purchased and developed by Wyndham. Wyndham transferred ownership of the resorts to Worldmark, and retained the exclusive right to market and sell the original credits created by the development of each resort. Worldmark members may also advertise, sell, and transfer their credits to others.*fn2 Other companies also compete with Wyndham for the resale of existing time share credits.

Miller's first attempt to contact other Worldmark members is evidenced by a letter dated August 8, 2008, addressed to the Worldmark board of directors. Enclosed with the letter was a membership petition with proposed resolutions attached. Miller requested that the board make the petition available to the membership via Worldmark's email list in order to have the measures voted on at Worldmark's annual meeting, which was scheduled to be held on October 23, 2008. Miller did not request a list of Worldmark member email addresses, but merely requested that the board distribute his petition via email. Miller indicated that by including the measures at the board's annual meeting, the significant expense of calling a special meeting would be avoided.

Miller's proposed petition expressed a concern over the domination of Worldmark's board of directors by current or former Wyndham executives, the failure to conduct meetings at which member motions could be raised and voted upon, the absence of any independent owners on the board, and the lack of meaningful member representation in the governance of Worldmark. The proposed resolutions would, if passed, revise Worldmark's bylaws to address these concerns.

The response to Miller's letter came from Stephanie Aardal, Worldmark's director of board and owner relations. Aardal's letter stated that Miller's request did not comply with section 3.3(c) of Worldmark's bylaws requiring a written request signed by members holding five percent of the voting power.*fn3 Miller's request was declined.

Miller sent a second letter on August 25, 2008. He urged the board to reconsider, and noted that the board could call a meeting without obtaining any signatures, and he was requesting that the board do so. He also noted that no signatures were required to distribute his petition to the membership.

Aardal answered Miller's letter, and again informed him that it was his responsibility to gather the minimum five percent owner support to bring the petition to the membership. Aardal stated that the board would take appropriate action when he submitted the names of those signing the petitions and copies of the original signed petitions, provided he had received a valid number of signatures.

Miller responded by letter (his third) on September 9, 2008. Since the board refused the request to distribute his petition, he gave notice that he wanted an opportunity within five days to personally inspect Worldmark's membership records, including its email list. He acknowledged that he would use the information only to distribute his petition.

Instead of scheduling an opportunity for Miller to inspect the membership register as provided in the Worldmark bylaws, Aardal wrote back to Miller informing him that the membership register did not include email addresses, and enclosing a copy of Worldmark's "Policies and Procedures" regarding the inspection of Worldmark's membership roster. The Policies and Procedures were approved by Worldmark's board of directors, but were not a part of the bylaws.

The document stated that the policy of the board was that members not be allowed to inspect or copy the membership roster "because of privacy concerns and because [of] the roster's tremendous commercial value...." Instead, the board would provide a "reasonable alternative as provided by California law." The alternative procedure required that the member deliver to Worldmark's offices a copy of the materials he or she desired to be sent to the other members. If Worldmark determined that the content was not commercial in nature and was reasonably related to the affairs of the corporation, it would contact the member demanding payment for Worldmark's cost of providing the information, then upon receipt of payment, would provide the member with the name of a mail house to contact in order to arrange the mailing of the materials at the owner's expense.

Miller sent a fourth letter on September 26, 2008, and for the first time referenced section 8330. The letter stated in part:

"Notwithstanding the Club's refusal to acknowledge the hundreds of member signed Petitions submitted over the past month, you've been made amply aware of the substantial owner voting power endorsing this Petition and supporting its distribution to the membership.

Be advised that this demand for membership access has been endorsed by Worldmark owners holding voting rights well in excess of the 'authorized number' specified in section 5036 of the California Corporation[s] Code. Be further advised that pursuant to section 8330 of that Code the undersigned, individually & collectively, hereby demand access to the Club's records of the member names, voting rights and corresponding email addresses for personal inspection & copying at the Redmond office within five (5) business days from the date of this communication. Further evidence of endorsement is now being executed and sent to your attention.

The purpose for the requested information is to enable a timely & cost effective electronic distribution of the Membership Petition prior to the Annual Meeting set for October 23, 2008."

On October 7, 2008, the Worldmark board of directors sent Miller a letter detailing its "serious concerns about the detrimental effect the petition measures would have on the Club if implemented."

On October 10, 2008, Miller went to Worldmark's offices in Redmond, Washington and presented Worldmark with a list of members purporting to constitute the authorized number to make a demand under section 8330. Miller demanded the email addresses of the members.

On October 15, 2008, Aardal sent Miller a letter acknowledging the receipt of the signed membership petitions, but rejecting Miller's request to disclose email addresses. Aardal stated this time that the email addresses were owned by Wyndham, and that Wyndham "strenuously" objected to their production. The letter stated that it would "take some time" to determine whether the petitions submitted by Miller satisfied the authorized number of members. Worldmark again proposed the alternative of providing the membership list to a mailing house, which would distribute the petitions, and further agreed to pay 50 percent of "the costs associated with administering the mailing, including processing, presorting, addressing and delivering your mailing" to the post office. Miller would, however, be responsible for providing the finished printed materials and paying the postage.

On October 22, 2008, Miller sent a fifth letter to Worldmark. He rejected the alternative Worldmark offered because: (1) it was not responsive to his stated objectives, (2) it lacked the efficiency of email communication, (3) it lacked the cost effectiveness of email communication, (4) the cost of the alternative was unreasonable, and (5) the alternative could not achieve the stated ...


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