The Case Against: Why to Vote NO!

In reaching a decision on how to vote on this proposal, owners should consider the following before reaching a decision:

1) If approved this amendment could result in concerned owners having to pay up to $130,000 to communicate with each member of the Club and  could make any owner to owner communication prohibitively expensive. Owner to owner communication is essential for proper governance.  If this amendment is approved, any owner initiated communication that is intended to reach all members could be forced to use a third-party mailing house. The cost of this communication would be in excess of $130,00 to reach all members. Clearly this cost would create a significant barrier that will inhibit owner communication on key issues. In an era where direct communication has never been less expensive, this amendment could effectively create costly barriers that impede communication.

2)      California court has already rendered the opinion that the  alternative procedure  from this amendment is “clearly prohibitively expensive.” The procedure offered in this by-law amendment is functionally similar to the proposal offered to the owner in the litigation in California. Actually, in that particular case the WorldMark Board offered to share 50% of the cost of the third-party mailing. Despite the offer of a level of cost sharing that is not in this amendment, the court still  rendered the opinion that the use of a third-party mailing house was “clearly prohibitively expensive”.

3) Given the opinion of California court it is unclear that this amendment would  meet the requirements of Cal. Corp. 8330. The question of an owner’s access to the mailing list is governed in part by  the requirements of Cal. Corp. 8330. The complete text of this statute can be reviewed here. As the statute states, the Board is obligated to offer a reasonable alternative if they fail to provide the mailing list as requested.  Given the previously ruling in the current litigation that this method was “clearly prohibitively expensive”, it is unclear that the court would find this alternative proposal to be reasonable.

4) This amendment fails to achieve the stated purpose. The obligations of WorldMark are not changed by this amendment for there is no provision under Cal. Corp Section 8330 for a corporation to require a member to accept an alternate procedure. The fact that the procedure is authorized in by-laws does not reduce the obligations of the Board to seek a protective order to block access to the list. So even with this amendment, a court can still require the mailing list to be produced.

4)      The outcome of the litigation in California could render this amendment void. The issue of an owners privacy rights vs the right for members is currently on appeal in California court.  The court will render a final decision, and this by-law could be rendered void based on the final outcome of that case. Likewise this action might be viewed by the court as an attempt to negate the judicial verdict, giving rise to additional litigation.

5)      This  amendment would convert a very clear right of owners to one subject to the discretion of the WorldMark Board. If approved, this amendment would create ambiguity regarding the an owners right to the mailing list. The current language is very clear on a member’s right to the mailing list. This amendment would result in an ambiguous process that requires the board to reach a discretionary decision on each request.

6) This amendment would effectively grant the Board vast discretionary powers to decide  member-to-member communication. The essence of the current language in our by-laws to provide a reasonable process for members to communicate with other on key issues.  If approved, this amendment would effectively put the Board in the role of deciding which member communications to permit and which will be forced to adhere to a prohibitively expensive method.

Why this is an important issue.

At the heart of this amendment is the question of allowing reasonable access for WorldMark owners to communicate with each other. Proper governance of WorldMark the Club, requires that members be able to communicate with each on key issues. Given the current policy of the Board, there is no venue available by which this communication can reasonably take place.

This amendment if passed would greatly impede the ability of owners to communicate with each other. This represents a further erosion of the rights afforded owners under the governing documents of the Club.

When deciding how to vote on this key issue, owners should decide if they are willing to sacrifice their right to affordable communication with other owners in order to eliminate the potential for unauthorized use of their information.

The Case For: Why to Vote YES! (UPDATED)

UPDATE: In a e-mail from the Board regarding a question about this by-law amendment, I received the following information:

By Law Amendment

The issue related to the bylaw amendment is strictly related to protecting the owner’s personal information. It is not an issue related to cost of the mailing. The only venue the owners have today to contact other WorldMark owners is through a direct mail distribution as the membership register only includes owners name and address. That is all that is provided for per the governing documents. The proposed bylaw amendment does not change that process in any way except that instead of distributing personal information directly to an owner the Board would like to adopt the language consistent with California law that says a reasonable alternative can be provided.  Using a third party mail house protects the owners’ privacy and would cost the requesting owner no more than mailing the materials directly themselves (and in fact, this would potentially save the owner money with the mail house getting a reduced postage rate using presorted rates).

Here is the  statement the WorldMark Board has offered in support of this proposal:

General statement: The WorldMark Board of Directors is committed to protecting Owners’ privacy. The Club’s Bylaws were developed in 1989, long before the prevalence of identity theft and the damage that can be suffered through release of personal information. Just as legislators have worked diligently to develop effective privacy laws, the WorldMark Board of Directors has developed privacy language to add to the WorldMark Bylaws to best protect Owner’s private information.

THE WORLDMARK BOARD OF DIRECTORS ENCOURAGES YOU TO VOTE FOR THE PROPOSED BYLAW AMENDMENT TO FURTHER PROTECT YOUR PRIVACY.

A FOR vote will express your desire to protect your personal information, while not inhibiting Owner’s rights to communicate with other Owners.

Proposal 1 has been prompted by litigation now pending in the California Court of Appeals.  In that litigation, WorldMark sought to prevent the disclosure to an owner of the names, addresses, telephone numbers, and email addresses of all WorldMark members (now exceeding 260,000), instead offering the reasonable alternative of facilitating an owner mailing through an independent mail house, as described in the amended language below.

Proposal 1 seeks to revise WorldMark’s Bylaw so it conforms with governing California law, which expressly authorizes a corporation to provide a reasonable alternative to simply turning over member identities to an owner who requests them. (Cal. Corp. Code § 8330) Once personal information is disclosed, it cannot be protected from further disclosure. The Bylaw revision described in Proposal 1 would align WorldMark’s procedures with California law, share costs with an owner who seeks to communicate with other owners (which is more than California law requires), and continues to protect private owner contact information from disclosure to any member who asks for it.  Proposal 1 thus balances the needs of owners who want to communicate with other owners and the interests of owners who desire to protect their privacy.

The Impact

As the Board indicates, it is this lawsuit that is requiring this amendment. Given the decision of the court that the Board’s action violated the by-laws, the Board was forced to seek the vote of the members to codify their policy into the by-laws.

What is prompting this:

Per the material on the election site:

The Proposal 1 has been prompted by litigation now pending in the California Court of Appeals.  In that litigation, WorldMark sought to prevent the disclosure to an owner of the names, addresses, telephone numbers, and email addresses of all WorldMark members (now exceeding 260,000), instead offering the reasonable alternative of facilitating an owner mailing through an independent mail house, as described in the amended language below.

Proposal 1 seeks to revise WorldMark’s Bylaw so it conforms with governing California law, which expressly authorizes a corporation to provide a reasonable alternative to simply turning over member identities to an owner who requests them. (Cal. Corp. Code § 8330) Once personal information is disclosed, it cannot be protected from further disclosure. The Bylaw revision described in Proposal 1 would align WorldMark’s procedures with California law, share costs with an owner who seeks to communicate with other owners (which is more than California law requires), and continues to protect private owner contact information from disclosure to any member who asks for it.  Proposal 1 thus balances the needs of owners who want to communicate with other owners and the interests of owners who desire to protect their privacy.

(emphasis added)

What are the changes:

Basically the amendment provides the Board with some additional options in setting a policy for access to the mailing list. Currently the by-laws provide a very specific process for requesting the mailing list.  Per the by-laws, the current process is:

1) Petitioner makes a request to the board

2) Petitioner signs written agreement agreeing to obligations on usage of the list

3) Member receives the list

Now this is the provision from the by-laws.  Under the proposed amendment, the process will be the following:

1) Petitioner requests the list

2) Board has the discretionary option of providing the list, directly communicating the petitioners information to the members, or directing the member to a third-party mail house. Member will then cover the cost of postage, printing, and stationary.

Break it down:

Here is the significant text that is being added to the By-Laws:

Notwithstanding the foregoing, to protect the privacy of its Members and to protect the Membership register as a WorldMark, The Club corporate asset, the Club may, in lieu of making  the Membership register available for inspection and copying, provide Members with a reasonable alternative by facilitating a Member’s request to communicate with other Members for purposes reasonably related to the affairs of the Club, by distributing the Member’s message either directly or through a mail house or other third party distributor.  Any administrative expenses incurred by the Club in facilitating the distribution, or any service or administrative fee charged by the mail house or third party distributor, shall be paid by the Club; however, all other costs, including without limitation printing, postage and stationery, are the sole responsibility of the requesting Member.

The Amendment Language

Text with a line through it is current language that would be removed if the amendment passes, while underlined text denotes the revisions agreed to by voting FOR on the amendment.

7: RECORDS AND REPORTS
7.1 Inspections.
7.1(a) Members. The Articles, Bylaws, Declaration, Rules, Membership register (including mailing addresses and telephone numbers) or duplicate Membership register, the books of account and minutes of proceedings of the Members, the Board and any committees, and all other records of the Program maintained by the Club or its Manager, shall be made available for inspection and copying, upon written demand and reasonable notice, by any Member or his duly appointed representative, at any reasonable time and for a purpose reasonably related to his interests as a Member.  The Club may restrict the use of information from the Membership register by requiring Members to sign a written agreement not to use or allow use of Membership information for commercial or other purposes not reasonably related to the affairs of the Club.  Notwithstanding the foregoing, to protect the privacy of its Members and to protect the Membership register as a WorldMark, The Club corporate asset, the Club may, in lieu of making  the Membership register available for inspection and copying, provide Members with a reasonable alternative by facilitating a Member’s request to communicate with other Members for purposes reasonably related to the affairs of the Club, by distributing the Member’s message either directly or through a mail house or other third party distributor.  Any administrative expenses incurred by the Club in facilitating the distribution, or any service or administrative fee charged by the mail house or third party distributor, shall be paid by the Club; however, all other costs, including without limitation printing, postage and stationery, are the sole responsibility of the requesting Member. An original or copy of the Articles and Bylaws, as amended to date, shall be kept at the principal office of the Club and shall be open to inspection by the Members at all reasonable times during office hours.  The records shall be made available for inspection at the office where the records are maintained.  Upon receipt of an authenticated written request from a Member along with the fee prescribed by the Board to defray the costs of reproduction, the Manager or other custodian of records shall prepare and transmit to the Member a copy of any and all records requested.

Background

As announced in the August 2009 issue of Destinations magazine, the WorldMark Board of Directors has placed an amendment to the By-Laws on the ballot for the 2009 Annual Meeting.

Purpose

This blog is intended to discuss issues related to the proposed 2009 amendment to the By-Laws of WorldMark the Club.