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When Board Members Go Rogue

Do some of your fellow board members have “unofficial” meetings without certain members, where they decide things in advance of the regular meeting? Do they get together in secret and arrange to vote as a bloc? Is this legal? Is this proper? And as people on “Board Talk”(at www.habitatmag.com/
board-talk) are asking: what can you do about such “rogue” board members?

Not much, it turns out. Their secret meetings, according to attorneys, are perfectly legal. But not everything they do may be.

“I have learned that four out of nine board members have been meeting secretly to advance a shared agenda,” writes one “Board Talk” participant in a recent post. “They are joined by a … former board member. They also have a fifth member of the board who is an automatic ‘yes’ vote. Then they send out an e-mail asking for votes on motions that have not been discussed with the full board. What is going on here?”

To answer that, we need to unpack its four components. None of these is optimal. But only two appear to be improper or even illegal.

 

1
Some of the board members meet secretly. In and of itself, board members meeting privately, without notifying all the board members, is “perfectly legitimate,” says Abbey Goldstein, a partner at Goldstein & Greenlaw, one of three attorneys who analyzed the “Board Talk” post and the responses that followed. “It’s called freedom of speech. People have the right to speak with anyone they want.”

Adam Finkelstein, a partner at Kagan Lubic Lepper Finkelstein & Gold, agrees. “The board members may be friends, and after talking about the Mets and Knicks, what do you talk about? Stuff in the building. Board members are free to talk about what’s going on.” Indeed, as one “Board Talk” commentator responded, “I am on a board and it is fairly normal for part of [the] board to have discussions between meetings.”

 

2
A non-board member meets with the rogue members. Once you involve a non-member, however, “that potentially breaches the confidentiality obligation of the board,” notes Kenneth Jacobs, a partner at Smith, Buss & Jacobs. “There has to be a concern that this person has unauthorized access to information” that could include sensitive matters, such as residents’ financial data.

So there we go: that’s one no-no. But what if this secret meeting includes only board members – without any outside person – who decide to vote as a majority bloc? Surely that’s not allowed. Except that it is.

 

3
A majority swing vote aligns with the secret bloc. Board members are free to discuss how they plan to vote and to agree with others how they’ll vote together. As long as members are acting in good faith, such vote consolidation is legal. It may not be savory, transparent, or among the best of democratic principles, but occasionally, attorneys note, it may be necessary. “Sometimes it’s used to bypass people who are severely disruptive,” says Goldstein, who stresses that he doesn’t mean someone with contrary or disagreeable opinions, but someone who screams, threatens, or otherwise makes the normal process untenable.

 

4
The rogue members ask for a vote without the full board’s input. Where such arrangements do become improper or even illegal is when discussions turn into decisions without including the uninvolved board members at all.

“If, when they get to the official meeting, the board members [who met in secret] totally shut down any discussion and don’t give the other board members a chance to say what they need to say, that’s crossing a line,” says Finkelstein. “If there’s a proper allowance for discussion, I think it’s going to pass [the] bare minimum standard for an allowable decision.”

“Even if the outcome is foregone, the minutes should reflect a discussion,” agrees Jacobs. “The board should not be making official decisions outside the confines of the formal board meeting.”

 

The Wrap-Up. To sum up: board members meeting privately, even secretly, between official meetings is legal, so long as confidential matters aren’t discussed with non-board residents. And deciding how a group is going to vote on an issue is legal, but going into the official meeting and declaring the motion passed without the minutes reflecting a discussion is not.

Join our online discussion forum where board members post questions and the board director community responds.
Want to participate? http://www.habitatmag.com/Board-Talk

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