Stein v Art Students League of N.Y.

[*1] Stein v Art Students League of N.Y. 2010 NY Slip Op 52032(U) [29 Misc 3d 1226(A)] Decided on November 12, 2010 Supreme Court, New York County Gische, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on November 12, 2010
Supreme Court, New York County

Arthur Stein, Petitioner,

against

The Art Students League of New York, Respondent.



113134/10



Plaintiff's attorney is Stern & Zingman, LLP, 110 East 59TH ST. - 29TH FL New York, New York 10022. The court's computerized files do not reflect who represented the defendants.

Judith J. Gische, J.

Recitation, as required by CPLR § 2219 [a] of the papers considered in the review of this (these) motion(s):

PapersNumbered

OSC, Pet., exhibits 1

MEF affirm2

IG affd.......................................................................................................3

Verified Answer4 -

Upon the foregoing papers, the decision and order of the court is as follows:

The court is considering this petition on an expedited basis, because it concerns an upcoming election, scheduled for December 1, 2010. Respondent is a Not for Profit Corporation. Petitioner is a member of record of respondent. Petitioner seeks an order directing respondent to provide him with the books, records and papers of respondent, including but not limited to contact information and e-mail addresses.

Petitioner also seeks an order "enjoining the Art Students league of New York to follow their by-laws, specifically Article XI which requires the annual meeting to be held on the first Wednesday in December, that nominations to the Board be made at the November meeting and Amendment 28 of the By-laws governing elections of members to the Board of Control.."

Discussion

[*2]Inspection of Member E-Mail Addresses

Since this petition was brought, petitioner has been provided with almost all of the information that he originally sought, with the exception of e-mail addresses for the membership. Petitioner claims that both under Not For Profit Law ("NFPL") §621 and common law, he is entitled to the e-mail addresses, which are part of the membership lists maintained by respondent. Respondent vigorously argues that petitioner has no such right to e-mail addresses, whether under the applicable statute or common law. It also claims that providing such information would be violating the individual members rights of privacy. Respondent also questions petitioner's good faith in pressing for the information at this time. It argues that although this petition was brought based upon petitioner's original claim that he sought to run for a position on respondent's Board of Control, now that the nominations have been closed without petitioner seeking or obtaining any nomination, there is no longer any good faith basis for turning over the membership information.

NFPL § 621(b) provides in pertinent part:

"Any person who has been a member of record of a corporation for at least six months immediately preceding his demand...shall have the right to examine in person or by agent or attorney, during ususal business hours, its minutes of the proceedings of its members and list or record of members and to make extracts therefrom."

Because the e-mail addresses constitute a "record" of the members, the information comes directly within the ambit of the disclosure required by statute. Respondent argues that NFPL §621(a) only requires that it maintain information about a members address and does not require it to maintain e-mail addresses. Indeed, as respondent correctly points out, at the time NFPL §621 was enacted, no e-mail addresses existed. It argues, therefore, that the "list" or "record" referred to in §621(b) could not have required and does not now require the disclosure of e-mail addresses.

The purpose of disclosure of membership records under both common law and statute is to make sure that all members have a means of contacting other members about matters directly concerning that Not for Profit Corporation. See: Crane Co. v. Anaconda Co., 39 NY2d 14 (1976). Thus, the inquiry is not whether e-mail addresses existed at the time when the statute was enacted, but rather, whether they are part of the contact information that respondent regularly maintains about its members. While members are not required to provide e-mail addresses to respondent, many do. The e-mail addresses are clearly used by respondent for communication purposes. Respondent's claims about what it chooses to use the e-mail addresses for in the context of its overall operation is irrelevant.

The court also rejects respondents claim that it is just protecting the privacy of its members. NFPL §621 ( c ) restricts the use of information obtained by any member from the list to business of the particular not for profit corporation only. Thus, the statute has privacy protections built right in. The statute provides sufficient protection that the e-mail addresses can only be used by petitioner for matters pertaining to respondent. Respondent does not explain why a member has any greater privacy right in their e-mail address than their actual mailing addresses, which it concedes that it must disclose.

Finally, respondent argues that petitioner's purported reason for requiring the [*3]information currently lacks a good faith basis. It is true that the petition was originally based upon the claim that petitioner intended on running for membership on the Board of Control. The meeting in which nominations were made for this years election has already passed.Respondent claims that petitioner failed to advance his name for nomination. Therefore, it questions why petitioner needs the information sought at this time.

The right to inspect the books and records of a not for profit corporation requires a good faith basis and proper purpose on the part of petitioner. Mayer v. National Arts Club, 223 AD2d 440 (1st dept. 1996) leave to app den 88 NY2d 802; Curkendall v. United Federation of Correction Officers, Inc., 107 AD2d 935 (3rd dept. 1985).Reaching the membership to election for a Board position is a permissible basis to obtain the requested information.Where, as here, there respondent raises a disputed issue about the bona fides of the good faith basis asserted, the court is required to hold a hearing. Mayer v. National Arts Club, 192 AD2d 863 (3rd dept. 1993). At the hearing it will be respondent's burden to prove improper motive. Curkendall v. United Federation of Correction Officers, Inc., supra. Since the information sought is no longer relevant to this year's election period, the court sets the hearing for January 20, 2011 at 2:15 p.m.

Request for Injunction

NFPL § 618 gives the court equitable powers to set aside an election held by a Not for Profit Corporation, and order a new one, if justice requires. Petitioner seeks to have this court order, in advance of an election, that procedures be followed to ensure that it is fair. Whether or not the court has to power to intervene in the corporate process in advance of an election, it is a remedy that should be exercised sparingly. Goldfield Corp. v. General Hospital Corp., 36 AD2d 125 (1st dept. 1971) affd 29 NY2d 264 (1971). This is because a permanent mandatory injunction is still considered an extraordinary remedy ( Jackson v. Bunnell, 113 NY 216 [1889]) and further, the Courts should not unnecessarily interfere with the internal affairs of any Corporation, including a Not for Profit Corporation. Scipioni v. Young Women's Christian Assn of Rochester, 105 AD2d 1113 (4th dept. 1984). In order to get the relief requested, petitioner, at a minimum, needs to show that court assistance is needed to allow him to vote and/or solicit proxies. Goldfield Corp. v. General Hospital Corp., supra.

For the reasons that follow, the Court denies petitioner's request for an injunction. Although petitioner seeks to have this Court enjoin respondent to follow the by-laws, he is really seeking an order directing three specific things, to wit: [1] a direction that a nomination meeting be held in November; [2] a direction that the annual meeting at which the election occurs takes place on the first Wednesday in December and [3] that the Board of Control not designate any nominee on the ballot as "recommended" by it.

Nominations have already occurred in October of this year. Thus, the first aspect of the relief sought is moot. The parties' dispute about whether the timing of the nominations will ultimately affect the validity of any election is reserved for post election relief, if any, sought by petitioner.

The election is already scheduled to take place on the first Wednesday of December. Thus, there is no need for the Court to order that it be so held. [*4]

Finally, the parties have a significant dispute about whether designating any particular nominee on the ballot as recommended violates respondent's by-laws. Amendment 28 provides in pertinent part:

"There shall be no electioneering, solicitation or any action favoring any candidate during the electoral process by any employee of the Association. The Board of Control is expressly prohibited from expending any League funds for the purpose of promoting the candidacy of any person except as expressly contemplated in the League's constitution and By-laws."

Respondent admits that its Board of Control has in the past designated certain nominees as recommended. It denies that such past practice violates the by-laws because it argues that members of the Board of Control are not respondent's "employees" within the meaning of Amendment 28. Notwithstanding respondent's position, it represents "that it will no longer designate any candidates as recommended' on the ballot. Instead, starting with the ballot for the 2010 election, it will simply indicate for the benefit of the voting members each Board candidate who is an incumbent funning for re-election.'"

Based upon such representations there is no basis for the Court to either resolve the parties' dispute about whether the prior practice violated the by-laws or enjoin such conduct in the future.

Conclusion

In accordance herewith it is hereby:

ORDERED that the motion for access to information is granted only to the extent that the parties appear for a hearing on January 20, 2011 at 2:15 p.m. regarding the good faith basis of petitioner's request for access to information, and it is further

ORDERED that the motion for an injunction is denied, and it is further

ORDERED that any requested relief not otherwise expressly granted herein is denied, and it is further

ORDERED that this constitutes the decision and order of the Court.

Dated: New York, NY

November 12, 2010

SO ORDERED:

______________________

J.G. J.S.C.