District judge addresses relationship between BHS and its foundation
Society can gain control by appointing HFI trustees; lawsuit directed to state court
U.S. District Court Judge William M. Conley this morning issued a 17-page opinion and order that affirms the relationship between the Barbershop Harmony Society and Harmony Foundation International.
“It is significant that a federal judge indicates the Foundation is not separate from the Society,” BHS President John Donehower said. “Further, Judge Conley points to HFI’s fiduciary responsibility to BHS while also upholding the Society Board’s authority to appoint Foundation trustees.”
The opinion and order paves the way for the Society Board to appoint six new trustees to the Foundation’s nine-member board. Three would be in place this summer; three others would begin their terms in January.
While Conley dismissed the legal case involving the Society and Foundation citing procedural grounds, Donehower said the opinion and order clarify the path forward for the two organizations.
Conley’s opinion and order indicates:
- A trust agreement between the Society and Foundation is legitimate;
- The Society is the beneficiary of the trust, which was created by BHS and HFI;
- The Foundation’s 2009 bylaws are indisputably valid;
- And, in alignment with those bylaws, the Society Board elects Foundation trustees from among candidates submitted by an HFI nominating committee and, if the Society Board chooses, from among individuals the BHS Board nominates from its own floor.
The lawsuit, filed in December, cited then-Foundation Chair Gary Plaag as the defendant.
“Judge Conley sends a strong message that legitimate members of the HFI Board will ‘dwindle to zero,’ if the Foundation continues to operate under a false assumption of independence,” Donehower said.
The judge notes the lawsuit could proceed in state court, although Donehower said he hopes Conley’s guidance enables the two parties to work together without having to refile the case.
“Judge Conley could have issued a simple ‘case dismissed’ judgment,” Donehower said. “Instead, his 17-page document seems intentional in pointing to the Society’s primary role with HFI and its control in the appointment of Foundation trustees.”
Society attorneys are completing a thorough review of Conley’s opinion and order and will provide counsel to the BHS Board about next steps and options.