[Kzyxtalk] New Date for Inspection of Documents
dennisobrien at sharejerusalem.com
dennisobrien at sharejerusalem.com
Thu Sep 10 00:02:52 PDT 2015
To the Board of Directors and General Manager of Mendocino County Public Broadcasting (KZYX&Z)
We have received confirmation that a new General Manager has been hired for the radio station, effective September 7. According to our previous agreement, this triggers a new date for the inspection of documents as required by our Demand for Inspection of June 9. You had requested four weeks from the date of the hiring, and we accommodated your request. The new date for inspection is thus Wednesday, October 7. I have copied the Demand and subsequent correspondence below for your convenience.
Considering the work done by our new Treasurer, Clay Eubank, in organizing the financial records, we believe that four weeks provides adequate time. Please note that we do not agree with any of the limitations to inspection that were suggested by Stuart Campbell, then chair of the board and now General Manager, in his response of June 23. If you wish to stop or limit the inspection, you will need to obtain an order from the Superior Court.
Thank you very much for accommodating the inspection. Between now and then, please make sure that all records are preserved and that none are destroyed, removed, or otherwise made inaccessible.
Sincerely,
Dennis O'BrienJohn Sakowicz
Doug McKentyKing CollinsNorm de Vall
[July 2] To the Board of Directors:
Last week we received a response to our demand for inspection of documents from board president Stuart Campbell. That response disputed our right to inspect and proposed unreasonable alternatives, so we rejected its request to postpone the inspection and awaited the response of the full board.
At its meeting on Monday, the board was more accommodating to our long-term concerns - the need for open governance and greater engagement with the membership and public. The financial information in the proposed budget was more detailed, and the decision to reinvigorate the committee system offers potential for engagement and systemic change.
We see the beginnings of change in these early and important steps. Therefore, we agree to your request to postpone the inspection. It will now take place four weeks after the hiring of a new general manager. Please keep us informed of the progress toward that hiring; we will set an exact date that works for everyone once it happens.
Please note that by agreeing to the postponement we are not agreeing to anything else Mr. Campbell said in his response, nor waiving any other rights. We believe that the board must interact directly with the members and the public, and that such interaction by the board and staff is good for public/community radio, having a positive ripple effect on membership, operations, finances, etc. We have high hopes for the committee system, but we will remain ready to act if it does not fulfill its potential.
Sincerely,
John SakowiczDoug McKentyKing CollinsNorm de VallDennis O'Brien
[June 6] Mr. Campbell:
Thank you for your email of June 23, 2015, responding to our written demand of June 9 for the inspection of documents. We disagree with your analysis.
1. The right of a member to inspect and copy records is not based solely on California Corporations Code Section 6330, which authorizes the inspection of membership records. There is also Section 6333, which states:
"6333. The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person's interests as a member."
In addition, the Bylaws of Mendocino County Public Broadcasting grant members the right to inspect any records that are not personnel records or otherwise protected by law:
"Member Inspection Rights:
Members shall have the right at all reasonable times to inspect all of MCPB’s records which are or should be maintained at the principal office except personnel records and other items that would violate the privacy of a specific individual or are otherwise protected under Federal or California law."
Thus the members' right to inspect does indeed extend to the categories of documents enumerated in the demand.
Please note that the Board of Directors does not have the power to amend the Bylaws to diminish any rights granted to members. Only a vote of the membership can do that. If you wish to oppose the demand, Corporations Code Section 6331 requires you to file a petition in Mendocino County Superior Court. Under Section 6336, any director or officer who does not comply with the demand can be punished for contempt of court. Under Section 6337, the organization can be held liable for members' reasonable costs and expenses, including attorneys' fees, in connection with any related legal proceedings.
2. Thank you for acknowledging a director's absolute right to inspect any document under Corporations Code Section 6334. Because the volume of documents may be too great for any one person to inspect, Mr. Sakowicz may be accompanied by an agent or attorney to assist him. Since any given record will be inspected by the director or his attorney/agent, he will be in compliance with Section 6311 regarding such assistance. Further, any non-disclosure agreement must be limited to records that cannot otherwise be inspected by members, i.e., "personnel records and other items that would violate the privacy of a specific individual or are otherwise protected under Federal or California law." The Code does not require anyone to sign a blanket non-disclosure agreement as a condition for inspecting records, nor will they.
3. Your objection concerning a need to create records is misplaced. As stated in the Demand Letter:
"Please also note that a failure to present any of the requested items does not relieve you of the duty to make any and all of the other requested items available for inspection and/or copying. We are not asking you to create any summaries. But we do want access to all of the documents that are related to the above list, including any existing summaries, as part of the inspection of all records from 2007 to the date of inspection."
See also #6 below concerning your request for a delay.
4. To the extent you have already produced specific documents to Mr. Sakowicz in response to a prior demand, you do not need to provide duplicates. This exception does not apply if any member has demanded the same information.
5. The alternatives you have offered to Messrs. Collins and O'Brien concerning their prior demands to inspect the membership rolls are unreasonable and too expensive. They are based on an incorrect reading of a statute that bars releasing such information to third parties. Members are not third parties. In any event, prior efforts and negotiations are not a waiver of a member's right to inspect.
The efforts of Messrs. Sakowicz, Collins, and O'Brien to try to resolve the current crisis at MCPB/KZYX through negotiation with the board and discussion with the membership are not signs of bad faith but rather an attempt to avoid litigation. Do not confuse patience and reason with weakness and ill-will.
6. We see no need at this time to delay the inspection. As noted above, the failure to have all records available by July 11 does not relieve you of the duty to allow inspection of those records that are available at that time. If for any reason certain records are not available that the director or members believe are essential, then arrangements can be made to inspect them at a later time. Asking us to wait until four weeks after some unspecified date is too uncertain. However, we will consider a later date once the full board has met and considered this reply.
7. As noted above, you do not need to produce the same documents to Mr. Sakowicz twice. But the Demand Letter is more comprehensive and includes demands for inspection by members, demands which stand alone. There is no "condition precedent" that must be met before MCPB complies with the current demand.
8. Because Mr. Sakowicz has an absolute right of inspection as a director, his intentions are not an issue. The only time intent is an issue is if you believe that the members' demand for access to membership information under Sections 6330 is for reasons not related to their interests as members. If you believe so, then your remedy, as noted above, is to file a petition with the Superior Court to have that particular demand set aside. But the members do have a legitimate reason for their demand, as stated in the Demand Letter:
"The purpose of the demand by the members is to review all financial transactions and data, and all membership and voting records and data, from the year prior to the employment of the current general manager, Mr. John Coate, up to and including the date of inspection, as there has been inadequate oversight by the board of directors concerning finances, memberships, and elections during his tenure. The membership has a legitimate interest in the financial affairs of the corporation and the integrity of the voting rolls and election process."
9. Thank you for your willingness to consider the proposals set forth by Mr. O'Brien, one of the Demand Letter signers. If you adopt those specific proposals before July 10, he will drop his demand for inspection of the membership rolls, and will encourage the other signers to do likewise. However, this will have no effect on the demand to inspect and possibly copy all other records, including financial. Mr. O'Brien looks forward to working with the new Committee on Bylaws and Policies. MCPB policies authorize the Board of Directors to name volunteer members to board committees. The Board should consider naming some of the signers to certain committees - e.g., Mr. McKenty to the Finance Committee - as a way of engaging with the membership, promoting transparency of governance, and avoiding the need for future inspection demands.
Thank you again for you detailed response. Please make sure that the full board has time to consider this reply before it meets next Monday. We hope that the full board will acknowledge our right of inspection and take positive steps to address the underlying concerns. If it does, we will consider a delay. If not, then we will be at the main office on July 11 to proceed with the inspection. Please do not remove any records or take any other action that might hinder the process.
Sincerely,
John Sakowicz
Doug McKenty
King Collins
Norm de Valle
Dennis O'Brien
June 23, 2015 John Sakowicz Doug McKenty King Collins Norman deVall Dennis O’Brien Gentlemen: We are in receipt of your letter of June 9, demanding inspection of various records and asking various questions. We reply as follows: 1. The right of a member to inspect and copy records is limited to a narrow set of documents under Section 6330 of the California Corporations Code. Most of the 30 categories of records listed in the letter are not ones that the Corporations Code gives a member the right to copy and inspect. 2. Under Section 6334 of the Corporations Code, the right of a Director to inspect and copy records extends to all books, records and documents of every kind. Mr. Sakowicz is a Director. None of the other signatories to the letter is a Director. Accordingly, Mr. Sakowicz, and only he, has the right to demand inspection of the documents in most of the listed categories. We are aware that a Director may make an inspection personally, or he may send an agent or attorney to make the inspection and copy the documents if he chooses not to make the inspection himself. Corp. Code § 6311. If Mr. Sakowicz chooses to send an agent or attorney in his stead, that agent or attorney may inspect and copy records instead of Mr. Sakowicz. We will require the agent or attorney to sign a non-disclosure agreement promising not to reveal confidential information except to a person who has also signed a non-disclosure agreement. 3. Nothing in the Corporations Code requires managers or Directors to create records that the corporation does not maintain. The Corporations Code provides for inspection and copying of existing records. 4. This is not the first request from Director Sakowicz to inspect and copy KZYX records. In October 2014 Mr. Sakowicz sent then Board President Eliane Herring an e-mail requesting to inspect and copy records that pertained to nine separate questions. In response to that e-mail, KZYX spent considerable time and resources to (1) determine if it had documents responsive to Mr. Sakowicz’ s questions; (2) assemble the requested categories of documents; and (3) respond to Mr. Sakowicz outlining the documents in KZYX’s files that would be responsive and offering them up for copying and inspection. Copies of that correspondence are attached. Mr. Sakowicz has not yet followed up on his demand and has not yet reviewed the documents gathered by KZYX. This leads KZYX to question whether his request was made in good faith. 5. This is also not the first request from Mr. Collins and Mr. O’Brien to KZYX based on alleged rights of inspection pursuant to the Corporations Code. In July 2013 Mr. Collins sent a request for access to the members list. KZYX responded to that request with a detailed letter on July 19, 2013, outlining a process by which that access could be obtained. Formulating a careful response took KZYX considerable time and effort – time and effort that it could not spend on fundraising, attention to station infrastructure, or recruiting new programmers. A copy of that letter is attached. On January 19, 2015 Mr. O’Brien made a request for access to the members list. KZYX sent a response to that request on February 1, 2015 and distributed a copy of the response at the Board meeting on February 2, 2015. A copy of that response is attached. Because of the complex interplay between the Corporation for Public Broadcasting rules and the Corporations Code, it took KZYX considerable time and effort, including engaging an outside attorney, to formulate a legally correct response to Mr. O’Brien’s request. Again, that was time KZYX could not spend on fundraising and other productive activities. Neither Mr. Collins nor Mr. O’Brien has ever followed up to take advantage of the process offered by KZYX. This leads KZYX to question whether these requests were made in good faith. 6. As you know, John Coate has resigned his position as Executive Director and General Manager effective July 1, 2015. The station will need to rely heavily on him to assist in the transition before his last day. Due to his impending departure, and the fact that he is the person with the best understanding of where and how KZYX records are maintained, it will be physically impossible for KZYX to deal with the extraordinary and burdensome demands in your June 9 letter in the near term. We must recruit and train a new ED/GM and, at the same time, keep the station running. As such, we are forced to put your request aside until we have hired a new ED/GM, and that person has had a reasonable amount of time on the job, at least 4 weeks, to get up to speed. Then we will substantively respond to your requests, and provide access to records as appropriate. At such time as we have the resources to respond to this most recent request and its 30 categories of documents/information, we anticipate that it will again take us considerable time and effort to make a proper response and to gather the records. 7. In the meantime, we stand by the offer made to Mr. Sakowicz on December 10, 2014 to inspect and copy certain documents responsive to his October 2014 request. Once Mr. Sakowicz reviews the records he has already requested and that KZYX has already spent considerable time gathering, then he can assess what records, if any, he still wants to see. In other words, the results of his first document request may inform any subsequent document requests. 8. We think it not insignificant that Mr. Sakowicz has openly stated that his goal is to bring the station down. He openly undercuts that station’s fundraising efforts (with his slogan “Starve the Beast”), and he has written numerous letters to local newspapers attacking the station. Based on Mr. Sakowicz’ lack of follow-through on his document request last fall, we have a strong concern that the current request may just be another exercise in harassment and intimidation, intended to distract and demoralize KZYX. We hope that is not the case. 9. Finally, we note that one of the signatories to the June 9th letter, Dennis O’Brien, has offered to drop his demand to inspect and copy if the board/management adopts certain proposals he has put forth. While we cannot promise to adopt Mr. O’Brien’s proposals immediately, we are open to considering them as part of the Board’s Committee on Bylaws and Policies. That Committee will evaluate them and potentially present them, as refined by the Committee, to the full Board for further consideration and possible adoption. The Committee will communicate directly with Mr. O’Brien as part of its process. Very truly yours, Stuart Campbell President, MCPB Board of Directors
Stuart Campbell, President June 9, 2015
Mendocino County Public Broadcasting
P.O. Box 1 Via Registered Mail
Philo, CA 95466
John Coate, General Manager
KZYX&Z
P.O. Box 1
Philo, CA 95466
Re: Demand for Inspection and Copying of Records by Director and Members
Messrs. Campbell and Coate:
This letter is addressed to you in your official capacities with Mendocino County Public Broadcasting, aka KZYX&Z, a membership nonprofit corporation headquartered in Philo, California. It is a demand for inspection and possible copying of all records from 2007 through the present by Director John Sakowicz and other current members of the corporation.
Inspection and copying of corporate records is authorized by the California Corporations Code, including the following sections:
6330. (a) Subject to Sections 6331 and 6332, and unless the corporation provides a reasonable alternative pursuant to subdivision (c), a member may do either or both of the following as permitted by subdivision (b):
(1) Inspect and copy the record of all the members' names, addresses and voting rights, at reasonable times, upon five business days' prior written demand upon the corporation which demand shall state the purpose for which the inspection rights are requested;
(2) Obtain from the secretary of the corporation, upon written demand and tender of a reasonable charge, an alphabetized list of the names, addresses, and voting rights of those members entitled to vote for the election of directors, as of the most recent record date
for which it has been compiled or as of a date specified by the member subsequent to the date of demand. The demand shall state the purpose for which the list is requested. The membership list shall be made available on or before the later of 10 business days after the
demand is received or after the date specified therein as the date as of which the list is to be compiled.
6333. The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person's interests as a member.
6334. Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the
corporation of which such person is a director.
6310. If any record subject to inspection pursuant to this chapter is not maintained in written form, a request for inspection is not complied with unless and until the corporation at its expense makes such record available in written form. For the purposes of this chapter "written" or "in writing" also includes cathode ray tube and similar electronic communications methods.
6311. Any inspection under this chapter may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts.
6312. Any right of inspection created by this chapter extends to the records of each subsidiary of a corporation.
6313. The rights of members provided in this chapter may not be limited by contract or the articles or bylaws.
The purpose of the demand by the members is to review all financial transactions and data, and all membership and voting records and data, from the year prior to the employment of the current general manager, Mr. John Coate, up to and including the date of inspection, as there has been inadequate oversight by the board of directors concerning finances, memberships, and elections during his tenure. The membership has a legitimate interest in the financial affairs of the corporation and the integrity of the voting rolls and election process.
Please note that assurances by the board that there has been adequate oversight, or the provision of summaries, will not be reasonable alternatives to inspection and copying. Please also note that the right of a director to inspect and copy records is absolute, and does not require a statement of purpose.
Mr. Sakowicz and the members signing below may be assisted by others, as is also authorized by the Code:
6311. Any inspection under this chapter may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts.
By their signatures below, Mr. Sakowicz and the participating members hereby authorize such agency.
The records being demanded for inspection include, but are not limited to:
1) Certified Audits, 2007 through the present, along with the names, addresses, and contact information of all CPA's, listed by year, who conducted the Audits;
2) List of KZYX Audit Committee members from 2007 through present, i.e., who sat on the Audit Committee each year;
3) All Quarterly Financial Statements, January 2007 through present;
4) All underwriting revenue, both cash and in-kind, 2007 through present;
5) All Letters of Credit from 2007 to June 2015;
6) All bank statements and cancelled checks, 2007 to June 2015;
7) Contracts and total funds paid out to Independent Contractors, with Name/Address of Contractors, 2007 through 2015;
8) Total salaries paid to each employee for each year, 2007 through present;
9) Amount paid for benefits for each employee for each year, 2007 through the present;
10) All records pertaining to Restricted Funds, e.g., the Ukiah Studio Restricted Funds, including identifying how those funds have been used;
11) Valuation of the Business, Assets vs. Debts, beginning with 2007 through the present;
12) List of all Equipment Purchases by year with invoice documentation;
13) Any documentation for Individual Wills and Bequests making KZYX the beneficiary;
14) Total dollars pledged; defaulted pledges by year from all Annual On Air Fund drives; total number of Members per year to reflect the Total Dollars Pledged/or Defaulted; and any donations beyond memberships, including Anonymous Gifts, during and/or outside the on air drives, all from 2007 through 2015;
15) Actual Fund Raising dollars spent to raise money for pledge drives for 2007 through 2015;
16) Complete listing of Program Information and Promotional dollars spent, 2007 through 2015;
17) Complete listing of what is included in Programming and Production, 2007 through 2015, including the specific cost of each NPR program for each year;
18) Complete listing of what is included in Fundraising and Membership Development, 2007 through 2015;
19) Complete listing of Underwriting and Grant Solicitation expenses, 2007 through 2015;
20) Listing of all Special Events, Expense vs. Income by Event, 2007 through 2015;
21) Listing of all CPB Grant money by year, 2007 through 2015;
22) Listing of all Other grant money by year, 2007 through 2015;
23) Complete list of professional conferences attended and who attended, with total dollars spent on professional conferences, 2007 through 2015;
24) List of specific money set aside for Capital Improvements each year, 2007 through 2015;
25) List, by year, all utility costs outside of On-air Drives, meaning normal day to day costs;
26) All insurance records, including all correspondence and any payments by the insurer;
27) Total dollars spent on Board Retreat, Legal Fees, etc, for implementation of the 2002-2006 Long Range Strategic Plan;
28) The current standard contract between the station and the programmers;
29) All evaluations of the general manager, 2007 through 2015; and
30) An alphabetized list of the names, addresses, and voting rights of those members entitled to vote for the election of directors, currently and as of January 31, 2015.
Date of Inspection: The Corporations Code allows a maximum of 10 days for the collection of the records demanded. We intend to come to the corporate headquarters, aka the Philo station, on Saturday, July 11. Please have all records of MCPB/KZYX&Z available at that time, or provide copies of records (paper or electronic) beforehand. Even if certain records (e.g., personnel) are not available to the members, they are subject to inspection by the director.
Please note that the above list is for example only and does not limit the demand for all records. Please also note that a failure to present any of the requested items does not relieve you of the duty to make any and all of the other requested items available for inspection and/or copying. We are not asking you to create any summaries. But we do want access to all of the documents that are related to the above list, including any existing summaries, as part of the inspection of all records from 2007 to the date of inspection. Per Section 6310, please provide a written or electronic copy of all requested records if they are not readily accessible or impractical to review onsite.
Since this is a concurrent request from both a director and other members, please send confirmation that all the requested records will be ready for inspection to the following email addresses:
sako4 at comcast.net
dennisobrien at sharejerusalem.com
Thank you very much for your prompt and serious attention to this matter.
Sincerely,
John Sakowicz, Director, Mendocino County Public Broadcasting
Doug McKenty, Member & Former Director
King Collins, Member & Former Director
Norman L. de Vall, Member & Former 5th District Supervisor
Dennis O'Brien, Member
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