Michael K Jeanes, Clerk of Court *** Electronically Filed *** S.

Bagnall, Deputy 8/30/2013 1:48:00 PM Filing ID 5423432

1 CHRIS FORD, ESQ., SBN 029437 LAW OFFICE OF CHRIS FORD 2 125 East Coronado Road 3 Phoenix, AZ 85004 t: 602-688-5571 4 f: 888-447-3714 5 cford@azbar.org 6 Attorneys for Plaintiffs, JOSE ROBERTO SOTO, MARIA SALAZAR, MAYRA MIRANDA 7 8 9 10 11 12 JOSE ROBERTO SOTO, MARIA 13 14 15 v. 16 LEAGUE OF UNITED LATIN 17 CHAPTER (LULAC); JOHN MIRELES, 18 Arizona Chapter; DAVID HERNANDEZ, 19 LULAC, Arizona Chapter; ANA
in his capacity as executive director of VALENZUELA, in her capacity as in his capacity as an officer of LULAC, AMERICAN CITIZENS, ARIZONA SALAZAR, MAYRA DISCUA MINRANDA, Plaintiffs, Case No. CV2013-008731 PLAINTIFFS BRIEF REGARDING SUBJECT MATTER JURISDICTION Assigned to: Hon. Michael Herrod

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA FOR THE COUNTY OF MARICOPA

20 national vice-president for youth for 22 23 24 25

1083; DOES 1-20,

21 capacity as president, LULAC Council #

Defendants.

LULAC; MARI ALVARADO, in her

INTRODUCTION
Pursuant to this Courts Order entered August 12, 2013, Plaintiffs hereby submit this brief

26 regarding whether the Court has subject matter jurisdiction over the present case. As explained 27 below, both statutory and case law bases exist to for the Court to retain or take subject matter 28 jurisdiction over the within litigation.
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1 2

BRIEF REVIEW OF FACTS AND CAUSES OF ACTION

As set forth in their First Amended Complaint (FAC), Plaintiffs assert that Defendants

3 deliberated upon and took actions intended to throw in their favor the elections held by LULAC in 4 Arizona on June 8, 2013 and for the national organization in Las Vegas, Nevada, June 19-22, 5 2013. Specifically, defendants hatched and carried out a plan to prevent local LULAC councils 6 from Phoenix and other areas of Arizona from voting at the Arizona Convention. That plan 7 included allowing members whom Defendants perceived to be likely to vote in favor of 8 Defendants chosen candidates or policies to vote without going through all the credentialing 9 formalities while deliberately refusing or failing to credential Plaintiffs and other properly 10 registered, if politically disfavored, members so they could vote at that Convention, despite their 11 having prepared and attempted to navigate Defendants credentialing formalities. 12
Moreover, Defendants denied Plaintiffs and at least 147 other members their right to vote

13 at the National Convention, and defendants deliberately cut Plaintiffs off from any possible avenue 14 of appeal, instead issuing a so-called legal opinion that purports to justify Defendants having 15 disallowed plaintiffs from voting. Defendants hid and refused to show the so-called legal 16 opinion to Plaintiffs, a fact they do not specifically dispute. Meanwhile, Defendants engaged in 17 the questionable practice of delegate transferring so as to boost their chances at election time; 18 gave politically favored councils or members merchandise, cash, and funds for food, lodging and 19 transportation; and conducted the election via stand-up voting, a process not contemplated in 20 their own constitution or bylaws. 21
Plaintiffs have asserted the following causes of action against Defendants: failure to

22 comply with A.R.S. 10-3721, which provides, as relevant here, that each member of an 23 organization is entitled to one vote on each matter voted on by members; conversion of plaintiffs 24 membership and registration fees; common law fraud; promissory estoppel; breach of implied 25 covenant of good faith and fair dealing; and ultra vires acts. Plaintiffs seek declaratory and 26 injunctive relief. 27
As explained below, court jurisdiction over the facts alleged herein is warranted on various
Law Office of Chris Ford 125 East Coronado Road Phoenix, AZ, 85004 602-688-5571

28 statutory and common law grounds. At minimum, courts in Arizona and elsewhere agree that
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1 while the judiciary is generally reluctant to intervene in the affairs of private volunteer 2 organizations, they appropriately take jurisdiction when such a group acts contrary to its own 3 rules, its legitimate interests, or to the rights of individuals or the public, or arbitrarily or 4 unreasonably. Clearly, Defendants in this case have acted arbitrarily, unreasonably, contrary to 5 their own constitution and bylaws, and in contravention of statute. Therefore, it is appropriate for 6 this Court to take jurisdiction herein and grant relief to Plaintiffs. 7 8 9
ARGUMENT
I. Arizona Statutes Provide Bases for Subject Matter Jurisdiction Over This Case. Subject matter jurisdiction is defined as the authority to adjudicate the type of controversy

10 involved in the action. Restatement (Second) of Judgments 11 (1982) (quoted in State v. 11 Maldonado, 223 Ariz. 309, 311, 223 P.3d 653, 655 (Ariz. 2010)). In current usage, the phrase . . . 12 refers to a courts statutory or constitutional power to hear and determine a particular type of 13 case. Id. The jurisdiction of this court is broad. Ariz. Const., art. 6, 14(1) (cases and 14 proceedings in which exclusive jurisdiction is not vested by law in another court). 15 17 18 19 20 21
In Arizona, to determine whether a statute implies a right of action, courts apply the four

16 factors in Cort v. Ash, 422 U.S. 66 (1975), namely:

(1) whether the plaintiff was one of the class for whose especial benefit the statute was enacted; (2) whether there was any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one; (3) whether implication of such a remedy was consistent with the underlying purposes of the legislative scheme; and (4) whether the cause of action was one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law.

22 Tucson v. Superior Court, 127 Ariz. 205, 208 33, 36 (Ariz. Ct. App. 1980) (citing Cort, 422 U.S. 23 at 78) (internal quotation marks omitted). As explained below, the cited Arizona statutes meet the 24 Cort test and thus give rise to a private right of action over which the Court has jurisdiction. 25 26
A. Plaintiffs have a right of action under A.R.S. 10-3271. As asserted in Plaintiffs FAC, defendants acts at both the Arizona and National

27 Conventions contravene A.R.S. 10-3721. Found under Title 10, which concerns Corporations 28 and Associations, Chapter 30, Members Meetings and Voting Nonprofit Corporations, of the
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1 Arizona Revised Statutes, 10-3721 provides that unless a groups articles of incorporation of 2 bylaws provide otherwise, each member is entitled to one vote on each matter voted on by 3 members, where such matters are expressly provided in the articles of incorporation or bylaws. 4 A.R.S. 10-3721(A). 5
LULACs constitution and bylaws make express provisions with respect to member voting.

6 For example, LULACs constitution makes clear that members have a right to vote on matters of 7 interest to and for the welfare of their local council or LULAC itself. LULAC Const., art 4, 8 1b.(2)-(4). The organizations bylaws further provide that voting at all conventions shall be by a 9 show of hands, roll call or secret ballot. LULAC Bylaws, art. II, 8a; LULAC Const., art VIII, 10 5d. Moreover, unless otherwise specified in the groups constitution, a simple majority prevails. 11 LULAC Bylaws, art. II, 8d. 12
Plaintiffs have found no Arizona case law interpreting or analyzing 10-3721 (or its for-

13 profit corporation shareholder voting analog, 10-721). Applying the Cort test, (1) Plaintiffs 14 herein are members, and they thus among those for whom the statute was enacted; (2) Plaintiffs 15 have found no explicit legislative history pertaining to 10-3721, but a statute entitling members 16 of nonprofit organizations to one vote on each matter voted on by members would constitute mere 17 surplusage where there no remedy; thus, the language of the statute implicitly implies a remedy; 18 (3) the implied remedy fits within the underlying purposes of the legislative scheme of Chapter 30 19 of Title 10, which is to regulate member meetings and voting at nonprofit corporations; and (4) 20 corporate regulation is a traditional function of state law for example, Arizona has established 21 the Arizona Corporations Commission for exactly that purpose. Accordingly under Cort (and in 22 Arizona, Tucson), 10-3721 implies a right of action, and this Court has subject matter 23 jurisdiction over Plaintiffs claim. 24 25
B. Plaintiffs have a right of action under A.R.S. 10-3302. A.R.S. 10-3302, found at Chapter 26 of Title 10, Purposes and Power Nonprofit

26 Corporations, provides as relevant here that unless its articles provide otherwise, a corporation 27 has the same powers as an individual to do all things necessary or convenient to carry out its 28 affairs, including power to . . . [d]o any other act not inconsistent with law that furthers the
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1 activities and affairs of the corporation. A.R.S. 10-3302(20) (emphasis added). This statute is 2 relevant because Plaintiffs assert that Defendants engaged in unlawful activity, including failure to 3 comply with A.R.S. 10-3721, along with a number of common law claims against Defendants. 4
Applying Cort to 10-3302(20): (1) This subsection is among a nonprofit corporations

5 general powers and appears intended to benefit the public as a whole. At minimum, Plaintiffs are 6 among a class of those the statute was enacted to benefit, i.e. those with an interest that a particular 7 corporation conduct its affairs in a lawful manner; (2) again, plaintiffs are not aware of any 8 explicit legislative intent in regard to this subsection, but, as discussed above, a provision that a 9 corporation act not inconsistent with law is of little use without a remedy, and therefore a right of 10 action should be implied, and (3) such implication fits within the underlying the purpose of the 11 statutory scheme, which in this case is to set forth and define the limits of general powers given to 12 nonprofit corporations; and (4) as mentioned above, corporate regulation is a traditional state 13 function. Therefore, 10-3302(20) provides additional statutory basis for subject mater 14 jurisdiction in the present case. 15 16
C. Plaintiffs may have a right of action under A.R.S. 10-3304. As relevant here A.R.S. 10-3304 provides that a corporations power to act may be

17 challenged, inter alia, in a proceeding by members of a corporation . . . having at least ten per cent 18 or more of the voting power or by at least fifty members. A.R.S. 10-3304(B)(1). Here, three 19 Plaintiffs are challenging LULACs1 power to act; however, as asserted in Plaintiffs FAC, 20 Defendants acts similarly affected at least 147 members. Thus, to meet the statutory requirement 21 Plaintiffs if necessary could amend their FAC to either add a sufficient number of plaintiffs (or seek 22 leave to certify a class). 23 25 26 28
Law Office of Chris Ford 125 East Coronado Road Phoenix, AZ, 85004 602-688-5571

This statute openly grants potential plaintiffs the right to challenge a corporations power to

24 act in a proceeding. A.R.S. 10-3304(B)(1). Thus, no Cort analysis is needed. Here, Plaintiffs

Lulac is a Texas corporation. http://www.lulac.net/about/history/history.html (Past 27 [national president Paul] Andow was responsible for incorporating LULAC as a State of Texas corporation during his term in office.)
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1 challenge Defendants acts as ultra vires, and under 10-3304(B)(1) they may bring that challenge 2 in a court proceeding so long as they meet the minimum number of members statutorily required to 3 bring such a matter. As mentioned, if necessary Plaintiffs would seek leave of the court to add 4 plaintiffs so as to meet the statutory minimum. In summary, 10-3304(B)(1) at least potentially 5 provides an additional statutory basis for this Court to take jurisdiction over the within matter. 6 7 8
II. Even If the Court Finds No Statutory Basis for Subject Matter Jurisdiction, the Weight of Case Authority Supports the Courts Taking Jurisdiction in This Case. Even if the Court finds no statutory basis for subject matter jurisdiction over the instant

9 matter, courts, including those in Arizona, have defined the extent to which the judiciary will take 10 jurisdiction over internal matters of private volunteer organizations. It is true that generally courts 11 will avoid interposing themselves in such matters, but an Arizona court may review the act of such 12 a group where the group fails to apply a reasonable standard one which comports with the 13 legitimate goals of the [organization] and the rights of the individual and the public. See Blende v. 14 Maricopa County Med. Socy, 96 Ariz. 240, 245-46, 393 P.2d 926, 930 (Ariz. 1964) (Blende). 15
Courts in other jurisdictions similarly have expressed reluctance to intervene in the affairs

16 of a private organization but nonetheless will take jurisdiction when circumstances warrant. For 17 example, the judiciary in California resists ruling on internal disputes arising in private voluntary 18 associations. E.g. Cal. Dental Assn v. Am. Dental Assn, 590 P.2d 401, 405, 23 Cal.3d 346, 353 19 (Cal. 1979) (citing Blende, 96 Ariz. at 245, 393 P.2d at 930).2 The courts will nevertheless 20 accept jurisdiction over [such] organizations when the aggrieved party can demonstrate an abuse 21 of discretion, and a clear, unreasonable and arbitrary invasion of [its] private rights. Id. at 405-06, 22 23 Cal.3d at 353-54. 23 25 26 27 28
Law Office of Chris Ford 125 East Coronado Road Phoenix, AZ, 85004 602-688-5571

Thus, where an organizations action plainly contravenes its bylaws and if the burden

24 on the courts and on the interest of the [association] in its autonomy do not outweigh the
Worth noting is that various California courts cite Blende in their analyses regarding when it is proper for a court to take jurisdiction over the matters of a private organization. E.g. Oakland Raiders v. National Football League, 32 Cal. Rptr. 266, 283, 131 Cal.App.4th 621, 644 (Cal. Ct. App. 2005); Pinsker v. Pacific Coast Socy of Orthodontists, 526 P.2d 263, 265-66, 12 Cal.3d 541, 558 (Cal. 1974).
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2

1 [members] interests, it is appropriate for courts to exercise jurisdiction. Oakland Raiders v. 2 National Football League, 32 Cal. Rptr. 266, 283, 131 Cal.App.4th 621, 644 (Cal. Ct. App. 2005) 3 (quoting Cal. Dental, 590 P.2d at 406, 23 Cal.3d at 354) (alterations in the original) (internal 4 quotation marks omitted). Moreover, where a societys rule is contrary to established public 5 policy or is so patently arbitrary and unreasonable as to be beyond the pale of the law, a 6 court should prohibit its enforcement. Pinsker v. Pacific Coast Socy of Orthodontists, 526 P.2d 7 263, 266, 12 Cal.3d 541, 558 (Cal. 1974) (quoting Falcone v. Middlesex County Med. Soc., 170 8 A.2d 791, 800, 34 N.J. 582, 598 (N.J. 1961)). 9
Courts in other states concur with such views. For example, the Utah Supreme Court held

10 that a court appropriately takes jurisdiction over a private organizations rules or practices if they 11 contravene established public policy or are arbitrary and unreasonable. Bonneville Properties v. 12 Simons, 677 P.2d 1111, 1113 (Utah 1984). The Oklahoma Supreme court held that while courts 13 normally are reluctant to interfere in the internal affairs of voluntary membership organizations, 14 in particular situations, where the considerations of policy and justice are sufficiently compelling 15 judicial scrutiny and relief are available. Bd. of Regents of the Univ. of Okla. V. Natl Collegiate 16 Athletic Assn, 561 P.2d 499, 504 (Okla. 1977). 17 18 19 20 21
In Texas, [i]t is well settled that the courts will not interfere with the decisions of any kind of voluntary association in disciplining, suspending, or expelling its members where no property rights are involved, except to ascertain whether or not the proceeding was pursuant to the rules and laws of such an association, whether or not it was in good faith, and whether or not there was in it anything in violation of the law of the land.

3 22 Willis v. Davis, 233 S.W. 1035, 1037 (Tex. Civ. App. 1921). In summary, courts will intervene in

23 the affairs of a private volunteer organization where the groups actions constitute an abuse of 24 discretion and invasion of the aggrieved partys rights; contravene law or public policy; are 25 arbitrary and unreasonable; or for considerations of policy and justice. 26 27 28
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By implication, where property rights are involved the court necessarily has jurisdiction. See id. As such, this Court at minimum has jurisdiction over Plaintiffs conversion claim.
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Here, Plaintiffs assert that Defendants have plotted to keep Plaintiffs and other members

2 from voting at LULACs Arizona and National Conventions; deliberately failed or refused to 3 credential Plaintiffs and other members so they could vote, while allowing other members to 4 become credentialed to vote without impediment or without following to their own rules; cut off all 5 avenues by which Plaintiffs could appeal Defendants refusal to credential them, then upholding 6 said refusal by way of a supposed legal opinion and a vote to approve the legal opinion that did 7 not meet LULACs own voting requirements; rewarded politically favored members or subgroups 8 with cash, merchandise and funds for transportation, food and lodging; have taken Plaintiffs (and 9 others) money for membership while failing or refusing to provide the benefits of such 10 membership (including voting at conventions); and conducted stand-up voting, a method not 11 contemplated in their own constitution and bylaws. In so doing, Defendants have acted arbitrarily 12 and unreasonably, contrary to law and public policy; have abused their discretion; and have violated 13 Plaintiffs rights. As such, the weight of case authority supports the conclusion that this Court has 14 subject matter jurisdiction over this case. 15 16 18 19 DATED this 30th day of August, 2013 20 21 22 23 24 25
ORIGINAL of the foregoing 26 E-FILED this 30th day of August, 2013 with: ___/s/ Chris Ford_________ By: Chris Ford, Esq. Respectfully Submitted, LAW OFFICE OF CHRIS FORD Attorney for plaintiffs

CONCLUSION
For the foregoing reasons and based on the foregoing authorities, this Court clearly has

17 subject matter jurisdiction or at minimum should take jurisdiction over the with matter.

27 Clerk of the Court 28

Maricopa County Superior Court
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1 Phoenix, Arizona 85003 2 3

201 West Jefferson

FOR Hon. Judge Michael Herrod COPY of the foregoing FAXED

4 this 30th day of August, to: 5 Luis Roberto Vera, Jr. 6 National General Counsel, 7 Fax: 210-225-2060 8 Anthony Guajardo 9 Fax: 602-957-0801 10 11 By: Chris Ford 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Law Office of Chris Ford 125 East Coronado Road Phoenix, AZ, 85004 602-688-5571

League of United Latin American Citizens

Counsel for defendants ___/s/ Chris Ford_________

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