Brennan v. Minneapolis Society for Blind, Inc.
| Decision Date | 13 July 1979 |
| Docket Number | No. 48162.,48162. |
| Citation | 282 NW 2d 515 |
| Parties | James BRENNAN, et al., Respondents, v. MINNEAPOLIS SOCIETY FOR the BLIND, INC., Appellant. |
| Court | Minnesota Supreme Court |
Gray, Plant, Mooty, Mooty & Bennett, Robert L. Helland, and James R. Lande, Minneapolis, for appellant.
Head & Truhn, Jerome Truhn, and Thomas V. Seifert, Minneapolis, for respondents.
Richard W. Bleecker, Exec. Director of National Association for Accreditation Council, Baer, Marks & Upham, National Accreditation Council, New York City, amicus curia.
Heard before KELLY, SCOTT, and WAHL, JJ., and considered and decided by the court en banc.
The Minnesota Society for the Blind appeals from the judgment and amended judgment of the Hennepin County District Court. We must decide whether the judgment of the trial court striking down the Society's amendments of its corporate by-laws and articles of incorporation, allegedly designed to exclude plaintiffs from the organization, can be sustained and whether the trial court erred in finding no state action involved in appellant's conduct. We affirm.
Defendant Minneapolis Society for the Blind, Inc. (hereinafter "Society"), incorporated in 1917 as a Minnesota non-profit corporation, provides services to and employs blind and multiple-handicapped Minnesota residents. The Society is operated by an Executive Director and Board of Directors, with a membership of about 2,000 in 1972 and a 24-member Board of Directors in 1971. Until December of 1971, membership dues were $1 per year. Membership was primarily a method of soliciting contributions, with most members being almost completely inactive in the organization. One could become a member not only by paying dues but also by making a direct contribution through a supporting organization, such as the Kiwanis. Directors of the Board traditionally were elected by the membership after being selected by a nominating committee. From time to time certain community organizations were invited to submit the name of one of their members for a director's position.
The Society provides a rehabilitation center and occupational training and treatment, as well as a large workshop. The income produced by the workshop and contributions from the United Way accounted for between 62 and 80 percent of the Society's revenue for the period 1968-71.
An additional source of revenue is fees paid to the Society by the Minnesota State Services for the Blind (hereinafter "SSB"). Pursuant to periodic contracts between the Society and SSB, the Society provides rehabilitation services to SSB clients. Nearly all of the 20 participants in the Society's rehabilitation center were SSB clients. SSB pays the Society about $850 per month per client, which constitutes 75 percent of that client's cost to the Society.
SSB clients compose the Society's 10-person occupational treatment and training program, which was jointly established by SSB and the Society. SSB pays the Society $350 to $400 per month for each SSB client. During the period of 1968-71, the program services fees paid to the Society by SSB provided between 11 and 23 percent of the Society's gross revenue, which in 1971-72 approximated $1.2 million.
In addition to fees, the Society has received since 1956 about $722,500 in grants from SSB and from the U. S. Department of Health, Education and Welfare with SSB's approval. These grants were specified for construction of the Society's new building, purchase of workshop equipment, remodeling of the workshop, and alteration of its building to establish a regional adjustment center for the blind. The SSB is allowed to provide up to 80 percent of the total project cost and retains a reversionary interest in machinery and equipment purchased with these funds. In connection with the grants, the Society is subject to government reporting requirements, inspections and regulations. In January 1970, SSB assisted the Society in defining the rehabilitation program. The Society is also exempt from federal and state income taxes and from state real estate taxes.
In November 1970, the National Federation for the Blind (hereinafter "NFB") held its national convention in Minneapolis. A resolution was passed whereby NFB would request the Society to allow the blind community to elect three members of the Society's Board of Directors. No blind people sat on the Board at that time. The Society rejected the request.
In early 1971, several blind Society clients approached the legislation committee of the Minnesota Organization of Blind (hereinafter "MOB"), later renamed the National Federation of the Blind in Minnesota, Inc. ("NFBM"), with grievances against the Society. They demanded, among other things, that three blind people be allowed to serve as members of the Society's Board of Directors. Over the next six months, MOB representatives met at least three times with Society representatives with respect to the request for Board representation for the blind community. In August 1971, MOB demanded that two-thirds of the Society Board be elected by the blind community. Responding to these demands, the Board president, at the Society's September Board Meeting, told the directors that "disappointing criticisms" from "irresponsible critics" could not be allowed to jeopardize the Society's plans for its community support. The critics, or some of them, were then told by a Board member to become members of the Society if they wished to have input into its affairs. Shortly thereafter, several of the six plaintiffs, all blind, became members of the Society.
Meanwhile, unbeknown to plaintiffs, as a condition of a grant contract in 1971, SSB required the Society to make reasonable efforts to include the Society's consumers, meaning the blind, on the Society's Board of Directors. On September 22, 1971, the Society nominating committee of the Board offered director positions to the presidents of the United Blind (hereinafter "UB") and MOB. Both declined, one citing the fact that negotiations for electing blind representatives were continuing, and the other stating that he was unable to make such a time commitment. In October 1971, at the Society's request, the MOB and UB submitted two names from each organization for the director's positions, taking the stance that unless the Society accepted all four individuals as Board members, none would accept a position. One of the four individuals was offered a position by the Society and was elected to the Board. Three other blind persons, not members of UB or MOB, were elected to the Board.
At the December 15, 1971 Board Meeting, one of the new blind Board members presented a resolution, which was rejected, that one-third of the Board be elected by the blind community. At the same meeting, the Board enacted four amendments to the bylaws:
1. The Board could terminate any member by written notice for reasons deemed satisfactory to it.
2. Annual membership dues were increased from $1 to $5.
3. Cumulative voting was prohibited.
4. Nominations for Board positions had to be in writing, signed by at least 25 members in good standing, delivered to the secretary at least 15 days before the Annual Meeting. Any other manner of nomination required unanimous consent of the members.
At the Society's Annual Meeting on January 19, 1972, attempts by one of the plaintiffs to nominate individuals for the Board of Directors were unsuccessful, as was another plaintiff's attempt to introduce a resolution calling for one-third of the Board membership to be composed of blind representatives.
During the next three months, the Society's clerical employee was instructed to hold letters requesting membership because the Board was considering abolishing membership. Plaintiffs' letters containing dues were placed in a "special file," but the checks were cashed. Refunds were later sent to plaintiffs. No other dues were returned. Anyone else who sent in money became a "Friend of the Society." Within that period, the Society's counsel1 recommended to the Board's executive committee that Society membership be limited to persons on the Board. He cited as his reasons that many groups with what may be laudable purposes were seeking to control corporations and that it would be irresponsible to have articles and bylaws that permitted a takeover by such groups.
On April 19, 1972, the Board amended the articles of incorporation to provide that only directors of the Board could be members of the Society. The Society's executive director testified that it was the Society's concern that a small group of people with narrow or specialized interests could become members and vote themselves into director positions. The testimony of several Board members attributed the abolition of open membership to concern about takeover of the Society. To the contrary, plaintiffs testified that they had no plans to take over or jeopardize the Society, which had provided services to some of them for many years.
On May 31, 1972, the Society filed with the Secretary of State an amendment passed in 1966 that had shifted the power to amend the articles of incorporation from the membership to the directors.
Plaintiffs commenced this action on September 22, 1972, seeking injunctive relief and compensatory damages of $25,000 for violation of their civil rights. In response, on October 12, 1972, the Board undertook to reconstitute its former membership in order to vote on the issue of abolition of membership by amending its articles and bylaws to reestablish the previous membership provisions as they existed prior to the date of abolition and by establishing by Board resolution new qualifications for membership. As a result, only contributors or members as of September 22, 1972, the date of this action, were eligible.
Plaintiffs moved the district court for a temporary injunction to enjoin the meeting. They also sought an order for production of membership lists to enable them to contact the Society's...
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