The Insiders
-
Dec
9
Dishing on Davis’s Legal Opinion
Posted by: Neal Yonson | December 9, 2009 | Comments Off on Dishing on Davis’s Legal Opinion
It is safe to say that the last AMS Council meeting did not unfold quite the way anyone expected it to. Blake and Tim still hold their positions, were censured, asked to catalogue their activities on an hourly basis, and are now required to go to executive committee to make any decisions that could affect the AMS’s reputation. The motions that were passed (and more importantly, the ones that were not passed) stem almost exclusively as a result of a legal opinion from Davis LLP, legal counsel for the AMS, regarding the removal of executives.
Despite the importance of this document, I suspect very few outside the council/media circles have given it more than a passing glance, but I think it’s important to know what it’s all about. With that, and keeping in mind that I AM NOT A LAWYER, here is the short version of what the legal opinion says (everything is paraphrased):
The first section is the AMS’s questions.
Q1: Can Council remove an executive? If not, can Council keep them as councilors, while removing them from their executive positions?
A1: Council cannot remove them. As per the Society Act, they can only be removed through a general meeting or referendum. Their positions as councilors and executives are inseparable and therefore you cannot remove someone from one position without removing them from the other.
Q2: If Council can’t remove them, what else can they do?
A2: Potential actions include censure, additional oversight over their actions, removing the President as chair.
Q3: Are AMS executives considered employees of the AMS?
A3: Maybe. A definitive answer could only be obtained through the courts, or by changing the AMS Code and Bylaws.
NOTE: Q4 – Q7 are based on the assumption that executives are considered AMS employees.
Q4: If an executive is removed from office can that person sue the AMS for wrongful dismissal?
A4: Yes. The courts would then decide the outcome.
Q5: What can the AMS do to avoid a wrongful dismissal lawsuit?
A5: Amend Code and Bylaws. However, this would only affect future employees, not current ones.
Q6: Would it be acceptable for the AMS to change the duties that an executive is supposed to perform?
A6: Minor tweaks are ok. Anything major could invite a lawsuit.
Q7: Does failing to follow AMS Code qualify as an appropriate justification for firing an employee?
A7: Most likely yes.
Q8: Assuming executives are not employees, could Council take away an executive’s ability to directly supervise other AMS employees?
A8: That would probably be acceptable.
Q9: If Council were to take away an executive’s ability to oversee AMS employees, what are the possible legal consequences?
A9: If executives are not considered employees, there would be no consequences. If executives are considered employees, they would be able to take the AMS to court, where a decision would be rendered.
There are then a few sections of unsolicited legal advice. Unsolicited meaning that unlike the information above, this is not directly in response to any question posed by the AMS.
Background Facts in essence this lays out the case against Blake and Tim in a lawyerly fashion.
Governance Issues tackles the issue of the AMS Bylaws, and comes to the conclusion that removing an officer from his/her position but leaving that person as a director of the society is not currently possible under AMS Bylaws. (This is in addition to it not being possible under the Society Act.)
This section also contemplates removal of executive through the courts, but notes that this is not a feasible route. It then suggests censure, along with a suggested wording for the resolution. A resolution is then described which would place limits on an executive making “reputational decisions” for the AMS. Both the censure and “reputational decisions” motions made it into the meeting. The last section is where Davis suggests ways in which to change the AMS Bylaws. One interesting idea is the insertion of a clause that could automatically disqualify a councilor from being part of the executive committee upon Council finding wrongdoing with an executive’s actions.
Employment Issues first provides some background on the terms of employment for executives then examines the issue of whether or not executives are AMS employees. As they also stated in the questions above, there is no definitive answer to that question. The opinion is given that if an executive was terminated, withholding information from council could be considered reasonable grounds for dismissal. They also conclude that stripping an executive of core powers and responsibilities would be a relatively low-risk proposal.
The overall summary of the document is that while changing the Bylaws can bring clarity to some issues, the Society Act still reigns. The only way to remove directors is through a referendum or general meeting. This puts the AMS in an extremely difficult situation, since these are unwieldly for the size of the society’s membership. In the event of executive misbehaviour in the future, there will be little recourse to discipline that person. The only true solution to this problem will likely lie in changing the Society Act or receiving some sort of exemption from it. This is certainly something that should be looked into.
While the legal opinion from Davis LLP is just that, an opinion, there is also some interesting case law cited in which the issue has come up of a society’s bylaws being inconsistent with the Society Act. The main one revolves arond the Sagnam Educational and Cultural Society. This case was decided in 1990; at the time, this society’s bylaws allowed for directors to be removed by special resolutions of the board. The general story is that there were two opposing factions hoping to take control of this Society. When the leader of one side won the presidency, he then used special resolutions of the board (as per bylaws) to remove directors who had opposed him. Ultimately, the judge found the bylaws to be inconsistent with the Society Act, and reinstated the directors who had been removed, saying that only a vote of the membership could remove directors.
The judge’s reasoning behind it was thus: “The purpose of the [Society] Act is to regulate the affairs of those societies that seek its benefit by incorporation under its provisions. The members are entitled to that protection, and one of the ways in which they are protected is by ensuring that the directors who are elected by the members can only be removed by the members.”
Thank you very much to the person who passed along the Sagnam decision, who probably does not want to be mentioned by name.
