Jon, thanks for taking the time to generate that detailed reply regarding the NHRA proxy vote by the members, that's the most detailed description I've seen of the vote.
I realize that by trying to get an understanding of the situation from the "outside in" that some of my conclusions may be incorrect, but its a pretty difficult issue to dig into as its very hard to find anyone with knowledge of the situation that is willing speak about it, so thanks for providing your comments.
But I agree with you that the most critical issue is likely this vote that occurred in the 80's that stripped the membership of their ability to elect NHRA board members.
Here's some background on this issue that I'm pretty confident is correct. The information is based on requesting and receiving copies of the NHRA's Articles of Incorporation, original bylaws and what was claimed to be all the amendments that had been made to the original articles of incorporation. These documents must be provided upon request by non-profit organizations.
The original articles of incorporation and bylaws for the NHRA as a non-profit organization had some strong and clear statements regarding members.
"The Board of Directors shall have the right to refuse membership to any applicant, but unless so refused, all applicants for Active Membership shall become members upon the receipt by the corporation of the annual dues and whatever information concerning the applicant of the Board of Directors may from time to time require".
"One of the purposes of the annual meeting shall be the election of a Board of Directors".
"Each Director shall hold office for the term for which he is elected and until a successor is elected".
So as is generally required by the federal laws governing non-profit organizations which require them to be "generally controlled" by their members, the NHRA was originally set up with members having the generally expected rights to elect the Board of Directors. In addition, the documents clearly state that these members consist of all the general participants that have joined the NHRA, there was no "special class" of members that were the only ones that had voting rights.
This is important because the NHRA is bound by California law, which has very specific requirements on how non-profits are run, and in particular member's voting rights in a non-profit organization are very controlled and protected.
The California laws regarding non-profits are available on line here, and it appears that the 7000 sections and the early parts of the 5000 sections are the ones that apply to the NHRA:
California Corporations Code - California Code - California Law - California Statutes :: Justia
Now these are dense to work through and my interpretations of them may be wrong, but there are specific clauses there that apply to the modification of members voting rights and it appears that any modification of these rights requires approval by a true majority of the membership, not the majority of returned votes that was described by your attorney. As I mentioned earlier, the California laws put a lot of emphasis on member's voting rights, and this true majority requirement for a change in these rights is not surprising.
In addition, there is a clause in section 5814 that states that any modification to the articles that effects members voting rights must be submitted as a modification to the Articles of Incorporation, and the modification must specifically state that the change was made through a vote by the members.
But there is no such modification in the articles and amendments that I received, which were represented as the complete set of articles and their amendments. There is only the original original incorporation articles and an amendment dated 2005.
So it appears that the NHRA did not follow California law requiring a real majority vote in implementing this change that removed membership voting rights and they did not amend the articles of incorporation when the claimed the vote was performed. Thus what are represented by the NHRA as the full articles of incorporation for the company read as though members still have full voting rights.
Another clause conflicts with the opinion given to you by the attorney you mentioned. Clause 8330 states that any member may:
"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;"
The clause goes on in some detail about for purposes the names can be requested, but a request for the purpose of confirming a membership vote appears to not be something that the NHRA could decline.
Based on what I've seen, with the highlights described above, I still feel that there is a reasonable chance that the NHRA did not conform to California law in several significant and verifiable ways when they made the organizational changes based on their claimed membership vote.
The additional issue that I've described in previous posts that I thought potentially could be used to challenge the vote is voter eligibility. One thing I stated in the previous post was wrong, the NHRA was not a "business league" from the start, they changed to that designation on January 1, 1987, which apparently was after the vote was taken to remove membership voting rights. So if that timing is correct its probably not possible to challenge the vote based on ineligibility of the voters, the challenge would have to be purely based on whether the vote was correctly handled and implemented by the NHRA.
However, now that the NHRA is operating as a 501(c)(6) business league, the other statements I made regarding the general manner in which the NHRA is expected to admit members and operate are still valid. In particular, operating a "business league" non-profit organization where the organizations members have been made powerless appears to directly conflict the the requirements for a 501(c)(6), which state that the members must "generally control" the organization.
In summary, based on what I've seen in examining the California and federal laws and the NHRA's documents, I still feel that there is a reasonable chance that the NHRA's removal of membership voting rights could be successfully challenged.
Jon, I know this conflicts with the opinion of the attorney you mentioned, but candidly it appears he was wrong on several issues (majority vote, access to members). Each state has different laws for non-profit corporations so its possible he may not have been familiar with California's specific laws.
I know that forcing the NHRA to restructure its management would not be an easy thing to accomplish, even if based on strong legimate legal grounds, it would take substantial "lawyers, guns and money".
But if I was making my livelyhood from drag racing, as the Pro racers do, I would still feel it would be well worth funding at least an initial opinion from an attorney experienced in California non-profit corporate law.
I know its a layman's opinion, but too many things clearly don't appear to have been done correctly by the NHRA in regard to this membership voting issue, and that certainly would be consistent with their past history.