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Jesinger v. Nevada Federal Credit Union

filed: May 18, 1994.


Appeal from the United States District Court for the District of Nevada. D.C. No. CV-90-00195-HDM. Howard D. McKibben, District Judge, Presiding.

Before: Thomas Tang, Stephen S. Trott, and Ferdinand F. Fernandez, Circuit Judges. Opinion by Judge Tang.

Author: Tang

TANG, Circuit Judge:

Appellants are former members of the Board of Directors (collectively, the "Board" or "Board members") of Nevada Federal Credit Union ("NFCU"). On February 13, 1990, the Supervisory Committee of NFCU unanimously voted to suspend five of the Board members.*fn1 Two weeks later, the NFCU membership voted to sustain the Supervisory Committee's action, pursuant to the rules and regulations of the Federal Credit Union Act ("FCUA"), 12 U.S.C. § 1751 et seq.

The Board members filed the instant action for wrongful removal and defamation against NFCU and each of the members of the Supervisory Committee (collectively, the "Supervisory Committee" or "Committee"). The district court granted summary judgment in favor of the Committee, concluding that the Board members did not have a cause of action under either federal statute or common law. The court further found that there was insufficient evidence upon which any trier of fact could find that there was defamation. The Board members appeal both Conclusions. We have jurisdiction under 28 U.S.C. § 1291, and affirm.


On January 31, 1990, the Board met at a regular meeting and voted 5-2 not to renew the employment contract of Robert Street, the President and CEO of NFCU for the previous seven years.*fn2 Because this action had not been previously discussed by the members, the Board decided to reconvene to reconsider their decision in light of legal advice.

The Board held a second meeting on February 2, 1990. Again, the Board voted 5-2 not to renew Mr. Street's employment contract. The Board notified Mr. Street immediately thereafter, and advised him that it no longer had any trust or confidence in him.

The next morning, Ms. Jesinger, the Chairman of the Board, contacted the Chairman of the Supervisory Committee,*fn3 Robert Fleischman, and informed him that the Board decided not to renew Mr. Street's employment contract because he had lost the Board's trust and confidence.

On February 8, 1990, the Supervisory Committee directed a letter to Ms. Jesinger, containing specific questions as to whether Mr. Street's termination was the result of any misconduct that threatened the safety or soundness of NFCU. A response was requested by February 12, 1990, four days later, because of the serious implications of the Board's action.

On February 9, 1990, an examiner for the National Credit Union Association ("NCUA"), Louis S. McCalla, contacted both Mr. Fleischman and Ms. Jesinger regarding the above letter. After speaking to Mr. Fleischman, Mr. McCalla contacted Ms. Jesinger and advised her that if she failed to respond to the Committee's letter by February 12, 1990, Mr. Fleischman intended to take the matter up with NFCU's membership. Ms. Jesinger failed to respond by the deadline, and Mr. Fleischman concluded the Board was ignoring the Supervisory Committee's urgent request for information regarding the Street decision.

Consequently, on February 12, 1990, the Supervisory Committee met to discuss what action, if any, should be taken against the Board for Mr. Street's termination. The Committee also considered previous problems relating to Board decisions. Prior investigation discovered abuses of credit card usage, travel, and compensation policies by the Board members. Indeed, in 1985, the NCUA characterized the rise in operating expenses by the Board as "lavish." The NCUA also called for the immediate return of personal computers purchased by NFCU for members of the Board. One year later, the NCUA again emphasized a reduction in "frill" operating expenses by the Board.

The Supervisory Committee's review of these matters resulted in the Committee's decision to suspend five of the Board members. The Committee then ordered the preparation of formal notices of suspension, which each appellant received a day or two later. On February 13, 1990,

Mr. Fleischman announced a special membership meeting to allow the credit union membership to ...

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