New Jersey Court Again Nullifies USET Corporate Actions

Source :  USA Equestrian Inc.

After hearing oral argument, the Superior Court of New Jersey today granted summary judgment in favor of Alan Balch, the President of USA Equestrian, the National Equestrian Federation of the United States, declaring that the new bylaws which were adopted by the United States Equestrian Team in September and October 2001 are null and void.

In February 2001, the USET filed a Challenge with the United States Olympic Committee (USOC), seeking to replace the Federation as the National Governing Body for equestrian sport. Under the federal Amateur Sports Act and USOC precedents, an organization cannot file or maintain a challenge unless appropriate internal corporate governance documents are in place within one year after the end of the prior Olympic games. In March 2001, the USET began efforts to amend its bylaws to support its Challenge. Mr. Balch, acting in his capacity as an ex officio trustee of the USET, filed a lawsuit challenging the validity of the corporate actions taken by the USET. In August 2001, the New Jersey Court declared the USET's actions to be null and void because they violated New Jersey law as well as the USET's own corporate charter and bylaws.

Despite the ruling of August 2001 the Board of Trustees of the USET again purported to adopt amended bylaws on September 28, 2001. At the USET's annual meeting of October 10, 2001, a vote was taken to ratify the adoption of the new bylaws. After mediation efforts failed to resolve the Challenge, Mr. Balch filed another lawsuit to challenge the validity of the USET's corporate actions in September and October 2001.

Today, the New Jersey Court ruled that the USET had once again violated New Jersey law and its own corporate charter when the Board of Trustees adopted new bylaws on September 28, 2001. The Court also declared that all actions taken at the annual meeting on October 10, 2001 - including the ratification of the newly adopted bylaws - are null and void because the proxy solicitation issued by USET management failed to disclose that a ratification vote would take place, and thus was false and misleading.

In addition, the New Jersey Court observed: "As the record demonstrates, Mr. Balch did everything he could to avoid this lawsuit, but the USET persisted in thumbing its nose at the rulings of this Court in the first lawsuit, defiantly repeating the very same conduct for which it had been rebuked, even to the point of attempting to resurrect acts which this Court had nullified." As a result, the Court ordered the USET to reimburse Mr. Balch for the fees and expenses he incurred in obtaining today's rulings.