Respess v. VMI Alumni Ass'n

81 Va. App. 141

902 S.E.2d 105

William L. RESPESS, et al.

v.VMI ALUMNI ASSOCIATION

Record No. 1290-23-3

Court of Appeals of Virginia, Lexington.

June 25, 2024

FROM THE CIRCUIT COURT OF ROCKBRIDGE COUNTY, Christopher B. Russell, Judge

Paul McCourt Curley (Six East Law Group – Curley Law Firm, PLLC, on briefs), for appellants.

Michael E. Derdeyn (Matt Von Schuch; Flora Pettit, PC, on brief), for appellee.

Present: Judges Fulton, Causey and Raphael

OPINION BY JUDGE STUART A. RAPHAEL

Four alumni of the Virginia Military Institute sued the VMI Alumni Association under the Virginia Nonstock Corporation Act to force the Association to give them the email addresses of their fellow members. The Act requires nonstock corpora- tions like the Association to maintain a "record of members that includes the names and addresses of all members." Code § 13.1-932(C). The Association collects its members’ email addresses. And Code § 13.1-933(B)(3) entitles persons who have been members for more than six months and who have a proper purpose to inspect and copy "[t]he record of members." The Association denied petitioners’ request, arguing (among other things) that Code § 13.1-933(B)(3) does not require nonstock corporations to disclose their members’ email addresses. The trial court agreed and dismissed the petition.

We affirm. Subsection (E)(2) of Code § 13.1-933 makes clear that the Act does not limit the power of a court to enforce a member’s common-law right to inspect and copy the corporation’s records, which could include the email addresses of its members. But petitioners here limited their claim to enforcing only their statutory rights. And we agree with the trial court that a member’s statutory right to inspect the record of members does not extend to the members’ email addresses.

Background

The VMI Alumni Association is a Virginia nonstock corporation that consists of roughly 20,000 alumni of the Virginia Military Institute. Its records hold "very detailed" information about every alumnus, including their graduation year, rank, employment history, and other confidential information. The Association’s primary method of communicating with its members is by email.

The four petitioners are alumni of VMI and long-standing and active members of the Association. Two are graduates of the Class of 1961: William L. Respess and Salvatore J. Vitale, Jr. Two are graduates of the Class of 1974: Ronald M. Stelmasczyk and Mark W. Prentice.

In March 2023, citing Code §§ 13.1-845(B) and 13.1-933(B), petitioners requested the Association in writing to provide an electronic copy of "the record of members" that included "their email addresses."¹ Respess and Vitale wrote that they needed the email addresses "to solicit alumni participation in person at the upcoming Annual Meeting of the Members … to elect new members of the Board." They said that Vitale wanted "to be elected to the Board and require[d] the list to promote his candidacy." They noted that the Board’s decision in 2019 to eliminate voting by proxy warranted alerting Association members that they needed to appear in person for the upcoming meeting in Lexington. Stelmasczyk and Prentice signed a similar request stating that they intended to use the list to communicate with fellow members "on issues we feel are important to the Membership and [to] build consensus on these issues regarding the Alumni Association’s operations and VMI."

The Association answered that it would make available a paper copy of the names and mailing addresses of its members. The printout would be 400 pages long. But on "advice of counsel," the Association refused to provide email addresses, which it said were not required to be disclosed to members under Code § 13.1-933(B). The Association also wrote that petitioners had not shown a proper purpose. It expressed concern that disclosing members’ email addresses could lead to "general communications" from petitioners that "could cause confusion and unrest among the alumni and potential harm to VMI."

On April 25, 2023, the four alumni filed a verified petition for mandamus seeking to compel the Association to produce an electronic copy of the record of members that included members’ email addresses. They asserted inspection rights under Code §§ 13.1-845(B) and 13.1-933(B) and (C). Petitioners requested that the court "enter an order permitting inspection and copying of the record of members, to include the members’ names, physical addresses, and email addresses and that such information be transmitted in electronic form." Petitioners also sought attorney fees under Code § 13.1-935(C), production of the email addresses as part of the members’ list for the upcoming meeting on May 6, and an order under Code § 13.1-845(D) postponing that meeting until the list was provided. Petitioners did not assert any right of inspection under Virginia common law.

The Association filed a verified opposition to the petition, arguing that the record of members that it was required to produce did not have to include members’ email addresses. The Association also claimed that petitioners had failed to establish a "proper purpose" for having member email addresses.

Applications under Code § 13.1-933(B) and (C) must be heard "on an expedited basis," Code § 13.1-935(B), and the trial court promptly conducted an evidentiary hearing on May 4, 2023, two days before the scheduled alumni meeting in Lexington. The trial court heard testimony from the Association’s CEO and from Respess. The court made no findings about whether petitioners had a proper purpose to request the email addresses. Instead, the court concluded that neither "Code § 13.1-845 nor … § 13.1-933 require that a Virginia nonstock corporation provide or disclose the electronic mail addresses of its members." The court entered a final order dismissing the petition, and petitioners noted a timely appeal.

Analysis

Virginia law distinguishes between stock corporations governed by the Virginia Stock Corporation Act (Code §§ 13.1-601 to -792) and nonstock corporations governed by the Virginia Nonstock Corporation Act (Code §§ 13.1-801 to -946). A "shareholder" of a stock corporation typically has an equity interest in the company, Code § 13.1-603, while a "member" of a nonstock corporation has no ownership interest but may have certain rights associated with membership, including voting rights, Code § 13.1-803. See generally 1 Marilyn E. Phelan, Nonprofit Organizations: Law & Taxation §§ 1:1, 1:2 (2010).

[1] Whether a member or shareholder has the right to inspect and copy the email addresses of the corporation’s other members or shareholders presents a question of law that we review de novo. Berry v. Bd. of Supervisors, 302 Va. 114, 127, 884 S.E.2d 515 (2023). This question is a subset of the larger question about the rights of a member or shareholder to inspect a corporation’s books and records. There are two sources for such rights: the common law and the Code of Virginia. We summarize the legal history of those rights before turning to whether a nonstock corporation must disclose its members’ email addresses to a member who requests them.

I. The common law and the Code of Virginia govern a Virginia corporation’s obligation to disclose member or shareholder email addresses.

A. Inspection rights under the common law

Under Code § 1-200, the common law of England continues "in full force" in Virginia and provides the "rule of decision, except as altered by the General Assembly." Although we have noted the "continuing uncertainty about whether 1776 or 1792 ‘fixes the date of the Commonwealth’s adoption of English common law,’ " Butler v. Stegmaier, 77 Va. App. 115, 135, 884 S.E.2d 806 (2023) (quoting White v. United States, 300 Va. 269, 277 n.5, 863 S.E.2d 483 (2021)), that date does not matter here.

Long before 1776, English common law recognized the qualified right of a shareholder to inspect the corporation’s books and records. See, e.g., Rex v. Fraternity of Hostmen, 2 Str. 1223, 1223, 93 Eng. Rep. 1144, 1144 (K.B. 1745) ("[E]very member of the corporation had, as such, a right to look into the books for any matter that concerned himself, though it was in a dispute with others …."); Gery v. Hopkins, 7 Mod. 129, 129, 87 Eng. Rep. 1142, 1142 (Q.B. 1702) (ordering company to produce its books, "it being a cause between parties having stock there"); see also In re Steinway, 159 N.Y. 250, 53 N.E. 1103, 1105 (1899) (collecting cases); 5A William Meade Fletcher, Fletcher Cyclopedia of the Law of Corpora- tions § 2214, at 269 (2020) ("The common-law rule was recognized in the early English decisions.").

"When our ancestors migrated to America, they brought with them the common law of" England. Livingston v. Jefferson, 15 F. Cas. 660, 665 (C.C.D. Va. 1811) (No. 8,411) (opinion of Marshall, C.J.). As the United States Supreme Court said more than a century ago, "[t]here can be no question that the decisive weight of American authority recognizes the common law right of the shareholder, for proper purposes and under reasonable regulations as to place and time, to inspect the books of the corporation of which he is a member." Guthrie v. Harkness, 199 U.S. 148, 153, 26 S.Ct. 4, 5, 50 L.Ed. 130 (1905); see Fletcher Cyclopedia of the Law of Corporations, supra, § 2214, at 265 ("The general rule at common law is that all shareholders of a corporation have the right, by reason of their interest therein, to inspect and examine the books and records of the corporation at reasonable times and places and for proper purposes.").

The Supreme Court observed in Guthrie that "[i]n many of the States this right has been recognized in statutes which [were] generally held to be merely in affirmance of the common law." 199 U.S. at 153, 26 S.Ct. at 5. "The books are not the private property of the directors or managers, but are the records of their transactions as trustees for the stockholders." Id. at 154, 26 S.Ct. at 6 (quoting Huyler v. Cragin Cattle Co., ...