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Courts generally apply a principle of judicial deference, meaning they presume the board knows how to run the organization better than a judge does.
However, the courts typically use four specific criteria to determine if they should intervene. A court will step in only if the board:
• Breaks the law: The decision violates statutory regulations.
• Violates its own rules: The board failed to follow the procedures set out in its existing bylaws.
• Denies fair process: The board failed to provide procedural fairness to the members involved.
• Acts in obvious bad faith: The decision was made with malicious intent rather than for a legitimate business purpose.
Key Thresholds for Intervention The threshold for intervention is high. Courts are looking for cases where "something really important is at stake," such as property rights or clear contractual violations.
What Does NOT Warrant Intervention The episode clarifies several arguments that courts usually reject as grounds for intervention:
• Disagreement or "Hurt Feelings": Courts will not intervene simply because a member dislikes a decision or feels it is unfair.
• Vagueness: Unlike government laws, private bylaws are not struck down for being "vague" simply because they require interpretation. As long as they set out membership conditions, they do not need to explain every possible scenario.
• Targeting Specific Situations: A board changing rules to address a specific threat (such as a member working with a competitor) is viewed as a legitimate business concern ("self-preservation") rather than bad faith or a personal vendetta.
• Retroactive Changes: Courts do not consider changing bylaws to be "retroactive punishment." By joining a nonprofit, members contractually agree that rules "can and will be amended over time".
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