[Here is the letter/brief we submitted to Judge Sabraw this afternoon regarding KPFT LAB Chair Susan Darrow's, attempt to appoint Garland Ganter to the iPNB. We expect the judge will rule on this tomorrow morning via conference-call hearing. -- Carol Spooner]

December 27, 2001

Honorable Ronald M. Sabraw
Alameda County Superior Court

Re: People of the State of California v. Pacifica Foundation Consolidated Case No: 814461-0

Dear Judge Sabraw:

We write to present Plaintiffs' Motion to Enforce the Settlement Agreement and For a Declaration That the Appointment to the Interim Board by the KPFT LAB Chair of Garland Ganter Is Invalid.[1] Mr. Ganter is an employee of Pacifica Foundation, and is the Station Manager at KPFT; and is not a full voting member of the KPFT LAB.

The grounds for this motion is that Mr. Ganter is ineligible to be a member of the Interim Board, as his appointment is in violation of both Pacifica's Bylaws (which state that Pacifica employees and station personnel are ineligible to serve as directors) and the Settlement Agreement (which requires that the appointee be a member of the LAB).

FACTS

On December 24, 2001, Susan Darrow, the LAB Chair of KPFT (the Pacifica station in Houston), sent a letter by facsimile that stated that her appointment to the Interim Board of Directors of Pacifica Foundation, pursuant to the Settlement Agreement, was Garland Ganter. A true and correct copy of this letter is attached as Exhibit B.

The Settlement Agreement provides a power of appointment for the LAB Chairs, for each to appoint one member of the Interim Board. Paragraph 1(a) of the Settlement Agreement provides, in relevant part:

1(a). An interim board of directors of Pacifica Foundation (the "Interim Board") with a total of fifteen (15) directors shall be appointed in the following manner:
* * *
(iii) The Chair of each of the five LABs each shall select one director, for a total of five (5) directors selected by the LAB Chairs. Appointees cannot be the current LAB Chair as of September 30, 2001, and must be a member of the LAB as of September 30, 2001.

The current Bylaws of Pacifica Foundation (as amended February 28, 1999), provide that neither Pacifica employees or station personnel are eligible to be directors. Article 3, Section 1(b) of the Bylaws provides:

3.1(b) Eligibility: Any person with an interest in the mission and goals of the Foundation and an ability to aid in its development and in the conduct of its affairs, except for employees of the Foundation or station personnel as that term is defined in Pacifica policy documents, is eligible to be a member and director of the Foundation.

A true and correct copy of these Bylaws is attached as Exhibit C.

Upon receiving notice of Ms. Darrow's purported appointment of Mr. Ganter, on December 26, 2001, counsel for plaintiffs wrote to defendants' counsel that it was plaintiffs' position that Mr. Ganter was not eligible to serve as a director of Pacifica, and requested defendants' counsel to forward the letter to Ms. Darrow. A true and correct copy of this letter is attached as Exhibit D.

On December 27, 2001, Ms. Darrow sent a response, stating her reasoning why she believed Mr. Ganter was qualified to serve as a director on the Interim Board. A true and correct copy of Ms. Darrow's letter is attached as Exhibit E.

On December 27, 2001, plaintiffs' counsel sent a letter to Ms. Darrow, responding to her contentions. A true and correct copy of this letter is attached as Exhibit F.

ARGUMENT

1. The Appointment of Mr. Ganter Is in Violation of Pacifica's Bylaws

As discussed above, the current Bylaws of Pacifica provide that neither Pacifica employees or station personnel are eligible to be directors. Bylaw, Article 3, Section 1(b). It is undisputed that Mr. Ganter - the KPFT Station Manager - is both a Pacifica employee, as well as "station personnel" of the KPFT station.

Ms. Darrow claims that "the eligibility provisions from prior bylaws . . . are clearly overridden by Paragraph 7 of the settlement agreement." Ex. E. However, there is no valid basis for such a claim.

Paragraph 7 of the Settlement Agreement very narrowly overrides only certain types of bylaws. Paragraph 7 provides in full:

Operative Bylaws. During the term of this Agreement, its provisions regarding the establishment of and voting by the Interim Board shall prevail over all bylaws that address the number and manner of election of directors and voting by the board, which bylaw provisions shall not be operative, and to this extent this Agreement shall serve as the board's Action by Unanimous Written Consent pursuant to Bylaw Section 4.6 and Corp. Code § 5211(b).

Settlement Agreement ¶ 7 (emphasis added). Pursuant to this provision, the Settlement Agreement provisions prevail only over bylaws that address the following issues: (1) number of directors; (2) manner of election of directors; and (3) voting by the board. Bylaws that address other issues are unaffected by Paragraph 7 of the Settlement Agreement.

Contrary to Ms. Darrow's contention, Bylaw 3.1(b) concerning "eligibility" for directors is not made inoperative by Paragraph 7 of the Settlement Agreement. The eligibility requirements for directors stated in Bylaw 3.1(b) have nothing to do with number of directors, manner of election of directors, nor voting by the board. Therefore, these eligibility requirements are unaffected by the Settlement Agreement. Thus, for any appointment to the Interim Board by a LAB Chair to be effective, the appointee cannot be either a Pacifica employee nor station personnel. Thus, Mr. Ganter is ineligible to be a member of the Interim Board.

Paragraph 7 of the Settlement Agreement was included to explicitly deal with the fact that several provisions in the Settlement Agreement were in direct conflict with Pacifica's Bylaws, and that the parties could not "settle" the lawsuit by requiring procedures that were contrary to Pacifica's Bylaws unless the Bylaws themselves were properly amended. The provisions in the Settlement Agreement that were in conflict with Pacifica's Bylaws are the following: (1) "manner of election of directors": Pacifica's Bylaws as of 1999 provide for election of directors only by the Board, though plaintiffs claimed that the operative bylaw was the 1984 Bylaw and that such Bylaw provided for election of directors by the LABs; conflicting with the Bylaws, the Settlement Agreement provides for appointment of directors on the Interim Board by the Majority Members, the Minority Members, and the LAB Chairs; (2) "number of directors": Pacifica's Articles provide for five directors, and no bylaw has been adopted that provides for any other fixed or maximum/minimum amount; in conflict, the Settlement Agreement provides for a board of fifteen members; and (3) "voting by the board": Pacifica's Bylaws provide that the Board shall vote by majority vote; in conflict, the Settlement Agreement provides that the Interim Board shall not vote by a majority vote, but shall in addition require a vote from each of the three appointing groups. To deal with these explicit conflicts between the Settlement Agreement and the Bylaws, Paragraph 7 of the Settlement Agreement states that, only as to these three types of issues, the Settlement Agreement prevails over the conflicting Bylaw provisions, and in addition provides that the Settlement Agreement acts to amend the Bylaws by having the Settlement Agreement operate as the board's Action by Unanimous Written Consent.

The eligibility requirements in Bylaw 3.1(b) do not fall within the three areas addressed by Paragraph 7 of the Settlement Agreement, and these eligibility requirements are not in conflict with any provision of the Settlement Agreement. Thus, these eligibility requirements remain in effect.

As a policy matter, Pacifica's Bylaw concerning eligibility should be enforced. Employees should not serve as directors of a corporation, except in very limited circumstances. The board of directors is to review the actions of employees and to set policy for the organization. There would be direct conflicts when an employee is also acting as a director. [2]

2. The Appointment of Mr. Ganter Is in Violation of the Settlement Agreement

The Settlement Agreement requires that any appointee by a LAB Chair "must be a member of the LAB." Settlement Agreement ¶ 1(a)(iii).

However, Mr. Ganter is not a member of the KPFT LAB. Pacifica's Policies Governing Local Station Advisory Boards make clear that Mr. Ganter does not fit within the definition in the Settlement Agreement. A true and correct copy of Pacifica's Policies Governing Local Station Advisory Boards ("LAB Policy") is attached as Exhibit F.

The LAB Policy provides a distinction between "LAB members" and the "general manager" and "station personnel" who might participate in the LABs. The LAB Policy has several paragraphs on Membership:

Membership. Number of Members. The LAB will consist of not less than twelve (12) nor more than twenty-four (24) members. These members are recruited by the LAB through the Nominating Committee process and should be representative of the communities the station serves. Station Personnel. Station personnel may serve as ex-officio non-voting members of the LAB. . . General Manager. The General Manager serves as an ex-officio non-voting member of the LAB.

LAB Policy pp.2-3 (Ex. F).

Thus, the LAB Policy provides that "members" of the LAB are to "recruited by the LAB" and "should be representative of the communities the stations serves." The LAB Policy does provide that the General Manager of a station might be able to participate in the LAB meetings, but in the limited role of an "ex-officio non-voting member."

This is consistent with the Corporation for Public Broadcasting's application of federal statutes concerning community advisory boards, as well as with Pacifica's LAB Policy. Section 396(k)(8)(C) of the Communications Act provides that:

(C) . . . In no case shall the board have any authority to exercise any control over the daily management or operation of the station.

The CPB interprets this statutory provision to mean that members of any LAB cannot simultaneously be a member of Pacifica's national board of directors. Consistent with this interpretation, a station's General Manager - who "exercise[s] . . . control over the daily management or operation of the station" - cannot be a member of any LAB.

Pacifica's Board in 1998 adopted the LAB Policy in order to bring LAB membership into compliance with this interpretation of the Communications Act. The LAB Policy explicitly repeats this provision of the Communications Act, at Section C (page 2). Thus, the LAB Policy enabled station personnel and the General Manager to participate in the LAB meetings, but explicitly made a distinction between LAB members - to be recruited by the LABs and representative of the station's communities - and the General Manager and other station personnel who could only be "ex-officio non-voting members" of the LAB.

Though the LAB Policy does use the word "member" to refer to the General Manager's relationship to the LAB, it explicitly limits such "membership" to be "ex-officio" and "non-voting." The intent of the Settlement Agreement was to have the LAB Chair appointees be "members of the LABs" - individuals selected from and representative of the community. Mr. Ganter does not fit within the meaning of this term in the Settlement Agreement.

Respectfully submitted,

Terry Gross

TG:ks
Enclosures

cc.: Robert Darby, Esq.

[1] The Settlement Agreement provides that "the Court maintains jurisdiction to enforce the terms of this settlement agreement, with any party or director having standing to apply to the Court for enforcement." Settlement Agreement ¶ 5. This motion is made pursuant to this provision, to enforce the terms of the Settlement Agreement concerning the appointment of members of the Interim Board. A true and correct copy of the Settlement Agreement is attached as Exhibit A.

[2] In addition, Mr. Ganter was directly involved in many of the "Hot Issues" specified in the Settlement Agreement in Paragraph 3(d): (1) the PNN stringers strike (Mr. Ganter had been Acting National Program Director, and was responsible for dismissal and removal of Dan Coughlin as National News Director, which led to strike of PNN stringers); (2) Democracy Now! (Mr. Ganter, as Acting National Program Director, was involved in a number of grievances raised by the staff of Democracy Now! Which remain to be adjudicated or otherwise resolved); (3) the gag rule (Mr. Ganter was Acting Station Manager at KPFA in Berkeley in 1999 and was involved in the application of the gag rule to a KPFA programmer which led to the demonstrations, as well as other applications of the gag rule); and (4) assault charges in Houston (Mr. Ganter was station manager in Houston and involved in the filing of such charges).