Besides giving notice and details of the “Mandatory Settlement Conference” Ms. Spooner also gives a very educational precis of the mediation and settlement process so far.
On Tuesday December 11th, at the request of all parties to the four pending lawsuits against the Pacifica Foundation board of directors, we will be attending a “Mandatory Settlement Conference” with the pre-trial judge. This conference is “mandatory” not in the sense that parties must agree to settle -- but that it is mandatory for all parties whose consent is necessary to settle the cases must be present either in person or by telephone. This conference with the judge will not be open to the public.
We are doing this in a “last ditch” attempt to persuade the board majority to enter into a negotiated settlement agreement in the best interests of the Pacifica Foundation.
Meanwhile, depositions in preparation for trial are continuing. Current board majority director Valrie Chambers & former directors David Acosta and Micheal Palmer were deposed in Houston last week ... more depositions will take place in Los Angeles and Washington next week, and in New York and Washington the week after.
Whether or not the cases settle or go to trial -- our legal expenses for the past month and this month will be extremely high. Your continued financial support is necessary appreciated -- please see the bottom of this bulletin for information on how to contribute & where to send your checks. Thank You!
Pasted below is a statement of my position on settlement at this point.Pacifica Means Peace.
The parties to the consolidated actions participated in a 12-hour mediation session at JAMS with Retired California Supreme Court Justice Edward Panelli on November 1st, and have been in almost non-stop negotiations since then. Despite assurances given by the defendants that the two representatives they sent to the mediation had authority to settle the cases, some of the defendants later claimed that they were unaware of the mediation and that they did not see the agreement negotiated following the mediation until November 16th - the night before a Board of Directors' meeting scheduled for November 17-18th. Some of the directors then refused to accept that agreement. The board next, on November 18th, adopted a resolution to establish a “transition board” that would require the resignations of some board members, and that the “transition board” would then attempt to settle these lawsuits. However, for reasons not entirely known to plaintiffs, that “transition board” resolution has not been implemented. A new proposed settlement agreement has been negotiated among the parties since then that is a hybrid of terms from the board resolution and the former mediated settlement agreement. Plaintiffs believe there is only one outstanding unresolved issue, which is discussed below.
Under the new proposed settlement agreement an “interim board” of directors for Pacifica would be established for a term of 15 months. This “interim board” would address and attempt to solve some of the most critical problems besetting the Foundation that have resulted from the past several years of conflict, misdirection and mismanagement and have led the Foundation to near financial collapse. In addition, the “interim board” would amend the Foundation bylaws to comply with all statutory requirements, hold Local Advisory Board elections within one year, and would resign in favor of new directors, elected pursuant to new bylaws, at the end of 15 months. 
The make-up of the interim board would be 5 directors appointed by the current board majority directors, 5 appointed by the current board minority directors, and 5 appointed by the five Local Advisory Board (LAB) chairs -- one from each LAB.
One issue remains outstanding - whether this “interim board” will be governed by simple majority rule, as plaintiffs' insist, or by a so-called “balanced majority” rule, as at least some of the defendants insist. The “balanced majority” rule proposed by the defendants would require at least one vote from each of the three groups of appointed directors and would thus, in effect, grant a veto power to the 5 directors appointed by the current board majority. Granting this veto power is unacceptable to the plaintiffs as it is a recipe for a deadlocked board that could not take the actions urgently needed to restore public confidence, staff morale and financial stability to Pacifica. 
Plaintiffs understand and share defendants' desire that the interim board operate in a spirit of cooperation, and plaintiffs believe that cooperation can be achieved without granting the defendants' board appointees a veto power. Indeed, if defendants' desire for cooperation is sincere, then they do not need a veto power. However, plaintiffs are not willing to proceed on “trust” that the defendants' board appointees will be cooperative. Too much is at stake. The Pacifica Foundation is on the brink of bankruptcy  due to reckless spending and lack of financial controls under the defendants' watch, as well as the loss of the Foundation's largest revenue producer - “Democracy Now!” Pacifica's “signature” daily national news magazine program -- which has gone into independent production and distribution since last August, and also as a result of an effective national “boycott” since last March by Pacifica's listeners (who donate 75%-80% of the roughly $10 million annual budget) in protest over wholesale firings and “bannings” of several hundred valued program producers and volunteers over the past several years - most recently at WBAI in New York where more than 30 have been fired or “banned” since last December.
Some of the defendants have stated that they fear a “blood-bath” of the station managers, apparently fearing that station managers would be fired without fair treatment and a process of evaluation and review.  Some of the defendants, also, are very new to Pacifica (having been elected to the board only last September) and are unfamiliar with the long history of this conflict that has torn Pacifica apart and makes it impossible for the plaintiffs to accept on trust defendants' promised new cooperative intent. At the core of this conflict is the abandonment of Pacifica's mission, as stated in the Articles of Incorporation, and the “reprogramming” of Pacifica 's radio stations over the past decade to reduce or eliminate controversial news and political analysis programming.  It is long past time for new directors at Pacifica who are committed to restoring Pacifica to its mission. Some painful decisions will be necessary to that restoration, more than likely including the replacement of some or all of the five station managers.
Plaintiffs have made major concessions to reach this agreement, including, without limit, agreement that directors who have acted in bad faith and with gross abuse of their authority or actual malice may be appointed by the current majority to the interim board, and that none of the LAB Chairs may serve on the interim board, and an agreement to use “restraint” in several areas where swift and decisive action are probably needed. In addition, plaintiffs will be settling the case for whatever monetary damages the insurance carrier is willing to pay to the Foundation on defendants' behalf. (The policy limit is $1 million. Negotiations with the insurance carrier are hampered by the lack of independent counsel for the Foundation.) This is despite considerable exposure to personal liability that many of the past and some of the current directors would face at trial - not only for extraordinary expenses in the $2 million range in relation to ultra vires actions at KPFA and WBAI since 1999, and the cancellation of the long-planned $20 million 50th Anniversary capital campaign that was scheduled to begin in 1999, but also for waste and failure to exercise financial controls over the executive director and to adequately provide for audits and financial reports over the past few years, and finally, the squandering of more than $1.6 million in Foundation money to pay for legal defense fees in this case - when the Foundation and its directors had a free legal defense provided by their insurance carrier.
At this point, the crisis at Pacifica is dire. Unless the interim board can act swiftly to deal with a myriad of financial, personnel & management problems, bankruptcy could be a real possibility in a few short months or even weeks. The interim board must be able to act decisively and swiftly -- particularly to address the management and personnel issues that have so inflamed public opinion - or the listeners' boycott of Pacifica will almost certainly continue, the Foundation may not be able to get back on its feet financially, and fifty years of fiesty pioneering “alternative” listener-sponsored radio may come to an end.
The current board majority must relinquish control and their appointees must work collaboratively - by simple majority vote - to help restore and rebuild Pacifica or the “interim board” plan will fail.Endnotes:
1. Bylaws provisions concerning the number and manner of election of directors and LAB members would require approval by majority vote of 3 out of the 5 LABs.
2. The local Houston advisory board is dominated by the Houston station manager who supports the board majority and that board chair is expected to appoint a director aligned with the current board majority. Therefore, if history is predictive, on certain crucial issues (such as evaluations of station managers) the board vote could split 9-6, with no votes from the board majority appointees.
3. The best information available to Plaintiffs as of two weeks ago is that the Foundation has in excess of $2 million in current or past due bills (not including attorneys' fees) and something less than $300,000 in available cash. Plaintiffs are informed that the Treasurer (elected last September) is attempting to ascertain an accurate cash flow picture, but has been hampered by chaotic books and over 300 disbursements that have not yet been posted to the books.
4. Plaintiffs are informed that at least some of the station managers have engaged in intensive lobbying of the board majority directors to prevent any settlement agreement that would transfer control of the Foundation.
5. This loss has been starkly evident and keenly felt by listeners since the tragic events of September 11th. “Democracy Now!” has been producing a 2-hour daily “War and Peace Report” that is not broadcast on four of Pacifica's five stations (although KPFA in Berkeley is broadcasting it in defiance), nor is it distributed by Pacifica to its roughly 40 “affiliate” stations across the country.###
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