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IN THE CIRCUIT COURT OF THE STATE OF OREGON FOR THE COUNTY OF CLACKAMAS TIM REEVES, ERIC SAUB, GREG ) BURNETT, as the Libertarian ) Party of Oregon; DAVID TERRY,) M. CARLING and RICHARD BURKE,) as members of the Libertarian) Party of Oregon, ) ) Plaintiffs, ) ) and ) ) CARLA PEALER, as the ) Libertarian Party of Oregon, ) ) Plaintiff, ) ) v. ) ) WES WAGNER, HARRY JOE TABOR, ) MARK VETANEN, BRUCE KNIGHT, ) JEFF WESTON, JIM KARLOCK, ) RICHARD SKYBA, and JEFF ) WESTON, individuals; and ) LIBERTARIAN PARTY OF OREGON, ) ) Defendants, ) ) and ) ) JOSEPH SHELLEY, ) ) Defendant. )

Clackamas County Circuit Court No. CV12010345 CA A155618 Volume 1 of 5

TRANSCRIPT OF PROCEEDINGS ON APPEAL BE IT REMEMBERED that the above-entitled Court and cause came on regularly for hearing before the Honorable James E. Redman, on Monday, the 9th day of April, 2012, at the Clackamas County Courthouse, Holman Hearing Room, Oregon City, Oregon.

Appearances 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 April 12, 2012 Proceedings Court's Comment Defendants' Argument by Mr. Steringer Defendants' Argument by Mr. Leuenberger Colloquy, re: Bylaws Exhibit Proceedings recorded by digital sound recording; transcript provided by Certified Shorthand Reporter. * * * GENERAL INDEX VOLUME 1 KATIE BRADFORD, CSR 90-0148 Court Reporter (503) 267-5112 Robert Teringer and James Leuenberger, Attorneys at Law, Appearing on behalf of the Defendants. * * * APPEARANCES Tyler Smith, Attorney at Law, Appearing on behalf of the Plaintiffs;

Page No. 3 3 3 15 16 17 22 42 44

Defendants' Argument Continues Plaintiffs' Argument by Mr. Smith Court's Ruling Plaintiffs Request Leave to Amend Reporter's Certificate * * *

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Your Honor. file. (Volume 1, Monday, April 9, 2012, 9:47 a.m.) P R O C E E D I N G S (Whereupon, the following proceedings were held in open court:) (TRANSCRIBER'S NOTE: begins midsentence.) THE COURT: -- yesterday afternoon from Audio record

Judge Bowerman saying, "I think I have a conflict. Can you help me out?" So I've -- I've read the file.

I spent some time in the library, but I would invite everyone to pretend I don't know anything in your presentations. So I have -- I have two motions in the And who would like to go first? MR. STERINGER: Good morning,

Bob Steringer for the defendant,

Libertarian Party of Oregon. THE COURT: Okay. How do you -- how do

you spell your last name? MR. STERINGER: THE COURT: It's S-t-e-r-i-n-g-e-r.

Thank you. Your Honor, we have a

MR. STERINGER:

set of motions that -- that really fall in three different levels. There's a constitutional argument;

there's a statutory construction argument and then

4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you today. THE COURT: Go ahead. The -- the first motion there's a procedural argument. And those span the

four motions that we have presented today. THE COURT: I show five motions. You're correct.

MR. STERINGER: THE COURT:

Okay. I apologize. They span

MR. STERINGER: the five motions that -THE COURT:

Okay. -- that we have before

MR. STERINGER:

MR. STERINGER:

we have poses the constitutional question, and it is aimed at all of the claims that are made in the complaint. We make this motion because it's our view

that this is a political dispute that requires a political resolution, and that the First Amendment, combined with the Fourteenth Amendment, prevents the -- the State from interfering with -- with political party operations in the absence of a compelling State interest. That's what the -- the U.S. Supreme Court cases teach us about the extent of the -- the -- the right of association. The -- the cases then

distinguish between two types of -- of -- of

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 situations. And if -- if you get the opportunity to read the U.S. Supreme Court cases, and, quite frankly, a number of the other cases that have been cited by both parties, what we find is that where the State is operating to protect the electoral process, the Court has found a compelling State interest in -in making sure that the electoral process is -- is protected. But, on the other hand, the Court has been equally clear that when we're talking about intra-party disputes over the governance of -- of a party, the Courts find that you don't have, that the State doesn't have a compelling State interest to, essentially, protect parties from themselves. It's been described as there's an interest in protecting the electoral process. That

should be -- that should be maintained in a regular way, but in terms of within the party, that is not something that the -- the State has an interest in getting into. And I think the -- I think the

Bysiewicz case that's cited in the materials by the plaintiffs is a good example of that. That's a more recent case than the -the EU case, the Supreme Court case that we rely on.

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 That's a demonstration where -- of a situation where the Court has -- has made that distinction and clearly said that we're going to protect the ability of the national party to get a presidential candidate on the ballot, and in doing that, we're going to be very careful not to get into intra-party matters. I liken it to some except to what the Courts do in separation of church and state cases, where because of the First Amendment religion clauses, Courts are very reluctant to get into disputes over who runs a -- a church organization, for example. Those are things that are committed to Here, we should be -- this matter

church processes.

should be committed to political processes. The -- the second motion we have is directed at the -- the first claim for relief, the declaratory judgment action. Your Honor might have

noticed that we had two alternate bases for that motion when we filed it. We have withdrawn one of them; and, instead, we're focusing solely on the question of whether all the parties that need to be before this Court are before this Court. fairly straightforward -THE COURT: You're arguing that some of And I think that's a

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question. the officers are missing? MR. STERINGER: THE COURT: Exactly.

Okay. On both sides. In -- in The

MR. STERINGER:

both of the factions that are in dispute here.

plaintiffs are asking this Court to put one group of individuals into power, but not all of those individuals are before the Court as parties. And they're also trying to take out of power another group of people, in fact, a larger group of individuals, but they've only named one of the people that they're trying to take out of power. THE COURT: I'm going to ask you a

If I allow -- and I haven't made up my

mind, so be ready to argue -- but if I do allow the motion on the basis of we're missing some parties, does that make the balance of the motions premature? In other words, if we join other parties, aren't they going to want to have the right to file similar motions? MR. STERINGER: From the -- from the

parties' standpoint and from the motions that we have presented, I believe our motions would -- I take your point that they would want to be heard on that, but I believe that the motions that we have raised are not

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 specific to any of the particular individuals. We've raised fairly global questions that are going to be -- will -- will be applicable no matter which parties -THE COURT: But shouldn't any new party

have the opportunity to argue the -- the other motions that you've raised? MR. STERINGER: Well, if the -- if the

Court decides to dismiss the complaint, as we asked the Court to do, then those individuals will not be bound by the decision. Under the declaratory

judgment statute, I think it's -- it's fairly clear. And so if those individuals for whatever reason decided that they wanted to bring their own identical action, they would not be precluded from doing that. And so because their rights are not

affected, would not be affected in those circumstances, I believe that the Court may still proceed with respect to the parties that are here today. THE COURT: Would it be desirable to

avoid multiple hearings, perhaps involving different judges, on those points? MR. STERINGER: Our view is that it

would be preferable to get a decision of the Court on

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the motions that have been presented so that -- and we, of course, hope that it is favorable to the defendant, Libertarian Party here. We would prefer to have the ruling and if others choose to file new lawsuits, they would -they would have the ability to do that. THE COURT: Okay. Go ahead. The third

MR. STERINGER:

Thank you.

motion we have is the statutory construction argument and it's focused on the second claim for relief. The

plaintiffs bring that claim under ORS 65.084, which is one section of the Nonprofit Corporation Act that allows certain individuals to challenge the exercise of corporate authority by a nonprofit corporation. And the question we -- we pose to the Court in that motion is whether that statute applies to a political party. In going through and reading

-- reading the statutes, I think it becomes fairly clear that it does not. The jumping off point is ORS 248.004. That statute is in the -- the chapter of the Oregon Revised Statutes regarding political parties. And

what it provides is that in some instances, political parties will be treated as if they are nonprofit corporations.

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And the -- there are very specific ways in which that is the case. First, the powers of a

political party are the same as those that are granted to nonprofit corporations. And I think

that's the -- that's the subsection that is being relied on by plaintiffs here, although they might -they might extend that. We'll see. But what is clear is

ORS 248.004 doesn't say that political parties are nonprofit corporations. that they're not. In fact, it's very clear

They're only treated as -- as --

in other words, I guess the way I would describe it is the Legislature has borrowed from the Nonprofit Corporation Act in certain instances to provide a framework within which political parties would act. That takes us to the question of whether in 248.004 is there any linkage between the ways in which political parties are treated like nonprofit corporations and the statute that the plaintiffs rely on within the Nonprofit Corporation Act? The -- I think it's -- it's beyond -it's -- there's no dispute that the initial part of 248.004 does not link to the statute that plaintiffs rely on. When the Legislature has described the

powers of a political party, it's a reference to

11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. ORS 65.077, which lays out the specific powers that are granted to -- to nonprofit corporations. So there's no explicit citation to the statute that the plaintiffs rely on. What the

plaintiffs have done instead is try to bootstrap in 65.084 through other means. And as we've laid out in

our briefing, we don't think -- we don't think that the Court can get there. We don't think the plaintiffs can get For example, they cite the general

proposition that a nonprofit corporation can sue and be sued. Well, that doesn't mean that -- that the

political party is a nonprofit corporation. And without the finding that the political party is a nonprofit corporation, you simply can't get to 65.084, which only allows certain individuals to take actions against nonprofit corporations. I'm not sure if there's much more I can say about that other than there's no -- the bridge doesn't exist between the -- the chapter on political parties and the -- the chapter -- or that specific section of the chapter on nonprofit corporations. We have an alternative motion there with respect to that statute. If our third motion is not

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 granted, we would ask the Court to strike those requests for relief in the complaint that are brought under 65.084 that fall outside the scope of the relief that is available under 65.084. So because that statute really goes to the -- the ability to void a corporate act, we've identified in our briefing those forms of relief that fall outside that scope. And so, for example, there's -- you know, there's a request that the Court order an individual to go to the Secretary of State and report something, for example. And that's -- that's just

simply not the type of relief that's -- that's allowed. The -- the final motion we have is with respect to the attorney fee demand. As we all know,

under Rule 68, the plaintiffs need to state basis for their attorney fee demand. We've moved to strike

their demand for attorney fees for failing to meet that standard. The -- there's -- there are citations to statutes in plaintiffs' complaint. And it appears

that the -- the statute -- well, actually, I don't -I don't want to speculate on exactly what the plaintiffs are -- are alleging, because it's not

13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 quite clear to me. What the -- what the plaintiffs are alleging is that there's a separate provision in Rule 68 that says you can allege a right to attorney fees before the substantive right to -- to receive that award has accrued. And -- and so I think on that basis, they're saying that they can state a claim for attorney fees, even though they can't identify on what grounds in the future they may become entitled to that award. It's my -- you know, the -- the defendants' view of the -- of the rule is that that's not what -- what is meant by the -- the provision of Rule 68 that allows pleading in that manner. The example we give is that if a -- if a party's suing on a contract that has an attorney, a prevailing party provision in the contract, wishes to state a demand for attorney fees on that basis, they may do so by identifying the contractual basis for the -- the claim to attorney fees. And they may do that even though they have not yet prevailed in the lawsuit in a way that gives them the right to collect. That's a situation

where you can plead before the substantive right has

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accrued. What the plaintiffs seem to be doing in this case is simply saying, "There may be circumstances down the road when a right to attorney fees will accrue. We're not going to state on what We're not identifying the We just want to have a

basis that might be.

factual grounds for that. placeholder."

And I don't think the rule allows that. I think every -- it would swallow the requirement that individuals state the basis for their claim for attorney fees. And parties in the situation of the

defendant in this case would not have a reasonable basis for understanding why that claim is being asserted against them. So, for that reason, at least until the -- the plaintiffs can -- can state the basis for a demand for attorney fees, it should be stricken. Unless Your Honor has questions, that's our -- our argument. THE COURT: Mr. Steringer. No, not at this point,

Thank you. Thank you.

MR. STERINGER: THE COURT:

Who would like to go next? I would, Your Honor.

MR. LEUENBERGER:

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 James Leuenberger for Wes Wagner. THE COURT: Thank you. Proceed.

MR. LEUENBERGER:

I'm going to address

the -- the -- our motions that are separate from, distinct from the -- the Libertarian Party of Oregon's arguments and we're going to rely upon Mr. Steringer's oral argument on those, as well as his written argument. But as for ours, first, the caption of the complaint includes irrelevant language that shouldn't be there. It has no place in a lawsuit,

that Mr. Wagner's allegedly acting as chairperson of the Libertarian Party of Oregon. B, it's argumentative. At most, it would -- it would perhaps belong below the caption in the allegations, but it doesn't belong in the caption, which is only supposed to identify the parties by name. The -- the first A, it's irrelevant.

really important one, though, is the plaintiffs do not have the legal capacity to -- the plaintiffs do not have the legal capacity to sue. I know what I did and I believe the plaintiff did as well is we cited to the -- the Libertarian Party of Oregon Constitution and Bylaws, particularly 2009, though I don't think we provided

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Your Honor. the Court with those. I have provided -- I have copies of the 2009 version and what -- what my client and the Libertarian Party of Oregon asserts are the current versions in my hands here. And I'd like to provide I've given copies to

them to the Court at this time. counsel. THE COURT: MR. SMITH:

Please do. Your Honor, with regard to

those exhibits, we would like somebody to authenticate what they're asserting the valid bylaws are. As you know, one of the questions of material

fact are what are the valid bylaws. If they're submitting two forms of bylaws, we'd like to know which they're asserting are the current bylaws and that -- have that on the record. THE COURT: MR. SMITH: Well, if you can -'Cause we're -- we're

disputing whether anything other than the 2009 could be valid. THE COURT: I think that's a matter for

you to argue here in a moment. MR. SMITH: Okay. Thank you,

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. SMITH: Okay. Thank you.

And the one has a 2009 date.

The other one does not have any date on it. THE COURT: Okay. In order to -- in

MR. LEUENBERGER:

order to sue in a declaratory judgment action, a plaintiff has to have some skin in the game. And the

plaintiffs in this case do not have that skin in the game. Pursuant to the -- the bylaws that they say control, none of them are members of the Libertarian Party of Oregon, because one of the requirements to be a Libertarian Party member is that you pay dues. And none of them have paid dues.

And in their reply, they, essentially, acknowledge the same and say that instead of paying the dues, what they've done is, as they formed what they called a state committee that met and -- and decided that that provision of the 2009 bylaws does not apply. And that by a vote of eight people, they were able to basically amend the 2009 bylaws by saying, "We don't have to pay dues." As I've put in

my reply, that puts the plaintiff -- that gives him an impossible election. They're either going to have

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to take the position that they can amend the 2009 bylaws by a vote of eight people at what they call a state committee meeting and thereby not have to pay dues. And, therefore, they are members. Or that the version of the Constitution and bylaws that Mr. Wagner and the Libertarian Party of Oregon assert are the correct bylaws, that they are members because they're registered to vote as Libertarian Party -- as members of the Libertarian Party, registered voters as Libertarian Party on record with the Oregon Secretary of State. But if they choose either one of those -- and I think they have to choose one, they lose; because on the one, if the 2009 bylaws can be amended by the vote of eight persons, then -- then what they alleged that my clients did wrongfully was every bit as right as what they did when they claimed they waived the $50 membership or dues requirement. Alternatively, if they admit that they are members because the current bylaws and Constitution does not have a dues-paying requirement, and they are registered voters of the Libertarian Party, then they have acknowledged that the -- the version of the bylaws and Constitution that my client and the LPO say is the correct version is the correct

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 version, they lose. But as I say, in the interim and pursuant to the motion, they have to be members of the party and since they haven't paid their dues, they aren't members of the party; therefore, they have, pursuant to the Declaratory Judgment Act, they don't have any -- they don't have any grounds or standing to -- to sue. And as -- as Mr. Steringer said, they haven't even included all the people on their side, the people that they claim are all the officers of the Libertarian Party. And they certainly haven't

named as defendants all the officers of Libertarian Party of Oregon. Therefore, we've got people that in order to have a declaratory judgment action, they're not before the Court. THE COURT: That's your motion four.

And you know my concern about how many hearings would we have to have if the people that you've suggested in your motion that need to be joined are joined. And then where are we if they plead that there are additional parties that need to be joined? It seems to me we come back to the -the issues that you and Mr. Steringer have raised

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 multiple times. today. MR. LEUENBERGER: THE COURT: Mm-hmm. I'm talking about the other motions

Other than his motion two So at this -- I And the

and other than your motion four.

want everyone to know that concerns me.

result you may get today is that -- that I will require joinder and that the other matters will be placed in abeyance until the joined parties appear. MR. LEUENBERGER: THE COURT: that's in my head. MR. LEUENBERGER: THE COURT: Yes. Well --

That -- I want you to know

I'm keeping an open mind. Yes. And I -- I

MR. LEUENBERGER:

thought that would be a distinct possibility when we walked in here today. And -- and, frankly, I think

that -- I think that might be the best route to take, because were you to dismiss the case today and other people that wanted to join in, then joined in with a subsequent case, to the extent they tried to include the people that are named plaintiffs now, those people would have a difficult time, 'cause we would issue -- we would use issue preclusion on any existing plaintiffs who tried to join in a future

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 worry. MR. LEUENBERGER: THE COURT: Okay. Yes, I do. All right. Go ahead. you. THE COURT: But you see -- you see my case -THE COURT: Okay. -- held -- held by suit with additional plaintiffs who are non-named officers according to their way of looking at things, so -THE COURT: Plus you'd have -- if it

were my rotation on the motion docket, that would be fine, but if it's another judge, then you have another judge that would have to get up to speed. MR. LEUENBERGER: But that's a technical

thing I think could be addressed with calendaring that -THE COURT: Yes. You're correct. -- we could have the

MR. LEUENBERGER:

MR. LEUENBERGER:

MR. LEUENBERGER:

And I think it's On behalf

legitimate and I'll leave it to the Court.

of my client, I'd prefer the whole case be dismissed today. It will cut the costs incurred by the

plaintiffs in paying for their attorneys and for

22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 paying for ours, but -- and perhaps they should be given the opportunity to dismiss their case voluntarily, but I think that's ultimately what's going to have to happen. THE COURT: Who's next? MR. SMITH: Thank you, Your Honor. Okay. Thank you.

Tyler Smith representing the Libertarian Party of Oregon. With me at the bar is Tim Reeves, the And

chairperson of the Libertarian Party of Oregon.

the rest of my clients are -- or most of my clients are with me in the courtroom today. THE COURT: MR. SMITH: Mr. Smith, go ahead, please. Your Honor, this is -- this

case presents a very unique situation to this Court. We have defendants, particularly Mr. Wagner, this whole case reinvolves around Mr. Wagner and his actions. You will note if you read carefully our complaint and our brief, the -- the injunctive relief we request and the declaratory relief we request are specifically and only against Mr. Wagner in his personal capacity and against the organization itself. Defendants are in the unique position of

23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 asking this Court to state that bylaws do not matter, that they are above the law and that the law does not apply to them because they're a political party. Your Honor, I can just imagine the news that comes out of this Court if what they literally ask this Court to say that this Court cannot get involved in a bylaw dispute and that the chair of any political party is above the law and cannot be brought to justice. I can imagine the news coverage of this. The question is absurd. coverage of this? Can you imagine the news

The chairman of the Oregon

Republican Party cannot be brought to justice before a Court if they ignore their bylaws. The chairman of the Democratic Party of Oregon, Meredith Wood Smith, cannot be brought to justice in a court of law because she's the chair of a political party. This entire case revolves around a singular action that's precluding Mr. Reeves and the Libertarian Party of Oregon from continuing on their business the way they should have and that revolves around Mr. Wagner. The Oregon Secretary of State -- you asked us to inform you of the background information.

24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I'm going to cover a little background information. The Oregon Secretary of State keeps a list. That

list is of who the active officers are of a political organization and they keep a copy of the bylaws. State law specifically requires that they file a copy of the bylaws with the Secretary of State Elections Division. Last spring, defendant

Mr. Wagner was the vice chair of the Libertarian Party of Oregon. The chairman, shortly after we had here -- we had a March 12th, their annual state convention was on March 12th. At that March 12th

state convention, Mr. Wagner was the vice chair. Shortly after that March 12th state convention, a gentleman by the name of Jeff Weston resigned. Mr. Wagner then became the chair, is sitting, filling in his seat. However, at that

March 12th convention, Mr. Wagner himself moved to continue the meeting and hold it over until May 28th. At the -- the adjustment was made to that motion to move it to the 21st. This is Mr. Wagner's own motion to continue that meeting 'til May 21st. passed. That motion

The state convention was to continue on In that interim time when Mr. Wagner

May 21st.

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it. became chair, he called his own meeting of his own people where five people changed the bylaws and elected him chairman. Now, according to the Secretary of State's list, the only people that can submit new documents or new officer lists to the Secretary of State were on the old list. What that means is that

those four people that were on the old list are the -- and now the listed chair, Mr. Wagner, is the only person that can ever give up power of the Libertarian Party of Oregon. Secretary of State will do nothing about As you've seen, the statutes cite that they can So the Secretary of State, nor

do nothing about it.

anybody else, has any power to do anything about a political party chair that refuses to give up power. It wouldn't matter whether it was a recall, whether they lost 10 elections, lost one election. Nothing would matter, according to the

Secretary of State's rule unless that person voluntarily gives up power. not challenge it. before this Court. That's why this Court has to be able to make a decision on this. I'll get into all the other Secretary of State will

That's why it's a unique question

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case law about this, but this Court needs to make a decision about this. Nothing in the political realm

could solve this solution for the plaintiffs. So getting into, you know, their legal arguments, Your Honor, as to the jurisdiction of this case, the defendant's legal arguments literally have to jump a chasm as wide as the Grand Canyon to -- for this Court to believe there's not a statutory basis. As the Court surely knows, under the Declaratory Relief Act and to have jurisdiction as we cited in our brief with specific statutory authority. This is a state court of general jurisdiction. State and federal legal questions can be answered, but all three of our claims, first claim for relief, second claim for relief, third claim for relief, come from specific statutory authority. Claim No. 1 comes from ORS 28.010, declaratory relief. Contract rights are at stake. Specific expressed

Membership rights are at stake. rights are at stake.

That's a very broad -- ORS

Chapter 28 gives very broad powers to this Court under the Declaratory Relief Act. Also you can adjudicate rights that come from other statutory rights under the Declaratory Relief Act. So our second claim for relief comes

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statute. both from the statutory rights of declaratory relief, but also specifically as to the corporate rights. Now, the defendants here have argued that the nonprofit corporation status is somehow in question. But the Legislature -- there's no That's why I The language

statutory interpretation here required. used the metaphor of the Grand Canyon. of the statute is very clear.

ORS 208.003 and 208.004 specifically and expressly says that the officers of political parties are officers of nonprofits. The members of political ORS 248.004

parties are directors of nonprofits.

also says that ORS 65.077 applies to political parties and they have the powers therein. Those -- it's right there in the There's no interpretation required. It

says that political parties have the power to make and amend bylaws not inconsistent with state law. The only piece I took out there is the articles of incorporation. It literally says, "To make and amend bylaws not inconsistent with their articles of incorporation or state law." The Legislature clearly

says that bylaws of a political organization must comply with state law, particularly when they're

28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 amending it. It's right there literally in the

statute itself. But above and beyond all that, we have cited a plethora the cases that bylaws are enforceable. Bylaws create contractual rights.

Bylaws create other rights, both when they're in a corporate setting, and, as they briefly argued, in an unincorporated setting. It doesn't matter. Bylaws

create rights that can be adjudicated through the Declaratory Relief Act. In oral argument today, they have not mentioned ORS 248.011, which is the bar on Secretary of State and elections officers. have abandoned that argument. I take it they may

Obviously, this Court

is not an elections officer as that's deemed by statute and defined by statute. That's in our brief,

but clearly that doesn't apply here. And I think importantly as to their argument that there's some sort of a constitutional question here, Your Honor, there's two private parties here. There is the Libertarian Party of

Oregon and Mr. Wagner and his group of -- who claims to be the Libertarian Party of Oregon. My client has been operating since the May 21st meeting onwards. They've been having their

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 monthly meetings. months. They have their convention last

Been operating as the Libertarian Party of

Oregon ever since then. There is no state party here. You can't

have a constitutional challenge against the Secretary of State under that statute without there being a state party. Where is the state actor here? The important piece -- there is no case that either side has been able to find or cite that directly says that bylaws of a political party are not enforceable. We specifically pointed out

multiple cases of both the United States Supreme Court, various Federal Circuit Courts and Federal District Courts did, in fact, read the bylaws, interpret the bylaws, cite to the bylaws in their findings. If their argument is somehow valid that the Court cannot read or rely on bylaws, then a plethora of cases have been totally outside their constitutional limits. Even the United States

Supreme Court, where they even use as much -Robert's Rules of Order that are referenced in organizational bylaws, political organizational bylaws. So their argument is far afield from

30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reality, Your Honor. But they have -- they seem to In that Eu case, if

rely on the March Fong Eu case.

you pay attention -- and I encourage you if that's -if that case has any weight on your mind at all, to read that case in -- in close detail. factually inapplicable. So the legal conclusions and the dicta in that case simply don't apply here. That -- the It's totally

facts surrounding that case, where it was a constitutional challenge to a specific statute. constitutional challenge a specific statute. The

You had

a state actor challenging the validity under the Constitution of that particular statute. Here, there's no such thing. The

statute that was in question there banned political parties from making political endorsements. here. Not

They dictated the composition of how they

structured the organization, particularly requiring the chairperson to be from the north every -northern California every two years and then southern California every two years. Not even -- not even close to this factual scenario. There were term limits that were

overturned in that and the factual scenario in that case is -- is just not even close to applicable here.

31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 And there's no statutory constitutional challenge at stake here. This is a private litigation between private, nongovernmental parties. So there is no --

that whole case that -- the case analyzes the arguments about whether there's a compelling government interest, substantial interest, all that, just totally inapplicable here. We're not -- there is no constitutional challenge of a statute that's at stake. They don't

cite any statute that they think should be overturned. There is no need to weigh substantial

government interest, compelling government interest at all. That -- that statute in the case law lays out, it says, when you're -- when a Court is deciding whether internal affairs of a political organization are regulated by statute improperly, then they would apply that analysis. Here, there's

no statute that's regulating the internal affairs of a political party. It's the political party itself that has regulated itself by adopting bylaws; by, you know, using those bylaws. Mr. Wagner himself was vice It's why we raised the

chair under those bylaws.

32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here. argument today that they're -- they're, again, asserting to this Court that the bylaws have somehow been changed. That's the ultimate question of fact Did they change these bylaws? This is a

contract dispute, easy for this Court, no different than any other contractual dispute between parties to get involved with and determine whose rights are which under the Declaratory Relief Act. The March Fong Eu case even particularly cites Store (phonetic). The defendants seem to want

to switch the place of the Legislature with the Court to say maybe the Court is now the state actor. Can

the Court not even make a decision on this entire subject matter? That case is not cited. the case stands for. That's not what

That's not what happens in the

case, but even if they were to make that sort of switch, the case that's cited by the Supreme Court in You specifically states that a state government -well, if this case, even if you switch hats -- a Court can enact laws -- or with a switch to regulate or make an adjudication when it's about fair and honest elections or the integrity of the primaries. There are cases and that does -- that is

33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a compelling government interest. Compelling

government interest analysis shouldn't apply, but Store and cases cited in You, if you do through some sort of an osmosis, switching hats here, the leap that they're asking you to make, it's justified even under that standard. And that March Fong Eu case even points out that laws that are an indirect consequence of the party's external responsibilities to the outside world are allowed. And that's cited at 232. So the

You case factually isn't applicable; but even if it was partially applicable in the dicta that the Court states, it supports our assertion that this Court has jurisdiction over this matter. And, ultimately, I'll repeat -- repeat the question here when we were talking about the jurisdiction. If this Court didn't have

jurisdiction, there would literally be no remedy for the plaintiffs. There would be nothing that anyone could do to a political party's chair that wants to stay in office or change the bylaws under any rules or any procedures that he -- he or she should choose to do. All the cases that were -- that we've cited that relate in the briefs that relate to this

34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 constitutional jurisdictional question, the ones where the Court abstained and kept their hands out all revolved around there was some superior organization that would ultimately decide that political dispute. They happen mostly about national conventions when there was going to be a national convention, who are the delegates that get to sit and vote in that national convention? Here, there's no such arbiter. There

is -- this is a state entity that has no super entity that has jurisdiction and authority over them in the political sphere. This is the be -- this is the They're the be

state Libertarian Party of Oregon.

all and end all of libertarian politics in the state, so we don't have that option. This Court can't abstain for those reasons that they did in a few cases that were determining who the convention delegates were to a coming convention. Next, I'll move to the -- the parties. As they have mentioned -- and I think as this Court seems to have the -THE COURT: MR. SMITH: Concern. -- the commentary earlier as

35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to whether this should be the -- the time and place where this gets adjudicated, Mr. Steringer even seemed to have -- have stated that there are no additional arguments that would need to be made by outside parties. of any. And I would submit to this Court this is -- these are the affected parties. As you can see At least he couldn't conceive

in our brief, the relief we're requesting is against Mr. Wagner in his personal capacity as to basically negative and positive injunctive relief and the declaratory relief we're asking for is as to the Libertarian Party of Oregon as the organization. The -- again here, I'll get to the legal leap over the Grand Canyon they're asking this Court to make is that somehow in the Declaratory Relief Act, any time a corporation is involved or any time an organization involved -- is involved that all of the members would need to be -- need to be joined. Literally here, the members -Mr. Wagner through Mr. Leuenberger argues that all the members need to be joined. Under his proposed

bylaws, every registered libertarian in the entire state of Oregon is a member of the organization. And as we pointed out in our brief,

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ORS 248.004 makes members of a political party directors of the organization of a nonprofit corporate status. And so their -- their argument

would literally require us to name every registered Libertarian in the entire state of Oregon. THE COURT: Does it require every

registered Libertarian or does it require joining just the officers? MR. SMITH: Your Honor, our argument is If you look

it doesn't require joining the officers.

at all of the case law about how this operates when you challenge a corporate authority to act, you never see the CEO, the CFO, the CTO, all the vice presidents the secretaries, the treasurers of these organizations all named. THE COURT: MR. SMITH: It just doesn't happen. Okay. That's not how it works.

But I would argue that even if this Court wanted the other officers of the organization joined, we could certainly do that, but that's where we get back to the statutory. ORS 65.077. Sue and be sued in the corporate name is what that statute says. They have the power to sue Does not say The Legislature specifically cited to

and be sued in their corporate name.

37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court. you need to name all the officers. It's not how it's

done in the for-profit corporate world, the nonprofit corporate world and that's not what the statute says. I would -- I'd argue to the Court that there's no need to join any additional parties, first, because they're not affected. need -- we need a ruling. We need -- we

And the Secretary of State

has said that we need a ruling from a Court that says Mr. Wagner is not the chair and the bylaws were not legitimately changed in order for them to change their opinion. That's literally all we need from this And we have asked for an interpretation on The

whether the bylaws were properly amended.

conclusion that Mr. Wagner is not the chair falls naturally from that and we believe it's automatic if the bylaws were not changed. So the only relief that we're requesting -- we had frankly -- frankly, don't care if anybody else is affected or bound by this besides the Libertarian Party of Oregon as the organization and Mr. Wagner. We need Mr. -- we need this court

order to order Mr. Wagner to acknowledge that he's no longer the chair. So affected parties, the statute calls

38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. We cited the cases, Oregon Supreme Court cases, Wright and Salem. Wright is 293 Or 259 and the case -THE COURT: I have to tell everyone we for the affected parties. parties, Your Honor. Those are the two affected

Whether we need to name -- I

have -- Mr. Saub is here, Ms. Pealer are here. They're both now clients of mine based on these memos. They'd be happy to join in this lawsuit. We could certainly name the other officers that purport to be working with Mr. Wagner in his version of the LPO, but that's unnecessary under the law. It's not how it's done on any of the rest of the cases. THE COURT: MR. SMITH: Okay. So those arguments -- and

don't have an unlimited amount of time you today, so if you could wrap it up fairly soon that would be good. MR. SMITH: I will, Your Honor. Thank

City of Salem is 144 Or 93 and it specifically state that the participates to the controversy are who should be joined under that statute. And that's

39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Wagner, the LPO and -- and the organization itself. We're asking the organization to be enjoined from acting under those improper bylaws that they supposedly enacted. Again, as to their motions

to strike, I believe this Court will see that they're not -- there is nothing that's a sham, irrelevant or immaterial. Their complaint that we say that Mr. Wagner is alleging he's the chair. literally the factual scenario. question of ultimate fact. That's

That's an ultimate

A question of ultimate And

fact couldn't be immaterial or irrelevant. that's -- so that's the one they go to. And this Court, obviously, has

substantial power to set -- under ORS 65.084, this Court has specific statutory authority to set aside or give prospective relief, positive or negative in effect, under the Declaratory Relief Act and 65.084. And the Court -- the case law that we've cited says you can fashion appropriate remedies under declaratory relief. Court to do. And that's what we've asked this

It -- it should be determined at a

later date if our remedies are exactly what this Court determines are appropriate or not for the ignoring and filing of improper bylaws.

40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The complaint, as this Court knows, as to their ORCP 21A8 argument that motions to dismiss are determined on the face of the pleadings as to any facts our complaint more than -- as we've cited in our brief, more than states the sufficient facts to make all of our claims. Even any inferences should

be decided on -- on behalf of the plaintiffs. And we -- they didn't even cite any missing that they would think we're somehow missing aside from membership. We've asserted that the facts

on the membership -- you've seen the membership list. I assume it's in the record, the membership list, the full and accurate membership list as of January of this year is in the record. that they are members. And regardless of their membership status, Your Honor, another thing that should be pointed out, they're officers. The membership status Plaintiffs have asserted

question is in essence a sidebar, because they're officers and they're actually the organization. Like

I said, they've been operating as the organization for the last eight months. And then their argument about Mr. Wagner breaching his fiduciary duties they seem to have skipped over that one in oral argument, because

41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 clearly as I said before, state law, ORS 248.004(3) and (4) make Mr. Wagner an officer of a nonprofit corporation, clear expressed directive from the statute, and director of the organization which has fiduciary duties under the applicable statutes. I'd be happy to -- that's -- that's the link, Your Honor. They argued there was no link. How many -- how many

THE COURT:

officer -- how many officers are there altogether? MR. SMITH: Your Honor, of -- of our

organization I think there are four titled officers that get elected, but the question then remains if the defendants want to argue that any officer -- well does that mean a -- a committee chair -- does their argument that there's somehow interests that might be affected because somebody's sitting in a seat? THE COURT: Well, let me -- let me ask

you, because your -- your identification of the plaintiffs is Tim Reeves, David Terry, M. Carling, Greg G. Burnett and Richard Berg as members and officers of the Libertarian Party of Oregon. question is: Are they all of the officers? MR. SMITH: Your Honor, there were -So my

there are two other elected officers with that -THE COURT: Okay.

42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going to do. and -THE COURT: Here's my ruling. You -MR. SMITH: -- route, and that's one --

the individuals I mentioned. THE COURT: MR. SMITH: Okay. Mr. Saub, who's here and

Ms. Carla Pealer who are both clients of mine -THE COURT: MR. SMITH: Okay. -- that will join on this

you don't need to say anything further.

I'm -- I'm

going to -- help me make sure I'm identifying the right motions here. Of the Libertarian Party of

Oregon motion, I've identified Motion 2 as the motion to join or that there are parties that haven't been joined? MR. STERINGER: THE COURT: Yes, Your Honor. And then,

Okay.

Mr. Leuenberger, is it your Motion 4 where you claim that there are parties that aren't joined? MR. LEUENBERGER: THE COURT: Okay. Let me look. Yes.

Here's what we're

Except for those motions, all the other

motions will be deferred for later ruling. The Libertarian Party of Oregon Motion No. 2 is allowed in that this Court believes there

43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to amend. THE COURT: MR. SMITH: THE COURT: Of course. Okay. Of course. Now, I -- I know join. are other parties, meaning the balance of the officers, that need to be joined. And I think that's

clear where you identify as part of the plaintiffs that they're officers. I think we have to have all officers The same ruling with respect to Motion 4 for

Mr. Wagner and for the same reasons. MR. SMITH: Your Honor, we request leave

everyone here wanted a ruling on everything, but it just seems to me it'll be helpful if we get all the other motions heard at the same time when we have the additional parties joined. I just -- I just -- I can't see any point in ruling today and then we have new people on board and they want to file the same motions. have to go through the hearing all over again. We You

have to appear again and then the lawyers for the new parties have to appear again. MR. LEUENBERGER: Your Honor, it's a

small thing, but I think it is important, symbolically, at least, and that is that the relevant

44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of course. wording in the caption be eliminated in our motion to strike. That is the alleged -- the acting as -THE COURT: I'm not going to rule on I appreciate your

that today, Mr. Leuenberger. point. MR. SMITH: things on this.

Your Honor, I would ask two

First, that we -- if we can docket There are

this back as quickly as possible. elections coming up.

We had intended to ask for an

expedited trial on this as soon as possible because there are -- this is an election year. coming up. Elections are

The resolution of this case matters

significantly in that regard. THE COURT: that request? MR. LEUENBERGER: proceedings on this motion? THE COURT: Yes. No objection. To expedited continued I will -- any objection to

MR. LEUENBERGER: THE COURT: Okay.

MR. STERINGER: THE COURT:

Right.

No.

There's a practical matter,

You have to say who the additional They have to be served. Then they have

parties are. to appear.

So the immediacy may not be as immediate

45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as you'd like. MR. SMITH: And, Your Honor, if I could Are we

ask one additional clarifying point on that.

stipulating or is it your order that the officers that they assert today are their officers, are the people that need joined, because as an ongoing organization, they could play games with this and switch them around or those types of things. THE COURT: That's a lawyer call, not -I can't tell you how to

not for the Court to call.

do that part of the pleading. MR. SMITH: Can -- is your order that

the officers are the necessary parties? THE COURT: Well, when you file a

pleading and allege certain officers, it would have to be the officers, it seems to me, that are the current officers. MR. SMITH: Okay. Not the -- not the

members that were -- that's off the table? THE COURT: I said officers and somebody

said there were two other officers and that's what my ruling refers to. MR. SMITH: other officers. officers? Your Honor, we have two

Are you just saying the plaintiffs' They will join --

'Cause they're here.

46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 directors. MR. STERINGER: meant officers. MR. LEUENBERGER: MR. STERINGER: THE COURT: (Indiscernible). No, I said officers. I alleged -MR. STERINGER: is trying to do is -THE COURT: They haven't alleged the No. What the other side officers. well, one of them's here right now. THE COURT: MR. SMITH: Okay. THE COURT: All right. Well, wait. I don't Yes. Okay. Yes. Just the plaintiffs'

MR. STERINGER:

believe that's the Court's ruling.

I believe there

are also other directors of the Libertarian Party of Oregon, other officers of the Libertarian Party of Oregon. THE COURT: Well, they -- they haven't

I meant officers.

Okay. But what their side is

MR. STERINGER:

saying is that their people should be replacing our people. That is, their group versus our group. And

I'm just (indiscernible) for Mr. Wagner, but the LPO

47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 has officers now. by name. THE COURT: It's -- it's -- I appreciate They were identified in my reply

your point, but it seems to me it's up to Mr. Smith to bring the parties in that he thinks should be in and then you, of course, have the right to say he hasn't doesn't it correctly. MR. STERINGER: THE COURT: Okay.

Is that clear? Yes, Your Honor. I

MR. LEUENBERGER:

was going to ask a question about the board of directors, which is separate from the officers, but I understand your -THE COURT: need for the directors. MR. LEUENBERGER: Well, if I may, This Court doesn't see any

Your Honor, the plaintiffs are seeking the removal of that board of directors and so we would -- we would respectfully suggest that they must be parties to this case if they're going to be removed from their positions. THE COURT: with Mr. Smith. I think you should confer

And -- and, again, I'm reluctant to I think you should -- you

say who you have to join.

should talk with Mr. Smith and -- and see if you can

48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 come to some agreement as to who the parties are that are necessary and then join them. MR. LEUENBERGER: THE COURT: Will do, Your Honor.

It'll certainly save all

kinds of lawyer fees and court time if you can come to an agreement on that, okay? MR. SMITH: Your Honor, the whole

dispute is about who the officers are, so that may be -THE COURT: understand that. presentations. Okay. I understand that. Thank you. Good I

Complex case.

And we'll just get the

joinder solved and then we can rule on the other motions. MR. SMITH: Your Honor, will you want

oral argument on the other motions or have you -assuming that we solve the joinder, are we going to be pleading -THE COURT: Well, I think -- I think we

have to see where my rotation is on the docket. I'm -- I rotate about once a month. it may be that I hear it. I'll keep them. arguments down. MR. SMITH: Can we look to your And so by chance

I have my notes here.

If I hear it, that'll shorten your

49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rotation. THE COURT: This is Ms. Tegman. Contact do this. THE CLERK: THE COURT: THE CLERK: They can contact me. Okay. I have your -- I have your calendar, Your Honor? I mean, I'd hate to have to I know it's

re-educate another judge on this matter. how Clackamas County does it. THE COURT: Okay.

Is it possible? I -- I will -- I will

her and you can -- if there's no objection, then she'll put me as the -- as the judge on the next motion and that'll save about an hour's argument time, I think, unless the newly joined parties are long-winded. Okay? MR. SMITH: THE COURT: you very much. That's fine, Your Honor. All right. Gentlemen, thank

It's a most interesting case. Thank you, Your Honor.

MR. STERINGER: * * *

(Court adjourned, Volume 1, 4-9-12 at 10:44 a.m.)

Reporter's Certificate 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ___________________________ Katie Bradford, CSR 90-0148 Court Reporter (503) 267-5112 REPORTER'S CERTIFICATE

50

I, Katie Bradford, Court Reporter of the Circuit Court of the State of Oregon, Fifth Judicial District, certify that I transcribed in stenotype from a CD the oral proceedings had upon the hearing of the above-entitled cause before the HONORABLE JAMES E. REDMAN, Circuit Judge, on April 9, 2013; That I have subsequently caused my stenotype notes, so taken, to be reduced to computer-aided transcription under my direction; and that the foregoing transcript, Volume 1 of 5, Pages 1 through 49, both inclusive, constitutes a full, true and accurate record of said proceedings taken from a CD and so reported by me in stenotype as aforesaid. Witness my hand and CSR Seal at Portland, Oregon, this 10th day of March, 2014.