## Facts

- The Jonathan Club (the Club) was a California nonprofit mutual-benefit corporation operating social and recreational facilities, including a beach facility in Santa Monica.
- Christian E. Markey III was a member of the Club.
- In December 1997, an incident occurred at the beach facility involving Markey and three minor girls; police reports were filed.
- The district attorney charged Markey with three misdemeanor counts of annoying or molesting a minor.
- Markey entered a no-contest plea to the misdemeanor charges and was placed on probation for three years.
- As part of the criminal disposition, Markey was ordered to pay restitution, have no contact with the girls, and undergo psychological testing.
- Markey contended that, under California law, a misdemeanor no-contest plea could not be used as an admission of guilt in a civil lawsuit or an administrative hearing.
- The Club’s bylaws permitted expulsion of a member for conduct “prejudicial to the best interests, welfare, character, and reputation” of the Club.
- The Club notified Markey that the board intended to consider expulsion based on the facts and circumstances of the incident, the location of the incident, and the outcome of the criminal case.
- Markey received notice of an expulsion hearing and submitted a lengthy written statement to the board opposing expulsion.
- The Club held a hearing before a three-member committee of the board; Markey appeared with counsel.
- After the hearing, Markey sent additional written materials to the board.
- The full board voted unanimously to terminate Markey’s membership, effective September 3, 1999.
- Markey filed a petition for writ of mandate seeking reinstatement, arguing the procedure was unfair, the expulsion was unreasonable, and the Club improperly relied on his no-contest plea.
- The trial court denied relief, and Markey appealed.

## Issues

1. Whether the Club provided a “fair and reasonable” expulsion procedure under Corporations Code section 7341 and the Club’s bylaws, including by using a three-member board committee to conduct the hearing.
2. Whether the Club impermissibly relied on Markey’s misdemeanor no-contest plea despite statutory limits on using such pleas as admissions in later civil suits or administrative hearings.
3. Whether the Club’s expulsion decision was arbitrary or unreasonable given the bylaws’ standard allowing expulsion for conduct prejudicial to the Club’s interests and reputation.

## Decision

- The Court of Appeal affirmed the judgment denying Markey’s petition for writ of mandate.
- The court concluded the Club’s notice, opportunity to be heard, and overall process satisfied Corporations Code section 7341 and did not violate the bylaws.
- The court rejected the claim that a hearing before a three-member committee, followed by a full board vote, was procedurally invalid.
- The court rejected Markey’s challenge to the Club’s consideration of the no-contest plea and surrounding circumstances in the Club’s internal membership decision.
- The expulsion remained in effect.

## Legal Principles

- A nonprofit mutual-benefit corporation may expel a member if it follows its bylaws and provides a “fair and reasonable” procedure consistent with Corporations Code section 7341, including notice and an opportunity to be heard.
- Section 7341 does not require that an expulsion hearing be conducted by the entire board; a committee hearing may satisfy the statute when the member receives meaningful notice and a chance to respond and the board acts through its authorized decisionmaking process.
- Courts generally give substantial deference to a private association’s disciplinary decision and will not set it aside absent a showing that the association acted outside its authority, used unfair procedure, or acted arbitrarily or in bad faith.
- Statutory restrictions that limit use of a misdemeanor no-contest plea as an admission in a civil suit or administrative hearing do not necessarily bar a private club from considering the criminal disposition and related facts when deciding whether a member’s conduct is inconsistent with the club’s standards.

## Conclusion

The Court of Appeal upheld Jonathan Club’s unanimous decision to expel Markey, holding that the Club’s committee hearing and board vote provided a fair procedure under Corporations Code section 7341 and the bylaws, and that the Club could consider the incident and the criminal case outcome—including the no-contest plea and probation terms—when deciding that Markey’s continued membership was detrimental to the Club’s interests and reputation.


Markey v. Jonathan Club, 2002 WL 1904416 (2002)