In the case of the Minnesota League of Credit Unions v. Minnesota Department of Commerce (Supreme Court of Minn., Case No. C7-90-2054), the Minnesota League of Credit Unions, hereinafter referred to as the “League”, challenged a legislative restriction on any credit union promoting and soliciting membership in eligible groups entitled to credit union membership.

Historically, credit unions were established throughout the country for members who shared a common bond of occupation, association, or to residents within a well defined neighborhood, community or rural district.

The Minnesota legislature further expanded the field of membership by adopting a provision that permitted “select groups” to join an existing credit union when that group would otherwise not be able to practically form a credit union of their own.

By expanding the potential field of membership to existing credit unions, the legislature sought to open credit union benefits and services to those who would not otherwise qualify in an existing credit union’s field of membership.

A “select group”, such as a group of small business persons, photographers, church members, or an unlimited number of other small cohesive groups, would then be eligible for membership in an existing credit union and avail themselves of the privileges of credit union membership.

The legislature, however, intended to prohibit credit unions from creating an open field of membership by soliciting the general public to join a “select group” and thereby become eligible for credit union membership.

In other words, the credit unions were prohibited from open and conspicuous solicitations directed toward the public to join the select group as a condition for membership in the credit union.

The League argued that such a restriction on procuring new members by promoting membership in the “select groups” violated several federal and state constitutional provisions protecting the credit unions’ right to free speech and promotion of its membership benefits.

The trial court found in favor of the League, however, the court of appeals and the Minnesota Supreme Court found that the government’s interest in limiting any credit union’s field of membership constituted a legitimate concern that justified a prohibition against a credit union openly soliciting members through the “select group.”

The Minnesota Supreme Court found that “the credit union” could, however, promote the values and interests of the “select group”, as long as the credit union did not establish membership in the credit union as a requisite to join the select group.

Here, according to the Minnesota League, the rule does not ban all advertising, it only seeks to prohibit open solicitation of membership if only a select group is entitled to join.

A credit union can solicit people who share a common bond with the other members to join the credit union, or recommend joining the select group to individuals.

By Charles R. Harroun, Attorney at Law