Sacramento Co-Op Board Abandons Democratic Principles Won't Let Members Vote On Proposed Israel Products Boycott

By Maggie Coulter

What started out as a question of whether the Sacramento Natural Foods Co-op should stop carrying certain products based on human rights considerations has now become a matter affecting the Co-op’s very democracy.

In an effort to prevent the Co-op’s members from voting on this issue, the Co-op Board has eliminated its long standing boycott policy, done away with Open comments at Board meetings, and is seeking to eviscerate member’s ability to put initiatives before a vote of the full membership as provided in the Co-op’s Bylaws. All of this while it discusses major policy changes at private meetings with no member input.

Almost forty years ago, the Sacramento Natural Foods Co-op started as a buying club out of private homes, operating essentially as a direct democracy. Soon there was a store front, then a small store on Freeport Blvd. In 1989 the Co-op moved to its current location at Alhambra and S. As the Co-op grew, it incorporated and shifted to what might be viewed as a form of representative democracy, with a member-elected Board of Directors.

But Co-op democracy goes beyond just electing a Board. Cooperative Principles call on members to “actively participate in setting their policies and making decisions.” One vehicle for Sacramento Co-op member-owners to do this is similar to the initiative process available to voters in California and 23 other states. Enshrined in the Co-op’s Bylaws, members’ ability to put initiatives on the Co-op ballot without Board interference is one of two significant member checks on Board power. The other is members’ ability to recall Board members. One hundred active member signatures are required for an initiative; 20% of the members must sign for a Board recall (current active membership is about 6,000).

Enter the Human Rights Initiative

On January 26, 2011, following the requirements spelled out in the Co-op Bylaws, a group of Co-op members submitted the necessary member signatures to put the Human Rights Initiative on the ballot for the September 2011 general Co-op election (see www.sacbds.org). The Initiative, if passed, would require the Co-op to stop carrying products from Israel until Israel complies with international law and stops violating the human rights of the Palestinian people.

The Initiative exempts Israeli Co-ops which support the grassroots global movement for boycott, divestment, and sanctions (BDS), which is similar to the effort that helped end apartheid in South Africa. Gaining worldwide momentum, BDS has proved to be a powerful tool in putting pressure on Israel to change its policies. In the U.S., Israel lobby groups have committed $6 million to stop BDS.

The Sacramento Co-op currently carries several products whose content comes from the Israeli side of the Dead Sea, land that was taken from Palestinians in 1947-48. It also carries matzo from Israel, which, like any agricultural product imported from half way around the world, is inherently unsustainable in direct contradiction of the Co-op’s goals to promote sustainability. Further, the water used to grow wheat for the matzo is in critically short supply. Israel controls nearly all of the occupied West Bank’s water, draining the aquifers while Palestinians often go days without water.

After submitting the required signatures, Initiative proponents learned that the Board was not intending to follow the Bylaws which permit no Board meddling with initiatives. On January 28, Board Secretary Michelle Reynolds emailed proponents: “We are reviewing the petitions to ensure they are in accordance with the co-op’s founding documents and principles. If the petitions are found to be acceptable, we will add this item to our upcoming quarterly membership meeting in March” (emphasis added).

Not only does the Board lack the discretion to review any member initiatives, it has already claimed that a boycott would violate the bylaws. Attempting to give itself this power seems to be a clear attempt to prevent the Initiative from going on the ballot.

“The Bylaws do not provide any exception that would vest the Board with the authority to refuse to place an initiative that meets the procedural requirements on the ballot,” notes attorney Gordon Kaupp. After submitting the required signatures, the only other procedural requirement was to propose the initiative; this was done by proponents at the February 1 Board meeting.

To underscore the Initiative’s unwelcome, on February 3, proponents were notified by the Co-op General Manager, Paul Cultrera that their ability to table in front of the store was being suspended indefinitely. Since then, requests of three other groups to table about Palestinian human rights have also been refused by Cultrera.

Denying permits based on content “would clearly violate the constitutional right to free speech guaranteed by the California Constitution,” notes Attorney Kaupp in a letter he wrote to the Co-op Board on February 28, 2011. “In Pruneyard Shopping Center v. Robins, 447 U.S. 74, 88 (1980), the United States Supreme Court upheld the California Supreme Court’s holding in Robins v. Pruneyard Shopping Center 23 Cal.3d 899, 910 (1979) that the California Constitution protects the rights to speech and petitioning, when reasonably exercised, on the property of shopping centers even when privately owned.”

It also runs contrary to the Co-op’s commitment to non-discrimination as stated in its Tabling Policy: “The Sacramento Natural Foods Co-op will not knowingly conduct business with, nor support, any organization, business, group or individual who discriminates against others…with regard to race, color, ethnicity, national origin, gender, sexual orientation, marital status, age, disability, veteran’s status, or religious beliefs.”

Proponents continued to gather member signatures and by the end of February, had submitted more than twice the number required. Disregarding this clear support for the initiative, on March 1 the Co-op Board modified the Election Code to give it a mechanism through which to stop it. The Code changes would require that initiatives be reviewed by the Board’s Policy Committee to “ensure clarity and alignment” (emphasis added) with Federal and State laws, the Bylaws, and the “Rochdale Cooperative Principles”.

“The Board is trying to circumvent members’ right to put initiatives on the ballot,” notes Co-op member Ellen Schwartz. “They are trying to change the Bylaws without having members vote; that is a violation of the Bylaws.”

In this illegitimate, de facto Bylaw amendment, the Board sets up a standard of review that is both more subjective and onerous than any other standard of review, including of the Board’s own policies. Further, if there is a dispute about the Policy Committee’s interpretation, it is to be handled by the Committee, making it both judge and jury.

The Shadow of the Second Store Failure

A precursor to the dangers of excluding the input and involvement of the membership is the history of the Co-op’s failed Elk Grove store which closed in January 2007, leaving the Co-op over $2 million in debt. At the March 1 meeting, General Manager Cultrera noted that the Co-op is still over a million dollars in debt, $700,000 of which is a balloon loan due in December. Cultrera also told members that the Co-op’s net worth is $612,000, an amount that includes $500,000 in inventory.

It is noteworthy that the history of the Co-op posted on its website makes no mention of the significant member opposition to this second store. Starting in the late 1990s, the Board wanted to expand the Co-op by building a second store in another community.

“If a second store had emerged from a group of people in some community who wanted to sponsor it and put in their labor because they wanted a coop, that would have been fine,” explained Preston Rudy, a professor at CSU San Jose, who was one of many members that opposed the Elk Grove store. “But the Board was pushing to open a store somewhere, like you would open a franchise of Safeway. To do that it would have to borrow money and members did not want the Co-op to go into debt. Borrowing from a bank would also mean imposing conditions that are top down and not democratic. This changes the character of a co-op.”

Opposition to the second store catalyzed and resulted in the election of two candidates in an upset. One of these, Muriel Strand, notes “We were opposed to the corporate approach where you open branches and have an empire. We supported helping other communities that wanted to open their own coop.”

Following this election, the general manager resigned and Cultrera replaced him. Despite the strong no-second store message of the election, some of the Board and Cultrera still wanted to pursue it.

With the election of the two new Board members, the opposition became less active, explained Rudy, “People thought that having them on the Board meant there would not be a second store created from the top, so the issue was dead.”

But the pro-second store Board members still had a majority on the 7-person Board. They hired consultants with Co-op money to convince members over time to support the top-down expansion. This worked; opposition died down and the second store was approved. The Co-op borrowed over two million, built a state-of-the art building and opened the Elk Grove store in June 2005. It closed 18 months later, a dismal and costly failure. Members lost their dividends, employees had to take pay cuts and the future of the Co-op was put in a jeopardy that shadows it to this day.

In February this year, Co-op members received notice they would not be getting a dividend again this year. “I got the letter about the dividend,” said a Co-op member at the store earlier this month. “I can support the money being used to reduce the debt, but I have to ask, who decided that? Shouldn’t members have a say?”

What happened with the second store illustrates the limitations of just relying on Board elections. If the opposition had gotten a member initiative passed, they could have put a stop to the second store. Had this happened, the Co-op would now not be debt, would still own one of the buildings it now leases back, and who knows, might be able to offer more affordable prices.

Fate of Boycott Policy: Confusing People with Products

The Board’s resistance to a human rights-based boycott started last summer. In June 2010, Co-op members followed the requirements of the Co-op’s long-standing Boycott Policy by bringing their proposal that the Co-op stop carrying Israeli products to the Policy Committee. The Committee first declined to follow the Boycott Policy, but by August agreed, at least temporarily.

Proponents prepared a requested article for the fall Co-op newsletter and submitted materials for an informational binder to be placed at the customer service desk for three months. The Co-op Board reneged on the newsletter article and instead ran an anti-boycott piece by Steve Brancamp, who is now Board president. Politics and religion should be kept out of business affairs, Brancamp argued.

“This argument about the Co-op not being political is completely specious,” explains Professor Rudy. “The whole history of the coop is premised on a political alliance with the environmental and organic food movement and to some extent with the social movement that accompanies that. The Co-op would not exist if it had not made political decisions. Its marketing is based on food politics.”

“Objecting to the human rights violations of Israel is about that government’s policies, not about religion,” says Ellen Schwartz, one of a number of boycott supporters who is Jewish. “This argument that criticizing Israel is anti-Jewish has been used to silence any criticism of what Israel is doing to the Palestinians including stealing their land, killing them, and imprisoning them for non-violently resisting Israel’s violent and repressive military occupation.”

“My own government supports Israel in these violations by giving them my tax money, $8 million a day,” continues Schwartz. “As an owner of the Co-op, I would like my store to take a principled stand for human rights like they have for animal rights.”

Interestingly, Brancamp recently became the national sales director for Ginger People, a company that sells to the Co-op. Since it imports some, if not most, of its ginger from China, another human rights violator, one could imagine that its sales director might not be interested in having human rights be a factor in purchasing decisions.

The informational binder went into the store on October 1. On October 4, the Co-op Board received a grievance appealing the Boycott Policy from Co-op member Barry Broad, filed on the stationery of the Jewish Community Relations Council, part of the Jewish Federation, which advocates for Israel.

Broad, who has attended several Board meetings, has called boycott proponents Nazis; he has said to Jews who support the boycott that they are “house Jews”.
At its October 5 meeting, the Co-op Board suspended the Boycott Policy and directed that the informational binder be removed. An appeal by boycott proponents was dismissed.
The Board argues that making discernments about which products it carries is the same as discriminating against people. Board attorney, Therese Tuttle stated in a letter: “Boycotting a nation discriminates on the basis of nationality – an action prohibited in the admission of members to the co-op – making its inclusion in the selection of boycott targets, suspect.”
This assertion that somehow boycotting products from a nation discriminates against individuals is refuted in thorough analysis by Attorney Gordon Kaupp who writes: “Section 3.01 of the Bylaws permits “[a]ny California resident, irrespective of age, sex, race, nationality, political opinion, sexual preference, handicap, or marital status” to become a member of the Cooperative. The proposed boycott would only bar the sale of goods that originate from Israel or from illegal Israeli settlements. Section 3.01 relates to membership by individuals while the boycott relates to a decision not to carry products from a particular place. Nothing in the language of the proposed boycott would prevent an Israeli national from becoming a member of the Cooperative, so long as the individual meets the California residency requirements set forth in Section 3.01. To interpret Section 3.01 as being in conflict with the Boycott Policy is either an intentional gloss on – or gross misrepresentation of – the meaning of the Bylaws and the Boycott Policy. No one argues (nor could they) that Israelis would be prevented from becoming members of the Cooperative. Thus, the Boycott Policy and the proposed boycott of Israeli goods in no way violate Section 3.01.”

Between June and December, boycott proponents submitted over 800 members and shopper signatures on petitions and letters to the Co-op Board supporting the boycott and/or asking the Board to follow its Boycott Policy. At its December 7 meeting, the Board eliminated the Boycott Policy without bothering to notify members this elimination was under consideration. The Board did so with a resolution that had been written before the Board meeting, away from the eyes and ears of members. The Board received and dismissed an appeal about its decision without bothering to put it on an agenda or discussing it at a Board meeting.

Silencing and Excluding Members

Board policies are not currently available on the Co-op’s website. Members instead are informed that the Board is revamping its policies under the “patented process” called Policy Governance that it adopted in May 2010. As with the changes to the Election Code, the Board provides no advance notification or draft policy language to members, underscoring that their input is not wanted.

At its January 4, 2011 meeting, the Board eliminated the long standing Open Comment period at the beginning and end of Board meetings. Members are now allowed to speak only at the very end of the Board meeting and only about agenda items that the Board has just discussed and acted on.

The Sacramento City Council attempted last summer to move its public comment period to the very end of its meetings. This was opposed, including by the Sacramento ACLU which states on its website that moving the comment period “undoubtedly will preclude members of the public from having the opportunity to voice their grievances, concerns, and comments to their elected representatives.” The City Council recanted and the Open comment period is at the beginning of the meeting, an action, the ACLU said “would best serve the people of the City of Sacramento.”

The parallel may be lost on the Co-op Board, who do not seem concerned about eliminating member input. Extolling the virtues of patented Policy governance, Board member Reynolds writes in the Winter Co-op Reporter, “If you attend monthly board meetings, you’ll notice much more efficient meetings under the new process.” Reynolds also notes that Policy Governance “will promote Board holism,” an apparent reference to the Policy Governance dictate that the Board speak with one voice.

At the March 1 Quarterly Membership meeting, Board member Reynolds told members that the Co-op Board was like the House of Representatives. A member in the audience quickly responded that unlike the Co-op, draft legislation is readily available to the citizenry well in advance of when it is considered by the Legislature.

The Co-op Board, however, is clearly not interested in member input in its policies. At the March 15 Board Policy Committee meeting, Reynolds noted that policy revisions are on the agenda for the Board’s [private] retreat in April.

With efficient, no-member-comment meetings and a “one-voiced” Board, the Board would seem more akin to a two-eared multi-headed autocrat than a multi-voiced house of representatives.

The Cooperative Principles define Co-op as “democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.” In contrast, the only apparent role for Members is to elect the Board, according to Board President Steve Brancamp, who has said on several occasions, “if you don’t like what I am doing, vote me out next time.”

Brancamp’s comments were amplified by Barry Broad at the March 1 Board meeting. Broad said to those opposing the Board’s illegitimate, de facto Bylaws amendment, “you have two choices, you can sue or vote out the Board.”

An alternative for the Board would be to consider putting its own actions in “alignment” with the Rochdale Principle of “Democratic Member Control.” This would mean restoring Open Comments at Board meetings, making draft policies available for member review, and soliciting members’ input on policies, including asking members if they want their Co-op run under the dictates of a “patented process”. It would also mean respecting the Bylaws and letting members vote on member-proposed initiatives.

Other Co-ops

Acting in concert with its interpretation of the Cooperative Principles, the Co-op Board in Olympia, Washington took Israeli products off the shelf in July 2010. The 2-store Co-op is thriving today, reports Board member Rochelle Gause, who was elected to the Board after the boycott was instituted.

“The Olympia decision was covered by the international press, including the Israeli major newspaper Haaretz, explained Co-op member and boycott proponent, Noah Sochet. “We got calls from tearful Palestinians who said this had given them hope.”

Sochet was a signatory to a letter of support to the Co-op which begins: “As Jewish members of the Olympia Food Co-op we strongly support and endorse the proposed boycott of Israeli goods and products.”

A member vote at the Ann Arbor, Michigan Peoples Food Co-op in 2007 did not pass a proposed boycott of Israeli products. “But the co-op certainly was in no way harmed by honoring its bylaws,” states member Anne Remley. “The Co-op thrives to this day, and I am so proud to be a longtime member. …. So consciousness was raised, discussions had been held, and the proud tradition of U.S. co-ops was upheld — honoring members’ petitions and following duly established rules even amid controversy.”

In 2009-10, members of the Davis Food Co-op also collected enough signatures under their Co-op’s Bylaws to have members vote on removing Israeli products for human rights reasons. Also lobbied by Israel-right-or-wrong advocates, the Davis Co-op Board claimed that the initiative did not serve a “proper” purpose as required by the Bylaws and refused to let members vote on it. Proponents chose not to mount a legal challenge to the Board’s decision. No such requirement exists in the Sacramento Co-op’s Bylaws.

On multiple occasions, the Sacramento Co-op Board has stated that the reason the Berkeley Co-op failed was boycotts—a claim also made by opponents of the Davis Food Co-op Initiative. However, that charge does not withstand scrutiny. A former editor of the Berkeley Co-op’s newsletter, Paul Rauber, writes in What Happened to the Berkeley Co-op? A Collection of Opinions: “What was it then that killed the Co-op? Too rapid expansion into areas without a firm member base, increasing reliance on non-members; an attempt to emulate aspects of the major chains beyond the organization’s ability to do so; political strife at the board level, which kept management of the stores in turmoil; changing demographics of the core area of Berkeley; inability to control labor costs as a percent of sales; a spectacular failure of the Rochdale principle of cooperation between cooperatives; and plain bad luck. The history of [the Berkeley Co-op] vindicates the importance of democratic decision making: the most costly errors came as a result of major decisions made in secret, or those made by only a narrow majority.”

At its November 9, 2010 meeting, after lamenting that there have been no new Co-ops since the 1970s, the Board voted to deny a potential new co-op in Placerville the right to call itself the Placerville Natural Foods Co-op. Despite that Placerville is 45 miles from Sacramento, in the foothills, Board members expressed that people would mix up the two co-ops if the Placerville Co-op were to also call itself a natural food co-op. Board members said that “people mix us up with the Davis Co-op all the time.” The question is, if the idea is to support Co-ops, does mixing them up even matter?

Why does the Co-op Board oppose members voting?
The Co-op Board has attempted to defend its position by: 1) claiming that it has the authority to add conditions to member initiatives that are not in the Bylaws; 2) stating that members should make individual shopping decisions, not have the store decide for them; 3) saying it has consulted with experts; 4) claiming that its only purpose is to sell natural foods, and 5) dismissing the initiative’s proponents as one faction.
The Co-op’s Bylaws clearly and simply do not give the Board any authority over what member initiatives are put on the ballot. Like with statewide initiatives, the Board could result to legal challenges if an initiative passed which it felt was illegal or against the Co-op Bylaws. But the Board does not get to pre-judge.

Equally clearly, the Co-op is making decisions all the time about what it carries and does not carry. For example, it does not carry products tested on animals, Coca-cola, cigarettes, or endangered fish in its fresh meat/fish counter. It does carry a large variety of Fair Trade coffee, but no Yuban and only carries organic produce. Furthermore, according to the cooperative principle of democratic member control, members have a say in what the store carries.

The Board has made available only two short statements from “experts”. One by Therese Tuttle is discussed above. The other was a statement that co-op consultant David Thompson had written to the Davis Co-op which makes the unsubstantiated claim that “There are thousands of cooperatives in Israel, the West Bank and Gaza,” then goes on to say: “Should we turn our back on the important work those organizations are doing to bring people together.”
The International Cooperative Association Website has no listings under Palestine and two under Israel. The first is Co-op Israel, a click on this leads to the website of Blue Square- Israel LTD and the second listing is Kibbutz movement. Some if not most kibbutzes are built on land stolen from Palestinians. Most, if not all, are open only to people of one religion: so much for “bringing people together”.
The common purpose of the Sacramento Natural Foods Cooperative purpose goes much beyond the provision of natural foods, extending to issues of community, sustainability, animal rights, concern about endangered species, and worker rights (as exemplified by the Fair Trade coffee). Furthermore, the Bylaws of the Co-op give members the ultimate ability to determine what they want to add or take away from that common purpose. This is why Section 6.01 of the Bylaws states that “the control over the cooperative shall be vested in the membership.”

“People join the Co-op because they support the concept of a cooperative,” explains Rudy. “If the Co-op wants me to interact with them strictly on money terms, it cannot compete. Because of the second store failure, the dividend is gone and the prices are relatively high. Membership at the Co-op is not just getting a card like you would at Costco. It means something more because you have a moral reason to shop there; your purchases are consistent with some set of values that we have created. And those values include member’s being able to have a say. The more the Board restricts the opportunities for members to participate, the more they cut themselves off at the knees.”
The End of Member Involvement?
The Co-op Board’s latest stab at member initiatives and the possibility of meaningful member input and control could come at its April 2011 Board meeting. Catering to the Board’s anti-member input bent, attorney Tuttle drafted a resolution for the Board which was red at the March 15 Policy Committee meeting: “Now be it resolved that the acts called for in the [Human Rights Initiative] petition fall outside the specific purposes of the cooperative as set forth in the Articles of Incorporation and the Board therefore respectively declines to certify this petition as a ballot measure and to perform the acts requested.”
For democracy advocates, there are at least two serious flaws with Tuttle’s reasoning. First, neither the Articles of Incorporation nor the Co-op’s Bylaws give the Board exclusive power to interpret these documents. Secondly, the Co-op’s articles of incorporation are very broad in setting the purpose of the Co-op. They include: “conducting such other activities as will serve the economic, education, recreational and cultural welfare of the members of the corporation.” For many, perhaps most co-op members, the “culture of the Co-op” is one of promoting social justice, which includes human rights. Again, through the initiative process, members have the right to call for actions that enforce their interpretations what the Co-op is and should be doing.

It is difficult to see how letting all members vote on an issue is pandering to one faction. It is impossible to see how preventing members from voting supports the democratic principles that underlie the Co-op. The Board offers excuses, but these beg the question: Why won’t the Board just let members vote?
Maggie Coulter is a long time activist, working for human and labor rights, the environment and to end U.S. military intervention and occupations. She is an organic gardener and has been a member of the Sacramento Natural Foods Co-op since the 1990s.