Opinion ID: 1224651
Heading Depth: 1
Heading Rank: 5

Heading: The Statutory Scheme Governing Group Self-Insurance Associations and Derivative Actions Pressed On Behalf of An Unincorporated Association

Text: TEWCA, an unincorporated association of approximately 1,000 members, was organized under the terms of 85 O.S.1991 § 149.1 [12] as a workers' compensation self-insurance group. That statute (a) permits multiple employers to pool their liabilities for the purpose of qualifying as a group self-insurer and (b) authorizes the Workers' Compensation Court to regulate group self-insurance associations and to adopt rules [13] and procedures governing their establishment. [14] The Agents Group, an unincorporated association composed of 11 independent insurance agencies, was organized to function as the sole marketers of memberships in TEWCA. At common law a voluntary unincorporated association was not recognized as a legal entity. Because it lacked a status distinct from the persons composing it, an unincorporated association had no capacity to become a party to an action. It could neither sue nor be sued. [15] Acting in clear derogation of the common law, the Legislature authorized suits against unincorporated organizations in their common name and provided that venue in these actions is the same as that prescribed for domestic corporations. [16] Section § 2023.1 [17] of the 1984 Pleading Code  which is patterned on the Federal Rules [18]  creates a right of action, derivative in nature, for an unincorporated association. Its terms provide that a derivative action may not be maintained if it appears the plaintiff does not fairly and adequately represent the interests of similarly situated members in enforcing the right of the association. [19] In the context of shareholder derivative suits, this requirement has been construed to mean that plaintiffs bringing a derivative claim must be shareholders at the time of the alleged wrong as well as retain ownership during the pendency of the lawsuit. [20] The continuous-ownership requirement is based on the belief that only a party with an ongoing proprietary interest in the corporation on behalf of which action is maintained will adequately represent the corporation's interest in a derivative suit. [21]