Wyndham vs Worldmark -- The battle continues

People who attend the Wyndham presentations are shown pretty pictures of vacation destinations and are asked to imagine leisurely holidays. Only at the very end do they get to see the legal contract. Never are they told about the relationship between Wyndham and Worldmark.

In a nutshell from my limited knowledge, Wyndham build (or purchase) and sell the accommodation, while Worldmark maintains it and has members. They are separate organisations. One is dedicated to selling. The other is the club that people join.

It appears that the relationship between the two is not all that happy. Here's information recently published by the Worldmark Owners association, which is unaffiliated with them both.

Dear WorldMark Owner:

By now, you should have received a copy of "Notice of Pendency of Settlement of Derivative Action" dated July 2, 2010 regarding the proposed settlement of litigation involving WorldMark and certain WorldMark directors. A copy of the settlement is available here. The settlement affects ALL persons who own WorldMark. Since this is a derivative suit, all owners will receive the settlement benefits (if any), therefore, an "opt out" option is not available as is often the case in class action suits. A settlement hearing will be held on September 10, 2010 at 9:00am in San Francisco, CA. You have a right to address the court, attend the hearing, and/or submit written comments/objections. Written comments must be received by the court and attorneys no later than August 27, 2010. 

The proposed settlement was negotiated between Plaintiffs' and Defendants' Counsels, not the Court. It is in your best interest to comment on the proposed settlement since in previous suits of this nature courts have considered comments in approving the final settlement. Your comments are important! To facilitate preparation of your comments, and to ensure compliance with specific requirements stated in the notice, a recommended format is available here.
WMOwners, Inc. objects to the proposed settlement, and there are a number of reasons to object. Not all are stated here.

1. The proposed settlement will result in undetermined expense to The Club and provide only minimal benefits. The crux of the case is that Director Defendants breached their fiduciary duty to members of the Club and placed the interests of Wyndham ahead of their obligations to Club members. This breach has resulted in ongoing controversy regarding the responsibilities of the Director Defendants and their obligation to prevent Wyndham from implementing certain programs that violate or are contrary to our governing documents. This settlement brings no relief or resolution on this important issue. 

2. The proposed settlement leaves the Club with a Board dominated by Wyndham-affiliated Directors. The Wyndham-dominated Board will merely fill the vacant position required by appointing one of their close "nonaffiliated" allies. The settlement does not adequately address this, and fails to impose restrictions that would prevent the Board from continuing those practices. 

3. The settlement contains a provision requiring "review" of the Management Agreement. The current Management Agreement is an annual, automatically self-renewing, multi-million dollar contract ($22.3M in 2009) for management services; yet never in the history of our Club has this contract been competitively awarded. Without competition it is impossible to determine if the Club could obtain the same services elsewhere at less cost. Given a board dominated by Wyndham affiliated Directors, the likelihood of revision or open competition that would benefit owners is extremely remote. 

4. Meaningful relief is grossly inadequate considering that no monetary recovery to the Club is proposed to offset the implementation expenses of settlement provisions. 

5. The proposed settlement is a broad waiver of claims. If the settlement is approved in the current format, this waiver would effectively preclude any further action on all claims - both known and unknown - related to any activity of the board during the settlement period. When balanced against the relief obtained, this waiver is excessive. The waiver is so broad that it arguably can be interpreted to bar states' Attorneys General from suing on behalf of Club members. 

For these reasons WM Owners, Inc. recommends that all WorldMark owners submit written objections to the proposed settlement. Any settlement in a complicated case of this nature is a compromise. As with any compromise, the final resolution is rarely the best possible outcome. However, the settlement as proposed is so unbalanced against the interests of WorldMark owners, that it should not be approved by the court. 

Click here to see the position of WorldMark Owners, Inc. on each of the subjects addressed in the Settlement notice. The document contains suggested relief that would be acceptable to WM Owners, Inc. Although the Court and Counsels are not obligated to accept any of the relief suggested, it is important to offer suggestions as well as criticism. By offering suggested relief it is hoped that the Court and Counsels will better understand the degree and scope of owners' concerns. Please feel free to use any of the material in this message or on wmowners.com in preparing your response to the Court and Counsels. 

For additional information on this proposed settlement, please visit Owners 4 WorldMark, the WMOwners discusson forum, and Marci Tribe's website. 

Remember, comments must be received by the Court and both Plaintiffs' and Defendants' counsel no later than August 27, 2010. 

Please do not assign your proxy to the Wyndham-controlled Board of Directors. Please assign your proxy to WMOwners, Inc. 

Thank you for your attention in this important matter, 

Your friends and co-owners at WMOwners, Inc

Mmm. Not good at all.

-- Fabbo


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