Legal Background

 

While not explicitly defined in the Constitution, the Supreme Court has acknowledged that certain implicit rights, such as the right to associate, privacy, and presumed innocence, share constitutional protection in common with explicit guarantees such as free speech. Specifically, the Supreme Court has described the right to associate as inseparable from the right to free speech.

 

The right of association under the Constitution was heavily litigated in the 1950’s and 1960’s, and association members’ rights were consistently upheld by the Court.  In fact, the right of association became a cornerstone of the civil rights movement.

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In general, members of an association do not fall under the jurisdiction of local, state, and federal governments and corresponding laws and regulations.  The exception to this general rule is when the activities of the private membership association "present a clear and present danger of substantive evil". Thomas v. Collins, 323 U.S. 516 (1945).

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A simple example of private associations is alcohol service in dry counties in Texas.  Since prohibition was repealed in 1933, regulation of the alcoholic beverage industry was delegated to individual states.  Some states, such as Texas, allow individual counties and cities to govern the sale of alcohol.  Initially, 46 out of Texas’ 254 counties were completely dry, meaning the sale of alcohol was prohibited.  However, over the years and in particular with the passing of the Private Club Act in 1961, the number of completely dry counties has diminished. Since 1961, the State has agreed to allow qualifying private associations and clubs to provide alcoholic beverages to private members only. These organizations may be in either the public or private domain.

 

 

 

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It is important to note that the right to associate is not limited to social or political activities.  According to the Supreme Court, this right can be utilized for business activities of all types.  Members of a private membership association have the right to private contract under the due process liberty clause of the 5th and 14th Amendments, and states may not pass laws that impair the obligation of a contract.

 

Again, in Thomas v. Collins, the Supreme Court stated: "Great secular causes, with small ones, are guarded. The grievances for redress of which the right of partition was insured, and with it the right of assembly, are not solely religious or political ones. And the rights of free speech and a free press are not confined to any field of human interest".

 

Under the First and Fourteenth Amendments to the U.S. Constitution and equivalent provisions of your State Constitution, you have the right to associate with fellow members and offer benefits and services that are outside of the jurisdiction, venue and authority of State and/or Federal agencies. What could come under scrutiny and in some cases be considered a criminal act outside the association can be perfectly legal within the protection of a private association.

 

Some Common Benefits of Operating Under a Private Membership Association

 

• Conduct private association member activities outside the jurisdiction and authority of federal and state regulatory agencies whose mandate is to protect the health, safety, and welfare of the public.

• Maintain greater privacy of financial and business records.

• Greater security of being able to continue operation in a world of changing laws and politics.

• Increase profits due to unrestricted and beneficial structuring and strategies not available to regulated public domain business.

• Instead of conducting business under a legal loophole, you can operate under legal rights decided by the supreme law of the land, i.e., the Supreme Court decisions interpreting the U.S. Constitution. For example see NAACP v. Alabama, 357 U.S. 449.

• Simplify your business by eliminating annual reports such as those required with the LLC model.

• No need to register your unincorporated association PMA, as a corporation with the Secretary of State.