Say What About a Plantation?"
Yes, there's a Plantation Club in California. And, of course, there's a lawsuit
California is many things to many people: Hollywood, tech bros, bohemian retreats and Bohemian Grove. It’s also home to the only organization that we’re aware of that’s actively lobbying for the interests of private clubs and club members on the state level.
It’s also the (and soon to be even more) talk of many Club Tables across the country as its members become embroiled in a lawsuit that could potentially challenge the clubs’ male-only status. Ishaan Jajodia brings more on this.
This also seems the perfect time for us to announce that Clubland USA will be on a publishing holiday for the entire month of May. Subscriptions will be paused during this period and we look forward to returning to your inboxes rejuvenated and with the best club stories from around the country.
See you next week!
Probing into The Plantation Club
By: Ishaan Jajodia
The men who make up the ranks of members of the Indio, California Plantation Golf Club could face hefty fines that result in having to allow women past far more than its parking lot.
A lawsuit has been filed against the Club alleging discriminatory behavior, conspiracy and racketeering, tax fraud, and violations of the Securities Exchange Act and the California Civil Rights Act.
The Plantation isn’t a stranger to controversy ever since the club was among the last entities to obtain IRS 501 c(7) status as a male-only club in the 1990s. The Club has gone to great lengths to protect its status as male only with some reports claiming that the Club prevents women from the grounds past the parking lot.
It would seem that the Club’s recent activity is a continuation of its long standing penchant for grabbing headlines.
Plantation Golf Club engaged JCM Farming in a 50/50 joint-venture to “grow and sell Mejdool date palms, with profits split” halfways, per the lawsuit. The women-led company alleges the club of souring the deal in an attempt to protect their tax status and the male-only membership of the club.
Legal Reader reports that not only did The Plantation Club “misrepresented the joint venture in tax filings”, it also sought to actively sabotage the business venture after learning of its threats to the much-coveted 501(c)7 federal tax status that exempts it for income tax.
The IRS grants 501(c)7 status to social clubs if they meet certain criteria. It must, according to the IRS, only “receive de minimis income from nontraditional sources”, which include joint ventures such as the Plantation Golf Club’s joint-venture with JCM Farming. The statute establishing this category of exempt organisations—social clubs—compels the IRS to limit it to 35% of gross receipts, and no more than 15% in total from non-members using club facilities.
We can here only read between the lines that when the club stopped watering the date trees, it was because they were threatened with loss of 501(c)7 status that protected income from members being assessed as taxable income.
But the allegations—that, according to the lawsuit, “comes from people inside the club”, per KESQ—that are even more damning to the Plantation Club stem from a laundry list of things any reasonable person, much less an attorney, would push a club not to engage in, from running a de-facto casino and gambling centre in-house to acting as broker-dealers for securities sold on premises and then “compensat[ing] its members for losses when these [sales] were later deemed fraudulent sales”. Not only was the club acting as a stock market and exchange, it also took on the role of bookkeeper and market maker, among other things.
I am no lawyer but I have previously published academically on jurisprudence and the common law and constitutional law. All of these other matters aside, the most cogent line of argument in Equity Ag Financial’s argument is that the club sabotaged a business venture it agreed to perform certain duties for the sake of protecting its membership and tax status.
What this means for Clubland
Proponents of single-sex clubs have argued that it’s a matter of members simply choosing who they want to associate with. A single-sex club is no different than a club that has an unspoken quota for attorneys, such as SoHo House, or a club that has a preference for members to be of a certain political preference, such as Washington’s National Democratic Club or Manhattan’s Women’s Republican Club.
Alexander Pacheco, founder of the male-only Viridian Club in Austin, told Clubland USA that his rebuttal to questions of his club’s single sex status usually involves pointing out that there’s a women’s only club within a three-mile radius.
It has yet to be determined whether younger generations of club members will be interested in these spaces and whether the scandals surrounding them and their evolutions will ensure their arrival in the next generation.
For those following, Judge Fernando Olguin has been assigned to the case and as of March 24, Plantation Club’s attorneys have yet to appear before the court. Clubland USA will be keeping all abreast of the developments here.
Please be sure to keep an eye out for our next issue on Tuesday, March 31.