Lead Stories

A former director’s derivative suit for breach of fiduciary duty against the CEO of a nonprofit corporation has been dismissed by a trial court and appellate court in California on the ground that the plaintiff was not actually a director at the time he filed the suit.  The former director claimed that he was still on the board because the deciding vote to oust him was cast by a director who had been automatically dropped from the board by a bylaw terminating anyone who had missed three consecutive meetings.

A federal District Court in Virginia has issued a temporary injunction enjoining the enforcement of constitutionally questionable questions asked by the state Attorney General in an investigation for violation of the state’s charitable solicitation registration law.  It has found that the charity is likely to prevail on its claim that demanding donor lists in a Civil Investigative Demand (”CID”) likely violates the right of free association guaranteed by the First and Fourteenth Amendments.

A Magistrate Judge in the federal District Court of Oregon has recommended that a nonprofit organization be permitted to continue its suit against two former employees and their new business entity for misusing the nonprofit’s donor lists and other trade secrets and disclosing confidential information obtained while they worked for the organization.  The judge has rejected motions to dismiss claims for misappropriation of trade secrets, intentional interference with economic relationships, defamation, and breach of the duty of loyalty.

In a case starting during the IRS “scandal” for allegedly holding up applications for conservative 501(c)(4) social welfare status for a variety of groups in 2011, the federal District Court for the District of Columbia has held that IRS rulings on what constitutes intervention in political campaigns are void for vagueness.  It has remanded the case for the parties to reargue their positions on the standards for deciding the case.

By Cheshire Law Group

A trial court in Pennsylvania has dismissed a claim by a Penn State University trustee that amended and restated bylaws at the University are invalid on their face.   

A non-religious nonprofit corporation may argue that its religious freedom has been infringed by the government’s denial of approval for a program to address the abuse of opioids through overdose prevention services, including supervised illegal drug use, the Third Circuit Court of Appeals.  It has returned the case to the District Court in Philadelphia to determine whether the denial violates the corporation’s religious freedom under the Religious Freedom Restoration Act.