Lead Stories

Members of a Masonic/Scottish Rite organization lost their standing to bring a derivative suit on behalf of the organization against several of its officers when the members lost their membership rights and started a competing organization.  An appellate court in Tennessee has ruled that the plaintiffs could not fairly represent the interests of the remaining members of the original organization when they had started a new one.

A California appellate court has reversed a trial court decision that a director of a public benefit nonprofit lost her standing to sue the organization and another director for self-dealing and breach of fiduciary duty when she was removed from the board following initiation of her suit.  In what is apparently a case of first impression in the state, the Court said that a close reading of the Corporations Code and the needs of public policy justified its ruling that the plaintiff could continue to lead the case.

A bylaw “addendum” of the Chinese Consolidated Benevolent Association in San Francisco contains an unusual set of voting requirements that has required nearly six years of litigation to interpret.  A Court of Appeal in California has affirmed a trial court decision that a motion to prohibit display of the Republic of China flag at Association meetings failed to pass despite having received a majority of the votes cast at an Association meeting.

The U.S.

The Pennsylvania Supreme Court has refused to join several other jurisdictions in accepting a “good cause” inquiry to provide exceptions to the basic rule of attorney-client privilege in derivative action cases.  It has held that providing such a “conditional privilege” would reduce the certainty of the attorney-client privilege.

A federal District Court in Virginia has refused to remove the bank trustee of a scholarship fund as sought by two individual trustees and has refused to remove the individual trustees as sought by the bank, saying that neither side had shown that the other breached their fiduciary duty or otherwise failed to function properly.  But it has sided with the bank on some substantive issues, including telling the trustees that they could not add conditions to the scholarship grants that are inconsistent with the provisions of the will establishing the fund.