Justia Non-Profit Corporations Opinion Summaries

Plaintiffs, who had donated funds to the Church of Jesus Christ of Latter-day Saints, alleged that the Church and its investment subsidiary, Ensign Peak Advisors, Inc., fraudulently induced donations by concealing the true use and accumulation of donated funds. They claimed that the Church misrepresented that tithing would be used for charitable and religious purposes, when instead large portions were invested and used for commercial ventures, such as the development of the City Creek Mall. A key event in the case was the publication of a whistleblower report in December 2019, which was widely reported in national and local media and described how the Church managed and concealed a large investment portfolio. The Church publicly responded, and three other lawsuits were filed by different donors based on similar allegations.After actions were filed in several federal district courts, the cases were consolidated in the United States District Court for the District of Utah. Plaintiffs brought claims for breach of fiduciary duty, fraud, fraudulent concealment, fraudulent misrepresentation, and unjust enrichment, seeking to represent a nationwide class of post-1997 donors. The district court dismissed the consolidated complaint with prejudice, ruling that the claims were untimely under Utah’s three-year statute of limitations for fraud. The court found that the widespread news coverage of the whistleblower report meant that plaintiffs, exercising reasonable diligence, should have discovered the alleged fraud more than three years before filing suit.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s dismissal. The Tenth Circuit held that the plaintiffs’ claims were time-barred because the whistleblower report and related media coverage provided sufficient public notice to trigger the statute of limitations, and that reasonable diligence would have led to earlier discovery. The court also found no error in the district court’s procedural rulings and denied the request for leave to amend. View "In re: Church of Jesus Christ of Latter-Day Saints" on Justia Law

Several nonprofit organizations and associations that receive federal funding challenged a memorandum issued by the Office of Management and Budget (OMB) shortly after President Trump’s return to office in 2025. The memorandum, M-25-13, directed federal agencies to temporarily pause the obligation and disbursement of all federal financial assistance to analyze compliance with recent executive orders. Plaintiffs argued that the memorandum called for a sweeping freeze on virtually all federal funding, which they alleged would have catastrophic consequences for federally funded programs.The United States District Court for the District of Columbia initially responded to plaintiffs’ request for emergency relief by issuing a temporary restraining order, and later a preliminary injunction, barring OMB from implementing the memorandum. The district court found that the memorandum was likely to be arbitrary and capricious and possibly beyond OMB’s statutory authority. The court rejected the government’s argument that the case was moot after OMB rescinded the memorandum, relying in part on statements from the White House Press Secretary and ongoing funding disruptions.The United States Court of Appeals for the District of Columbia Circuit reviewed the preliminary injunction. It did not address the merits of the plaintiffs’ legal arguments or the district court’s interpretation of the memorandum. Instead, it concluded that the plaintiffs’ challenge was likely moot because OMB had rescinded the memorandum before the government knew of the lawsuit and had clarified, in guidance issued the day after the memorandum, that a global funding freeze was not intended. The court found that there was no reasonable expectation the government would reissue the challenged action. As a result, the court vacated the preliminary injunction. View "National Council of Nonprofits v. OMB" on Justia Law

Between 1976 and 1984, nine plaintiffs allege they were sexually abused by a part-time counselor at the Boys and Girls Club of Hudson County (BGCHC), a New Jersey nonprofit. Following a 2019 amendment to the New Jersey Child Sexual Abuse Act extending the statute of limitations, these plaintiffs brought suit against BGCHC, Boys and Girls Clubs of America (BGCA), and others, claiming damages from the alleged abuse. BGCA, federally chartered in the District of Columbia and headquartered in Georgia, was not directly involved in the alleged abuse but maintained an affiliation with BGCHC through membership requirements, support, professional development opportunities, and brand usage.In the Superior Court of New Jersey, Law Division, BGCA moved to dismiss for lack of personal jurisdiction. The court found no general jurisdiction over BGCA but allowed for jurisdictional discovery on specific personal jurisdiction. After discovery, a motion judge held that BGCA was subject to specific personal jurisdiction in New Jersey based on its relationship and activities with BGCHC. BGCA appealed, and the Superior Court of New Jersey, Appellate Division, reversed, finding the evidence insufficient to establish that BGCA’s conduct related to the plaintiffs' claims of abuse. The plaintiffs then sought further review.The Supreme Court of New Jersey reviewed the case and affirmed the Appellate Division’s ruling. The Court held that New Jersey courts cannot exercise specific personal jurisdiction over BGCA because the plaintiffs’ claims do not arise out of or relate to any affirmative act by BGCA directed toward New Jersey. The Court clarified that BGCA’s provision of resources, branding, and support to BGCHC did not constitute purposeful availment for the purposes of specific jurisdiction in this context. As a result, the claims against BGCA were dismissed, though proceedings against BGCHC in New Jersey continue. View "E.T. v. The Boys and Girls Club of Hudson County" on Justia Law

A sexual assault counselor employed by a nonprofit mental health organization was asked multiple times by her supervisors to disclose the location and information regarding a minor victim, whom law enforcement and county officials were seeking in connection with a probation violation. The counselor refused to provide this information without the victim’s consent, citing the statutory sexual-assault-counselor privilege. Despite her refusal, and after continued pressure, the counselor was ultimately terminated from her position. She then brought claims against her employer under the Minnesota Whistleblower Act and for common-law wrongful discharge, arguing that disclosing the information would have violated the sexual-assault-counselor privilege.The Washington County District Court granted the employer’s motion to dismiss for failure to state a claim, finding that the facts alleged did not support that the requested disclosure would violate the privilege statute. The Minnesota Court of Appeals affirmed, holding that the sexual-assault-counselor privilege is limited to disclosures made in the context of a court action or proceeding, or before someone authorized to receive evidence, and that the counselor had not alleged such circumstances.The Supreme Court of Minnesota affirmed the decision of the court of appeals. The court held that the sexual-assault-counselor privilege in Minnesota Statutes section 595.02, subdivision 1(k), applies only in an “action or proceeding, civil or criminal, in court or before any person who has authority to receive evidence.” Because the counselor did not allege she was ordered to disclose information in such a context, her claims under the Minnesota Whistleblower Act and for common-law wrongful discharge failed as a matter of law. The court declined to extend the privilege or recognize a broader common-law claim, emphasizing that any broader confidentiality protections would need to come from the legislature. View "Wredberg vs. Canvas Health, Inc." on Justia Law

A religious nonprofit organization sought to purchase a former university campus property after being selected as the winning bidder in a competitive process conducted by a state university system. Following the public announcement of the award, there was significant public opposition to the sale, particularly due to the religious nature of the winning bidder. Two unsuccessful bidders filed administrative protests, raising both procedural and substantive objections, including criticism of the university's decision to sell to a religious organization. The university's designated official initially denied these protests, but upon further internal review, a higher-level administrator determined that a flaw in the bid evaluation process—specifically, the failure to consider cost-saving proposals for existing infrastructure—warranted rescinding the award and restarting the process. In the new round, the property was awarded to a different bidder who scored higher under revised criteria.The original winning bidder, the religious organization, challenged the university's decision in the United States District Court for the District of Maine, alleging violations of the Equal Protection and Free Exercise Clauses of the U.S. Constitution. The district court denied the plaintiff’s motions for a temporary restraining order and a preliminary injunction, finding that the plaintiff failed to show a likelihood of success on the merits of either claim. The court credited testimony that the university’s decision was motivated by cost-saving considerations rather than religious bias, and found no clear evidence of procedural irregularity or pretext.On appeal, the United States Court of Appeals for the First Circuit reviewed the denial of the preliminary injunction for abuse of discretion. The Court affirmed the district court’s decision, holding that the lower court applied the correct legal standards and did not clearly err in its factual findings. The Court concluded that the plaintiff failed to demonstrate a likelihood of success on the merits of its constitutional claims. View "Calvary Chapel Belfast v. University of Maine System" on Justia Law

The case centers on a lawsuit filed by the Attorney General of Florida against the American Academy of Pediatrics (AAP) and other organizations, alleging that their advocacy for gender-affirming care violated several Florida statutes, including the state's Deceptive and Unfair Trade Practices Act, RICO Act, and antitrust law. The Florida enforcement action targeted AAP's policy statements and legal filings that supported access to gender-affirming care for transgender youth, with the Attorney General seeking significant monetary penalties and organizational restrictions. Although the lawsuit was publicized, there was a three-month delay before the organizations were served.Following the initiation of the Florida state court action, AAP, an Illinois nonprofit, filed a separate suit in the United States District Court for the Northern District of Illinois. AAP claimed that the Florida enforcement proceeding was brought in bad faith to retaliate against its First Amendment–protected advocacy. The district court granted a preliminary injunction to prevent the Florida Attorney General from pursuing the enforcement action against AAP and denied the Attorney General’s motion to dismiss, finding that personal jurisdiction and venue in Illinois were supported, and that the facts suggested the Florida action was brought in bad faith.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed only whether to stay the district court’s injunction during the expedited appeal. The Seventh Circuit denied the motion for a stay, holding that the Attorney General did not make a strong showing of likely success on the merits or irreparable harm. The court found that the bad-faith exception to Younger abstention applied based on the district court’s factual findings, and that jurisdiction and venue in Illinois were appropriate given the circumstances. The injunction against the Florida enforcement action remains in effect pending appeal. View "American Academy of Pediatrics v Uthmeier" on Justia Law

A woman visited a federally qualified health center in East Orange, New Jersey, for medical treatment in 2019. After her appointment, she slipped on water as she was leaving the examination room and suffered serious injuries. She was insured by Medicare at the time. The health center, Newark Community Health Centers, Inc. (NCHC), is a nonprofit entity with a mission to provide affordable, quality healthcare to underserved populations. Its organizational documents reference charitable, educational, and healthcare purposes, and its revenue is derived mostly from government grants and service fees, with only a very small portion from charitable contributions.The plaintiff sued NCHC for negligence. The Superior Court of New Jersey, Law Division, granted summary judgment to NCHC, finding it immune from liability under the New Jersey Charitable Immunity Act (CIA) as an entity organized exclusively for religious, charitable, or educational purposes. The Appellate Division affirmed, emphasizing the educational aspects of NCHC’s mission and activities, and did not conduct a detailed funding source analysis.The Supreme Court of New Jersey reviewed the case to determine whether NCHC qualified for complete charitable immunity or was instead subject to the statutory cap on damages applicable to organizations organized exclusively for hospital purposes. The Supreme Court held that NCHC is organized exclusively for hospital purposes under the CIA, given its dominant motive and primary activity of providing healthcare services, not education or charity. Because almost none of NCHC’s revenue comes from charitable donations, it does not qualify as exclusively charitable. As a result, NCHC is not fully immune from liability, but its liability for damages is capped at $250,000 as provided by the statute. The Court reversed the Appellate Division’s judgment and remanded the case for further proceedings. View "Smith v. Newark Community Health Centers, Inc." on Justia Law

A nonprofit religious corporation, incorporated under Missouri law, sought to restore its governance authority over a university in Texas that was established as an agency of the church. The university, although separately incorporated, was subject to church governance under its charter and bylaws. In 2022, the university’s regents unilaterally amended their governing documents to reject the church’s authority. The church’s internal adjudicatory body declared these amendments void, and the church’s convention directed action to restore church control. The university refused to recognize church-appointed regents as its governing body.Litigation ensued in the United States District Court for the Western District of Texas. The church, through its corporate body, sued the university and its leaders in federal court, asserting diversity jurisdiction. The university counter-sued in Texas state court, naming the church as an unincorporated association. The federal actions were consolidated. The district court, adopting a magistrate judge’s report, held that the church was an unincorporated association and the real party in interest, and that joining the church as a plaintiff destroyed diversity jurisdiction because its members included Texas citizens. The court dismissed the federal suit and remanded the state suit to state court.The United States Court of Appeals for the Fifth Circuit reversed the district court’s dismissal. The appellate court held that the district court’s approach violated the church autonomy doctrine under the First Amendment by imposing secular interpretations on the church’s governance structure and disregarding the church’s own description of its internal polity. The court found that the nonprofit corporation is the appropriate party for civil litigation and that diversity jurisdiction exists. The case was remanded for further proceedings. View "Lutheran Church v. Christian" on Justia Law

The defendants in this case are a Massachusetts-based nonprofit organization and three individual unpaid volunteers. The plaintiff, a member of the organization, sought to run for its presidency in 2023. He filed suit in the Superior Court, alleging that the defendants planned to conduct the election in violation of the organization’s bylaws. After a hearing, the court issued a preliminary injunction barring certain voting procedures. Following the election, the plaintiff filed a civil contempt complaint, claiming the defendants had disregarded the injunction. The trial judge found, by clear and convincing evidence, that the defendants violated the injunction, causing the election results to be unreliable, and ordered a new election. The court also invited the plaintiff to apply for attorney’s fees and costs.After the parties settled the underlying election dispute but not the fees issue, the plaintiff applied for attorney’s fees and costs totaling over $134,000. The defendants opposed, arguing that Massachusetts’ charitable immunity statute, G. L. c. 231, § 85K, capped their liability at $20,000 and that the fee request was unreasonable. The motion judge rejected the statutory cap argument, found the fee request reasonable, and awarded the full amount. Judgment was entered, and the defendants appealed. The Supreme Judicial Court transferred the appeal from the Appeals Court.The Supreme Judicial Court held that the charitable immunity statute’s $20,000 cap applies only to actions based on tort, and that a civil contempt action for violating a court order is not a tort action within the statute’s meaning. The court also concluded that the motion judge did not abuse her discretion in awarding the requested attorney’s fees and costs, finding the fees reasonable given the nature and complexity of the case. Accordingly, the Supreme Judicial Court affirmed the fee award and judgment. View "Khoda v. Bangladesh Association of New England, Inc." on Justia Law

A nonprofit organization, dedicated to supporting children with cancer, constructed several buildings on land owned by a married couple. The couple later decided to sell the property as part of their divorce. During the process, the nonprofit was misinformed by the couple, who were also involved in the nonprofit’s board, about the value of its buildings and the contents of an appraisal report. Acting on these representations, the nonprofit agreed to accept a fixed percentage of sale proceeds. It was only after the sale closed that the nonprofit discovered the buildings had been undervalued and that the appraisals had, in fact, specified higher values for the structures.The nonprofit sued the couple in the District Court of the Seventh Judicial District of Idaho, asserting claims of constructive fraud, breach of fiduciary duty, and unjust enrichment. The district court ruled in favor of the nonprofit, finding the couple liable but reduced the damages by 50% based on comparative negligence and failure to mitigate damages. It denied attorney fees and prejudgment interest to both parties. After the nonprofit satisfied the judgment, it appealed the damage reduction and denial of fees, while the couple cross-appealed on several grounds, including the application of the election-of-remedies doctrine, various defenses, and the finding of fiduciary breach.The Supreme Court of the State of Idaho held that the election-of-remedies doctrine did not bar the nonprofit’s appeal. It found the district court erred in reducing the damage award by applying comparative negligence and the duty to mitigate, as those doctrines did not apply to the equitable and fiduciary claims at issue. The Supreme Court affirmed the district court’s rulings on the other affirmative defenses, the finding of fiduciary breach, and the denial of prejudgment interest. The court remanded for entry of a judgment for the full damages and for reconsideration of prevailing party status and attorney fees, awarding the nonprofit its appellate costs. View "Camp Magical Moments, Cancer Camp for Kids, Inc. v. Walsh" on Justia Law