Justia Non-Profit Corporations Opinion Summaries

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

A nonprofit organization focused on reducing consumer exposure to chemical toxins alleged that two companies selling dietary supplements violated California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). The nonprofit, through its law firm, sent the required pre-suit notice to the companies, public prosecutors, and the Attorney General. The notice identified the nonprofit and its chief executive officer but did not expressly provide the address and telephone number of a responsible individual within the organization, instead listing only the law firm’s contact information. The nonprofit later filed suit seeking civil penalties and injunctive relief.The Superior Court of Alameda County granted the defendants’ motion for judgment on the pleadings, finding that the pre-suit notice did not strictly comply with the relevant regulation, which requires the name, address, and telephone number of the noticing individual or a responsible individual within the noticing entity. The trial court held that providing only an officer’s name and the law firm’s contact information was insufficient, and entered judgment for the defendants.The California Court of Appeal, First Appellate District, Division Two, reviewed the matter de novo. The appellate court concluded that the doctrine of substantial compliance applies to the statutory and regulatory pre-suit notice requirements under Proposition 65. The court held that, although the notice did not literally meet every technical requirement, it substantially complied by providing sufficient information for the defendants and public officials to assess and respond to the alleged violations. Accordingly, the appellate court reversed the judgment, directed the trial court to deny the motion for judgment on the pleadings, and ordered costs to the plaintiff. View "Chemical Toxin Working Group v. Best Naturals, Inc." on Justia Law

After the Texas Legislature enacted a law banning certain medical treatments for minors for the purpose of gender transition, PFLAG, Inc., a nonprofit organization with Texas members, became involved in litigation challenging the law. During this litigation, PFLAG’s executive director submitted an affidavit describing, among other things, how families sought “alternative avenues to maintain care” for transgender youth in Texas. The Office of the Attorney General, suspecting that some medical providers might be concealing violations of the new law through deceptive billing practices, issued a civil investigative demand (CID) to PFLAG seeking documents underlying the affidavit and related information. PFLAG declined to produce the documents and instead petitioned the 261st Judicial District Court in Travis County to set aside or modify the CID. The Attorney General subsequently narrowed the scope of the CID to exclude identifying information of PFLAG’s members and focused the requests more closely on the affidavit’s content.The district court granted a temporary restraining order and, after a trial, issued a final declaratory judgment and injunction largely protecting PFLAG from producing the requested documents. The district court focused its analysis on the original, broader CID and found that the Attorney General lacked a valid basis to believe PFLAG possessed relevant information. The court also concluded that the CID infringed on constitutional rights and failed to comply with statutory requirements.On direct appeal, the Supreme Court of Texas held that the district court erred in analyzing only the original CID and not the revised version. The Supreme Court clarified that the Attorney General’s statutory authority to issue a CID requires only a reasonable belief, not proof, that the recipient may have relevant material. The Court found the Attorney General’s belief reasonable given the content of the affidavit and ruled that PFLAG must produce most responsive documents, subject to privilege and redaction of identifying information. The district court’s order was reversed and the case remanded for further proceedings consistent with this opinion. View "OFFICE OF THE ATTORNEY GENERAL v. PFLAG, INC." on Justia Law

A nonprofit organization that publishes content critical of United States immigration policy was issued a subpoena by the New York Attorney General’s office seeking documents related to its governance, finances, and relationships with vendors and contractors. The organization alleged that the subpoena was motivated by a desire to suppress its viewpoints and thus violated its rights under the First Amendment and the New York State Constitution. The Attorney General, however, maintained that the investigation was prompted by concerns about possible self-dealing and regulatory noncompliance.After the subpoena was issued, the nonprofit partially responded but maintained objections. It then filed a federal lawsuit seeking damages and an injunction against enforcement of the subpoena, claiming the subpoena was retaliatory and unconstitutional. Shortly thereafter, the Attorney General initiated a special proceeding in New York State Supreme Court to compel compliance. The organization moved to dismiss or stay the state proceeding, raising constitutional arguments. The state court ruled against the nonprofit, ordering compliance with the subpoena (with some redactions allowed), and the New York Appellate Division, First Department affirmed. The New York Court of Appeals dismissed a further appeal.The United States District Court for the Northern District of New York denied the nonprofit’s request for a preliminary injunction and dismissed the federal claims, holding that they were precluded by the earlier state court judgment under the doctrine of res judicata. The United States Court of Appeals for the Second Circuit affirmed the district court’s judgment, holding that the state court’s decision was final and on the merits, involved the same parties and subject matter, and therefore barred the federal claims. The court also dismissed as moot the appeal of the denial of preliminary injunctive relief. View "VDARE Foundation, Inc. v. James" on Justia Law

A nonprofit research foundation affiliated with a state university entered into a memorandum of understanding (MOU) with the university in 2007, becoming a statutorily regulated direct-support organization (DSO). The MOU provided that the foundation’s board would include two appointees from the university but was otherwise silent on board approval and on budget approval processes. In 2018, the Florida Legislature enacted a law requiring all DSO board appointments to be approved by the university’s board of trustees. Around the same time, a regulation by the Board of Governors (BOG) required university boards of trustees to approve DSO budgets. The foundation challenged these requirements, arguing that they impaired its contractual rights under the MOU.The Circuit Court conducted a trial and found that the MOU limited the university’s involvement to only the two appointees and that the statutory board approval requirement impaired the MOU. It concluded that the university failed to show a significant and legitimate public purpose for the statute. However, regarding the budget approval dispute, the court held that the MOU did not address budget approval, so there was no contractual impairment. The Fourth District Court of Appeal affirmed both findings, concluding that the statutory board approval requirement rewrote the parties’ contract, while the regulation on budget approval did not impair the MOU.The Supreme Court of Florida reviewed the case. It held that the MOU only addressed the university’s power to appoint two board members and was silent on approval of other appointments or on budget approval. Therefore, the statutory and regulatory changes did not impair any specific contractual obligations. The court reversed the Fourth District’s ruling on the board appointment issue and otherwise affirmed, holding that neither the statute nor the regulation unconstitutionally impaired the MOU. View "Florida Atlantic University Board of Trustees v. Harbor Branch Oceanographic Institute Foundation, Inc." on Justia Law

The plaintiff was an employee who brought claims for wrongful termination, Labor Code violations, and breach of contract against two defendants: the Los Angeles County Metropolitan Transportation Authority (MTA) and the Public Transportation Services Corporation (PTSC). MTA had created PTSC, a nonprofit public benefit corporation, to provide retirement and employment benefits to certain workers and to manage employees who support MTA’s transportation functions. The plaintiff did not file a prelitigation claim under the Government Claims Act (GCA) before suing these entities.The Superior Court of Los Angeles County first granted a motion for judgment on the pleadings in favor of both defendants, finding that the plaintiff had not alleged compliance with the GCA’s claim presentation requirements. The plaintiff was given leave to amend but continued to argue that PTSC was not a public entity subject to the GCA, and that even if it was, the claims presentation requirement should not apply because PTSC had not registered as required by statute. The trial court sustained a demurrer without leave to amend, finding both defendants to be public entities and that PTSC was not required to register separately from MTA. The court entered judgment for both defendants.On appeal to the California Court of Appeal, Second Appellate District, Division One, the plaintiff did not challenge the judgment in favor of MTA but contested the ruling as to PTSC. The appellate court held that PTSC qualifies as a public entity for purposes of the GCA’s claims presentation requirement, given its creation and control by MTA. However, the court found that if PTSC failed to register properly on the Registry of Public Agencies—including with county clerks where it maintains offices—this would excuse the plaintiff’s noncompliance with the GCA. The judgment for MTA was affirmed, but the judgment for PTSC was reversed and remanded to allow the plaintiff to amend his complaint. View "Black v. L.A. County Metropolitan Transp. Authority" on Justia Law

A nonprofit corporation purchased a 192-unit apartment complex from a government agency in 1994 at a significant discount. In exchange, the purchaser agreed by contract to rent all units at below-market rates to low-income families for 40 years and to comply with annual reporting and administrative fee requirements. Around 2016, the purchaser stopped fulfilling these obligations, including the reporting and fee provisions. The government’s successor agency, through its monitoring agent, notified the purchaser of the breach and initiated legal action seeking remedies under the contract.The purchaser counterclaimed in state court, seeking a declaration that the agreement was no longer enforceable and an injunction against further enforcement. The Federal Deposit Insurance Corporation (FDIC), as successor to the original government agency, intervened, removed the case to the United States District Court for the Middle District of Florida, and moved to dismiss the counterclaim. The purchaser argued that the contract’s obligations ended when Congress repealed the statute that created the original agency and authorized such agreements. The district court rejected this argument, holding that the contract remained enforceable, dismissed the counterclaim with prejudice, and remanded the case to state court.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It held that the contract’s plain language required the purchaser to comply with its obligations for the full 40-year term, regardless of the repeal of the underlying statute. The court found that the FDIC, as successor, retained both contractual and statutory authority to enforce the agreement. The Eleventh Circuit affirmed the district court’s dismissal of the counterclaim, concluding that the agreement remains enforceable and the purchaser is still bound by its terms. View "Affordable Housing Group, Inc. v. Florida Housing Affordability, Inc." on Justia Law

Three non-profit corporations, each formed by littoral homeowners in the Portlock neighborhood of East Honolulu, purchased narrow beachfront reserve lots that separated their homes from the ocean. In 2003, Hawai‘i enacted Act 73, which declared certain accreted lands—land gradually added to the shoreline by natural forces—to be public property, preventing private parties from registering or quieting title to such land. Shortly after purchasing the lots, the non-profits (the Ohanas) filed an inverse condemnation action, alleging that Act 73 resulted in an uncompensated taking of accreted land seaward of their lots, in violation of the Hawai‘i Constitution. The parties stipulated that, if a taking occurred, just compensation would be based on the fair market rental value of the accreted land.The Circuit Court of the First Circuit initially granted partial summary judgment to the Ohanas, and the Intermediate Court of Appeals (ICA) affirmed in part, holding that Act 73 effected a taking of existing accreted lands. On remand, after a bench trial with expert testimony, the circuit court found that the fair market rental value of the accreted land was zero dollars, based on credible evidence that the land’s use was highly restricted and had no market value. The court declined to award nominal damages or attorneys’ fees. The ICA affirmed, finding the circuit court’s factual determinations were supported by substantial evidence and that sovereign immunity barred attorneys’ fees.The Supreme Court of Hawai‘i affirmed the ICA’s judgment. It held that the circuit court did not err in awarding zero dollars as just compensation, nor in declining to award nominal damages, because the Ohanas suffered no compensable loss. The court further held that the just compensation clause of the Hawai‘i Constitution does not waive sovereign immunity for attorneys’ fees in inverse condemnation cases. View "Maunalua Bay Beach Ohana 28 v. State" on Justia Law

After the Washington Medical Commission adopted a policy to discipline physicians for spreading COVID-19 “misinformation,” several plaintiffs—including physicians who had been charged with unprofessional conduct, physicians who had not been charged, and advocacy organizations—filed suit. The Commission’s actions included investigating and charging doctors for public statements and writings about COVID-19 treatments and vaccines. Some plaintiffs, such as Dr. Eggleston and Dr. Siler, were actively facing disciplinary proceedings, while others, like Dr. Moynihan, had not been charged but claimed their speech was chilled. Additional plaintiffs included a non-profit organization and a public figure who alleged their right to receive information was affected.The United States District Court for the Eastern District of Washington dismissed the plaintiffs’ First Amended Complaint. The court found that the claims were constitutionally and prudentially unripe, and that the doctrine of Younger abstention required federal courts to refrain from interfering with ongoing state disciplinary proceedings. The district court also addressed the merits, concluding that the plaintiffs failed to state a plausible First Amendment or due process claim, but the primary basis for dismissal was abstention and ripeness.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The Ninth Circuit held that Younger abstention barred claims challenging ongoing state disciplinary proceedings (including as-applied and facial constitutional challenges, and due process claims) for all plaintiffs subject to such proceedings. The court also held that Younger abstention did not apply to claims for prospective relief by plaintiffs not currently subject to proceedings, but those claims were constitutionally and prudentially unripe because no concrete injury had occurred and further factual development was needed. The Ninth Circuit thus affirmed the dismissal of all claims. View "STOCKTON V. BROWN" on Justia Law

Catholic Charities Bureau, Inc., and its subentities sought an exemption from Wisconsin's unemployment compensation taxes, claiming they were controlled by the Roman Catholic Diocese of Superior and operated primarily for religious purposes. The Wisconsin Supreme Court denied the exemption, ruling that the organizations did not engage in proselytization or limit their services to Catholics, and thus were not operated primarily for religious purposes.The Wisconsin Department of Workforce Development initially denied the exemption request, but an Administrative Law Judge reversed this decision. The Wisconsin Labor and Industry Review Commission then reinstated the denial. The state trial court overruled the commission, granting the exemption, but the Wisconsin Court of Appeals reversed this decision. The Wisconsin Supreme Court affirmed the Court of Appeals, holding that the organizations' activities were secular and not primarily religious, and that the statute did not violate the First Amendment.The United States Supreme Court reviewed the case and held that the Wisconsin Supreme Court's application of the statute violated the First Amendment. The Court found that the statute imposed a denominational preference by differentiating between religions based on theological lines, subjecting it to strict scrutiny. The Court concluded that the statute, as applied, could not survive strict scrutiny because the State failed to show that the law was narrowly tailored to further a compelling government interest. The judgment of the Wisconsin Supreme Court was reversed, and the case was remanded for further proceedings. View "Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission" on Justia Law