Justia Non-Profit Corporations Opinion Summaries

A minor league baseball team in Oregon lost its longstanding affiliation with a Major League Baseball (MLB) club after MLB restructured its relationship with minor league teams in 2020. The team’s owner alleges that a minority owner of an MLB franchise, who also served on the board and a negotiation committee of the national minor league association, acted to reduce the number of minor league clubs for personal gain, which resulted in the team’s exclusion from the new affiliation structure. The owner claims that the association’s rules left it dependent on the board and committee members to protect its interests.The United States District Court for the District of New Jersey dismissed the owner’s complaint, finding that it failed to plausibly allege the existence of a fiduciary relationship between the board member and the team. The owner appealed, arguing that fiduciary duties arose under Florida’s non-profit statute, by contract, or by implication due to the structure of the association and the interactions between the parties.The United States Court of Appeals for the Third Circuit reviewed the District Court’s dismissal de novo. The Third Circuit held that Florida’s non-profit statute does not create a fiduciary duty from a director to the members of the non-profit, only to the corporation itself. The court also found no express or implied fiduciary duty arising from contractual provisions or the surrounding circumstances. The court distinguished direct and derivative actions and concluded that the complaint did not allege facts to support a direct or implied fiduciary relationship. Accordingly, the Third Circuit affirmed the District Court’s dismissal of the complaint for failure to state a claim. View "Sports Enterprises Inc v. Goldklang" on Justia Law

Safehouse, a Pennsylvania nonprofit corporation, was established in 2018 to address opioid abuse in Philadelphia by providing overdose prevention services, including supervised illegal drug use. Safehouse argues that its activities are motivated by a religious belief in the value of human life and that government intervention substantially burdens its religious exercise.The United States District Court for the Eastern District of Pennsylvania initially determined that Safehouse’s proposed activities did not violate 21 U.S.C. § 856(a)(2). However, the Third Circuit Court of Appeals reversed this decision, holding that Safehouse’s activities would indeed violate the statute. On remand, the District Court dismissed Safehouse’s Religious Freedom Restoration Act (RFRA) and Free Exercise counterclaims, reasoning that non-religious entities are not protected by these provisions. Safehouse appealed this dismissal.The United States Court of Appeals for the Third Circuit reviewed the case and held that the District Court erred in its interpretation. The Third Circuit determined that RFRA and the Free Exercise Clause extend protections to non-natural persons, including non-religious entities like Safehouse. The court emphasized that RFRA’s plain text and Free Exercise doctrine protect any “person” exercising religion, which includes corporations and associations. The court reversed the District Court’s dismissal of Safehouse’s RFRA and Free Exercise counterclaims and remanded the case for further consideration of whether Safehouse has plausibly pleaded these claims. The appeal by José Benitez, President of Safehouse, was dismissed due to lack of appellate standing. View "United States v. Safehouse" on Justia Law