Justia Non-Profit Corporations Opinion Summaries

A nonprofit corporation, Moving Oxnard Forward (MOF), challenged campaign finance limitations in the Oxnard City Code, alleging they violated the First Amendment. The limitations, adopted by the City of Oxnard, California, primarily affected Aaron Starr, MOF's President, who had a history of receiving large contributions and challenging the City Council's policies. Starr had previously led recall efforts against the City Council and ran for Mayor, relying on larger-dollar contributions.The United States District Court for the Central District of California granted summary judgment in favor of the City, upholding the campaign finance limitations. MOF appealed the decision, arguing that the limitations were designed to target and suppress Starr's political activities rather than to prevent corruption.The United States Court of Appeals for the Ninth Circuit reviewed the case and found significant "danger signs" of invidious discrimination against Starr. The court noted that the legislative record and the practical impact of the limitations disproportionately affected Starr, who had been a vocal critic of the City Council. The court also found that the City's justification for the limitations, based on a 2010 corruption scandal, was tenuous and unrelated to campaign contributions.The Ninth Circuit concluded that the contribution limits were not narrowly tailored to the City's interest in preventing quid pro quo corruption. Instead, the limits appeared to be more closely drawn to suppress Starr's political activities. As a result, the court reversed the district court's decision and remanded with instructions to grant summary judgment in favor of MOF, holding that the per-candidate aggregate contribution limitations in the Oxnard City Code violated the First Amendment. View "MOVING OXNARD FORWARD, INC. V. ASCENSION" on Justia Law

Grand Canyon University (GCU), a private university in Arizona, applied to the U.S. Department of Education to be recognized as a nonprofit institution under the Higher Education Act of 1965 (HEA). The Department denied GCU’s application, despite GCU having obtained 26 U.S.C. § 501(c)(3) recognition from the IRS as a tax-exempt organization. The Department concluded that GCU did not meet the operational test’s requirement that both the primary activities of the organization and its stream of revenue benefit the nonprofit itself.The U.S. District Court for the District of Arizona granted summary judgment in favor of the Department, upholding the denial of GCU’s application. The court found that the Department’s decision was not arbitrary and capricious or contrary to law. GCU appealed this decision.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court’s summary judgment. The Ninth Circuit held that the Department applied the wrong legal standards in evaluating GCU’s application. Specifically, the Department incorrectly relied on IRS regulations that impose requirements beyond those of the HEA. The correct HEA standards required the Department to determine whether GCU was owned and operated by a nonprofit corporation and whether GCU satisfied the no-inurement requirement. The Department’s failure to apply these correct legal standards necessitated that its decision be set aside.The Ninth Circuit reversed the judgment of the district court and remanded the case with instructions to set aside the Department’s denials and to remand to the Department for further proceedings consistent with the correct legal standards under the HEA. View "GRAND CANYON UNIVERSITY V. CARDONA" on Justia Law