Justia Non-Profit Corporations Opinion Summaries

In 2003, the Alabama Legislature and the citizens of Greene County voted to allow nonprofit organizations in that county to operate bingo games for fundraising purposes. Greenetrack, Inc. ("Greenetrack"), which was not a nonprofit organization, almost immediately began offering live and electronic bingo games at its gambling facility. From 2004 to 2008, Greenetrack reaped vast profits under the guise that its whole casino-style bingo operation was constantly being leased and operated by a revolving slate of local nonprofit organizations, whose nominal role earned them a tiny fraction of the bingo proceeds. Eventually, the Alabama Department of Revenue ("the Department") audited Greenetrack, found that its bingo activities were illegal, and concluded that it owed over $76 million in unpaid taxes and interest. Following a decade of litigation, the Alabama Tax Tribunal voided the assessed taxes on the threshold ground that Greenetrack's bingo business (regardless of its legality) was tax-immune under a statute governing Greenetrack's status as a licensed operator of dog races. The Department appealed, and the Alabama Supreme Court reversed, rejecting the statutory analysis offered by the Tax Tribunal and circuit court. Judgment was rendered in favor of the Department. View "Alabama Department of Revenue v. Greenetrack, Inc." on Justia Law

The issue presented for the Court of Appeal's review in this case centered on whether petitioner, The Community Action Agency of Butte County (CAA), had to produce its business records pursuant to the California Public Records Act (CPRA), the Freedom of Information Act (FOIA), and/or a regulation promulgated by real party in interest, California’s Department of Community Services and Development (the Department). After considering the arguments presented (including those of amici curiae), the text and history of CPRA, and other applicable authorities, the Court concluded: (1) a nonprofit entity like CAA might be an “other local public agency” only in exceptional circumstances not present here; (2) under a four-factor test adopted based on persuasive out-of-state authority, there was not substantial evidence for the trial court’s ruling that CAA was an “other local public agency”; (3) FOIA did not apply to CAA; and (4) the Department’s regulation did not require CAA to provide public access to its records generally. Accordingly, the trial court’s order was vacated. View "Community Action Agency of Butte County v. Super. Ct." on Justia Law

Canyon Vineyard Estates I, LLC (CVE) appealed from a grant of summary judgment in favor of Mountains Restoration Trust (MRT), John Paul DeJoria, the County of Los Angeles, and the California State Attorney General. CVE also appeals from an injunction in favor of MRT and from an award of attorney fees and costs in favor of MRT and the Attorney General.   The Second Appellate District affirmed the summary judgment order finding that there is no genuine issue of material fact that the property is subject to a valid conservation easement. However, the court concluded that the injunction is overbroad in that it improperly bars CVE from filing further litigation to challenge the conservation easement without regard to the potential merits of a future claim. Thus, the court reversed the injunction and remanded the matter to the trial court to enter a new injunction that is more narrowly tailored so that it does not enjoin future lawful actions by CVE. The court reasoned that CVE has not demonstrated a triable issue of fact as to whether Tuna Canyon remains subject to a conservation easement held by MRT. The court explained that the grant of a fee title subject to a condition subsequent did not preclude the grant of a conservation easement. Moreover, the court held that the trial court must ensure the injunction does not preclude CVE from exercising its right to seek relief in court. View "Canyon Vineyard Estates I v. DeJoria" on Justia Law

Goodwill Industries of Central Oklahoma, Inc., suspended operations of its retail stores and donations centers on March 25, 2020, to comply with state and local orders regarding the COVID-19 pandemic. After suffering losses due to the shutdown, Goodwill sued its insurer, Philadelphia Indemnity Insurance Company (“Philadelphia”), under its commercial lines policy. The policy provided coverage for “loss of Business Income” when the insured must suspend its operations due to “direct physical loss of or damage to” covered property. The district court granted Philadelphia’s motion to dismiss, concluding the policy did not cover Goodwill’s loss and that the policy’s Virus Exclusion barred coverage. Finding no reversible error in that judgment, the Tenth Circuit affirmed. View "Goodwill Industries Central v. Philadelphia Indemnity" on Justia Law

Debra Turner, formerly a director and president of the Conrad Prebys Foundation (Foundation), appealed judgments of dismissal in favor of the Foundation and its directors, following orders sustaining demurrers to her probate and civil actions. In those actions, Turner alleged the other Foundation directors breached their fiduciary duties in preapproving a settlement range for Laurie Victoria, who served both as a Foundation director and as the trustee of the Conrad Prebys Trust (Trust), to negotiate a settlement of a trust challenge by a disinherited heir. Turner also challenged Victoria’s actions as trustee. Several months after commencing her action, Turner’s term as a Foundation director and officer expired when she was not reelected to her positions during the annual election process. The civil and probate courts determined that Turner lost standing to maintain her causes of action. The issue this case presented for the Court of Appeal's review centered on whether a director of a nonprofit public benefit corporation who brings an action on behalf of the nonprofit public benefit corporation could lose standing to pursue its claims if the director was not reelected during the litigation. The Court of Appeal concluded the statutory scheme and public policy considerations required a continuous relationship with the public benefit corporation that was special and definite to ensure the litigation was pursued in good faith for the benefit of the corporation. "If a plaintiff does not maintain such a relationship, the statutory scheme provides the nonprofit public benefit corporation with protection through the Attorney General, who may pursue any necessary action either directly or by granting an individual relator status." Because Turner lost standing to pursue her causes of action, the Court affirmed the judgments of dismissal as to Turner acting in her capacity as a former director and officer. The case was remanded, however, with directions for the civil and probate courts to grant 60 days leave to amend, limited to the issue of whether a proper plaintiff could be substituted to pursue the existing claims. The Attorney General could consider during that 60-day period whether granting relator status to Turner, or another individual, for these claims was appropriate. View "Turner v. Victoria" on Justia Law

Charitable organizations soliciting funds in California generally must register with the Attorney General and renew their registrations annually by filing copies of their IRS Form 990, on which tax-exempt organizations provide the names and addresses of their major donors. Two tax-exempt charities that solicit contributions in California renewed their registrations and filed redacted Form 990s to preserve their donors’ anonymity. The Attorney General threatened the charities with the suspension of their registrations and fines. The charities alleged that the compelled disclosure requirement violated their First Amendment rights and the rights of their donors. The Ninth Circuit ruled in favor of the Attorney General.The Supreme Court reversed. California’s disclosure requirement is facially invalid because it burdens donors’ First Amendment rights and is not narrowly tailored to an important government interest. Compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as other forms of governmental action. Exacting scrutiny requires that a government-mandated disclosure regime be narrowly tailored to the government’s asserted interest, even if it is not the least restrictive means of achieving that end.A dramatic mismatch exists between the Attorney General's asserted interest and the disclosure regime. While California’s interests in preventing charitable fraud and self-dealing are important, the enormous amount of sensitive information collected through the disclosures does not form an integral part of California’s fraud detection efforts. California does not rely on those disclosures to initiate investigations. There is no evidence that alternative means of obtaining the information, such as a subpoena or audit letter, are inefficient and ineffective by comparison. Mere administrative convenience does not “reflect the seriousness of the actual burden” that the disclosure requirement imposes on donors’ association rights. It does not make a difference if there is no public disclosure, if some donors do not mind having their identities revealed, or if the relevant donor information is already disclosed to the IRS. View "Americans for Prosperity Foundation v. Bonta" on Justia Law

The Grand Cayman Blue Iguana is protected by the Endangered Species Act, 16 U.S.C. 1531, and by the Convention on International Trade in Endangered Species, which ban their collection, trade, and export. The Secretary of the Interior may permit “any” otherwise prohibited conduct “to enhance the propagation or survival” of a protected species. The nonprofit Phoenix Herpetological Society applied for permits to export four blue iguanas to a Danish zoo and continue its captive-bred wildlife program at its Arizona facility. For export, the Fish and Wildlife Service must find that “proposed export would not be detrimental to the survival of the species.” The Service also evaluates—under Endangered Species Act criteria—whether a permit “would be likely to reduce the threat of extinction facing the species.” The applicant bears the burden of showing that its specimens were lawfully acquired, including lawful importation of the ancestors of specimens it has bred.The D.C. Circuit affirmed the denial of the permits. The agency determined that exporting the iguanas would not be “detrimental” to the species but that exporting them would not “reduce the threat of extinction” for the species. The court concluded that its reasoning was not inconsistent. The Service appropriately acknowledged the prior permits and explained that inconsistent assertions about the parental stock raised new questions about lawful acquisition. View "Phoenix Herpetological Society, Inc. v. Fish and Wildlife Service" on Justia Law

Clay County Animal Shelter, Inc. ("the animal shelter"), appealed a circuit court judgment declaring Act No. 2018-432, Ala. Acts 2018, to be unconstitutional. The animal shelter was a nonprofit “no-kill” organization that provided food, water, medical care, spay and neutering services, and adoption services for stray and abandoned animals in Clay County, Alabama. Most of the people working at the animal shelter were unpaid volunteers. The animal shelter incurs numerous expenses associated with operating the shelter and caring for the animals. The legislature sought to provide funding to the animal shelter with proceeds from the tobacco tax authorized in Clay County pursuant to section 45-14-244, Ala. Code 1975. It was undisputed that Act No. 2017-65, the appropriation measure at issue, did not receive the vote of two-thirds of all the members elected to each house. The Clay County Commission argued that that portion of Act No. 2017-65 purporting to distribute funds to the Clay County General Fund to be disbursed to the animal shelter was, therefore, unconstitutional. After careful consideration, the Alabama Supreme Court concluded the circuit court erred in declaring Act No. 2018-432 as unconstitutional. Judgment was reversed. View "Clay County Animal Shelter, Inc. v. Clay County Commission et al." on Justia Law

The issue in this case was whether the Washington legislature extended a privilege or immunity to religious and other nonprofit, secular employers and whether, in providing the privilege or immunity, the legislature affected a fundamental right without a reasonable basis for doing so. Lawmakers enacted Washington’s Law Against Discrimination (WLAD) to protect citizens from discrimination in employment, and exempted religious nonprofits from the definition of “employer.” In enacting WLAD, the legislature created a statutory right for employees to be free from discrimination in the workplace while allowing employers to retain their constitutional right, as constrained by state and federal case law, to choose workers who reflect the employers’ beliefs when hiring ministers. Matthew Woods brought an employment discrimination action against Seattle’s Union Gospel Mission (SUGM). At trial, SUGM successfully moved for summary judgment pursuant to RCW 49.60.040(11)’s religious employer exemption. Woods appealed to the Washington Supreme Court, contesting the constitutionality of the statute. SUGM argued RCW 49.60.040(11)’s exemption applied to its hiring decisions because its employees were expected to minister to their clients. Under Our Lady of Guadalupe School v. Morrissey-Berru, 140 S. Ct. 2049 (2020), plaintiff’s employment discrimination claim must yield in a few limited circumstances, including where the employee in question was a minister. Whether ministerial responsibilities and functions discussed in Our Lady of Guadalupe were present in Woods’ case was not decided below. The Supreme Court determined RCW 49.60.040(11) was constitutional but could be constitutionally invalid as applied to Woods. Accordingly, judgment was reversed and the case remanded to the trial court to determine whether SUGM met the ministerial exception. View "Woods v. Seattle's Union Gospel Mission" on Justia Law

The Freedom Foundation was a nonprofit organization that describes itself as committed to “advanc[ing] individual liberty, free enterprise and limited, accountable government in the Evergreen State.” The Foundation brought citizen’s actions against Teamsters Local 117; Service Employees International Union Political Education and Action Fund (SEIU PEAF); and Governor Inslee, the Department of Social and Health Services, and Service Employees International Union 775 for various alleged violations of Washington’s Fair Campaign Practices Act (FCPA). In consolidated appeals, the issue common to all was whether the Freedom Foundation satisfied the FCPA’s prerequisites before filing their citizen’s actions. In each case, the superior courts ruled the Foundation failed to meet a 10-day deadline required by the FCPA and, accordingly, entered judgment for respondents. After review, the Washington Supreme Court agreed and affirmed. With respect to the Foundation's suit against the Teamsters Local 117, the Supreme Court determined that though the superior court erred by granting judgment on the pleadings to the union, the court’s entry of judgment would have been proper as summary judgment, and was thus affirmed. This result precluded the Foundation’s other challenges to the superior court’s rulings, which were therefore not addressed. As to the union's cross-appeal of its counterclaim against the Foundation under 42 U.S.C. 1983, the Foundation was not a state actor, was not wielding powers traditionally and exclusively reserved to the State, and therefore was not subject to suit under section 1983. View "Freedom Found. v. Teamsters Local 117" on Justia Law