[24119] in APO-L
Re: [APO-L] Board Liability
daemon@ATHENA.MIT.EDU (Michael Gallagher)
Wed Jan 21 09:42:00 2004
Date: Wed, 21 Jan 2004 09:41:59 -0500
Reply-To: Michael Gallagher <famtree@UDel.Edu>
From: Michael Gallagher <famtree@UDel.Edu>
To: APO-L@LISTSERV.IUPUI.EDU
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Board LiabilityAPO is a non-profit corporation. It's been 3 years, but =
my economics teacher my senior year of high school said (when I asked) =
that nonprofit groups would probably be S-corporations. Corporations =
exist to limit liability. A stockholder is only liable for the amount =
of investment s/he has individually in such corporation (ie bankruptcy =
making the shares worthless) & the individual cannot be touched by legal =
suits solely as an investor.
501c3's are nonprofit corporations and do not have stock, but I would =
conjecture that limited liability applies.
Any thoughts on why APO does not have a Congressional charter? What =
clause allows APO "to sue and be sued"?
Michael Gallagher
----- Original Message -----=20
From: Mark Allen Stratton=20
To: APO-L@LISTSERV.IUPUI.EDU=20
Sent: Wednesday, January 21, 2004 9:07 AM
Subject: Re: [APO-L] Board Liability
While I don't have a definitive answer, I'll tell you what my thoughts =
are on this (though I'm certain there are those who can speak with more =
authority than I).
1. There is nothing that prevents the Board (or the Fraternity, for =
that matter) from being sued. In the litigious society in which we =
leave, everyone is a potential target.
2. The best defense that I can think of is for members of the Board =
to diligiently exercise their fiduciary responsibility, to exercise due =
diligence in the course of their duties. By that, I mean to address =
problems when they arise, to work as best as they can to minimize risk, =
and overall, to do the jobs to the best of their ability. =20
I do not believe there is anyway the structure of the Fraternity or =
the Board can somehow lessen the impact of a potential lawsuit. I say =
that because our governing documents (Articles of Incorporation, =
National Bylaws, etc.) are inferior to the laws of the United States and =
the several states. Given that, any law at issue supercedes our =
governing documents, so I don't think the structure of our organization =
would have any protective value.
Now, as I understand, there are some laws that do offer some measure =
of protection to volunteers (as I recall, I heard about them at the SRW =
a few years back), but I cannot recall the specifics of them.
All of that aside, I am not a lawyer, but I really do think the best =
defense against a lawsuit is to do one's job to the best of one's =
ability, to address problems as they arise, and to minimize risk as best =
as possible.
Mark
----- Original Message -----=20
From: Vehlow, Richard=20
To: APO-L@LISTSERV.IUPUI.EDU=20
Sent: Wednesday, January 21, 2004 8:57 AM
Subject: [APO-L] Board Liability
I was having a dinner conversation with two fellow section staff =
members the other day. We eventually stumbled upon the omnipresent risk =
management topic, and I apparently learned something interesting. If the =
fraternity is sued, the 18-member board can be personally liable!
We discussed a few what-ifs, and there was an interpretation made =
that theoretically, a region director on one coast can be cleaned out =
financially thanks to the litigation stemming from an incident =
transcontinentally.
I would assume that members of a volunteer organization would be =
personnally protected against such personal financial risk. When APO =
faced an injury lawsuit in 1988 (which was dismissed), I was =
understanding that the target of the lawsuit was the financial assets of =
the fraternity itself.
If this is indeed the case, then what would a board member have to =
do to protect his/her assets if he/she would like to serve in that =
position? Is there a way to structure ourselves to avoid this?
-Rich Vehlow=20
Section 88 Leadership Coordinator=20
vehlor@alum.rpi.edu=20
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<HTML><HEAD><TITLE>Board Liability</TITLE>
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<DIV><FONT face=3DArial size=3D2>APO is a non-profit corporation. =
It's=20
been 3 years, but my economics teacher my senior year of high =
school said=20
(when I asked) that nonprofit groups would probably be =
S-corporations. =20
Corporations exist to limit liability. A stockholder is only =
liable for=20
the amount of investment s/he has individually in such corporation (ie=20
bankruptcy making the shares worthless) & the individual cannot be =
touched=20
by legal suits solely as an investor.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>501c3's are nonprofit corporations and =
do not have=20
stock, but I would conjecture that limited liability =
applies.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Any thoughts on why APO does not have a =
Congressional charter? What clause allows APO "to sue and be=20
sued"?</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Michael Gallagher</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3Dmark_stratton@yahoo.com =
href=3D"mailto:mark_stratton@yahoo.com">Mark=20
Allen Stratton</A> </DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3DAPO-L@LISTSERV.IUPUI.EDU=20
href=3D"mailto:APO-L@LISTSERV.IUPUI.EDU">APO-L@LISTSERV.IUPUI.EDU</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, January 21, =
2004 9:07=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> Re: [APO-L] Board=20
Liability</DIV>
<DIV><BR></DIV>
<DIV><FONT face=3DArial size=3D2>While I don't have a definitive =
answer, I'll tell=20
you what my thoughts are on this (though I'm certain there are those =
who can=20
speak with more authority than I).</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>1. There is nothing that =
prevents the Board=20
(or the Fraternity, for that matter) from being sued. In the =
litigious=20
society in which we leave, everyone is a potential =
target.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>2. The best defense that I can =
think of is=20
for members of the Board to diligiently exercise their fiduciary=20
responsibility, to exercise due diligence in the course of their =
duties. =20
By that, I mean to address problems when they arise, to work as best =
as they=20
can to minimize risk, and overall, to do the jobs to the best of their =
ability. </FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>I do not believe there is anyway the =
structure of=20
the Fraternity or the Board can somehow lessen the impact of a =
potential=20
lawsuit. I say that because our governing documents (Articles of =
Incorporation, National Bylaws, etc.) are inferior to the laws of the =
United=20
States and the several states. Given that, any law at issue =
supercedes=20
our governing documents, so I don't think the structure of our =
organization=20
would have any protective value.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Now, as I understand, there are some =
laws that do=20
offer some measure of protection to volunteers (as I recall, I heard =
about=20
them at the SRW a few years back), but I cannot recall the specifics =
of=20
them.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>All of that aside, I am not a lawyer, =
but I=20
really do think the best defense against a lawsuit is to do one's job =
to the=20
best of one's ability, to address problems as they arise, and to =
minimize risk=20
as best as possible.</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT face=3DArial size=3D2>Mark</FONT></DIV>
<BLOCKQUOTE dir=3Dltr=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
<DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV=20
style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
<A title=3DRichard.Vehlow@ogs.state.ny.us=20
href=3D"mailto:Richard.Vehlow@ogs.state.ny.us">Vehlow, Richard</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3DAPO-L@LISTSERV.IUPUI.EDU=20
=
href=3D"mailto:APO-L@LISTSERV.IUPUI.EDU">APO-L@LISTSERV.IUPUI.EDU</A> =
</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Wednesday, January 21, =
2004 8:57=20
AM</DIV>
<DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [APO-L] Board =
Liability</DIV>
<DIV><BR></DIV>
<P><FONT size=3D2>I was having a dinner conversation with two fellow =
section=20
staff members the other day. We eventually stumbled upon the =
omnipresent=20
risk management topic, and I apparently learned something =
interesting. If=20
the fraternity is sued, the 18-member board can be personally=20
liable!</FONT></P>
<P><FONT size=3D2>We discussed a few what-ifs, and there was an =
interpretation=20
made that theoretically, a region director on one coast can be =
cleaned out=20
financially thanks to the litigation stemming from an incident=20
transcontinentally.</FONT></P>
<P><FONT size=3D2>I would assume that members of a volunteer =
organization=20
would be personnally protected against such personal financial risk. =
When=20
APO faced an injury lawsuit in 1988 (which was dismissed), I was=20
understanding that the target of the lawsuit was the financial =
assets of the=20
fraternity itself.</FONT></P>
<P><FONT size=3D2>If this is indeed the case, then what would a =
board member=20
have to do to protect his/her assets if he/she would like to serve =
in that=20
position? Is there a way to structure ourselves to avoid =
this?</FONT></P>
<P><FONT size=3D2>-Rich Vehlow</FONT> <BR><FONT size=3D2>Section 88 =
Leadership=20
Coordinator</FONT> <BR><FONT size=3D2>vehlor@alum.rpi.edu</FONT>=20
</P></BLOCKQUOTE></BLOCKQUOTE></BODY></HTML>
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