317 F. Supp. 3d 284
D.C. Cir.2018Background
- Plaintiffs are current and former members of the American Studies Association (ASA), a D.C.-incorporated, tax-exempt charitable nonprofit. They challenge ASA leadership and several individual leaders for actions that led to adoption of an academic boycott of Israeli institutions (the "Resolution").
- Plaintiffs allege defendants misled members, manipulated governance/voting procedures, diverted ASA resources, and anticipated the Resolution would cause reputational and financial harm, including member resignations, lost donations, and increased legal/PR expenses.
- Plaintiffs seek money damages only from the Individual Defendants and invoke federal diversity jurisdiction under 28 U.S.C. § 1332 (amount in controversy > $75,000); parties do not dispute diversity of citizenship.
- Defendants rely on D.C. Code § 29-406.31(d), which bars money damages against directors of charitable corporations except for certain exceptions (improper personal benefit, intentional infliction of harm, violation of § 29-406.33, or intentional criminal conduct).
- The court ordered supplemental briefing to determine whether § 29-406.31(d) makes it legally impossible for plaintiffs to recover $75,000 and thus defeats federal diversity jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether D.C. Code § 29-406.31(d) precludes recovery of damages such that amount-in-controversy requirement for diversity jurisdiction cannot be met | Many Individual Defendants either were not directors or acted outside their director capacities; alleged conduct falls within the statute's exception for "intentional infliction of harm"; exculpatory provision is an affirmative defense not jurisdictional | Section 29-406.31(d) bars damages for directors; non-director defendants covered by another D.C. exculpatory provision; plaintiffs cannot recover on behalf of ASA (derivative claims dismissed) so damages limited | Court held § 29-406.31(d) does not defeat jurisdiction at this stage because plaintiffs plausibly alleged conduct constituting "intentional infliction of harm," making recovery > $75,000 legally possible |
| Standard for "intentional infliction of harm" exemption | Model Act comment: requires specific intent to do the act and actual knowledge the act will cause harm; plaintiffs pleaded such intent and knowledge | Defendants: factual record (documents, deposition) shows defendants believed actions were proper and not intended to harm ASA | Court adopted Model Act standard and found plaintiffs' allegations (withholding information, packing votes, diverting resources, anticipating backlash) plausibly meet it |
| Whether non-director defendants are nonetheless insulated by other D.C. statutes | Plaintiffs: some Individual Defendants (e.g., Puar, Tadiar) were not directors so § 29-406.31(d) inapplicable | Defendants: non-directors covered by § 29-406.90(b) volunteer immunity and other statutory protections | Court did not resolve immunity of non-directors here; focused on directors and concluded plaintiffs plausibly pleaded an exception for intentional harm |
| Whether dismissal of derivative claims means plaintiffs cannot obtain the damages they seek | Defendants: damages are ASA's and derivative claims were dismissed, so plaintiffs cannot recover those damages | Plaintiffs: maintain damages pleaded and injunctive relief value could satisfy amount-in-controversy; factual disputes remain | Court declined to decide now; indicated these arguments should be raised in a motion to dismiss or summary judgment and jurisdiction will be revisited as needed |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (court’s subject-matter jurisdiction is limited to constitutional/statutory grant)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (scope of federal courts’ subject-matter jurisdiction and Congress’s power to limit it)
- St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283 (plaintiff’s claimed amount controls unless legal certainty shows claim is for less)
- Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428 (federal courts’ obligation to ensure they have subject-matter jurisdiction)
- Adams v. Slonim, 924 F.2d 256 (reliance on Model Act commentary to interpret nonprofit-corporation statutory language)