Thorsen v. Sons of Norway
996 F. Supp. 2d 143
E.D.N.Y2014Background
- Plaintiffs Thorsen family, former Nansen Lodge members, sue SON and individual officers for breach of fiduciary duty and various torts related to alleged mismanagement.
- SON is a Minnesota nonprofit with about 61,000 members and global lodges; Nansen Lodge is a New York-based local lodge.
- Individual Defendants are Heiberg (SON CEO, Minnesota), Ness (SON general counsel, Minnesota), and Rude (former SON International President, Montana).
- Plaintiffs allege a ‘cabal’ within Nansen Lodge caused mismanagement, jeopardizing SON’s tax-exempt status, and that the Individual Defendants failed to oversee properly.
- Claims include: Count I derivative breach of fiduciary duty; Counts II–IV defamation (per se and as to Plaintiffs); II/IIED claims; and a request for damages and receivership for SON.
- Court granted the motion to dismiss all claims with prejudice and denied leave to amend further; court also addressed derivative standing and personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has personal jurisdiction over the Individual Defendants | Thorsens contend NY long-arm extends to them via committee actions. | Individual Defendants argue no general or specific jurisdiction; conduct insufficient for NY contacts. | Specific jurisdiction established under CPLR 302(a)(1); general jurisdiction lacking; due process satisfied; jurisdiction over individuals limited to the claims against them. |
| Whether Plaintiffs have derivative standing to sue for breach of fiduciary duty | Winter/Rales standards justify excusing demand; Minnesota law governs derivative standing. | Demand not futile; no majority of board shown to be disinterested/independent or wrongdoers. | Derivative standing dismissed for lack of demand futility; claim fails. |
| Whether defamation and IIED claims against SON state a plausible claim | Defamation and IIED alleged via SON’s adoption of lodge statements and broader conduct. | Plaintiffs fail to identify actionable statements, actual damages, or extreme outrageous conduct. | Defamation and defamation per se claims dismissed; IIED claims dismissed. |
| Whether amendment would be futile and leave to amend should be granted | Plaintiffs would amend to cure pleading deficiencies. | No viable amendments; proposed facts insufficient to state claims. | Leave to amend denied; complaint dismissed with prejudice. |
Key Cases Cited
- Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779 (2d Cir. 1999) (due process minimum contacts and choice of law framework)
- Best Van Lines, Inc. v. Walker, 490 F.3d 239 (2d Cir. 2007) (minimum contacts and arisng-from nexus in 302(a)(1))
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 673 F.3d 50 (2d Cir. 2012) (purposeful availment and transacting business standard)
- Ehrenfeld v. Bin Mahfouz, 9 N.Y.3d 501 (N.Y. 2007) (quality of New York contacts governs transaction of business)
- Winter v. Farmers Educational Coop. Union of Am., 259 Minn. 257, 107 N.W.2d 226 (Minn. 1961) (demand futility standard for derivative actions in Minnesota)
- Rales v. Blasband, 634 A.2d 927 (Del. 1993) (demand futility test for directors)
- Liberman v. Gelstein, 80 N.Y.2d 429 (N.Y. 1992) (defamation per se and damages framework)
- Thai v. Cayre Group, Ltd., 726 F. Supp. 2d 323 (S.D.N.Y. 2010) (defamation elements and special damages standard in NY federal court)