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Bronner v. Duggan

United States District Court, District of Columbia

March 31, 2017

SIMON BRONNER, et al., Plaintiffs,
v.
LISA DUGGAN, et al., Defendants. Re Document No. 21

          MEMORANDUM OPINION GRANTING IN PART AND DENYING IN PART DEFENDANTS' RENEWED MOTION TO DISMISS

          RUDOLPH CONTRERAS United States District Judge

         I. INTRODUCTION

         Plaintiffs bring this suit in their individual capacities and derivatively on behalf of the American Studies Association, alleging that a group of academic leaders improperly introduced and implemented an academic boycott of Israel. Plaintiffs seek injunctive relief and damages from the American Studies Association for alleged breach of fiduciary duty, ultra vires acts, breach of contract, and violation of the D.C. Nonprofit Corporation Act. They seek recovery for alleged ultra vires acts and waste against the pro-boycott leaders directly. Defendants move to dismiss on several grounds, including lack of subject-matter jurisdiction, lack of personal jurisdiction, the First Amendment, and failure to state a claim. With respect to their contention that Plaintiffs do not state cognizable claims, Defendants' argument does not extend to Plaintiffs' claims for waste or violation of the D.C. Nonprofit Corporation Act.

         Although the Court finds that it possesses jurisdiction and it would not violate the First Amendment to rule against Defendants in this case, it also finds that Plaintiffs, in part, failed to state cognizable claims. Although Plaintiffs allege plausible direct claims for breach of contract and waste, their failure to adequately demand that the nonprofit corporation remedy the situation internally makes them ineligible to proceed derivatively under District of Columbia law. Additionally, because Plaintiffs do not allege facts suggesting that Defendants acted in violation of an express prohibition in the bylaws, they fail to state cognizable ultra vires claims. Accordingly, the Court will dismiss Plaintiffs' derivative claims and ultra vires claim. The case will proceed, however, with Plaintiffs' direct claims for waste, breach of contract, and violation of the D.C. Nonprofit Corporation Act, which survive dismissal.

         II. FACTUAL BACKGROUND

         Plaintiff Simon Bronner brings this action derivatively on behalf of the American Studies Association (“ASA”) against Defendants Lisa Duggan, Curtis Marez, Avery Gordon, Neferti Tadiar, Sunaina Maira, and Chandan Reddy (collectively “Individual Defendants”) for breach of fiduciary duty, ultra vires acts, and waste. See Am. & Verified Compl. for Derivative and Direct Claims (“Compl.”) at 1, ECF No. 19. Plaintiffs Bronner, Michael Rockland, Michael Barton, and Charles Kupfer (collectively “Individual Plaintiffs”) bring this action directly against the ASA for breach of contract and violation of the D.C. Nonprofit Corporation Act, and against all Defendants for ultra vires acts and waste. Compl. at 1-2. Individual Plaintiffs are or were members of the ASA during the time period at issue. See Compl. ¶¶ 11-14. Individual Defendants were involved with the ASA in different capacities during the relevant time period. See Compl. ¶¶ 16-21. Individual Plaintiffs are citizens of Pennsylvania and New Jersey. Compl. ¶¶ 11-14. Individual Defendants are citizens of California, New York, and Washington. Compl. ¶¶ 16-21. The ASA is organized under the District of Columbia's nonprofit laws and maintains its corporate headquarters there. Compl. ¶ 15.

         A. The American Studies Association

         The ASA is a nonprofit organization whose object is “the promotion of the study of American culture through the encouragement of research, teaching, publication, the strengthening of relations among persons and institutions in this country and abroad devoted to such studies, and the broadening of knowledge among the general public about American culture in all its diversity and complexity.” See Const. & Bylaws of the Am. Studies Ass'n (“ASA Const. & Bylaws”), Const., Art. I § 2, Defs.' Ex. 1, ECF No. 21-3.[1] Founding documents of the ASA provide that the society was “organized exclusively for education and academic purposes.” Compl. ¶ 24. The president of the ASA presides over the National Council and has a duty to “fulfill the chartered obligations and purposes of the [ASA].” ASA Const. & Bylaws, Const., Art. IV § 2. The National Council is charged with “conduct[ing] the business, set[ting] fiscal policy, . . . and oversee[ing] the general interests of the [ASA].” ASA Const. & Bylaws Const. Art. V § 2. There are 23 voting members of the National Council. Compl. ¶ 74; ASA Const. & Bylaws, Const., Art. V § 1. Under the ASA's bylaws, “[n]o substantial part of the activities of the [ASA] shall be the carrying on of propaganda, or otherwise attempting, to influence legislation, and the corporation shall nor participate in, or intervene in . . . any political campaign on behalf of any candidate for public office.” Compl. ¶ 25. According to the complaint, the ASA has conformed to these rules for decades and has established a “uniform practice” that prevents the ASA from advocating for particular positions on U.S. government policy. Compl. ¶ 25. Based “solely on the condition and understanding that this practice would be followed, ” Individual Plaintiffs donated time and money to the ASA. Compl. ¶ 26.

         The ASA bylaws provide that “[t]he Executive Committee [may] speak for the [ASA] on public issues [that] directly affect” the scholarly work of the ASA's members. See ASA Const. & Bylaws, Bylaws, Art. XI § 1. These bylaws also provide that if “an issue arise[s] which, in the opinion of the Executive Committee or Council, seems to require public action, speech[, ] or demonstration by the association at a particular annual meeting, . . . [t]he Council shall convene an emergency meeting of the membership on the first full day of the annual meeting[] to recommend a course of action [and] conduct a public discussion of the issue.” See ASA Const. & Bylaws, Bylaws, Art. XI § 3. The votes of two-thirds of the members in attendance at the emergency meeting are required for such a proposition to pass. See ASA Const. & Bylaws, Bylaws, Art. XI § 3.

         In 2013, the ASA elected Defendant Marez to be its president. Compl. ¶ 28. Mr. Marez ran on a platform of campus openness and “making knowledge less privatized and more equally distributed.” Compl. ¶ 28. He did not mention Israel or the concept of an academic boycott during his campaign. See Compl. ¶ 28. According to the complaint, after he was elected, Mr. Marez made Israel the “central focus” of the ASA under his leadership, and generally began turning the ASA into a “social justice” organization. Compl. ¶ 29.

         B. ASA's Boycott Resolution

         At the ASA's annual meeting in November 2013, ASA leadership introduced a resolution advocating for the boycott of Israeli academic institutions on the grounds that Israel restricted academic activity in formerly Jordanian-occupied territory that came under Israeli control after the Six Day War in 1967. See Compl. ¶ 41. The boycott resolution's preambulatory clauses stated that the ASA is devoted to “the struggle against all forms of racism, ” that the United States helps enable Israel to illegally occupy Palestine, that there is “no effective or substantive academic freedom for Palestinian students and scholars under conditions of Israeli occupation, ” and that the ASA is dedicated to the rights of students and scholars in Israeli institutions. Compl. ¶ 31. The operative clause of the resolution read as follows:

It is resolved that the American Studies Association (ASA) endorses and will honor the call of the Palestinian civil society for a boycott of Israeli academic institutions. It is also resolved that the ASA supports the protected rights of students and scholars everywhere to engage in research and public speaking about Israel-Palestine and in support of the boycott, divestment, and sanctions (BDS) movement.

         Compl. ¶ 31. During the presentations in support of the resolution, the proponents allegedly did not present any data or research, did not address how the affected institutions were founded, and did not specifically address “any . . . aspect of the actual state of academic freedom in the [t]erritories at any time.” Compl. ¶ 45. Instead, the speakers' “principal focus” was on an alleged apartheid state in the territories at issue, and the need for the ASA to support the ending of “the so-called settler-colonialist Zionist project” and America's support for these policies. Compl. ¶ 48. Plaintiffs allege that no speakers in opposition to the resolution were invited to speak during the course of the discussion, Compl. ¶ 47, and that Defendants “actively prevented an informed and methodical discussion of the Boycott resolution” in part by actively preventing opponents of the measure from being heard. Compl. ¶ 46.

         Individual Defendants were involved with the boycott resolution in varying degrees. Defendants Marez and Gordon co-hosted the discussion of the resolution. Compl. ¶ 16-17. Defendant Tadiar is alleged to have helped plan the 2013 convention. Compl. ¶ 18. Defendants Maira, Duggan, and Reddy are alleged to have been members of the 2013 National Council and Executive Committee. Compl. ¶¶ 19-21. Plaintiffs allege that Individual Defendants each engaged in actions that were intended to, and did in fact, alter the nature and purpose of the ASA. Compl. ¶ 30. Individual Defendants are alleged to have jointly led the campaign for the ASA to adopt the boycott resolution. Compl. ¶ 2. Plaintiffs further allege that a majority of the current National Council members are supporters of the boycott resolution, but do not specifically plead facts showing that a majority actually participated in the adoption of the resolution. Compl. ¶ 74.

         According to the Amended Complaint, the ASA National Committee allowed ASA members to vote at any time during a ten-day period in December, the month following the 2013 convention. Compl. ¶ 33. Plaintiffs allege that, although around 5, 000 people were members of the ASA at the time of the conference, Compl. ¶ 33, only 1, 252 voted on the proposal, with 828 voting in favor of the resolution. Compl. ¶ 33. So, according to Plaintiffs, of the members who voted on the resolution, just under two-thirds voted in favor. Compl. ¶ 33.

         Plaintiffs also suggest that Defendants manipulated the vote. According to the complaint, members of the ASA who supported the resolution encouraged their students to join the ASA because they knew the students would vote in favor of the resolution. Compl. ¶ 40. Around the same time, at least one Individual Plaintiff attempted to vote but was told by ASA leadership that he could not vote on the resolution “ostensibly because he renewed [his ASA membership] too late to vote.” Compl. ¶ 35. Plaintiffs allege that at least one other person who renewed his membership just before the vote was allowed to vote despite the individual plaintiff being barred from doing so under similar circumstances. Compl. ¶ 38. At the end of voting, the ASA asserted that the resolution passed. Compl. ¶ 33.

         Plaintiffs allege that since the boycott, several members of the ASA have resigned in protest of the boycott, financially depriving the ASA of membership dues for years to come. Compl. ¶ 60. Moreover, Plaintiffs allege that the ASA has experienced a significant decline in reputation because of the boycott. The ASA is alleged to have suffered financial harm as a result of the boycott because of an alleged decrease in donations and an increase in public-relations spending required by the need to deal with the public backlash resulting from the boycott. Compl. ¶ 61. Although Plaintiffs do not allege any specific amounts of damages in their complaint, they do, in their “Jurisdiction and Venue” section, assert that “the amount in controversy exceeds $75, 000.” Compl. ¶ 9.

         The ASA, through its Executive Director, has countered that the ASA's membership dues actually increased in the year following the boycott and have not significantly changed since then. See Decl. of John Stephens (“Stephens Decl.”) ¶¶ 5-8, ECF No. 21-2. The ASA also claims that it received an increase in grants and contributions following the boycott. This increase is alleged to have amounted to almost $40, 000 in the first year, with a total of $49, 000 specifically designated by donors for support of the boycott resolution. Stephens Decl. ¶ 9. However, the ASA acknowledges that it spent $20, 000 of the funds received in support of the boycott resolution on a media strategist, and spent over $15, 000 on boycott-related expenses during annual meetings. Stephens Decl. ¶¶ 10-14. All said, according to the Executive Director of the ASA, “there has been no financial loss on ASA's part as a result of the Resolution[, and] [i]f anything, there has been a net gain of at least $11, 770[].” Stephens Decl. ¶ 16.

         Prior to filing this suit, some Individual Plaintiffs allege that they attempted to get the ASA to rescind the resolution and reorient its focus away from Israel. Compl. ¶ 8. According to the complaint, two Individual Plaintiffs, one of whom was an officer and member of the ASA governing council, “repeatedly attempted to have the Defendant ASA usurpers abide by the rules and procedures set forth in [the] ASA's [c]onstitution.” Compl. ¶ 8.

         But the complaint does not further specify what actions Plaintiffs took to resolve these issues short of filing this suit. According to the Complaint, “Plaintiff Bronner has issued a written Demand to the Council that it investigate these claims and that it cause the ASA to prosecute such claims.” Compl. ¶ 75. Although the complaint does not indicate when this demand was made, Defendants attach the demand letter as an exhibit to their motion to dismiss. Defs.' Mot. Dismiss Ex. 2, ECF No. 21-4. It is dated April 18, 2016, two days before Plaintiffs filed their complaint in this case, and apparently attached a copy of the original complaint. Defs.' Mot. Dismiss Ex. 2, ECF No. 21-4. Plaintiffs do not contest the authenticity of the demand document. Pls.' Mem. Opp'n Defs.' Renewed Partial Mot. Dismiss (“Pls.' Opp'n”) at 19-25, ECF No. 23.

         Plaintiffs allege that, despite their pre-suit efforts to resolve these issues and their written demand, Defendants have allegedly “made clear that they will not voluntarily redress Plaintiffs' concerns.” Compl. ¶ 8. Plaintiffs support this contention by citing the ASA's expenditures on public relations, continued efforts to turn the ASA into a “social justice” organization, and their publicly-stated positions in favor of the boycott and efforts to defend the boycott in publications. Pls.' Opp'n at 22.

         III. LEGAL STANDARDS

         A. 12(b)(1)

         Plaintiffs have the burden of showing subject-matter jurisdiction, and their allegations are not presumed to be truthful. Carmona v. Snow, 2007 WL 915220, at *2 (D.D.C. Mar. 26, 2007) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 n.16 (3d Cir. 1977)). Indeed, the Court must give the plaintiff's allegations “closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim.” Ludvigson v. United States, 525 F.Supp.2d 55, 56-57 (D.D.C. 2007). In doing so, the Court may consider evidence outside of the pleadings. Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); Al-Owhali v. Ashcroft, 279 F.Supp.2d 13, 21 (D.D.C. 2003).

         B. 12(b)(2)

         The plaintiff bears the burden of establishing personal jurisdiction over each defendant. Crane v. N.Y. Zoological Soc'y, 894 F.2d 454, 456 (D.C. Cir. 1990). And, although the court must resolve any factual discrepancies in favor of the plaintiff, Crane, 894 F.2d at 456, “[b]are allegations and conclusory statements are insufficient, ” Johns v. Newsmax Media, Inc., 887 F.Supp.2d 90, 95 (D.D.C. 2012). See also Second Amendment Found. v. U.S. Conference of Mayors, 274 F.3d 521, 524 (D.C. Cir. 2001). A court may consider evidence outside of the pleadings to resolve questions of personal jurisdiction. See Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005).

         C. 12(b)(6)

         To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual allegations that, if accepted as true, would state a plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Instead, plaintiffs must “nudge[] their claims across the line from conceivable to plausible.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “In evaluating a Rule 12(b)(6) motion to dismiss, a court may consider the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, or documents upon which the plaintiff's complaint necessarily relies even if the document is produced not by [the parties].” Busby v. Capital One, N.A., 932 F.Supp.2d 114, 133-34 (D.D.C. 2013) (alteration in original) (internal citations and quotation marks omitted).

         IV. ANALYSIS

         Defendants move to dismiss on several grounds. First, they contend that the Court lacks subject-matter jurisdiction because Plaintiffs do not meet the amount-in-controversy requirement to maintain this diversity suit. Second, they argue that the Court lacks personal jurisdiction over Individual Defendants because their only alleged connection with the District of Columbia was the fortuitous location of the ASA's annual meeting. Third, Defendants argue that a ruling in favor of Plaintiffs-and thus against the boycott resolution-would constitute state action infringing on their First Amendment rights. As their fourth grounds for dismissal, Defendants argue that Plaintiffs failed to make an adequate pre-suit demand on the ASA because the demand was made only two days prior to the commencement of this lawsuit, and that the demand would not have been futile. Fifth, Defendants contend that, because the ASA had the authority to pass the boycott resolution, it did not act ultra vires. Sixth, Defendants argue that they did not breach any contractual obligations owed to the ASA membership-in other words, that they did not violate the bylaws. Finally, Defendants argue that the D.C. Nonprofit Corporation Act does not allow Plaintiffs' claims to proceed against Individual Defendants.

         For the reasons set forth below, the Court grants Defendants' Motion to Dismiss in part and denies it in part. The Court concludes that it has both subject-matter and personal jurisdiction. It has subject-matter jurisdiction because Plaintiffs have shown, beyond the low standard of legal possibility, that they could recover more than $75, 000 if they prevailed. The Court has personal jurisdiction over the Individual Defendants because they voluntarily served as directors of a nonprofit registered in D.C. and attended an annual meeting in D.C. and, thus, have purposefully availed themselves of the laws and protections of the District of Columbia.

         Moreover, because a judgment against Defendants would be based on generally-applicable laws with only incidental effects on expression, it would not violate the First Amendment. But Plaintiffs' claims begin to falter when the Court moves to their substantive claims. Because Plaintiffs bring a derivative claim, they were required to make a demand of the ASA before bringing suit. But Plaintiffs failed to wait the required time after making their demand-which would not necessarily have been futile-to maintain their derivative claims. Plaintiffs also fail to show that Defendants acted contrary to any express prohibitions in the bylaws, and thus do not state an ultra vires claim. Plaintiffs do, however, state a cognizable claim for breach of contract and Defendants do not move to dismiss their claim for waste. Accordingly, the Court will dismiss Counts I and II in their entirety, and Count III insofar as it seeks derivative relief on behalf of the ASA.

         A. The Court Has Subject-Matter Jurisdiction, Because It is Not Legally Impossible for ...


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