MEMORANDUM OPINION RE DOCUMENT NO. 85, 88
RUDOLPH CONTRERAS UNITED STATES DISTRICT JUDGE.
Confirming
the Court's Subject Matter Jurisdiction
I.
INTRODUCTION
This
Memorandum Opinion addresses a specific, narrow issue: The
impact of District of Columbia (“D.C.”) Code
§ 29-406.31(d), which shields directors of charitable
corporations from damages except in specific circumstances,
on this Court's subject matter jurisdiction.
While
the issue here is narrow, the underlying lawsuit to which
this issue relates arose from a much broader dispute over the
extent to which an exclusively academic organization should
involve itself in political issues. Plaintiffs are current
and former members of the American Studies Association
(“ASA”), a nonprofit, charitable corporation
dedicated to the promotion of the study of American culture.
They have sued the ASA and several of its current and former
leaders, including Defendants Lisa Duggan, Curtis Marez,
Avery Gordon, Neferti Tadiar, Sunaina Maira, Chandan Reddy,
Jasbir Puar, J. Kehaulani, Kauanui, Steven Salaita, and John
Stephens (“Individual Defendants”), alleging that
the Individual Defendants improperly introduced and
implemented a resolution calling for the academic boycott of
Israel.
During
recent briefing regarding whether Plaintiffs could amend
their complaint, D.C. Code § 29-406.31(d) emerged as a
possible impediment to the Court's subject matter
jurisdiction. For the reasons stated below, the Court,
concludes that § 29-406.31(d) does not defeat its
jurisdiction at this stage in the litigation.
II.
BACKGROUND[1]
A.
The American Studies Association
The ASA
is a nonprofit organization in service of “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, ECF No. 21-3. The ASA's founding documents
provide that the society was “organized exclusively for
education and academic purposes.” Pls.' Sec. Am.
Compl. (“SAC”) ¶ 30, ECF No. 81.
The ASA
was incorporated in D.C. as a private, nonprofit corporation,
and is therefore governed by D.C. law. SAC ¶ 17.
Moreover, it has been designated by the Internal Revenue
Service as a tax-exempt, charitable organization under the
Internal Revenue Code, 26 U.S.C. § 501(c)(3).
Id. Because it is exempt from taxation under §
501(c)(3), it is considered to be a “charitable
corporation” under D.C.'s statutory framework
governing nonprofit corporations. D.C. Code §
29-401.02(3), (4).
The ASA
is overseen by a “National Council” and a
President. 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. It
consists of thirteen voting members. ASA Const. & Bylaws,
Const., Art. V, § 1. The ASA's President 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.
B.
ASA's Boycott Resolution
In
November 2013, at the ASA's annual meeting, ASA
leadership introduced a resolution advocating for the boycott
of Israeli academic institutions (the
“Resolution”), in response to the allegation that
Israel restricts academic activity in formerly Jordanian
territory currently under Israeli control. See SAC
¶¶ 89, 98. The Resolution's operative clause
states:
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.
Am.
Verified Compl. (“FAC”) ¶ 31, ECF No. 19.
Plaintiffs allege that the Individual Defendants engaged in
improper conduct, in contravention of their duties to the ASA
and its members, and in violation of the ASA's bylaws and
D.C. law, to ensure that the Resolution was formally endorsed
by the ASA. See generally SAC. They also allege that
the Individual Defendants improperly utilized ASA funds to
defend the Resolution after its passage. Id.
Additionally,
Plaintiffs allege that the Resolution has harmed ASA in
multiple ways. First, Plaintiffs claim that, since the
Resolution, several members of the ASA have resigned in
protest, depriving the ASA of membership dues. See
SAC ¶ 174. Second, Plaintiffs claim that the ASA has
experienced reputational harm because of the reaction to the
Resolution by the academic community and the general public.
See SAC ¶ 154-55, 176. And third, Plaintiffs
claim that the ASA has suffered financial harm because of an
alleged decrease in donations and an increase in
public-relations and legal spending in response to the public
backlash resulting from the Resolution. See SAC
¶ 171, 175, 185. Although the complaint does not specify
an amount of damages sought, it does state that “the
amount in controversy exceeds $75, 000.” SAC ¶ 11.
C.
Relevant Procedural History
Plaintiffs
filed suit in this Court in April 2016, ECF No. 1, and later
amended their complaint in June 2016, ECF No. 19, and in
March 2018, ECF No. 81. They challenge various acts relating
to the passage of the Resolution and its aftermath, seeking
damages, declaratory relief, and injunctive relief for
alleged breaches of fiduciary duties, ultra vires
acts, breaches of contract, violations of the D.C. Nonprofit
Corporation Act, and corporate waste. See generally
SAC. They claim that the Court has subject matter
jurisdiction under 28 U.S.C. § 1332, “inasmuch as
there exists complete diversity of citizenship between
Plaintiffs and Defendants and the amount in controversy
exceeds $75, 000.” SAC ¶ 11.
Soon
after the First Amended Complaint's filing, Defendants
moved to dismiss it. Among other arguments, Defendants argued
that the Court lacked subject matter jurisdiction because
Plaintiffs failed to satisfy the amount-in-controversy
requirement-$75, 000-necessary to maintain a diversity suit
under 28 U.S.C. § 1332. See Defs.' Mot.
Dismiss at 7-11, ECF No. 21. The Court disagreed, holding
that because it was not legally impossible for Plaintiffs to
receive a judgment of at least $75, 000, the
amount-in-controversy requirement was satisfied. Bronner
v. Duggan, 249 F.Supp.3d 27, 38 (D.D.C. 2017).
In
November 2017, Plaintiffs moved for leave to amend their
complaint for a second time. See generally Pls.'
Mot. Leave File Sec. Am. Compl., ECF No. 59. In their
opposition to the Plaintiffs' motion for leave to amend,
Defendants argued that Plaintiffs did not “attempt to
satisfy the requirements under the D.C. Nonprofit
Corporations Act to hold the individual defendants
liable.” Defs.' Opp'n Pls.' Mot. Leave File
Sec. Am. Compl. at 5, ECF No. 66. Specifically, they argued
that “Plaintiffs' proposed second amended complaint
alleges none of [the] exceptions [to D.C. Code §
29-406.31(d)], nor could it.” Id.
The
Court allowed Plaintiffs to amend the complaint, but it also
recognized that “[b]ecause Plaintiffs are only seeking
money damages from the Individual Defendants, if the D.C.
Nonprofit Corporations Act precludes them from doing so, then
it would in fact be legally impossible for them to recover
$75, 000 in this action.” Bronner v. Duggan,
324 F.R.D. 285, 294 (D.D.C. 2018). “Such a finding
would necessarily mean that this Court's subject matter
jurisdiction could not be founded on 28 U.S.C. §
1332.” Id. Discharging its duty to reexamine
its subject matter jurisdiction when that jurisdiction comes
into doubt, the Court ordered the parties to provide
supplemental ...