Volunteer Protection Act - Litigation

Litigation

In Armendarez v. Glendale Youth Center, Inc., 256 F.Supp. 2d 1136 (D.C. AZ 2003), the former CEO of a nonprofit sued both the nonprofit corporation and its individual—and volunteer—Board of Directors members for unpaid wages under the Fair Labor Standards Act (FLSA).

The Court was thus confronted with multiple puzzles:

• Did the former CEO's claim against the Board members sound in contract or in tort (or in both)? Were contract claims also immunized under the VPA?
• If the CEO's claim was a tort claim arising under the FLSA --a federal law-- then what was the effect of the preemption provision of the Act which only expressly preempts state law claims? Did this therefore leave the federal claim under FLSA viable?

The Court noted that the FLSA was not noted as an exception to the immunities granted in the VPA, and consequently held that the VPA immunized the individual board members from liability. This was true, whether or not the nonprofit itself could actually pay any judgment in the former CEO's favor, whether or not the CEO's claim was in contract or tort, and whether or not the claim arose under federal or state law.

Nunez v. Duncan, 2004 U.S. Dist. LEXIS 11037 (D.Or. 2004). The volunteer President of a nonprofit is entitled to VPA immunity. A cite to Armendarez was sufficient for this Court to rule in favor of the volunteer.

Galindo v. Board of Directors of Latin American Civic Assoc., 2006 Cal. App. Unpub. LEXIS 378, 11 (Cal. App. 2006) (unpublished), same result.

In Mormons et al. v. St. John’s Northwestern Military Academy, Inc., 2000 U.S. Dist. LEXIS 5129 (E.D. Ill. 2000), parents sued a nonprofit school and its volunteer trustees for fraud under state law, claiming they were fraudulently persuaded by the trustees to enroll their children in the school. The Court considered the trustees' defense that they were protected from liability by the VPA and noted that the Act protects volunteers, including directors, who perform services for a nonprofit and receive compensation of no more than $500 per year.

The Court observed that the parents were claiming that the trustees made representations they knew were false, and that the trustees acted with the intent to induce the parents' reliance. Such allegations of willful tort, the Court noted, would exclude the immunity defenses under the VPA, and the parents should therefore have an opportunity to try to prove their allegations in court. The trustees' attempts to avoid liability at an early pleading stage were therefore thwarted.