• Paul Peter Nicolai

VOLUNTEER DIRECTORS IMMUNE

The Massachusetts Supreme Court has issued a broad decision immunizing volunteer directors to Massachusetts nonprofits from liability and being sued. The decision, interpreting Massachusetts and federal law, means volunteer directors of Massachusetts nonprofits need not defend cases alleging non-intentional negligence. They are also encouraged to move early in a case to have it dismissed against them and should expect to win a motion for dismissal.

Further broadening a relatively remarkable decision, the court noted that if a lower court does not grant the motion, the volunteer directors should file an immediate appeal for appellate review. Generally speaking, these kinds of appeals, known as interlocutory appeals, are discouraged.

In the particular case, a group of former employees of a dissolved nonprofit sued volunteer directors for nonpayment of wages claiming the directors were among the employers who violated the law by failing to pay wages due. The lower court had ruled it was unclear whether an exception to volunteer immunity applied, specifically, whether the director acted in a way which was intentionally designed to harm the employees.

The Supreme Court decided volunteer directors enjoy immunity from suit in addition to immunity from liability for many common law and statutory claims including, in this case, claims for nonpayment of wages.

The only clear exceptions to this new rule is that volunteer directors cannot get cases which adequately alleged fraud, gross negligence resulting in harm to a person or intentional misconduct dismissed.

WHY THIS IS IMPORTANT… The broad scope of the decision and the fact that volunteer directors are encouraged to file immediate appeals means that volunteer directors of Massachusetts nonprofit organizations have the ability to avoid not only liability but also the expense of defending lawsuits. It greatly reduces the possible exposure from being a volunteer director.