Justia Pennsylvania Supreme Court Opinion SummariesArticles Posted in Non-Profit Corporations
Pgh History v. Ziegler
This case involved questions of how the attorney-client privilege should apply in the context of derivative litigation. The nonprofit corporations involved in this matter were the Pittsburgh History and Landmarks Foundation (“the Foundation”) and its subsidiary, the Landmarks Financial Corporation (“the Corporation”), which managed the Foundation’s endowment. Plaintiffs were five former members of the Boards of Trustees of the Foundation and the Corporation who alleged they were improperly and ineffectively removed from the Boards in an attempt to thwart their oversight of the Foundation’s president, whom they believed was engaging in actions that were improper and not in accord with the Foundation’s mission. The Foundation’s Board created a Governance Task Force to review various practices of the Foundation; the Task Force recommended that both Boards be reduced substantially in number. The Foundation Board approved this recommendation and removed all trustees then serving from both Boards; significantly smaller boards were elected and as a result of these consolidations, and Derivative Plaintiffs lost their seats on the Boards. In accord with standard procedures for bringing a derivative action adopted by the Pennsylvania Supreme Court in Cuker v. Mikalauskas, 692 A.2d 1042 (Pa. 1997). The Supreme Court rejected the Commonwealth Court’s adoption of a qualified attorney-client privilege as set forth in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), which the Supreme Court viewed as inconsistent with prior Pennsylvania caselaw emphasizing predictability in the application of the attorney-client privilege. However, the Commonwealth Court’s decision not to apply the fiduciary or co-client exceptions to the attorney-client privilege under the facts of this case was affirmed. The matter was remanded for further al court and the Commonwealth Court and remanded the matter to the trial court for further proceedings. View "Pgh History v. Ziegler" on Justia Law
Zampogna v. Law Enforcement Health Benefits, Inc.
In this discretionary appeal, the issue presented for the Supreme Court's review was a narrow issue of whether Law Enforcement Health Benefits, Inc. (“LEHB”), a nonprofit corporation that administered health and welfare benefits to Philadelphia police officers as part of the union’s collective bargaining agreement, was authorized under the Pennsylvania Nonprofit Corporation Law (“NCL”), as well as its Articles of Incorporation, to spend some of its corporate funds to pay for a postcard sent to its members endorsing a candidate in a union election. The Supreme Court found that nothing in the NCL nor the corporation’s Articles prohibited the action at issue and that LEHB’s action was sufficiently related to its corporate purpose to be permissible. Accordingly, the Court reversed the decision of the Commonwealth Court which held otherwise, and reinstated the trial court’s order dismissing the declaratory judgment action against LEHB. View "Zampogna v. Law Enforcement Health Benefits, Inc." on Justia Law
Pennsylvania v. Veon
Appellant Michael R. Veon, a twenty-two-year member and eventual Minority Whip of the Pennsylvania House of Representatives, was entitled to $20,000 annually to cover business expenses associated with maintenance of a district office, as well as $4,000 for postage. Pursuant to House Democratic Caucus (“Caucus”) procedures, Veon could seek additional funds from Caucus leadership if he exhausted his $20,000 allocation, and it was not uncommon for Caucus members to do so. In 1991, Veon formed the Beaver Initiative for Growth (“BIG”), a non-profit corporation. BIG received all of its funding from public sources, primarily through the Pennsylvania Department of Community and Economic Development (“DCED”). Veon's Beaver County district office initially shared space with BIG, but opened two more district offices, for which the rent easily exceeded his caucus allotment. Veon was criminally charged with various offenses relating to BIG paying the district offices' rents. After some charges were withdrawn, Veon went to trial on nineteen counts. In the portion of the jury charge that was relevant to Veon’s appeal to the Supreme Court, the trial court defined the pecuniary requirement in the conflict of interest statute. The statute prohibited public officials from leveraging the authority of their offices for “private pecuniary benefit;” at issue here was whether or not that benefit extended to what the trial court in this case referred to as “intangible political gain.” In addition, another issue before the Supreme Court was whether the Commonwealth could receive restitution following prosecution of a public official for a crime involving unlawful diversion of public resources. The Court concluded the trial court committed prejudicial error in its jury charge regarding conflict of interest, and that it erred in awarding restitution to the DCED. Veon's judgment of sentence was vacated, the matter remanded for a new trial on conflict of interest, and for other proceedings. View "Pennsylvania v. Veon" on Justia Law
Mesivtah Eitz Chaim of Bobov, Inc. v. Pike Co. Bd. of Assessment Appeals
Appellant Mesivtah Eitz Chaim of Bobov, Inc., a not-for-profit religious entity related to the Bobov Orthodox Jewish community in Brooklyn, appealed a Commonwealth Court ruling, asking that the Supreme Court find it is an "institution of a purely public charity" under Article VIII, sec. 2(a)(v) of the Pennsylvania Constitution, and entitled to exemption from real estate taxes. Appellant operated a summer camp in Pike County, Pennsylvania. Pike County denied Appellant's exemption request, finding that occasional use of Appellant's recreational and dining facilities by Pike County residents was insufficient to prove Appellant was a purely public charity. The Court allowed this appeal to determine if it must defer to the General Assembly's statutory definition of that term. Upon review, the Supreme Court affirmed, holding its prior jurisprudence set the constitutional minimum for exemption from taxes; the legislation may codify what was intended to be exempted, but it cannot lessen the constitutional minimums by broadening the definition of "purely public charity" in the statute. View "Mesivtah Eitz Chaim of Bobov, Inc. v. Pike Co. Bd. of Assessment Appeals" on Justia Law
Petty v. Hospital Service Assoc. of NE Penna.
Appellant Robert Petty is sole owner of Co-Appellant R.G. Petty Masonry. Appellants contracted with Respondent Blue Cross of Northeastern Pennsylvania (Blue Cross), a nonprofit hospital corporation that provides health insurance coverage for its employees. Appellants are covered under the group policy as subscribers. Appellants filed a four-count class action suit against Blue Cross, alleging that it violated the state Nonprofit Law by accumulating excessive profits and surplus well beyond the "incidental profit" permitted by statute. The second count alleged Blue Cross breached its contract with Appellants by violating the Nonprofit Law. The third count alleged Blue Cross owed appellants a fiduciary duty by virtue of their status as subscribers, and that duty was breached when it accrued the excess surplus. The fourth count requested an inspection of Blue Cross' business records. The trial court found Appellants lacked standing to challenge Blue Cross' alleged violations of the Nonprofit Law and dismissed the suit. The Commonwealth Court affirmed the trial court. Upon careful consideration of the briefs submitted by the parties in addition to the applicable legal authorities, the Supreme Court found that Appellants indeed lacked standing under the Nonprofit Law to challenge Blue Cross by their four-count complaint. Accordingly, the Court affirmed the lower courts' decisions and dismissed Appellants' case. View "Petty v. Hospital Service Assoc. of NE Penna." on Justia Law