The following is a case update written by the Hon. Meredith Jury (United States Bankruptcy Judge, C.D. Cal., Ret.) a member of the ad hoc group and the Insolvency Law Committee of the Business Law Section., analyzing a recent decision of interest:

The Massachusetts Supreme Court, in a case of first impression anywhere in the country, held that the federal Volunteer Protection Act provides a qualified immunity from suit, not just liability.  Lynch v. Crawford, 2019 WL 6711385 (Mass. Dec. 10, 2019). 

To view the full opinion, click here.

FACTS

Former employees of a nonprofit community health center, the now-dissolved Roxbury Comprehensive Community Health Center, Inc. (RoxComp), brought an action against its reputed president Keith D. Crawford to recover wages which went unpaid during RoxComp’s final few weeks of operation.  Crawford moved for summary judgment, asserting that he was not president, instead serving as chairman of the nonprofit’s board, and that even if he were president, he served without compensation and therefore was immune from suit under the federal Volunteer Protection Act (VPA) and a similar Massachusetts charitable immunity statute.

The trial court denied his motion, concluding there were disputed material facts, making summary judgment inappropriate.  Crawford sought review on interlocutory order and–following a procedural path not pertinent to this review–arrived at the Massachusetts Supreme Judicial Court, which granted his motion for appellate review.  The Massachusetts Supreme Court determined that it was tasked with discerning whether, where a statute provides qualified immunity, as does the VPA, the legislature intended immunity from suit or simply immunity from liability.  Even though the statute speaks only of immunity from liability, the court determined it needed to look to the language of the entire statute and to the legislative purpose for providing the liability protection in order to reach its decision.  After making this analysis, it ruled that the only way to satisfy the legislative purpose of the VPA was to extend the immunity to the entire litigation, not just as a defense to liability.

REASONING

The VPA preempts inconsistent state laws except where the state laws provide greater protection from liability relating to volunteers in the performance of services for a nonprofit organization or governmental entity.  42 U.S.C. §14502(a).  The VPA states that “no volunteer of a nonprofit organization or governmental entity shall be liable for harm caused by an act or omission of the volunteer on behalf of the organization or entity if…the harm was not caused by willful or criminal misconduct, gross negligence, reckless misconduct, or a conscious, flagrant indifference to the rights or safety of the individual harmed by the volunteer.”  42 U.S.C. § 14503(a).

To answer the query regarding the extent of the immunity, the court looked to both the words of the statute and the Congressional findings which accompanied its enactment.  Those findings state the purpose is to sustain “the availability of programs, nonprofit organizations, and governmental entities that depend on volunteer contributions” by providing protections from liability abuses.  29 U.S.C. § 14501(b).  In order to satisfy that purpose, the court reasoned, the volunteer must be protected from not only ultimate liability but more importantly from the need to defend the litigation in the first place.  For volunteers, the need to withstand the costs and rigors of litigation in order to be found not responsible for damages at the end is not meaningful protection and not likely to satisfy the purpose of encouraging the public to volunteer in the first place.  Therefore, after recognizing this was a case of first impression regarding the VPA in any state in the country, the Massachusetts Supreme Court ruled that volunteers were immune from suit and could assert this defense at the onset of the litigation.  Almost as an aside to this significant ruling, the court affirmed the trial court’s denial of summary judgment because of disputed material facts and remanded for proceedings consistent with its ruling on this point of law.

AUTHOR’S COMMENT

Before I read this opinion, I was not aware of the Volunteer Protection Act, but the purpose of this legislation is indeed noble.  Myriad services are provided in every community in the country by nonprofit organizations which dependent on the efforts of volunteers, both as board members and as workers carrying out the tasks of the organization.  The idea that such volunteers could expose themselves to lawsuits and liability reminds me of the mantra that “no good deed goes unpunished.”  Federal legislation such as the VPA can give these volunteers some peace of mind as they choose to serve.  Moreover, this decision by the Massachusetts Supreme Court, likely to be recognized all over the country because of its sound reasoning, makes the accorded immunity truly meaningful since it would stop any overbearing litigation before it creates a time-consuming burden for the volunteer.  In addition, to the extent some nonprofits may attempt to protect their volunteers with insurance policies, the premiums for policies which cover negligent acts will be substantially lower if insulation from suit is generally adopted.

These materials were written by the Hon. Meredith Jury (United States Bankruptcy Judge, C.D. Cal., Ret.) a member of the ad hoc group and the Insolvency Law Committee of the Business Law Section.  Editorial contributions were provided by Corey R. Weber, a partner at Brutzkus Gubner Rozansky Seror Weber LLP, a member of the ad hoc group and the Chair of the Business Law Section.  Thomas Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomas Reuters.