Corporate Philanthropy and Social Responsibility in Latin America

Case Notes: North America

The International Journal
of Not-for-Profit Law

Volume 4, Issue 1, September 2001

The United States

Bieker v Community House of Moorestown

This case concerned the ability of a charity to claim immunity from liability in tort under the law of the state of New Jersey. Under the Charitable Immunity Act (NJSA 2A:53A-7 to –11), nonprofit corporations, societies or associations “organized exclusively for religious, charitable or educational purposes” are immune from claims from persons who suffer damage from negligence of any agent or servant of such organizations, and buildings actually used for such purposes are deemed to be operated and maintained for such purposes.  In this case, the defendant nonprofit organization owned a building that was originally intended to be used solely by other organizations operating exclusively for religious, charitable, scientific, literary or educational purposes; however, the owner had subsequently changed its letting policy, and hired the building out to any organization (whether nonprofit or not) on the same terms, except that nonprofit organizations were allowed to use some of the facilities for reduced fees.  The plaintiff was one of a group of men who rented the building’s gym on a regular basis to play basketball; during one visit his three year old son had slipped through the guardrails on a fire escape and sustained a head injury.  In the resulting action for damages for personal injury, the trial court held that an organization established to serve the recreational and social needs of the community on a nonprofit basis has a charitable purpose and is therefore entitled to charitable immunity.  On appeal, the court assumed, without deciding the issue, that a not-for-profit entity that rents facilities to other not-for-profits organized exclusively for qualifying purposes (within the meaning of the Act) would be entitled to charitable immunity; however, since the right of a property owner such as the defendant organization was purely derivative, and if as in this case the facilities were used for non-qualifying purposes, the owner was precluded from claiming immunity.  Furthermore, the defendant could not be said to be operating exclusively for qualifying purposes merely because it rented some of its facilities to other not-for-profits at reduced rates; immunity from suit is only granted to not-for-profits organized exclusively for the purposes specified in the Act and does not extend to other not-for-profits that perform vital public services. [Editor’s note: the concept of granting a charitable organization general, or limited, immunity from liability for torts committed by its agents and employees in the course of pursuing charitable activities is only applied in certain US states; the doctrine was repudiated by the English courts where it originated (see Mersey Docks Trustees v Gibbs (1866), 11 HLC at 686 overruling Feoffees of Heriot’s Hospital v Ross (1846) 12 C.& F. 507). Most US courts now hold that charities are liable in tort to the same extent as individuals and private companies, although in recent years some states have reinstated a limited immunity, e.g. through statutes that place a cap on the amount of damages that can be awarded against a charity].

(Bieker v Community House of Moorestown, A-6659-97T3, New Jersey Superior Court Appellate Division 2000, 327 NJ Super 467, 25 January 2000). PB

People’s Mojahedin Organization of Iran v United States Department of State, 182 F. 3d 17, (Fed. Cir. 1999)

In a case of first impression, two groups separately and unsuccessfully sought judicial review of their designation by the Secretary of State as “foreign terrorist organizations” (FTOs) under section 302 of the Antiterrorism and Effective Death Penalty Act (AEDPA) 1996 (Pub. L. No. 104-132, 110 Stat. 1214).  By an order effective from 8 October 1997 (62 Fed.Reg. 52,650 (1997)), the Secretary of State had designated 30 organizations as FTOs.  Designated organizations are effectively prohibited from fundraising in the US, since the Act prohibits any person within the US or US jurisdiction from knowingly providing material support to a FTO (on penalty of a fine or imprisonment); the AEDPA also authorizes the Secretary of State to freeze all the US assets of a FTO.  The two groups, the People’s Mojahedin Organization of Iran (PMO) and the Liberation Tigers of Tamil Eelam (LTTE), were not related but the court addressed the two petitions in one opinion because they raised similar issues.  The AEDPA provides for judicial review of such designations solely on the basis of the administrative record, except that the Government can submit classified information used in making the designation for review in camera.  The two groups argued that the fact-finding procedures adopted by the Secretary of State deprived them of due process of law since they were given no notice or an opportunity to be heard, and that the evidence did not provide substantial support for the finding that the groups were foreign organizations engaged in terrorist activities that threaten national security (“national security” is defined for this purpose as “the national defense, foreign relations, or economic interests of the United States”).  As regards the first claim, the court held that since both groups were foreign organizations without property or presence in the US, they had no constitutional rights under the Due Process Clause of the US Constitution or otherwise; however, the court observed that a different approach might be required in cases involving a seizure of domestic assets.  [Editor’s note: had they been US organizations, the Due Process Clause would have been relevant – see Joint Anti-Fascist Refugee Committee v McGrath, 341 US 123 (1951), where the court set aside the Attorney General’s designation of several organizations as “Communist” for lack of due process.]  With regard to the second claim, the court refused to review the determination that the activities of the two groups threatened national security on the grounds that it is beyond the judicial function of a court to review foreign policy decisions of the executive.  Although the administrative record contained nothing more than news reports and other hearsay that had not been subject to any adversarial examination, the court held that section 302 imposed no constraints on the Secretary’s fact-finding process.  On a third claim advanced only by the LTTE, which seeks self-determination for the Tamil people of the northern and eastern provinces of Sri Lanka, that it was a government rather than a foreign organization, the court held that the recognition of foreign governments is solely entrusted to the political branches of government.  Since the AEDPA provides that designation of a group as a FTO can be challenged only by the group itself, the court did not have to decide in this case whether the Act’s limited provisions for judicial review violated the constitutional rights of any US citizens that might be prosecuted for transferring resources to a FTO.

(People’s Mojahedin Organization of Iran v United States Department of State, US Court of Appeals, D.C. Circuit, 182 F. 3d 17, 25 June 1999, reported in American Journal of International Law, Vol. 94, April 2000). PB