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Case Citations [1] (July 2020 - April 2021)

handle is hein.ali/alicodpri9907 and id is 1 raw text is: CHARITABLE NONPROFIT ORGANIZATIONS
CHAPTER 6. STANDING OF PRIVATE PARTIES
§ 6.03. Standing of a Private Party to Enforce the Purposes to Which Charitable Assets are
Devoted and Administrative Terms Governing Charitable Assets
D.D.C.2020. Quot. in sup. (quoting § 6.03 of T.D. No. 2, 2017, which is now § 6.03 of the Official
Text). Purchasers of insurance policies under a group health-insurance program brought a putative class
action against nonprofit program administrator, administrator's subsidiary, and grantor trust organized
by administrator, alleging that defendants breached fiduciary duties owed to plaintiffs by failing to
inform them of royalty payments that defendants withheld from insurer out of the premiums plaintiffs
paid, because the royalty payments were illegal commissions evidencing that defendants engaged in
self-dealing. This court granted defendants' motion to dismiss, holding, inter alia, that defendants did
not owe plaintiffs any fiduciary duties on the theory that administrator held itself out to plaintiffs as an
unbiased advocate for its members. The court cited Restatement of the Law, Charitable Nonprofit
Organizations § 6.03 in reasoning that, under the common law, private parties typically could not bring
claims against nonprofit organizations to enforce the charitable purposes or administrative terms
governing charitable assets, and that large membership organizations like administrator and its members
typically had an ordinary business relationship, not one creating fiduciary duties. Krukas v. AARP, Inc.,
458 F.Supp.3d 1, 10.

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