June 12, 2013

Iowa Supreme Court Rules to Protect Government Directors and Volunteers

On June 7, 2013, the Iowa Supreme Court ruled in City of Postville v. Upper Explorerland Regional Planning Commission that volunteer directors may be able to rely on statutory provisions providing immunity from liability in certain circumstances.

The City of Postville case highlights the legal protections available to certain directors and volunteers of Iowa councils of government and also may provide authority to extend immunity from damage assessments to directors of not-for-profit corporations under the state or a comparable federal volunteer act.

These additional protections likely could go beyond the protections already provided by the Iowa nonprofit corporation act, the provisions in a not-for-profit corporation's articles and bylaws limiting liability and providing indemnification, and the provisions of a nonprofit corporation's D&O insurance.

The Court found that volunteers for councils of governments (statutorily-sanctioned regional planning commissions and entities established by 28E agreements) are generally immune under Iowa law from personal liability for damages pursuant to Iowa Code section 28H.4(2): "A director, officer, employee, member, trustee or volunteer is not personally liable for a claim based on an act or omission of the person performed in the discharge of the person's duties, except for acts or omissions which involve intentional misconduct or knowing violation of the law, or for a transaction for which the person derives an improper personal benefit."

The Court also noted a similar protection available to nonprofit volunteers for ordinary negligence under the Federal Volunteer Protection Act, but the Court did not address such federal immunity because the state law immunity applied in this case.

In the City of Postville case, the Upper Explorerland Regional Planning Commission took a vote at one of its meetings by secret ballot and publicly announced the results without associating individual names with the votes.

Shortly after the meeting, the Commission recognized it had violated the Iowa Open Meetings Act (IOMA) by taking a secret ballot. The members then conducted a subsequent vote by mail including names with the votes, which resulted in the same outcome.

The Commission admitted that it violated the Iowa Open Meetings Act by taking a secret ballot vote and subsequently voting by mail, but challenged imposition of liability against the individual Commission members because of the state law and federal law immunity provisions.

The Court held that the state law immunity in Iowa Code Section 28H.4(2) for council of government volunteers applied because there was no intentional misconduct or improper personal benefit.

The Court did not address the federal immunity in light of application of the state law immunity law.

The Court also declined to decide whether board members who are employees or receive compensation to serve may still qualify as a volunteer for purposes of the state and federal immunity because the issue was not properly raised.

For the same reason, the Court also specifically did not address the issue of whether the immunity section applied to liability created by volunteers violating IOMA.

Therefore, the application of federal immunity remains a possible additional protection against liability for the ordinary negligence of Iowa nonprofit volunteers that supplements the existing protections in the nonprofit statute and limitations of liability in the corporation's Articles of Incorporation. But, governmental entity and nonprofit board members who receive a salary or payment for service to such organization may not be covered by such immunity.

For organizations subject to IOMA, the individual immunity to open meetings violations remains an additional unresolved  issue.

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