SUIT AGAINST AKA, INDIVIDUALS DISMISSED; APPEAL FILED

Daniel McCarthy, Manley Burke

Judge Natalia M. Combs Greene of the Superior Court of the District of Columbia dismissed the lawsuit brought by individual members of Alpha Kappa Alpha against AKA, the AKA Educational Advancement Foundation and twenty-four individuals.¹  As first discussed in the September 2009 issue of Fraternal Law, the plaintiffs’ complaint sought damages, injunctive relief, and other equitable remedies for alleged wrongful conduct by the AKA directors and officers.

The defendants moved to dismiss the case on four grounds: 1) that the Court lacked personal jurisdiction over the individual defendants; 2) that the plaintiffs lacked standing to bring the lawsuit because they did not suffer an injury-in-fact and they failed to properly bring a derivative action; 3) that the plaintiffs could not establish irreparable harm and therefore could not receive injunctive relief; and 4) that the plaintiffs’ complaint failed to state a claim upon which relief could be granted.

The Court’s decision first addressed personal jurisdiction.  There was no dispute that the Court had personal jurisdiction over AKA, as it is organized in the District of Columbia.  The Foundation, however, is a private Illinois foundation.  The plaintiffs argued that the Foundation established the necessary minimum contacts with the District by maintaining a website accessible in the District and because the Foundation “receives applications from and makes grants” to District of Columbia students.  The Court rejected these arguments and held, “this Court cannot exercise personal jurisdiction over a private Illinois foundation with no contact with the District of Columbia other than the ‘mere maintenance of a website accessible to internet users in the District.”  As for granting tuition assistance, the Court stated that such activity is not a business transaction but rather “it is a gift.”

The plaintiffs argued that the Court had personal jurisdiction over the individual defendants, though none of them live in the District, because the Court had jurisdiction over AKA, and by extension, AKA’s defendant officers and directors.  The Court denied this argument and found that the corporate shield protected AKA’s officers and directors from personal jurisdiction merely because it had jurisdiction over AKA.  Further, the Court held that none of the individual defendants had sufficient minimum contacts with the District for personal jurisdiction.  The plaintiffs argued that several defendants established such minimum contacts, including Judge Miles-LaGrange, a United States District Judge, who sometimes travels to the District for work.

The decision next addressed whether the plaintiffs had standing against the defendants.  The Court stated that because the plaintiffs sought relief on behalf of the corporation, they should have brought the case as a shareholder derivative suit.  Ultimately, the Court found that only one plaintiff had standing because her membership privileges had been suspended.  None of the other plaintiffs had standing because they did not suffer concrete or particularized harm separate from the rest of the members of the corporation.

By the time it addressed the defendants’ motion to dismiss for failure to state a claim, it had already dismissed the individual defendants and the Foundation because of a lack of personal jurisdiction.  Further, the only plaintiff who had standing to pursue any claim against AKA was the individual who had her membership suspended.  Because of that, many of the remaining counts against AKA were also dismissed.   The only remaining claims concerned the one remaining plaintiff’s claims for waste, ultra vires and breach of contract.  The Court found no merit in any of the remaining claims and dismissed each count for failure to state a claim.

On February 19, 2010, the plaintiffs filed a notice of appeal with the Superior Court of the District of Columbia.  The plaintiffs released a statement on their website (www.friendsoftheweepingivy.com), which stated, in part:

“We are disappointed in the Judge’s decision to dismiss our case, however; we view the decision as justice taking a detour. Consequently, our resolve to return our beloved sorority to its members is undiminished, and we plan to appeal the decision. Know that this suit was never about financial gain for any of the plaintiffs. We simply want the entire membership to know how the Leadership is spending our monies. We are committed to have the books and records opened and will not rest until it is done.”

Look for updates in Fraternal Law as this case moves through the appellate process.  This case covers many important issues for fraternal organizations, including procedural issues such as jurisdiction, to substantive issues such as the daily governance of organizations at the national level.

¹  Joy Elaine Daley, et al. v. Alpha Kappa Alpha Sorority, Inc., et al.  Superior Court of the District of Columbia Case No. 2009 ca 004456 B.