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Day Pitney Secures Victory in First Circuit For Founder of Non-Profit

Publisher: Day Pitney Press Release
March 20, 2015

(Boston, MA March 20, 2015 )-- Day Pitney LLP recently secured an important victory in the First Circuit by arguing that a case could not go to trial without expert testimony to establish the standard of care owed by a corporate officer to the company. The First Circuit agreed with the District Court that these allegations involved matters outside the common knowledge of the average juror, and that Plaintiff needed an expert to guide the jury in determining the standard of care owed under the complex circumstances alleged.

Day Pitney lawyers represented the founder and former President of the Environmental Careers Organization ("ECO"), an environmental non-profit organization, in a case before the panel of the First Circuit Court of Appeals. ECO was in the business of recruiting, training, and placing students in environmental internship positions in various government agencies. After ECO filed for bankruptcy in 2007, the Trustee alleged that the president had breached his fiduciary duty of care to the organization, misinterpreting government contracts and treating certain reimbursement rates as "fixed" rather than "provisional." In this instance, the Trustee sought to hold the president personally responsible for the bankruptcy of the organization, alleging that the misinterpretation of these government contracts led to an audit by the Environmental Protection Agency ("EPA") and termination of all contracts. In the Bankruptcy, the EPA sought $6 million, despite admitted satisfaction with the performance of the interns.

Day Pitney lawyers Barry Klickstein and Sara Colb argued that the Trustee could not prove his case where he had failed to designate an expert on the standard of care owed to the entity by an officer of a non-profit. Although Massachusetts law does not automatically require expert testimony to elucidate the professional standard of care owed by officers of a nonprofit corporation, the district court properly concluded that this particular case could not be resolved without specialized knowledge. On March 13, 2015, the First Circuit affirmed the decision of the Federal District Court for the District of Massachusetts, which granted defendant's motion for judgment as a matter of law.

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