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Liability Issues for Sections and BranchesPresidents & Governors Forum
September 2011
Officer and director duties:
Volunteer leaders have a fiduciary duty to the Society/Section/Branch. Includes:
1. Duty of care – good faith, informed decisions, reasonable care
2. Duty of obedience – support Board decisions, Society mission
3. Duty of loyalty – confidentiality, conflicts of interest, corporate opportunities
Liability for
Sections & Branches
Liability for
Sections & Branches
Types of Potential Liability:
1. Contract2. Negligence3. Copyright4. Privacy/Defamation5. Antitrust6. Tax
(…and many others)
Contract Liability Includes contracts with hotels, caterers, vendors, independent
contractors
Sources of liability: breach of contract, indemnity obligations, warranties/guarantees
Risk Management Strategies: Read contracts closely
Where possible, use model contracts provided by ASCE
Contact ASCE’s legal department with questions
Specific items to watch for:
1. Indemnification – who’s responsible
2. Limits of liability – maximum payable under contract
3. Authority to act – ensure oversight
4. Performance damages – minimum guarantee and fees for failing to reach
5. Cancellation/termination – can you terminate early, and if so, are there fees?
Liability for
Sections & Branches
Negligence Failure to meet a reasonable standard of care in performance of
some duty
Potential sources: accidents at a Section/Branch event; service of alcohol; professional negligence
Risk Management Strategies: Use model waivers and releases
Shift responsibility to other parties (e.g., hotel or caterer responsible for alcohol service)
Verify insurance coverage for activities
Copyright/intellectual property
Protects books, articles, music, photographs, figures, etc.
Potential sources of liability: newsletters, website, blogs, presentations
Risk Management Strategies: Look for material that is in the public domain
1. federal government2. pre-19263. Creative Commons license
When in doubt, get permission
Things to remember:
1. Distribution in public does not waive copyright; assume that content on websites is protected
2. No guidelines exist to describe hat is “fair use”
3. Beware of trademark issues; e.g., “Engineering for Dummies”
4. Protect ASCE’s intellectual property: ASCE logo, shield, etc., are for official purposes only;
Liability for
Sections & Branches
Privacy/defamation Privacy claims: invasion of privacy, right of publicity
Defamation claims: slander, libel, “false light”
Potential sources: photographs posted in electronic or print media; official correspondence; editorial comments in print or at meetings
Risk Management Strategies: Seek photo releases where possible
Be particularly careful with photographs of children
Exercise caution when speaking or corresponding in an official capacity
Antitrust Prohibits agreements among competitors “in restraint of trade”
Sources of liability: sharing of data about fees and costs; standards; codes of conduct; statements by volunteer leaders
Risk Management Strategies: Do not discuss costs, profit margins, discounts, etc., at
meetings
Do not say or write anything to suggest that ASCE supports anticompetitive behavior
Consult with ASCE counsel before distributing statistical information on market data or salary surveys
ASME v. Hydrolevel
1. ASME standards committee member with a financial conflict of interest
2. Drafts a letter falsely implying the new manufacturer’s cutoffs do not comply with ASME standard
3. Manufacturer suffers heavy losses due to customer fear that cutoffs are unsafe
4. ASME is held liable for committee member’s actions because he acted within the scope of his apparent authority (damages of $4.5M)
Liability for
Sections & Branches
Tax issues Certain actions can lead to tax penalties or even threaten ASCE’s
tax exempt status
Sources of liability: political activity; private inurement; “excess benefit transactions”;
Risk Management Strategies: Do not say or write anything in an official capacity to suggest that
ASCE supports/opposes a political candidate or party
Do not engage in personal financial transaction with Section/Branch (or consult with Society counsel for advice)
Seek advice from ASCE/Section/Branch tax professionals to ensure compliance with filing requirements
Things to remember:
1. State Income Tax – some states may require an annual state filing
2. Sales Tax – in some states, Sections and Branches may qualify for exemption from sales tax
3. Legislative activities :• Grass roots/direct lobbying
• Permitted so long as not a substantial part of total activities
• “Issue advocacy” near elections may receive extra scrutiny
• Contact ASCE Government Relations for advice
Liability for
Sections & Branches
Liability Protections: Federal/state volunteer protection legislation: volunteers in
general are shielded from liability to third party for negligence when acting in good faith in performance of duties
ASCE’s bylaws permit for indemnification of officers, directors, etc., acting in good faith on behalf of the Society
ASCE retains insurance coverage for officers, directors, and volunteers when acting in good faith in performance of duties
Risk Management Strategies: If you’re engaging in an unusual activity, or have any
concerns about legal liability, consult with ASCE counsel
ASCE Code of Ethics
1. Public health, safety, and welfare
2. Competence
3. Truthful and objective public statements
4. Fiduciary duty/conflicts of interest
5. Unfair competition
6. Honor, integrity, and dignity
7. Provide professional development
Liability for
Sections & Branches
