'How safe are those boards?'

Threat of lawsuits more common than you think, but a local legislator hopes to change that

Volunteers who serve on boards for schools, water districts and nonprofits may have something to think about after threats of personal lawsuits were directed toward board members of the Jefferson Public Radio Foundation.

"That would have a very chilling effect," said Sen. Alan Bates, a Medford Democrat. "It really opens up the question of how safe are those boards?"

Bates said he will seek advice from legislative attorneys to determine how effective state laws are in protecting members of boards from personal lawsuits.

If state law doesn't provide enough protection, Bates said, he might seek a legislative solution.

The issue came up recently in a dispute between Jefferson Public Radio and Southern Oregon University over control of leadership and assets of JPR's public radio station network.

Attorneys for SOU, acting with the support of the Oregon University System Chancellor's Office, threatened personal lawsuits against each member of the JPR Foundation and informed them that any liability insurance the foundation carried likely would not be enough to cover the potential settlement.

Following receipt of the letter, the foundation board chairman resigned from a separate board and said he would resign from the JPR board rather than put his family at financial risk.

The lawsuit threat was lifted last week after Gov. John Kitzhaber intervened in the dispute, along with Bates and Rep. Peter Buckley, an Ashland Democrat.

Bates, who has been a member of various boards, said that as long as board members aren't engaged in questionable activities that benefit them personally, they shouldn't be threatened with lawsuits by a state agency.

The Oregon Attorney General's Office notes in a booklet, "A Guide to Non-Profit Board Service in Oregon," that there are protections for nonprofit board members, although they are not absolute. The guide reads in part:

"To encourage citizens to serve as board members for charities, the law cloaks volunteer board members with qualified immunity. They cannot be sued for negligent acts. They may, however, be subject to lawsuits alleging that a loss was due to their gross negligence, willful or fraudulent acts."

In the case of the JPR Foundation Board, there wasn't a suggestion that funds were misappropriated. Instead, the dispute arose after the state conducted an audit that questioned potential conflicts with JPR's ventures into other businesses such as the Cascade Theatre in Redding, Calif., and the Holly Theatre in Medford.

Kitzhaber's office has called for a 90-day cooling-off period to bring both sides back to the table to resolve the dispute.

Bates said the purchase of the Cascade Theatre was approved by the state and the bonds used for that purpose are being paid back by JPR.

"There is nothing illegal about that," Bates said.

The latest ventures into Medford appear to be consistent with JPR's goal to expand its fundraising capabilities, including opening the Holly Theatre as a performing arts center, he said.

"What's so bad about doing the Holly?" Bates asked.

Paulie Brading, chairwoman of the Medford School Board, said the potential for personal liability has come up on every board she's served on.

"It's always something in the back of your mind," she said. "People are very litigious."

Brading said she regularly consults with the School Board's full-time attorney to avoid legal entanglements.

Board members are always questioning their decisions, bouncing their ideas off fellow board members, she said

"I'm cautious about every decision," she said. "I am not fearing liability necessarily. I'm just trying to be sensible and reasonable."

Steve Nelson, president of the JPR Foundation, resigned from the Jackson County Library Foundation Board and contemplated resigning from the JPR Foundation after receiving the legal threats from SOU's attorneys.

Lawsuit threats are not just of concern to board members, but to their families as well because assets owned by board members are suddenly in jeopardy, he said.

Nelson said that since the threat of a lawsuit has lifted, he feels better about the situation.

Nelson said his JPR activities are a labor of love. "It has nothing to do with money," he said.

When foundation board members travel to other locations for meetings, Nelson said, they pay out of their own pockets for accommodations and travel, though they do get their dinners paid for by the foundation.

Despite Nelson's distress at the threat of lawsuits, he said he likely will spend more time in the near term volunteering for the foundation board as it works its way through the mediation process. That's due in part to the termination of longtime JPR Executive Director Ron Kramer.

"This has morphed into a full-time commitment," he said.

Reach reporter Damian Mann at 541-776-4476 or email dmann@mailtribune.com.


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