San Diego – August 4, 2023 – The California Supreme Court yesterday issued a landmark decision in Turner v. Victoria et al., which ensures essential whistleblower protections for more than 110,000 charities across California.
Cooley represented plaintiff and appellant Debra Turner in successfully petitioning the court to review her case and in achieving a sweeping victory on the merits for Turner and for all California charities. Lawyers Steve Strauss, Erin Trenda and Matt Nguyen led the Cooley team during this phase of the appeal.
“Charity-director plaintiffs like Ms. Turner have direct standing to bring an action for breach of fiduciary duty that occurred on their watch and see it through to completion,” said Strauss during oral argument. “Any other rule would make a mockery of these statutes and justice because it would allow the defendants – the majority of the board – to control litigation against them. A board majority should not be able to immunize themselves from suit.”
Turner served as a director and officer for The Conrad Prebys Foundation, which holds more than $1 billion in charitable funds left by celebrated San Diego philanthropist Conrad Prebys. As alleged in her complaint, during her service on the foundation’s board, Turner witnessed director and trustee Laurie Anne Victoria and three other directors divert $15 million toward a noncharitable purpose in violation of Mr. Prebys’s last wishes and the express terms of his trust. Turner promptly initiated an action to challenge their wrongdoing and restore the foundation’s lost funds. In retaliation, the defendant directors expelled Turner from the board during the foundation’s next election. Due to her ouster, the lower courts dismissed Turner’s case for lack of standing.
Cooley then sought and secured the California Supreme Court’s review on the proper interpretation of the charity director enforcement statutes to hold wrongdoers accountable. California Attorney General Rob Bonta, the California Association of Nonprofits and the reporters of the American Law Institute’s “Restatement of the Law, Charitable Nonprofit Organizations,” all filed amicus briefs supporting Turner’s appeal.
“Even in the face of retaliation by the other directors, Ms. Turner stayed true to the foundation’s best interests by challenging defendants’ misconduct in the trial court all the way up to the highest court in California,” said Trenda.
As a result of Cooley and amici advocacy, the court sided with Turner and reversed the lower courts’ opinions. Authored by Chief Justice Patricia Guerrero, the court’s unanimous opinion concluded that, even if a charity director is removed from the board, they still maintain standing to fully litigate their existing actions and protect their charities. According to the court, “We decline to adopt a rule that would incentivize director defendants to erect barriers to their fellow board members’ retention of their position as a means to terminate litigation against them.”
“The court’s ruling strengthens vital accountability safeguards and empowers more than 110,000 charities to faithfully serve California families,” said lead associate Nguyen, who previously clerked on the California Supreme Court. “We are proud to handle consequential appeals like this in our appellate practice at Cooley.”
In recent years, Cooley has prevailed in numerous California Supreme Court matters on behalf of Fortune 500 companies, startups, nonprofits, coalitions, and individuals – including CEOs, scholars and charity directors like Turner. Cooley’s bench of appellate practitioners resolves high-stakes appeals across all federal and state courts and includes former clerks of the US Supreme Court, the California Supreme Court and federal Courts of Appeals.
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