Plugging The Legal Liability Holes

It's hard to believe - but believe it. According to the Detroit News (Sunday, June 22, 1997, "The Metro," Section B, page 18) a lawsuit was filed against the PONY League seeking more than $75,000.00 in damages because of umpire calls in a kid's baseball game "that were clearly wrong." Imagine!

Have we really come to this in our society?

Whether this suit is meritorious or not, a judge will decide. But, as attorneys for many athletic, recreational, and sport clubs nationwide, we know this without having to go before a judge: every athletic association or sports club should be prepared to minimize the impact of a lawsuit.

What should amateur sports clubs do to minimize the risk of potential liability? Among other items, we recommend the following nine liability-limiting safeguards:

1. Be sure to incorporate your sports club or athletic association as a nonprofit corporation.

2. Adopt liability limiting provisions for volunteer officers, directors, and regular volunteers in your organization's articles of incorporation (these provisions are effective only if placed in the articles).

3. Examine your insurance policies for exclusions and limitations of coverage.

4. Make certain your sports club is an IRS recognized tax-exempt organization (many clubs are not tax-exempt but are operating as if they were tax-exempt. Call us if this is your situation). Also, some clubs may qualify for favored IRC §501(c)(3) status (this allows clubs to seek contributions and grants, and provide donors with charitable deduction receipts).

5. Make certain your club's minutes of board members' meetings set forth clear and unambiguous resolutions of decisions are accurate and contain only essential material (and not material which could open the door to potential liability).

6. Watch your fundraising activities and be careful of "quid pro quo" gift transactions. You may be required to recognize the value of gifts given in exchange for donations, and you may be required to register under your state's charitable solicitations law.

7. Examine your bylaws. If bylaws do not provide indemnification of officers and directors, and clearly state officer responsibilities, they should be amended.

8. Review your board policies re: sexual harassment, sexual molestation, etc., etc. If your board is not adopting sound policies, call us for our exclusive sports club board training program.

9. Make certain your board members understand their fiduciary duties of care, loyalty and obedience.

If your club has been operating for several years with potential legal liability holes, or if your board is not sure what to do, you may wish to contact us. We know how to plug the liability holes and train your board to be enthusiastic and effective decision makers.