Judge Adds To Lung Association Confusion

January 26, 2009       Mark Hrywna      

The Pacific Northwest has two local organizations that appear to be affiliated with the American Lung Association (ALA), but no permanent CEOs to run the organizations as of Feb. 1.

Clarifying an earlier preliminary injunction that essentially shut down an ALA affiliate, a Washington state judge allowed the ALA of the Northwest to resume operations. At the same time, the national ALA has started the process to create a new affiliate.

King County Superior Court Judge Regina Cahan had granted the ALA national’s request for a preliminary injunction on Jan. 6, and barred the Northwest affiliate from operating with the word “lung” or essentially do anything but pay legal expenses. The affiliate put its staff on unpaid leave and went so far as to remove the logo from its Seattle headquarters building.

The judge’s clarification essentially said the “original opinion went further than she intended,” said Laird Harris, board chair-elect for the ALA of the Northwest. The order allows the Seattle-based affiliate to resume operations, continue fundraising and mission-related activities. It also executes a separation agreement with Mike Alderson, who helped form the new Pacific Northwest Lung Cancer Foundation after becoming CEO in June. He will leave Feb. 1, along with a one-time payment of about $175,000 – a year’s salary – as severance.

The separation agreement was not made public until the last round of pleadings, Harris said, describing it as a typical arrangement businesses and organizations enter into under similar situations. Alderson has been “a lightning rod in the whole affair,” Harris said, and informed the affiliate that he would agree to leave if it made for a stronger case for the new foundation. Terms of the separation agreement were negotiated last fall, Harris said, and the judge was specifically asked to approve it.

The Northwest affiliate will appoint an interim CEO but a search for a permanent replacement probably will be deferred until the case is settled, Harris said. Alderson remains a board member of the new foundation, which is prohibited from doing anything until the case is resolved, he said.

After the initial injunction in January, the national association began the process of creating a new affiliate and recruiting volunteer leaders. The latest clarification “reiterates that we’re still likely to win on the merits of the case, but we are concerned because it does cause some confusion,” with a new affiliate, said Carrie Martin, a spokesperson for the ALA.

The two sides will begin mediation next month, with a trial date pending in June.

The Northwest affiliate transferred assets, including its Seattle headquarters, to the foundation last summer. At issue is whether approval from national ALA was required for the affiliate’s contribution agreement. The affiliate did not seek approval from national to transfer its building to provide assets to the new foundation. “Who has the authority to do these transactions, that’s the issue,” said Harris.

After disaffiliating, the national organization demanded that the affiliate stop using the ALA name, in addition to getting the building back and turning over its assets.

The Northwest affiliate is based in Seattle and serves Washington, Idaho and Alaska. The new affiliate is called the American Lung Association in Alaska, Idaho and Washington.

The Northwest affiliate had $6 million for the Fiscal Year Ending 2007, with $2.3 million in government contributions and $3.8 million in direct public support, according its Federal Form 990. The affiliate paid ALA national almost a half-million dollars for direct mail production management last year. ALA national runs direct mail programs for affiliates, receiving a percentage of that income to cover administration and a bulk of revenues for national headquarters.



This article is from NPT Weekly, a publication of The NonProfit Times.

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