I was sent a link to a story and asked if it was true. The story noted that Charity Navigator, the charity watch dog group, had attached a Donor Advisory to the Humane Society of the United State’s listing, specifically because of the lawsuits related to the Ringling Brothers circus.
I was astonished. A donor advisory because of a single Endangered Species Act lawsuit? Many nonprofits are involved in lawsuits as they work to achieve the goals that are part of their underlying mission. I have a hefty annual PACER (federal court document system) fee because of the documents I download for the numerous environmental and animal welfare cases I follow—and I’m only following a tiny fraction of the cases I’d really like to follow.
Was the Donor Advisory given because the animal welfare groups lost the case? I would hope not, because penalizing nonprofits for taking a chance in court would have a chilling effect on their ability to do their work.
Was the Advisory given, then, because they also entered into a settlement for attorney fees? That seems to be more likely, especially considering the hefty size of the attorney fee settlement ($15 million). However, that a single incident related to a single court case would override 60 years of history in the Charity Navigator’s decision seemed both capricious and arbitrary. If civil lawsuits were not part of the arsenal of the organization, or if HSUS was in the habit of losing these cases and having to pay hefty attorney fees on a regular basis, then I think it would give most people pause before donating—but a single instance? Frankly, my first reaction was, “Well, aren’t you the precious.”
Charity Navigator also referenced the fact that Ringling Brothers filed a counter-lawsuit against the animal welfare organizations based on RICO—the Racketeering law. The reference to RICO does sound serious, if it weren’t for the fact that because of the RICO law’s overly loose design, and due to the Supreme Court’s over-reliance on the “intent” of Congress when passing the law, RICO’s purpose has been badly muddied over the years. Now, rather than go after the Mafia or sophisticated white-collar criminal networks, RICO has become a highly tempting tool in corporate America’s tool belt, especially after the recent findings in the Chevron RICO lawsuit related to the earlier lawsuit brought by poor Ecuadorians against the oil company for environmental damage to their lands.
Regardless, neither lawsuit—the original Endangered Species Act lawsuit brought by the animal welfare groups (not including HSUS), or the RICO case—ever reached a decision on the merits. The former was dismissed because of lack of standing, and the second never went to trial. As part of the attorney fee settlement, Feld Entertainment (parent company for the circus) agreed to dismiss the RICO lawsuit. The fact that the corporation filed a complaint should be seen as irrelevant and not figure into any agency’s determination of whether the organizations involved are sound or not. Not unless Charity Navigator believes that all one has to do is file a complaint in court and it’s automatically taken as true.
Charity Navigator noted the reasons why the Judge dismissed the ESA case for lack of standing, though the agency’s understanding of the legal documents and associated time line of all the events are equally confused and inaccurate. For one, the agency stated that Feld filed the RICO lawsuit after the ESA case was decided. Feld originally filed the RICO lawsuit in 2007 when Judge Sullivan denied the company’s request to amend its answer and assert a RICO counter-claim. The new lawsuit was stayed until the ESA case was decided in 2009, and Feld amended its original complaint in 2010, when the RICO case started up again.
I wanted to pull out part of the memorandum Judge Sullivan wrote in 2007 when he rejected Feld Entertainment’s request to amend their answer (leading to the RICO lawsuit). It relates to Feld’s implication that the animal welfare groups were involved in a complex and corrupt scheme to pay their co-plaintiff, Tom Rider that the company lawyers claimed they didn’t know about until 2006.
Finally, the Court cannot ignore the fact that defendant has been aware that plaintiff Tom Rider has been receiving payments from the plaintiff organizations for more than two years. Although defendant alleges an “elaborate cover-up” that prevented it from becoming “fully aware of the extent, mechanics, and purpose of the payment scheme until at least June 30, 2006,” Def.’s Mot. to Amend at 4, such a statement ignores the evidence in this case that was available to defendant before June 30, 2006 and does not excuse defendant’s delay from June 30 forward. Plaintiffs’ counsel admitted in open court on September 16, 2005 that the plaintiff organizations provided grants to Tom Rider to “speak out about what really happened” when he worked at the circus.
In other words, Feld’s lawyers found out about the “elaborate scheme” to fund Tom Rider, because the animal welfare groups mentioned funding Tom Rider during a court hearing in 2005.
As for that funding, it is true that the animal welfare groups paid Tom Rider about $190,000 over close to ten years. However, what isn’t noted is that some of that “money” wasn’t money at all. Rider was given a computer, a cell phone to keep in contact with the groups, a used van so he could travel around the country speaking out about the trial and his experiences with the circus, and various other goods. The groups also provided IRS forms for years 2000 through 2006 for Rider. When I added up the income for these years, it came to $152,176.00. However, after all of Tom Rider’s expenses were deducted, over the seven years he “took home” a total of $12,582, for an average of $149.78 a month. That’s to pay for all of his personal expenses—including a cheap dark blue polyester suit and equally cheap white shirt and tie he wore to the trial. (Tom Rider must have stood out for the plainness of his garb when next to Feld Entertainment’s $825.00 an hour DC lawyers during the trial.)
Among the small selection of oddly one-sided court documents that Charity Navigator linked, another was the Judge Sullivan decision denying the animal welfare group’s motion to dismiss the RICO case. What stands out in this document is a reference to the original Judge Sullivan decision, specifically a comment about the Rider funding:
The Court further found that the ESA plaintiffs had been “less than forthcoming about the extent of the payments to Mr. Rider.”
I compare this statement with Sullivan’s statement I quoted earlier, wherein Sullivan denied Feld’s request to amend its complaint because of the supposed underhanded and secret funding—an assertion that Sullivan rejected in 2007. The newer constradictory 2009 statement was just one of the many inconsistencies in Judge Sullivan’s decisions over the years related to these two cases.
But the last issue that Charity Navigator seemed to fixate on was Feld’s attempt to get confidential donor lists from the animal welfare groups. I’ve written about this request, and my great disappointment in Judge Facciola’s decision to grant the request.
Nothing will ever convince me this wasn’t a bad decision, with the potential to set an extremely bad precedent. Even when the discovery was limited primarily to those people who attended a single event, it’s appalling that a confidential donor lists can be given to a corporation who represents everything the donors loath and disdain—and a corporation with a particularly bad record when it comes to dealing with animal welfare groups and other people—not to mention its abysmal record when it comes to its animal acts.
The animal welfare groups settled because when you have a billionaire throwing $825.00 an hour lawyers at a case, and said billionaire doesn’t care how much it costs to win, it didn’t make sense to continue fighting a fight that was already stacked against them. When Judge Sullivan ruled on the ESA case, he should have recused himself in the RICO case, because to rule favorably for the animal welfare groups in the RICO case would be to say he was inherently mistaken in many of his assertions in the ESA case. When he turned the case over to the Magistrate Judge, Judge Facciola should have exercised independent thinking rather than just continue to parrot Judge Sullivan. In light of this judicial bias, and the fact that the groups would continue to spend way too much money fighting a lawsuit that the other side would deliberately stretch out as long as it possibly could, keeping up the fight was a lose-lose situation.
Top all that with the threat to the anonymity of their donors, and the groups settled. Point of fact, if they settled specifically to protect their donors, more power to them. They should be commended for doing so, not punished.
What’s ironic is in my original posts on the donor list request, I noted that if the animal welfare groups had to give these lists out, it would most likely impact on their ratings in sites such as Charity Navigator. Never in my wildest dreams did I expect that Charity Navigator would give a donor advisory to the groups just because a judge ordered that the list be provided, not that they were provided. The groups had planned on appealing this ruling before they settled, and frankly, I think they had a good chance of winning the appeal. But the very fact that a no longer existing possibility of an event is enough to trigger a donor advisory leaves me to wonder how many more innocent nonprofits will be labeled with a donor advisory just because someone sent in a newspaper article about the possibility of an event?
Kenneth Feld’s $825.00 an hour lead attorney, John Simpson, was recently interviewed for a legal publication. In it, he spoke about the donor list;
They didn’t want a situation where I’m taking the deposition of some donor asking — if you knew they were going to take this money to pay a witness, would you have given this donation?” Simpson said. “I don’t think they wanted that kind of discovery to take place. Some people might have made the donation anyway. But most of these people would have said — no, I wouldn’t have done that. And you would have been in the middle of their donor relations and potentially cutting off their donations in the future.”
In actuality, the one fund raiser that was at issue in the donor list request did specifically state that the money was for the lawsuit, and other requests for funds specifically stated the money was for Tom Rider’s media campaign. In addition, there is a legitimate concern about what would happen to individuals put into an intimidating situation by a high priced, DC powerhouse attorney. Mr. Simpson has a way of asking questions in depositions, and then subsequently paraphrasing the responses so that even the most innocent and naive utteranceseems dark, and dastardly. It was unfortunate that Judge Sullivan allowed his scarcely concealed disdain for Tom Rider to lead him to basically accept whatever Feld’s lawyers said, even though the animal welfare groups presented solid arguments in defense.
Lastly, Charity Navigator linked an article in the Washington Examiner, as if this was further evidence of good reasoning for the donor advisory. Might as well link Fox News as a character reference for the EPA, or The Daily Caller as a reasoned source of news for President Obama.
Just because something shows up in a publication online does not make what’s stated truth, or even reliable opinion. That a charity watch dog would link a publication known for its political and social bias, as some form of justification for a decision only undermines its own credibility. Yes, the HSUS and the FFA are involved in lawsuits with a couple of insurance companies regarding their liability coverage. As noted, though, it’s common for insurance companies to deny claims of liability when it comes to litigation fees. Kenneth Feld, himself, is involved in a lawsuit with his insurance company about it not wanting to pay those $825.00 an hour fees for Feld’s attorneys in the lawsuit with his sister.
However, there were several insurance companies involved with the groups and this court case. One way or another most, if not all, of the attorney fee settlement will be paid by one or more insurance companies.
An interesting side note about the insurance company lawsuits is the fact that the Humane Society’s lawsuit is being handled in federal court, while the Fund For Animals lawsuit is being managed in the Maryland state court system. This disproves one Feld Entertainment claim that HSUS and FFA are one organization (and hence, justifying Feld’s dragging HSUS into the lawsuit). The reason for the lawsuit split is that FFA is a Maryland corporation, while HSUS is not, and the insurance company was able to argue that it could move the HSUS case to the federal level because of jurisdictional diversity. Nothing more succinctly demonstrates that FFA and HSUS are not the same corporate organization. Yet HSUS has received a donor advisory for a lawsuit it was never involved in. FFA was involved in the ESA suit, but not HSUS.
There is so much to this case, too much to cover in a single writing, but I did want to touch on the major points given by Charity Navigator in its donor advisory. Will the advisory hurt an organization like HSUS? Unlikely. The Humane Society of the United States is one of the older, more established, and largest animal welfare organizations in the country. Its charity ratings to this point have been excellent. A reputable organization like the BBB lists it as an accredited charity, and one only has to do a quick search online to see that it is currently involved in many different animal welfare efforts across the country—from rescuing animals in North Carolina to defending American burros. If people donate or not to the organization it won’t be because of Charity Navigator’s listing, because most people wouldn’t need Charity Navigator to learn more about the HSUS.
But such donor advisories could negatively impact on lesser known, smaller charities. I hope that when Charity Navigator issues such a drastic warning from this day on, it does so based on a foundation that is a little less arbitrary, and much less capricious, than the one they used for HSUS and the other animal welfare groups involved in this court case.