Board Member Legal Battles Can Trigger Fees, NJ Justices Rule

Squabbles among corporate or association boards can trigger attorneys fees for members suing their board if the contract language points that way, the New Jersey Supreme Court ruled Thursday.

The unanimous opinion held that “first-party” lawsuits by board members against their organizations can qualify for indemnity provisions that are traditionally meant to protect boards from stakeholder lawsuits. However, that language must show a clear intent to protect a suing board member instead of a normal interpretation that indemnity provisions act as a bulwark against the cost of defending third-party suits.

“Contrary to the conclusion reached by the Appellate Division, we ...