[Foundation-l] Re: Outsiders on the Board? (was Re: Poll for Wikistandards)

Mon Jan 30 03:32:31 UTC 2006

Tim Starling wrote:

>Gerard Meijssen wrote:
>  
>
>>I am amazed that you suggest that an officer of the Wikimedia Foundation
>>would be personally liable for the work done as an officer. I would
>>expect that an officer of an organisation speaks for the organisation
>>and as a consequence the organisation is liable for the actions of its
>>personnel. Normally someone employed by an organisation is liable only
>>when gross incompetence can be proven or in cases where the law has been
>>violated to an extend where criminal intend can be proven.
>>
>>I am sure that someone can and will explain to what extend an employee
>>is personally liable for his actions as an employee of the Wikimedia
>>Foundation.
>>    
>>
>Well, firstly IANAL and secondly most of my legal knowedge comes from studying Australian law rather
>than US law. But my understanding is that civil liability for the action of employees rests with the
>corporation or individual employing them. This is called vicarious liability.
>
Gerard's response on this seemed naïve.  No-one wants to go into a 
situation where there is a high risk of liability,  But these things do 
happen, and there are situations where the law needs to pierce the 
corporate veil when the corporate structure is there to assist in the 
perpetration of a scam.  In some cases liability insurance can be 
purchased, but that too can be expensive.  It's also important to 
remember the level of litigiousness that is found in US society.  A 
plaintiff will often cast a wide net in the hopes of catching the right 
victim with deep enough pockets to pay for the wrongdoings of a 
penniless associate.  This can be a frightful experience when people 
with only marginal involvement find themselves put through the expense 
of defending themselves in court.

>Members of the Board of Directors are not ordinary employees though, and I think Danny's implication
>was that the Board is responsible for the actions of the corporation. At common law, the civil
>liability is limited to the assets of the corporation, that's the major difference between a
>corporation and a partnership. The threats to the Board of Directors then fall into three categories:
>
>* Statuatory -- many countries have laws making the Board of Directors liable for gross
>mismanagement, or other forms of misconduct.
>
Here in Canada the directors of a company can be held personally liable 
for failing to remit employee deductions to the tax department.

>* Contractual -- for example, some wholesale suppliers require that the Board of Directors accepts
>liability for debts accrued.
>
Banks especially ask directors to co-sign for a company's loans.

>* Criminal -- limitation of liability and vicarious liability do not apply in criminal cases.
>
Enron!

>I don't know whether vicarious liability extends to officers. Their legal position is less clear
>than, say, Kyle's (an outsider employed by the Foundation).
>
Anthere has already referred to an ambiguity in the use of the term 
"officer".

>Let's just say that I for one wouldn't be deterred from accepting a position of responsibility
>within the foundation by legal liability. We all live in a world ruled by law. That should be an
>impetus to educate ourselves about the issues, and to seek advice where appropriate, not to hand
>over the keys to the lawyers and let them run the place.
>
I would feel the same way.  As an organization gets bigger it needs to 
consider startegies for risk management.  From a lot of the discussion 
that I've read since I've been here I can observe that very few bother 
to educate themselves about the legal issues.  Having an organization 
overrun by lawyers is just another risk that needs to be managed.

Ec