Judge’s Ruling Favors Breakaway Affiliate

A federal judge has ruled that the former Mississippi affiliate of the American Diabetes Association can retain ownership of a roughly $1-million fund balance plus records, membership lists, and other property that the association had sought after the affiliate broke away from the national charity.

“We’re delighted,” said Alan W. Perry, a Jackson, Miss., lawyer who represents the former affiliate, now reorganized as an independent charity called the Diabetes Foundation of Mississippi.

The affiliate had balked at the national association’s plan to merge its 53 state and local units into a single, national corporation. The Mississippi affiliate said it would lose donations and autonomy because of the plan, which also led the Rhode Island affiliate to leave the national group.

Jerry Franz, a spokesman for the American Diabetes Association, said the charity is “evaluating the opinion” by U.S. District Judge Tom Lee and noted that the case “continues to be in litigation” because the judge’s decision did not resolve all issues in dispute.

The association had argued that the Mississippi affiliate had relinquished its claim to the fund balance and other assets when it terminated its contract with the national organization.

Judge Lee rejected that argument, though he did order the Mississippi group to honor its contract through its expiration date of June 30.

The contract requires the former affiliate to send a portion of all donations received through that date to the national office.