Weiss v. American Academy of Ophthalmology, Inc.

Background

Jeffrey N. Weiss, a Florida ophthalmologist and former life fellow of the American Academy of Ophthalmology, Inc. (AAO), challenged AAO’s investigation of his stem-cell research and its termination of his membership. AAO is a nonprofit corporation organized under Minnesota law. Its governing documents included bylaws and a Code of Ethics with rules concerning research, patient welfare, and public communications.

AAO’s Ethics Committee investigated Weiss’s SCOTS Trials and concluded that he had not complied with Rules 3 and 13. The Board of Trustees adopted those findings and terminated his membership on February 22, 2021. After Weiss appealed, AAO’s appellate panel affirmed the findings, and AAO permanently terminated his membership on June 19, 2021.

Weiss’s second amended complaint asserted claims under the Florida Deceptive and Unfair Trade Practices Act, California Business and Professions Code section 17200, the common-law right of fair procedure, and breach of contract. He sought reinstatement, an injunction, damages, and other relief. AAO moved to dismiss for failure to state a claim.

Ruling

The court first held that it had subject-matter jurisdiction because Weiss alleged a concrete injury: the permanent termination of his membership. The court nevertheless dismissed the complaint under Rule 12(b)(6), which permits dismissal when a complaint does not allege enough facts to support a legally recognized claim.

Choice of law. Applying California choice-of-law rules, the court held that Minnesota law governed Weiss’s claims. It applied the internal-affairs doctrine, which generally assigns regulation of a corporation’s internal matters to the corporation’s state of incorporation. The court concluded that Weiss’s allegations concerned AAO’s internal affairs because they involved investigation and termination of membership under AAO’s bylaws. It rejected Weiss’s argument that California or Florida law should apply based on public-policy interests.

Florida and California statutory claims. Because Minnesota law governed the dispute, the court dismissed Weiss’s claims under the Florida Deceptive and Unfair Trade Practices Act and California Business and Professions Code section 17200 for failure to state a claim.

Requests for reinstatement and an injunction. The court held that Minnesota Statute section 317A.467 barred Weiss’s requests for equitable relief, including reinstatement and an injunction. That statute requires certain equitable claims against nonprofit corporations to be brought by at least 50 voting members or 10 percent of the voting members, whichever is less. Weiss did not satisfy that requirement.

Right to fair procedure. The court held that Minnesota does not recognize the common-law right to fair procedure asserted by Weiss. It also stated that, even if such a right existed and relief were available, AAO had provided notice, a hearing, an investigation, a Board decision, and appellate review sufficient to satisfy the minimum fairness requirements described in the Minnesota cases discussed by the court.

Breach of contract. The court assumed, without finally deciding, that failure to follow the Code of Ethics could constitute a breach of contract. It nevertheless held that Weiss had not plausibly alleged that AAO misapplied Rules 3 and 13, failed to act objectively, or breached its confidentiality obligation. The court explained that approval by an institutional review board did not prevent AAO from finding a violation of Rule 3, and Rule 13 applied to public communications, including Weiss’s noncommercial research communications. The court also found Weiss’s allegations about an allegedly biased investigation and improper disclosure too vague and unsupported.

Disposition

The court granted AAO’s motion to dismiss without leave to amend. It concluded that Weiss had already received two opportunities to amend and that further amendment would be futile.