SCA: the lawsuit

[cellio]

As anybody in the SCA already knows, but for the rest of you, the SCA just settled a $7M lawsuit out of court for $1.3M. Corporate liability insurance has thus far refused to cover most of this (so there's another lawsuit over that), and meanwhile the money needs to be paid. The corporation has already spent a lot of money defending this suit so they don't have it; thus they are assessing an 18% levy on all kingdoms, local groups, and major wars (which have their own bank accounts) in North America.

I wasn't sure whether I was going to post about this (the discussion is happening in lots of places already), but a few people have asked what this relatively-long-time-SCAdian thinks, so...

I can't help feeling a bit of Cassandrafreude over this. A few people, most notably Duke Cariadoc (a real-world economist who knows a thing or two about organizational structure and law, and from whom I take a lot of inspiration), have been arguing against the centralized corporation for decades, for reasons including the giant target it paints on the corporate coffers. People called us paranoid. (Granted, I oppose the current centralization for many other reasons too.) Since the corporation asserted its ownership over all local-group funds about 20-25 years ago, I have been expecting something like this to happen. (Before then, a group could maintain its own bank account, absent the benefits of being part of a non-profit, if it wanted to. Some did.)

I have lots of questions about the current situation -- about what options were considered and why others were rejected, and about the timing. This post is not about that.

I have met the president of the SCA and several of its directors. I have had polite, respectful, and challenging conversations with them about various corporate doings. I have found them to be decent people, not at all like the situation in 1994. They are in a difficult position and, frankly, out of their league. This is not about the individual people who are in charge of the corporation. I think the problems are institutional and uncorrectable within the current structure and common mindset of the SCA.

So long as that giant target exists on the (new-reduced) coffers, and especially now that the SCA has settled once and thus demonstrated its willingness to anyone who wants to sue regardless of merit, there will be no end to the problem. Lawsuits are pressed when the potential payoff exceeds the expected costs of prosecution; big bank accounts mean higher potential payoffs. If the target had instead been "SCA Kingdom of the East, Inc" with a tenth the assets of SCA Inc, the settlement probably wouldn't have been $1.3M.

And not only are we a target no matter what we do (the precautions put in place after the current case would not have prevented that case), but every case and every precaution does some incremental harm to the society. People get deterred from volunteering because of either the risks or the new regulations, and meanwhile the level of discourse in these discussions is often rather far below what you would expect from a society founded on chivalric ideals. It's ugly and tiring, and I suspect we lose as many people to the arguments as we do to the underlying situations.

A single corporation holding all those assets does harm to the society. There's just no way around that. The directors of any corporation have a fiduciary responsibility to protect those assets; they do not have a duty to protect the culture that makes the society what it is. A corporation must protect its assets, and fears around that will always trump other concerns. It's not reasonable to expect otherwise.

It's funny: the most consistent argument I've heard for why we need a central corporation is insurance coverage. We're currently suing our insurance provider for refusing to pay a claim.

People have been advocating decentralization since the very beginning -- in fact, the society came first and the corporation only some years later -- but the idea has never taken hold. People like central authority, uniformity across the society, and -- while they grumble about the rent -- a central office that you can call when your newsletter didn't arrive or you need proof of membership for Crown Tourney. Demonstrations from other organizations that a decentralized structure can work are met with indifference or dismissal -- "we're different". Questions about whether the current structure is worth the cost, financial and otherwise, are often met with emotional, not logical, responses, preventing conversational progress. People do not see the possibilities that loosely-associated independent organizations could bring -- that An Tir could have same-sex royalty and AEthelmearc could adopt new fencing forms and Atlantia could reduce the fighting age to 14 and Caid could choose its royalty by vote and... (I'm making up some of these examples, ok?)

As I said before, I believe the president and directors are acting with the best of intentions. But even the best-intentioned people can end up perpetuating something that ought to be re-examined. If the current situation causes the society to re-examine its structure, to allow kingdoms to spin off and make the rules and cultural changes they find appropriate, with the consequent distributed liability, then $1.3M will have been a small price to pay for that change.

But that won't happen, just as it didn't happen in 1994. Too many people in the SCA are too eager to preserve the current structure unexamined, to avoid the responsibility that would come with independence, and to call anyone who says differently a bad person. The biggest fight the SCA has been through during my time was the fiasco that started with the mandatory-membership decree, and that did not rally people for a change in the end. This will not either. We rush to gather the payment for the disaster that has just occurred, but we are unwilling to ask what we should do to reduce the chances of a repeat occurrence. We think new rules will save us and we ignore the sights trained on the bank accounts. People have already compared the current and forthcoming fund-raising to the outpouring of support in the face of hurricanes and floods; I instead compare it to rebuilding on a ten-year flood plain.

I have been drifting away from the SCA over the last couple decades, and this is not my fight. Not this time. Fortunately for me, there are really only three things about the SCA that really matter to me, and the demise of the corporation (were it to happen) would not harm any of them. They are:

1. All the interactions and shared projects with friends across the world-wide society; we'll keep making music and researching clothing and brewing beer and cooking feasts and so on regardless.

2. Local activities. The absence of a tax-exempt corporation with an insurance policy (now shown to be of dubious reliability) won't stop us from gathering for tourneys and feasts and academies. It may affect where and how we do those things, but people who want to have fun together will keep having fun together. Other small groups do things at least as dangerous as we do; surely the liability problem isn't completely intractable.

3. Pennsic. Pennsic is nominally an SCA event, but it is unlike all others I have attended in structure. It is also the largest source of annual revenue for Cooper's Lake Campground, and I have no doubt that were SCA Inc. to vanish, the Coopers would make official what has been true in practice for years, that Pennsic is a Cooper's Lake event.

So if SCA Inc. were to go away, then after some local fund-raising efforts to replace seized property like crowns and loaner armor and kitchen supplies, I think the only impact I would notice would be the refreshing freedom to return to a society that's about the re-creation and the people and the fun. I don't think I'd mind that outcome at all.

Comments

[hildakrista.livejournal.com]

I, for one, am extremely glad to have the Corporation in exisitance. The reason: they indemnify local and Kingdom Officers from personal lawsuits stemming from their SCA duties. The Seneschale of the Shire of Eisenthal was named in the Ben Schragger lawsuit along with him, and two other officers. I'm sure her life was turned upsidedown enough even with the indeminfication - can you imagine the ruinous consequenses to her entire life had she not had it? I put myself in that hypothetical place, and I shudder.

The sad state of the world is that lawsuits, both justified and not, are common. (Ask Brandubh sometime about how often the City just settles crap lawsuits just to avoid legal fees - your tax dollars at work) Lawsuits are maybe not common in the Aethelmearc region, but in Caid, I've heard the Kingdom Exchequer gets served more than once a year. With suits against him, personally. No one would volunteer for the job. If Aethelmearc were regional only, even if we indemnified officers, can you imagine what even one lawsuit like the Ben Schragger case could do? The legal systems are so unpredictable, and so expensive. AE has about 1900 members. Charging a reasonable AE membership fee might bring in maybe $60K a year. Even one lawsuit could either bankrupt the whole Kingdom, or devastate an innocent local officer that was just trying to make stuff go - the real reason we volunteer. And what about the western Kingdoms, where people are just more litigous in general?

Even if the indivdual Kingdoms or regional entities could absorb it, the amount and quality of people volunteering for offices would drop dramatically overall as they get disillusioned. (You know something about that, right?) I have a hard enough time getting people to volunteer for just local Offices. Can you imagine if their personal risk increased 100 or 1,000-fold? It's not an anreasonable concern.

I understand that you believe that having the Corporation is a target, and decentralizing would eliminate that target. I don't think that's the case. I think it would make smaller, more vulnerable targets. Because people are like that, and our legal system is like that. Maybe most of the smaller targets never get hit, but it's very likely that some would.

So my membership fee is now, for all intents and purposes, protection money...it sucks. But as a Seneschal that needs protection, and as an SCA member who wants protection for my friends, both known and not... I'm actually OK with that. Take my $40, and take my Barony's $1900, and let me play my game without my having to worry (much) about being sued.

Is my stance fear-based or caution-based? Frankly, I don't know, and it's an uncomfortable place to be. And I don't like it. But here I am.

[zachkessin.livejournal.com]

OK but we are assuming that if there were local corps that officer risk will go up, we should verify that fact.

I will admit that I am in a strange point as the founding Sen of a shire in Israel (Ma'ale Giborim) which the SCA Insurance does not cover. Our shire is now inactive but while it was active we never had any Insurance at all.

[goldsquare.livejournal.com]

What you would get, and what most non-profits have, is a lot of smaller and more replaceable targets. If you put all your eggs in one basket, you have to watch the basket - and, as your post implies, you just can't.

Lots of smaller, affiliated corporations would limit the prize (in most cases) and limit the damage, and none of them would be irreplaceable.

[hildakrista.livejournal.com]

Most non-profits have a higher percentage of employees than we do. At the regional and local level, it's 100% volunteer.

In the case where the smaller corporations couldn't afford to indemnify its officers against personal lawsuits, a lawsuit itself, regardless of the outcome, would financially ruin or do great fiscal harm to individuals. In maby personal cases, there is no such thing as limited damage - any damage from a lawsuit would be devastating in fees alone. Who would take the risk to their families? Some would. I wouldn't.

In the case where individuals could be indemnified, but lawsuits burn up the little Corporations which are then replaced, how long would that go on before no one is *willing* to replace them? Our non-profit has much value, but we aren't feeding the homeless, we aren't providing life skills to children (in an obvious way)... We are a historical hobbyist organization with no deeply rooted societal purpose. Burn and replace wouldn't work for very long, when all we really want to do is play.

In the SCA, people burn out all the time just doing the normal business of facilitation of the game. Some of you are reading this now. If more people are forced to the meta-game, burn out would be higher and faster as people who aren't prepared for it take the Corporate positions. Settling for a burn-and-replace model may work, but it's not infdefinite, and the risk is too high for my taste.

[goldsquare.livejournal.com]

I lack the background to know about "most" percentage of employees - where did you find that figure? In any case, I'm not sure that your point obviates mine - maybe I don't understand.

You are correct that a non-profit which cannot indemnify its volunteers and officers is at risk - but that risk is as much from the state that incorporates it as it is from the risk to the volunteers. The non-profits I have examined that use the IRS Group Exemption also provide umbrella insurance policies, as well as umbrella exemptions. Sub-groups are free to find a better deal, of course. (There are risks to having multiple small corporations share a claims history, but at the same time it is part of risk sharing - so not altogether bad.)

I agree: no indemnification, no volunteerism. In this case, that's a historical statement - at the time when I last autocrated, the SCA did not indemnify volunteers or local officers. When I bought a house, I quit doing that stuff. Same for my absolute long-term refusal to assist with children's activities. I don't care to be a target.

Your question about repetitive "airbag deployment" of little corporations begs a question: why would that be? If the failures are diffuse across the Known World (and it is the result of proper indemnification), either there is a structural problem that merits fixing (or the corp should die), or the problem is not nearly so likely to effect recruitment. Contrariwise, if the repetitive failure is localized, failure to instate a new corporation is the right solution: that nexus of volunteers and law is too dangerous to continue.

The path to "death of the umbrella SCA predicted" that you seem to have made, is not a path I see clearly. Can you elaborate? How did you come to assess that risk - are you presuming a lack of indemnification (which is not justified) or some pattern of repetitive failure that you did not explain?

[hildakrista.livejournal.com]

I, too, lack the background to know for sure that most non-profits (hospitals, schools, churches, charitable funds) have at least some employees. However, considering that they are not mostly hobbyist groups, it's reasonable for me to think so. I'm just commenting on LJ, not annotating a paper. But if you're interested, you can look up more information: http://nccs.urban.org/.

I don't understand your question about airbag deployment, as I didn't use that metaphor. If you mean smaller Corporations failing due to bankruptcy brought on by lawsuits, and being re-invented by its former members, that was your idea, not mine. I was only pointing out that it's not sustainable, volunteer-wise.

I also don't understand "death of the umbrella SCA predicted", as I didn't say that, either. I don't know what you're referring to.

We play SCA becuase it's fun, or we're getting something out of it otherwise. The nature of our games is such that we need an internal structure of volunteers to run it. If it's a PITA to run it, or risky personally (which you admit it is even under the current structure, by you youself declining to take on positions of responsibility), you don't get as many or as qualified people to do it. Who wants to spend their free time dealing with meta-game stuff like lawsuits? We have one Corporation now, with a Board, who have volunteered to deal with just that. They have a hard time finding qualified people to volunteer to that one Board. Multuply it by 19 Kingdoms, and you have major drain on the few qualified people that are even capable of it, let alone qualified.

I don't think that the current Corporate system is perfect, not at all. But I'm happy that we as a Kingdom don't have the same stresses that the BoD does. I don't think we could handle it.

[goldsquare.livejournal.com]

I could not find any data on the topic of employees in the link you provided - and I lack the time to search out more. I note that while the non-profit sector is huge, it seems the vast majority of non-profits are small enough that they can barely afford 1 employee, especially those in the same sector as the SCA.

I had been cited elsewhere in the conversation as using the phrase "Corporations are like airbags", and I probably made a mistake in presuming you had read it. I find your bald assertion that "burn and replace wouldn't work for very long" to be doubtful. I'd like to see more analysis of that from you before I am prepared to believe it.

Your post also asserted that this model would, in the end, fail the umbrella corporation through an inevitable lack of volunteers. That was what I meant with a reference to the shibboleth of "death of the SCA predicted".

My point, which remains, is that while you are positing theory, there are many local affiliation equivalents out there which are successful under that model.

The data is somewhere here (http://www.irs.gov/taxstats/charitablestats/article/0,,id=97186,00.html), I feel sure, but I lack the time to check it. Given how many hobbies, fraternities and sororities, and other similar organizations that I know of do this, and it works, and for many it has worked for decades: I'm letting the facts speak.

One last thought: what new workloads do you think that the Kingdoms would need (if they were separately incorporated as subsidiaries) beyond what they already have? I can think of very very little.

[hildakrista.livejournal.com]

I still think it's reasonable to think that most non-profits have employees. If we're talking about *only* hobbyist 501(c)3's I agree it's probably different. But it appears neither you nor I have the time or inclination to actually check and make real comparisons. I'll agree to disagree on that one.

Under your burn-and-replace model, I was not predicting the death of the SCA. On the contrary, I actually think the SCA as a whole would survive nearly any crisis or reorganization, simply because it fulfills a need that isn't met in many other places (though increasingly, MMORPGs). There will always be someone who wants to play at knights in shining armor, and those with a true interest in re-creating medieval life. What I think could fail is particular local or regional groups, and potentially individuals, especially in litigious areas. I would rather see them protected.

You mention many other hobbies and similar organizations that are separately incorporated under an umbrella organization, and it works for them. I'd be happy to let those facts speak, but I am not familiar with any of them that are comparable to the SCA in size or principal. Or type of volunteer, for that matter. You mention fraternities and sororities, and you have a point there, but these have a both a constant infux of new folks, and a very limited term of engagement - burn-out is unlikely there, so I can't call them analagous. I looked at a couple of other living history organizations, and the ones I saw are all much smaller than the SCA, and limited geographically. Give me an example of a truly nationwide, hobbyist non-profit umbrella with membership numbers similar to ours. The Civil War folks, maybe? Don't know much about them, though I'm pretty sure they don't have a national umbrella. I'm not challenging you - I'm actually interested.

You find my assertions doubtful, and I find yours so, too, based on what I know. Honestly, your model for the SCA is a thought-experiment based on a hypothetical. It's interesting, but I'm not surprised we see the path of the thing differently. There are too many unknowns, and I assume we both have different experiences within the SCA (I don't know who you are).

Don't get me wrong, though. I don't think the current system is perfect, or even ideal. I see how Monica's suggestion could change things for the better in some ways, but I also think it would change other things for the worse. It's my opinion based on my experience and sadly (hard to admit), my fears.

[goldsquare.livejournal.com]

Give me an example of a truly nationwide, hobbyist non-profit umbrella with membership numbers similar to ours.

Barbershop.org

I did a quick look at a few others - I think American Contract Bridge League is likely similar, I found a few chess clubs that are similar, same for dog ownership, dog rescue and other animal rescue organizations.

Sports - I believe that most youth sports organizations function similarly.

Is that a good start?

[cellio]

I have much sympathy for the three officers whose lives were messed up by this for years. I'm glad they were protected.

But a question: why do you believe that a group can only function with officers? I've been worrying for years that creating more and more officers is one of the SCA's biggest sources of liability.

Consider: we have children's officers, so it is apparently reasonable to assume that we provide some measure of safety for children's activities. (So say the lawyers and board who settled this case.) We have officers in charge of publications (newsletters and web sites), conveying some level of corporate sanction over what they publish. If you or I were to publish someone's copyrighted material or abuse children (perish the thought), we would be on the hook for that. If the officer in charge of those areas does it, the SCA is on the hook for that. Officers are agents of the corporation. We should have as few of those as possible.

Ironically, the corporation made exactly this argument about 25 years ago when they ruled that local groups could no longer have chirurgeons. Today we have chirurgeon liaisons, which is somehow legally different. They are not a required office. Before that we had (required for baronies, IIRC) chirurgeons, responsible for providing first aid at events. I don't know why that was dangerous but children's officers aren't.

I suspect (I am not a lawyer) that we would be in a much better position, legally speaking, if we had no children's officers. This does not mean no children; far from it. It means that -- just like we did before we had children's officers -- children participated in the main part of the event to the extent they were able, parents were responsible for keeping their kids safe and happy, and any group of like-minded people could get together to share oversight (babysitting) or teach crafts or whatever. This wasn't perfect -- we had our share of unruly children of negligent parents -- but it wasn't ridiculous either, from what this non-parent could see. I grant that youth combat, which didn't exist then, complicates this, but martial officers are a smaller set than what we have now.

As for insurance, I'm not saying we don't need it; I'm saying that we are not the first group to engage in martial arts and other dangerous activities without the backing of a big corporation, and I strongly suspect that the insurance/liability problem is solvable. I've been to non-SCA events (and SCA events of course) that required me to sign waivers. I've heard of groups much smaller than our kingdom getting liability coverage for their activities (not to protect corporations, just people). I admit I'm punting somewhat by not doing the research; suspect but can't prove that this is solvable. If it ever looks like AEthelmearc (or the barony) would consider going independent I'll try to help with the research, but that seems highly improbable now so I won't spend that effort.

[hildakrista.livejournal.com]

Good point. I agree with some of your points, and certainly about children's activities in particular.

But if you want something to happen, someone's got to take responsibility for making it happen. And if you want stuff to happen long term, you have to create buy-in from the participants. In order to create buy-in from people unwilling to take on creative responsibility (those that play the game, instead of facilitating it - which is most people, as it should be), then they must have a voice with those that do facilitate. So you create a voice by creating an office. It's one way to do it, of course... There are other ways. But it's a way that lifts the burden of individual responsibility for the meta-game from those that don't care to have it.

This happens everywhere. Think of all the technically non-SCA, Inc, households that exist. They are not beholden to our structure, and yet the larger ones, the healthiest ones, have people with particular titles and/or responsibilities, many of which mirror geographical groups' set-ups at least partially. Of the ones that aren't so healthy, what you have is people taking on the responsibilities (really, someone has to), but without formal authority. These folks tend to get tired of it and burn out if the household is active, and if they continue to have no real or perceived authority.

Officers will happen, no matter what you call them. Why can't this be limited to a local level? I dunno, maybe it can. Maybe it really would be better. But the meta-game can be tough to handle. I really do think that we'd burn through people a lot faster if some of the burden of authority wasn't taken up at a high level.

I also like having a combined vision... overarching rules and ideals, some of which are codified. Don't you?

[cellio]

In order to create buy-in from people unwilling to take on creative responsibility (those that play the game, instead of facilitating it - which is most people, as it should be), then they must have a voice with those that do facilitate. So you create a voice by creating an office. It's one way to do it, of course... There are other ways. But it's a way that lifts the burden of individual responsibility for the meta-game from those that don't care to have it.

I have been using "officer" to mean "real-world in charge of something". We've both seen people in the SCA in positions of leadership and influence who aren't officers. For example, the heads of major households can, directly and indirectly, make a lot of stuff happen. But they're not on any list of agents of the corporation. Many SF cons operate the same way: you can make a music program or an art show or a games room or whatever happen without necessarily being on the concom. Religious organizations have this in droves, or at least the ones I'm familiar with do. I suspect but do not know that LARP groups operate this way.

I also like having a combined vision... overarching rules and ideals, some of which are codified. Don't you?

Sure, within reason that permits local variations that make sense to those involved. But overarching corporate rules aren't the only way to do it. Treaties can do that too. One example is the White Scarf Treaty; another is the rules of how the Pennsic War operates. And "inter-kingdom (anything)" tends to operate this way at strictest.

[hildakrista.livejournal.com]

Both excellent points. Thanks for clarifying.

I have two issues with informal leadership: One, that it can work really really well (and does) for in-game play (like organizing events), but it's harder for it to work well for meta-game play (like arranging long-term insurance or writing and maintainting rules, for example) and still have internal consistency.

Two, informal leadership is good when it's working, but when it goes awry, it can get very bad. A formal structure provides more avenues of recourse for the wronged, and a base for rebuilding interest after folks have drifted off or been driven away. Even our formal groups combust sometimes (I can think of 3 in AE alone just in the past 14 years). I think it would happen much more frequently in an informal set up, which I believe would be very bad for retention and would lessen the fun factor considerably.

Consider our own Barony's first Baron, too, and that whole situation. We are a personality-driven society. Formal structure can limit the power of individuals, and with the type of person our hobby sometimes attracts, that can be a very good thing.

On the treaty thing - yup, I like it. I've thought before that such a set up may work fine. I just don't see that it would be any better than what we have now. It would have issues, too, just different ones.

[cellio]

One, that it can work really really well (and does) for in-game play (like organizing events), but it's harder for it to work well for meta-game play (like arranging long-term insurance or writing and maintainting rules, for example) and still have internal consistency.

That could well be, yes. I haven't made a study of it, but what you say rings true. I have seen it work well for meta stuff (for example, I was on the committee that revised my congregation's bylaws last year), but certainly more people want to play than enable play.

Two, informal leadership is good when it's working, but when it goes awry, it can get very bad.

This can go badly awry with formal systems, too. When a volunteer organization needs to remove someone from a position, it gets ugly no matter how it happens. Plenty of local SCA groups have been damaged by fallout from such things. :-(

On the treaty thing - yup, I like it. I've thought before that such a set up may work fine. I just don't see that it would be any better than what we have now. It would have issues, too, just different ones.

It's better in one key way: treaties, being agreements among peers rather than rules from above, can be revoked if they are no longer working. Members have absolutely no recourse other than pleas to the BoD if they don't like how something's being done.

[paquerette.livejournal.com]

I don't think chirurgeon has been required during my ten years in; Endless Hills has seldom had one.

Organized children's activities irritate me as a parent. With the little children, it makes more sense to have an informal parent-staffed area, and with the older ones I'd rather just have them in on the regular classes and things that they're up to. I think my 7 year old may be just about there. Obviously, child specific martial activities make sense to have. But all that bureaucracy for a craft activity... ehhh, no. If I never again see a sugar cube and frosting castle, or "draw whatever you like on a shield shape and it's your HERALDRY YAY" it will be too soon.

[cellio]

I was a local officer when the chirurgeon change happened (I remember it being discussed at our officers' meetings), which puts it in the mid-to-late-80s.

Too often, children's activities manage to combine the worst aspects of SCA bureaucracy with the worst aspects of babysitting ("just stick them someplace out of the way for the afternoon"). I'm particularly glad to see youth combat flourishing because it's fun for them, on-topic, and right there in the event proper.