Parent Lawsuit Forces Sweeping Reforms at Laurel School PTO

SAN MATEO, CA – March 25, 2026 – A contentious, multi-year legal battle initiated by a parent volunteer against the Laurel School Parent Teacher Organization's former leadership has concluded in a landmark settlement, ushering in an era of sweeping governance reforms and financial oversight for the community non-profit.

The agreement, announced today, resolves the lawsuit Foroughi obo Laurel School v. Laurel School PTO, et al. (San Mateo County Superior Court, Case No. 21CIV01197) and mandates significant changes aimed at rebuilding trust and ensuring transparency. The settlement includes a substantial financial payment from insurers, which the plaintiff, Jaclyn Foroughi, has directed back to the PTO.

In a joint statement, Ms. Foroughi and the current Laurel School PTO expressed optimism about the resolution. "We are pleased to announce an agreement that will formalize various institutional reforms involving the Laurel School Parent Teacher Organization," the statement reads. "These reforms will strengthen the bond between the PTO and the parents and school that it serves by improving governance and transparency in PTO operations and fundraising."

A Multi-Year Battle for Accountability

The settlement marks the end of a legal saga that began with concerns raised by Jaclyn Foroughi, a parent with over two decades of experience in finance and non-profit management. Ms. Foroughi served on the PTO board as financial secretary and later co-treasurer during 2019 before resigning in December of that year.

In March 2021, she filed a derivative lawsuit on behalf of the PTO against nine individuals who served as officers and directors on the executive board during the 2019-2020 school year. The core of the lawsuit alleged a breach of fiduciary duty—a legal obligation to act in the best interests of the organization. The case centered on claims of financial mismanagement and a lack of proper governance and transparency.

The defendants attempted to have the case dismissed under California's anti-SLAPP (Strategic Lawsuit Against Public Participation) statute, arguing that the claims arose from protected free speech activities related to the PTO's operations. However, both the trial court and a subsequent appellate court rejected this argument. The courts affirmed that the lawsuit was not about speech, but about the fundamental fiduciary obligations that board members owed to the PTO, a significant clarification that underscored the seriousness of the allegations.

Ms. Foroughi's persistence through the complex legal process was formally recognized by the very organization she took to court. "The PTO would like to acknowledge the hard work and financial expertise that Jaclyn Foroughi brought to this process, which helped lead to important changes to the PTO's operation," the joint statement noted, thanking her for pursuing the changes for multiple years as a volunteer.

Sweeping Reforms and a Path Forward

The resolution is more than just a financial settlement; it establishes a new framework for how the Laurel School PTO will operate. The agreed-upon reforms are designed to be comprehensive and lasting, with an independent mediator, Bruce Friedman, who helped broker the agreement, continuing to work with the parties to ensure their successful implementation.

Key reforms include:

• Mandatory Board Training: All executive board members are now required to undergo training on their duties, with a specific focus on fundraising protocols, the appropriate use of PTO funds, their legal fiduciary responsibilities, and methods for respectful and effective collaboration.

• Financial Audit: To ensure a clean slate and complete financial accuracy, the PTO's financials are currently undergoing a full audit. The current PTO leadership has committed to addressing any corrections that are deemed necessary based on the audit's findings.

These measures directly address the issues at the heart of the lawsuit and are intended to create a durable system of checks and balances. The emphasis on training and auditing reflects a commitment to move beyond past disputes and establish best practices for the future. "Trust between parents and the schools... is critically important," the statement emphasized. "Ms. Foroughi's efforts have helped advance transparency and proper governance."

Insuring Accountability and Lessons for Volunteer Boards

A critical component of the settlement is the "substantial financial payment from insurers." While the exact amount remains confidential, its existence is highly significant. The payment strongly suggests the PTO was covered by a Director and Officer (D&O) liability insurance policy, a common form of protection for non-profit boards against claims of wrongful acts.

The willingness of an insurer to fund a substantial settlement indicates that the claims of mismanagement or breach of fiduciary duty were credible and posed a significant legal risk. For volunteer-led organizations across the country, this serves as a powerful reminder of the real-world legal and financial liabilities that can accompany board service. It highlights the necessity not only of having adequate insurance but, more importantly, of implementing strong governance and financial controls to prevent such claims from arising in the first place.

This case demonstrates that volunteer board members are held to a legal standard of care and loyalty. When that standard is not met, the consequences can be severe, involving costly litigation and potential payouts that underscore the gravity of their responsibilities.

A Potential Blueprint for PTO Governance

The resolution at Laurel School is being watched closely by other parent-teacher organizations and non-profits. The settlement provides a potential blueprint for how to handle internal disputes and, more importantly, how to structure an organization to prevent them. The emphasis on mandatory training, independent audits, and a clear understanding of fiduciary duties offers a model for best practices that any volunteer-led group can adopt.

By successfully bringing a derivative action, Ms. Foroughi has also illuminated a powerful legal tool available to members of a non-profit who believe its leadership is failing in its duties. The outcome reinforces that accountability can be demanded and achieved, even within a community of volunteers.

As the Laurel School PTO moves forward with implementing these reforms, the focus shifts from conflict to collaboration. The alliance between Ms. Foroughi and the current PTO, as described in the settlement announcement, signals a shared commitment to a more transparent and effective organization, one that has emerged from a difficult chapter with a stronger foundation for the future.