Washington Post: Schools Await Princeton Donor Ruling

<p>AP Article by Justin Pope: Colleges are closely watching a key ruling in the bitter legal battle over Princeton University and its use of the A&P grocery fortune - $35 million in stock to Princeton's Woodrow Wilson School of Public and International Affairs, given to the university with the express proviso to train to students to work for the U.S. government back in 1961. The upcoming state court ruling in the Princeton case touches on "donor intent", a key issue of great import to college campuses across the county. "For colleges, the issue is the fine line they must walk between acting as faithful stewards of their donors' money and maintaining the authority they need over their own affairs in a changing world."</p>

<p><a href="http://www.washingtonpost.com/wp-dyn/content/article/2007/09/04/AR2007090401206.html%5B/url%5D"&gt;http://www.washingtonpost.com/wp-dyn/content/article/2007/09/04/AR2007090401206.html&lt;/a&gt;&lt;/p>

<p>NY Times: "Princeton Faces Trial Over Use of Gift Now Worth $880 Million":</p>

<p>
[quote]
In a set of rulings, the judge, Neil H. Shuster of Superior Court, established the ground rules for one of the largest lawsuits ever filed exploring how closely colleges must adhere to the original intent of donors.

[/quote]
</p>

<p><a href="http://www.nytimes.com/2007/10/26/education/26princeton.html%5B/url%5D"&gt;http://www.nytimes.com/2007/10/26/education/26princeton.html&lt;/a&gt;&lt;/p>

<p><a href="http://www.princeton.edu/main/news/archive/S19/33/23C63/index.xml?section=topstories%5B/url%5D"&gt;http://www.princeton.edu/main/news/archive/S19/33/23C63/index.xml?section=topstories&lt;/a&gt;&lt;/p>

<p>This appears to be very good news for Princeton. </p>

<p>The Robertson family desperately wanted a jury trial. Their best shot was to blur the legal issues before a jury and then make an emotional appeal characterizing Princeton as the big bad rich institution abusing the trust of the donor family. A judge is far less susceptible to this kind of emotional manipulation and the outcome now will be based squarely on the facts which are nearly all in Princeton’s favor.</p>

<p>The other critical win for Princeton was the granting of a summary judgment on the issue of whether capital gains could be spent. The plaintiffs wanted to limit the spending to just interest and dividends on the principal. In other words, the approximately $840,000,000.00 that Princeton added to the original $35,000,000.00 gift through careful investing could not be spent. The plaintiffs took this position so as to cripple Princeton’s ability to use the endowment.</p>

<p>Finally, what many of the news stories (and the Robertson family) are characterizing as a win for the Robertsons is not what it seems. Princeton asked for summary judgment on the issue of whether or not it was the sole intended current and future beneficiary of the endowment. The judge denied this request and that denial has been characterized by the family as suggesting there is significant doubt on this issue. Nothing could be further from the truth. </p>

<p>Had the judge granted this summary judgment there would have been little reason to go to trial since the ultimate aim of the Robertson family (i.e. to take the endowment away from Princeton) would have been thwarted. It was a good move on Princeton’s part to ask for the judgment but it was a long shot. The judge denied the request but did so on a very narrow legal basis. He pointed out simply that his is a court of equity and that the granting of this request would effectively have ended the trial without the arguments for equitable relief even being given the chance to be heard. While thus allowing the trial to go forward, the judge at the same time agreed with Princeton’s contention that “Article 3 of the Foundation's Certificate of Incorporation is clear and unambiguous as to the University being the sole institution to which Foundation funds are to be directed." </p>

<p>In other words, the judge agreed that the endowment belongs to Princeton but was required by the nature of his court to allow arguments of alleged abuse to go forward with the possibility of equitable relief that could then overturn the intention of the original donors. This is an absolutely critical point since the plaintiffs had wanted to bring into question whether Princeton was ever intended to be the sole beneficiary. They have tried to characterize the endowment as having been established for “the American people,” a preposterous claim and one with which the judge clearly does not agree. </p>

<p>Having agreed that the endowment was intended solely for Princeton’s use, the issue now is whether or not Princeton abused its responsibilities so seriously that the endowment articles should be overturned and the endowment taken away from them. The judge stated that, in order to use his equitable powers to overturn the clear intent of the original donors, he would have to be presented with facts showing that Princeton behaved in the most “egregious and nefarious” of ways. No such facts exist and the Robertson family knows this. </p>

<p>The judge has set a very high bar for the Robertsons. Judges rarely use words like “nefarious”. It is not enough even to show that Princeton made mistakes in its disbursement of the funds. The plaintiffs will have to show that Princeton willfully, intentionally and maliciously misdirected funds. Furthermore, it appears that even if the plaintiffs are able to prove some cases of this, those cases would have to be more than trivial to meet a standard like “nefarious”. In the words of the judge, the abuses would need to be “egregious”. In my opinion, this will be an impossible burden for them to meet. If such cases existed, the Robertson family would have advertised them widely long before now.</p>

<p>The fact that this was mostly a win for Princeton is also demonstrated by the plaintiffs’ response. Their website even now contains no mention of this most recent decision. The Robertsons have been very active in bashing Princeton in the press at every opportunity. Had these decisions been favorable to them you would have seen an immediate mention of it on their website accompanied by press releases to all news outlets. Other than some very general comments from their lead attorney about how happy they are with the decisions, there is virtual silence. They know that they’re in trouble.</p>

<p>Thanks for the terrific analysis, PtonGrad! Glad to see that the suit is leaning in Princeton's favor.</p>

<p>PtonGrad, you must be an attorney! Your understanding of Summary Judgment montions clearly points in that direction. You did a great job explaining the court's rulings.</p>

<p>Yeah I sure hope Princeton wins. It's about time the heirs of the Robertson family did more than just sit around, count their pile of inherited cash, and want more (without working for it of course!)</p>

<p>Is this Robertson family at all related to the family who endowed the Robertson Scholarship at Duke?</p>