Motions for summary judgment scheduled for Nov. 28-29
On Nov.
28-29, attorneys representing Princeton University and four
University-designated trustees of the Robertson Foundation will present
oral argument before New Jersey Superior Court Judge Neil H. Shuster in
support of four motions for partial summary judgment filed by
Princeton, as well as a motion to strike plaintiffs' demand for a jury
trial. Attorneys for Princeton will also oppose two motions filed by
several members of the Robertson family who initiated the litigation in
July 2002.
According to Douglas S. Eakeley of Lowenstein Sandler, Princeton's lead
counsel, "The Robertson Foundation was formed to support the graduate
program of the Woodrow Wilson School of Public and International
Affairs. Thanks to that support and the leadership of successive deans
and presidents of the school and University, that program is a
spectacular success. It is pre-eminent in its field, providing its
graduates with a unique preparation for leadership positions in the
federal government in particular and the public sector in general, and
garnering the recognition and praise of a wide array of current and
former government officials. The school is not only healthy, but
thriving. So, too, is the financial condition of the foundation: under
the stewardship of its investment committee, ably led by
University-designated trustee John J.F. Sherrerd, the foundation's
assets have grown from $35 million in 1961 to a current market value of
$752 million; $200 million of this growth has occurred during the past
three years, after the University-designated trustees of the foundation
decided to retain the Princeton University Investment Co. (PRINCO) to
manage the foundation's assets.
"Through this lawsuit, the Robertson family members are seeking to
seize control of the funds that Charles and Marie Robertson chose to
donate to Princeton, and to overturn the governance mechanism that
Charles and Marie agreed to create that assigns majority control of the
board of the foundation to Princeton so that it has the freedom and
ability to construct a world-class graduate program," Eakeley noted.
"In essence, plaintiffs seek to violate the principle of academic
freedom, substituting their judgment for that of the University as to
how best to educate its students, recruit and retain faculty, design
curriculum, sponsor research and promote an array of other activities
-- all of which contribute ultimately to a robust, productive
intellectual community."
The motions to be argued were filed with the court earlier this year by
both parties. Under New Jersey law, a party is entitled to summary
judgment as a matter of law when the pleadings, depositions, answers to
interrogatories, admissions and any affidavits establish the absence of
any genuine issue of material fact.
The University's motions are as follows:
1. The "sole beneficiary" motion asks the court to declare that
Princeton University is and will continue to be the sole beneficiary of
the Robertson Foundation, and is and will remain entitled to designate
four of the foundation's seven trustees. Such a ruling would be
consistent with the foundation's charter, well-established law and the
donor's intent. Specifically, the foundation's certificate of
incorporation explicitly dedicates the assets and income of the
foundation "to and for the use of Princeton University." Despite its
name, the Robertson Foundation is not a private foundation, but instead
is what the tax code recognizes as a Type 1 "supporting organization"
that exists solely to support a particular charitable entity, in this
case Princeton University. The law requires that this type of
organization must be controlled by the entity it supports, not by the
donor. In an application to the Internal Revenue Service in 1970 on
behalf of the foundation, Charles Robertson confirmed that the
foundation should be classified as a supporting organization because,
"since its incorporation, the foundation has been operated exclusively
for the benefit of Princeton" and " is controlled by Princeton" and
that these arrangements had been "agreed to by the donors." The
existence and confirmation of these arrangements were critical to
preserve the charitable nature of the Robertson gift and to ensure that
decisions about the academic program of the Woodrow Wilson School would
remain under the control of the University.
In their complaint filed against Princeton, members of the Robertson
family have asked the court to amend the foundation's certificate of
incorporation and bylaws to remove the University from any control or
involvement with the foundation and to remove the University from its
position of being the sole charitable organization that can be
supported by the foundation. "The request by the Robertsons' son,
William, and the other plaintiffs to remove Princeton from any control
or involvement would be a violation of the agreement between the
University and the founders of the Robertson Foundation, the structure
and provisions of the certificate of incorporation, and the
University's reasonable reliance on the continued flow of Robertson
Foundation funds to support the Woodrow Wilson School graduate
program," Eakeley said.
2. The "PRINCO" motion asks the court to declare that the decision of
the foundation's University-designated trustees to retain PRINCO to
provide an additional layer of foundation investment management under
the supervision of the foundation's investment committee is permitted
by the foundation's certificate of incorporation and bylaws and was a
valid exercise of their "business judgment." The Robertson Foundation
has flourished under PRINCO.
"The retention of PRINCO enabled the foundation to avail itself of a
diversity of investment opportunities, level of managerial expertise
and quality of service that would not be available from any other
manager at a comparable cost," Eakeley said. "Contrary to allegations
by the plaintiffs, there is no conflict of interest on the part of the
University-designated trustees because their fiduciary duties to both
the foundation and the University are aligned, since the sole purpose
of the foundation is to support the graduate program of the Woodrow
Wilson School within Princeton University."
3. The "11(c)" motion asks the court to declare that the foundation's
certificate of incorporation authorizes the foundation to spend
realized capital gains as well as other income, consistent with
well-settled law.
4. The "laches" motion asks the court to rule that a six-year statute
of limitations and/or the analogous equitable doctrine of laches
precludes judicial review at trial of five categories of pre-1996
expenditures that were plainly known, or with the exercise of
reasonable diligence should have been known, to the plaintiffs and yet
went unquestioned by them for decades prior to the filing of this
lawsuit. In particular, plaintiffs William Robertson and Robert
Halligan have served on the board of the foundation for a combined
period of more than 56 years.
5. The "jury demand" motion asks the court to strike now, rather than
waiting until the parties are in the midst of trial preparation, an
unusual demand (made by plaintiffs long after the filing of their
original complaint) to have a jury decide some of the issues in the
case while the trial judge would decide other issues.
Meanwhile, one of the Robertson family motions seeks to overturn the
governance structure of the foundation (and, by extension, the
governance structures of other supporting organizations around the
country) and the other deals with several specific historical spending
issues related to the foundation.
"Princeton University and its designated representatives look forward
to the ultimate resolution of the litigation, so that the University
and foundation can focus exclusively on the foundation's true and sole
purpose of supporting the Woodrow Wilson School graduate program,"
Eakeley said. "The University-designated trustees take great pride in
the accomplishments of the Robertson Foundation, in the significant
improvements that have been made in the foundation's governance
procedures in recent years, and in the extraordinary quality of the
graduate program of the Woodrow Wilson School. Over the past 45 years,
the school has become one of the world's leading centers for teaching
and research in public and international affairs, preparing students
for governmental and other forms of public service, and both the school
and its graduates have had a growing impact on the government, on
public policy and on international affairs."
"To cite just three recent examples," Eakeley added, "last spring the
school launched a major new program, Scholars in the Nation's Service,
to encourage more college juniors and entering graduate students to
consider careers in the federal government; this fall the dean of the
school, Anne-Marie Slaughter, is chairing an Advisory Committee on
Democracy Promotion for Secretary of State Condoleezza Rice; and on
Nov. 28, the first day of oral argument in the lawsuit, the school will
be hosting a major policy address by U.N. Secretary-General Kofi
Annan."
More information about the lawsuit can be found at www.princeton.edu/main/news/robertson.