Robertson Foundation lawsuit Q&a updated December 18, 2008
Why did Princeton reimburse the Foundation for the Graduate Funding Agreement?
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- 45. How are plaintiffs funding this lawsuit against Princeton
- 46. Is funding the litigation through a private charitable foundation appropriate
- 47. What is the current status of the litigation
44. Why did Princeton reimburse the Foundation for the Graduate Funding Agreement?In March 2007, Princeton announced that it would reimburse the Robertson Foundation for the relatively modest cost of a program called the Graduate Funding Agreement (“GFA”). The GFA was a pilot program between 2000 and 2002 that was established by former Woodrow Wilson School Dean Michael Rothschild to support Ph.D. students in three academic departments closely related to the Wilson School—economics, politics, and sociology—for the purpose of attracting and retaining excellent faculty in the School. By virtue of its design to support the Woodrow Wilson School, the GFA program was a permissible expenditure for the Robertson Foundation under its Certificate of Incorporation. In 2002, at the conclusion of its three-year trial, the agreement was discontinued by the current dean, Anne-Marie Slaughter. During the most recent annual budget reconciliation, President Tilghman determined that the inception of the GFA pilot program had not met appropriate standards of transparency. The funding of the program should have been specifically presented to the Foundation because, although in support of the School’s graduate program, the funds were not direct expenditures through the Woodrow Wilson School. Princeton’s voluntary decision to return $782,375 to the Foundation was an affirmation by the University of its commitment to sound governance practices for the Foundation and of its willingness to take corrective action when it finds that such practices have not been followed. Banbury Fund 45. How are plaintiffs funding this lawsuit against Princeton?The Robertson descendants are funding their lawsuit and a related publicity campaign through the Banbury Fund, a private charitable foundation controlled by the Robertson family. The Banbury Fund’s 990-PF information returns show that, through calendar year 2006 (the most recent publicly available return), the Fund had disbursed nearly $23 million for this litigation, including expenditures for “legal services,” “accounting” and “public relations.” These expenditures were in addition to salary payments to plaintiff William Robertson and stipends for spouses of certain Robertson family members. If plaintiffs have continued their pace of expenditure, the total amount of Banbury Fund resources spent on the litigation to date may exceed $28 million. Between the end of 2001 and the end of 2006, Banbury Fund assets fell from almost $49 million to approximately $20 million. By drawing down the private foundation assets of the Banbury Fund, the Robertson family members have been able to finance a “scorched earth” approach to evidence gathering in this case, which has dramatically escalated the cost to Princeton of defending the lawsuit and dramatically reduced the amount of money that otherwise could have been expended for charitable grants by the Banbury Fund. For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -- Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as litigation counsel to Princeton University and the individual defendants in the Robertson litigation. 46. Is funding the litigation through a private charitable foundation appropriate?Since the Banbury Fund’s resources are supposed to be supporting charitable purposes, the Robertson family’s use of the Banbury Fund to support their legal and public relations expenses associated with this litigation, including their personal claims, raises serious questions about what might happen to Robertson Foundation assets if, as plaintiffs demand in this litigation, the Robertson Foundation were converted into a private foundation under the Robertson family’s control. The use of the Fund in this manner highlights issues in self-dealing that have become leading policy concerns for the IRS and for the congressional tax-writing committees. IRS regulations state that “if a private foundation makes a grant or other payment which satisfies the legal obligation of a disqualified person, such grant or payment shall ordinarily constitute an act of self-dealing.” In this situation, William Robertson and other members of the Robertson family are disqualified persons because they are descendants of Mrs. Robertson, the donor and, therefore, the Banbury Fund may not fund their litigation expenses. (The only exception that might apply is one for “incidental or tenuous benefits,” which could not reasonably apply to expenditures that likely will extend well past $25 million.) Litigation Status 47. What is the current status of the litigation?
On August 1, 2008, Judge Sypek had scheduled a trial date of January 20, 2009, but with the approval of the settlement agreement, there will be no trial. Judge Sypek was appointed successor to Superior Court Judge Neil H. Shuster, who retired from the bench effective March 1, 2008. On September 24, 2008, the Assignment Judge in Mercer County, Judge Linda R. Feinberg, informed the parties that Judge John Fratto would preside over the trial, but Judge Sypek remained the presiding judge in the pretrial phase of the case. Prior to the settlement, the previous key action in the case was the October 25, 2007, rulings by Superior Court Judge Neil H. Shuster on several motions for partial summary judgment that Princeton and plaintiffs filed in 2006. The summary judgment decisions issued by Judge Shuster are described in more detail in the next section of this website. The summary judgment decisions issued by Judge Shuster are described in more detail in questions 48-53 below. See:
After the summary judgment motions were decided, Judge Shuster determined that there were contested issues to be resolved at trial; hence, preparations continued toward trial until the settlement agreement was reached. Summary Judgments Download 180.02 Kb. Share with your friends:
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