Robertson Archives Story
University presents oral arguments in Robertson lawsuit, Nov. 28
Posted November 28, 2006; 08:26 p.m.
Princeton University's lead counsel argued Tuesday in support of the
University's motion asking New Jersey Superior Court Judge Neil H.
Shuster to declare by summary judgment that Princeton 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
Douglas S. Eakeley of Lowenstein Sandler, representing Princeton and four University-designated trustees of the Robertson Foundation, also asked the court to declare that the decision of the foundation's University-designated trustees to retain the Princeton University Investment Co. (PRINCO) to manage the foundation's assets is permitted by the foundation's certificate of incorporation and bylaws, and was a valid exercise of their business judgment.
In the first of two days of hearings, Eakeley also opposed a Robertson family motion seeking to overturn the governance structure of the foundation, which supports the graduate program of the Woodrow Wilson School of Public and International Affairs. The hearings will continue Wednesday with arguments on three additional motions for partial summary judgment, as well as a motion by Princeton to strike a demand for a jury trial that was filed by members of the Robertson family long after they initiated the litigation in July 2002.
"Forty-five years ago, Marie Robertson made an extraordinarily generous gift of $35 million to or for the use of Princeton University to build and maintain a graduate program at the Woodrow Wilson School of Public and International Affairs; the Robertson Foundation was set up as the vehicle for Mrs. Robertson's gift," Eakeley said in his opening remarks.
"Continuously since 1961 the Robertson Foundation has contributed funds to Princeton University, and as a consequence the Woodrow Wilson School has grown and prospered, and indisputably is today one of the pre-eminent if not the pre-eminent school of public affairs in the world. At the same time, the Robertson Foundation funds have been so prudently managed by the trustees of the foundation that even after the many contributions to Princeton University, the market value of those assets today is over $750 million from a gift initially of $35 million.
"Despite this record of extraordinary success, we are here today -- 45 years after the foundation was set up and began disbursing funds -- with the children of Mrs. Robertson who filed this lawsuit claiming that the foundation from the outset failed to fulfill the donor's intent. The children make this claim even though the Robertson family members have been on the board of the Robertson Foundation from the outset; and indeed Charles Robertson, the husband of Mrs. Robertson, served as president of the foundation for the first 20 years of its operations. Plaintiffs' claim is not only several decades late, it is indisputably erroneous," Eakeley said.
"Let me suggest that there are several undisputed facts and legal principles that ought to guide the court in its resolution of these motions," Eakeley said. "The first is the fact of the Robertson Foundation's certificate of incorporation [which] clearly and unambiguously describes the purpose of the foundation. The purpose of the foundation is to contribute the income, funds and property of the foundation to or for the use of Princeton University … to establish or maintain and support at Princeton University and as part of the Woodrow Wilson School a graduate school, where men and women committed to careers in public service may prepare for careers in government service."
The second point, he said, is that the "organizational structure of the foundation was chosen by the donor and requires that the foundation board be controlled by Princeton University. This was a condition that was required by the Internal Revenue Service as a precondition for the gift and income tax deductibility of the gift, and it was also required by Princeton University itself before accepting the gift for the simple reason that Princeton needed those guarantees in order to make the long-term commitments necessary to build this graduate school, [the] bricks and mortar, lifetime tenured faculty members, offices of admissions and placement, and all of the other things that go into building a world-class graduate school within an integrated University.
"The bylaws in the certificate establish unequivocally that Princeton is to control the foundation through designating four of the seven trustees of the foundation," Eakeley said. "So we have an organizational structure that … is a defining feature of the foundation from the outset stipulated by Mrs. Robertson, ratified by her husband, required by the IRS and a precondition to the University accepting [the gift]."
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.
In arguing for Princeton's "sole beneficiary" motion, Eakeley noted that a ruling for summary judgment in favor of Princeton would be consistent with the foundation's charter, well-established law and the donor's intent.
In the other Princeton motion discussed Tuesday, Eakeley asked Shuster to uphold 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. Eakeley emphasized that the Robertson Foundation has flourished under PRINCO, providing the foundation with access to diverse investment opportunities and a professional level of managerial expertise that would not be otherwise available at a comparable cost.
Contrary to the plaintiffs' arguments, Eakeley said, the decision to retain PRINCO was not the product of a disabling conflict of interest on the part of the University-designated trustees because their fiduciary duties to both the foundation and the University are aligned, as the sole purpose of the foundation is to support the graduate program of the Woodrow Wilson School within Princeton University. In presenting the PRINCO motion, Eakeley outlined the history of extensive consideration of the decision to retain the management company, which was first suggested in 1998. A final agreement with PRINCO was approved in December 2003 after a total of nine potential firms had been interviewed.
Eakeley also argued against a Robertson family motion that seeks to overturn the governance structure of the foundation -- and, by extension, the governance structures of other supporting organizations around the country. He noted that the governance structure had been agreed to by Charles and Marie Robertson and later confirmed by Charles Robertson in correspondence with the Internal Revenue Service, and that the existence of these arrangements had been critical both 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 his closing comments, Eakeley noted several expressions of strong support for the University and the Woodrow Wilson School over many years by Charles and William Robertson, and cited the extraordinary accomplishments of Anne-Marie Slaughter in her four and a half years as dean of the School. He described as a "travesty" the decision by the current generation of Robertson family members to use private foundation funds to conduct a "scorched earth" discovery process and "mount a national publicity campaign" in connection with the lawsuit.
At Wednesday's hearings, attorneys for the University will argue in support of the following Princeton motions:
- 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.
- 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 since 1974 and 1982, respectively.
- 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.
More information about the lawsuit can be found at www.princeton.edu/main/news/robertson.