The University filed a request for declaratory judgments on Wednesday, the latest development in the case of the two-year-old lawsuit brought by the Robertson family. The University also strongly criticized the family for hindering the ongoing work of the Robertson Foundation.
In its filing, the University asserted that the Robertson family trustees are "attempting to hold the foundation and the Woodrow Wilson School hostage," and that "[s]ince the filing of their original complaint in July 2002, the family trustees have used their positions as trustees of the Robertson Foundation to oppose and obstruct proposed financial support of the Robertson Foundation for the graduate program of the Woodrow Wilson School."
The request seeks a declaration from Judge Neil Shuster of Mercer Country Superior Court affirming that the foundation's funds cannot be transferred to another institution, that it is permissible to have the foundation's funds invested with the Princeton Investment Company (PRINCO) — a University subsidiary that manages the Princeton endowment — and that the University can use the capital gains of the foundation, along with its dividends and interest payments.
Expressing a degree of surprise at the University's latest step, Robertson family attorney Frank Cialone said he didn't understand what the University was doing or why.
"I think it's a tactic, I don't understand it, but I think it's an ill-advised one," Cialone said. "I don't really see how you could tee these up without trying the whole case."
University General Counsel Peter McDonough explained that the University seeks a resolution to these issues because they affect the day-today work of the foundation's board. The board consists of seven trustees; four represent the University and three represent the Robertson family.
"Board members have had to continue to be responsive to the needs of the foundation and it's very difficult to do that in real time while these very fundamental issues are in dispute and are affecting the ability of the foundation to be managed," he said. "These are the three rather fundamental issues that need clarity in order for this board to function."
McDonough noted the changed relationship between the trustees since the Robertson family first filed a complaint in 2002, alleging misuse of the funds donated by Charles '26 and Marie Robertson. The family originally donated $35 million in 1961; this sum has since grown to over $600 million.
The University's filing claims that the Robertson family is engaging in a "gratuitous, baseless public relations campaign" which threatens to negatively impact "the potential pool of student applicants [and] the receptiveness of funding agencies to Woodrow Wilson School grant applications."
Cialone defended comments made to the press by William Robertson, one of the foundation's family trustees.
"[William Robertson's comments] are not gratuitous or baseless," Cialone said. "It's probably one of the more important donor intent cases to ever take place, and people have a right to know what they're doing."
New evidence
The University's counterclaims in Wednesday's filing make use of evidence uncovered in the ongoing discovery process, begun in 2002 and expected to continue for months to come.
Regarding the question of who should have control of the foundation, the University cites, among other materials, a letter written by former University president Robert Goheen. The question is central because the Robertsons have indiciated they would like to move the foundation to another university.
"From the very inception of the proposal ... the prospective donor has understood and agreed that the University must have the responsibility for the direction, maintenance and operation of the School in all its aspects," the filing quotes Goheen as writing in a letter to the Internal Revenue Service (IRS), in support of the foundation's application for tax-exempt status.
"Thus, there is no question but that the donor intends this gift to be for the sole use of Princeton University," Goheen concludes.
The Robertson family dismissed the value of Goheen's letter, and sharply disagreed with each of the points brought forward in the University's filing.
"I understand that Goheen said that to the IRS," Cialone said. "And I also understand that the [foundation's] certificate of incorporation allows the University to appoint four of seven trustees. Not seven of seven. And I also understand that the university has a fiduciary and moral duty to use the money in the way it was intended. Nothing that Dr. Goheen says here supports the notion that the University's actions are beyond judicial review."
The filing submitted by the University also narrates the details of a Jan. 20 conference call with the board in which the family trustees declined to approve a request for certain renovations in Robertson Hall, the building in which the Wilson School is housed.
Cialone defended the family trustees' actions as being responsible and necessary.
"They've already taken $32 million to renovate that building in the past four years and now they want more money for a building that [the foundation] paid to build and paid to depreciate," Cialone said.
"The foundation trustees had the temerity to ask what was being done with the money. I guess you could say that that's our fault for making the progress difficult, but board members are supposed to ask tough questions and get full answers," he added.
The court's ruling
A ruling by Judge Shuster will likely not be immediately forthcoming, McDonough said.
"With these declarative judgment requests that we've asserted today, we don't imagine that the court could be positioned to resolve them for the parties until next fall at the earliest," he said, adding "though we certainly would prefer if it could be resolved tomorrow."
Even if these issues are resolved, additional ones remain. The court is yet to address the original claims brought forth by the Robertson family.
"If — hypothetically — the judge listens to two days of evidence and says well I'm going to decide this ... presumably we would still have the right to point to areas of misuse of funds, failure to disclose information, act of concealment, all of those things," Cialone said.
Though a trial is currently scheduled for February 2006, McDonough said the University continues to be amenable to an out-of-court settlement. The case — the most expensive in Princeton's history — has already cost the University more than $2 million.
Cialone's response: "You know, they ought to make an offer then."
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