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Thursday, April 20, 2017

Tenured Faculty Sue To Stop Closure Of Whittier Law School

WhittierFollowing up on yesterday's post, Whittier Law School To Close, Will Not Admit A 1L Class This Fall:  several tenured faculty have filed this lawsuit to enjoin the law school's closing:

Since 1985, the Law School has been fully accredited by the American Bar Association (the "ABA").  In 1996, the College acquired a 14-acre campus in Costa Mesa on which the Law School has operated continuously. Throughout that time, the Law School has remained a highly profitable part of the College. The Law School tuition revenues have covered all of the Law School's operating expenses, including servicing all debt on its 14-acre campus. And the lion's share of all residual Law School tuition revenues has been appropriated each year by the College-purportedly to cover overhead services allegedly provided by the College to the Law School.

Earlier this year, the College completed the sale of the Law School's 14-acre campus for a net profit of nearly $13 million. The College's representatives repeatedly assured the Law School's faculty that the proceeds of the sale would be reinvested in the Law School and used to support its future operations.

Days ago, however, a shocking tum of events took place. Judith Daar-the current Dean of the Law School-was notified that the College's Board of Trustees (the "Board") had voted (by phone) to immediately discontinue the Law School. The Board asked Dean Daar immediately to schedule meetings at the Law School in order for the College to notify the Law School community, including current students and staff. Dean Daar asked the Board to reconsider, or at least slow the process. The Board reaffirmed its decision. A public announcement at the Law School was scheduled for the morning of Wednesday, April 19.

This lawsuit is brought by tenured faculty of the Law School (the "Professors" or "Faculty") against the College and its Board to enjoin the unlawful discontinuance of the Law School, and corresponding termination of all Faculty. As discussed below, the proposed discontinuation of the Law School violates both the substantive and procedural protections of the Faculty's employment contracts with the College.  And an injunction is warranted because there is no adequate remedy at law.

Additional TaxProf Blog coverage:

http://taxprof.typepad.com/taxprof_blog/2017/04/tenured-faculty-sue-to-stop-closure-of-whittier-law-school.html

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Comments

Like a "guaranteed" annuity, the guarantee is only as solid as the company issuing it. If they go belly up, so does the guarantee.

Posted by: ruralcounsel | Apr 20, 2017 4:10:45 AM

This has to be one of the stupidest lawsuits I've ever heard of -- and the fact that it is being brought by law professors is just too much. If that's the quality of legal minds they have teaching at Whittier, then I think closure is justified.

Posted by: AnonLawProf | Apr 20, 2017 5:47:54 AM

It's clear who the faculty truly believe the school exists for...

Posted by: Anon | Apr 20, 2017 9:49:48 AM

Could the faculty address whether their graduates are finding employment in the law field? If a large portion aren't, isn't it unethical to continue recruiting suckers into the school?

Posted by: Half Canadian | Apr 20, 2017 9:52:26 AM

Skimming the complaint, it looks to me as if the faculty will win, because Whittier foolishly incorporated the AAUP's rules into its contract with them. Those rules don't let a college close down a department except for severe financial exigency or an educational purpose that has faculty support, neither of which seems present here. I think it's a foolish contract because the board of the university should not let the employees have the last word on major policy decisions like that. It's not a matter of academic freedom, but of the university being able to make hard decisions that hurt some employees.

On the other hand, I don't see the irreparable harm that would justify specific performance (an injunction) instead of money damages. This is a breach of contract case. Why wouldn't money damages be appropriate? Is it that Whittier would declare bankruptcy if it had to keep paying those professors without any tuition coming in? I'd be interested in hearing from somebody who knows contract law better than I do. This is relevant to the United Airlines fiasco, which I've been thinking about--- see http://rasmusen.org/papers/united.pdf .

Posted by: Eric Rasmusen | Apr 20, 2017 10:58:35 AM

Change is hard.

Posted by: Russell Tibbitts | Apr 20, 2017 12:55:58 PM

With regard to Eric Rasmussen's assessment of the case, lets keep in mind that he is not a lawyer and has never even been to law school, therefore it is hardly an expert opinion. I don't see how the faculty stands a chance based on the educational mission component and 22 percent bar passage. As for finances, 13 million is not a long term budget fix, nor is it even clear that the law school can lay claim to those funds unless the law school actually purchased the property in the first instance.

Posted by: JM | Apr 21, 2017 5:28:39 AM

You can see the audited financial statements for Whittier here:
https://www.whittier.edu/sites/default/files/media/businessoffice/WhittierCollege_Issued_FS_6_30_16.pdf

The school has $204 million in net assets (assets exceeding liabilities) which should be enough to pay monetary damages to faculty for breach of contract.

There are less than 40 tenured faculty members at Whittier Law School, so even if each of them were awarded $3 million for their tenure on average, the university could pay damages and still remain solvent.

Posted by: Damages | Apr 21, 2017 10:05:01 AM

If you read the faculty complaint, there are some very bad facts for Whittier College, including a prior judgment against the college for defrauding the faculty by misleading them during a tenure buyout effort. They also note that the law school was profitable for the university for around 25 of the last 30 years, and that they have plans to restore bar passage rates to previously higher levels.

It's not surprising that the court didn't grant a TRO. It's rare that a court will prevent someone from *saying* something.

The legal theory explained by Eric Rasmussen is colorable. Contracts can incorporate other documents by reference, and employment with tenure is arguably a contract-like right.

Also keep in mind, the suit is in California, which has more worker protections than many states.

A judge could easily view the Whittier administration as making a decision that is financially convenient for itself, but contrary to the universities' contractual commitments to its employees.

While it's hard to read the tea leaves, if you combine a colorable legal theory with bad facts and a plaintiff-friendly judicial system, Whittier could be looking at hefty damages.

Posted by: Reading Tea leaves | Apr 21, 2017 10:18:39 AM

Oh Damages, you dear dear thing. Just because a school has $204 million in assets does not mean it has $204 million on hand. Most of that will be the school's endowment, almost all of which is restricted in one form or another. And the bulk of the remainder will be the school's physical plant. Tsk, tsk.

Posted by: Unemployed Northeastern | Apr 21, 2017 5:17:09 PM

They took our jobs!!!!

Posted by: Djfnf | Apr 22, 2017 12:33:16 PM

Whether the law faculty manage to suck one last bit of milk from the Whittier tit in the form of damages is an afterthought. What's clear is that a nonperforming law school like Whittier's has no place on this earth, and it's to the central administration's credit that they realized this and are taking the appropriate action by pulling the plug. May many many more central administrations follow Whittier's lead...

Posted by: Anon | Apr 22, 2017 8:13:40 PM

The language at issue here seems similar to that in Linn v. Andover-Newton Theological School, 638 F. Supp. 1114 (D. Mass 1986). That court found the college breached its tenure contracts because it failed to follow its own internal procedures. The professors may have a colorable claim.

Posted by: Matthew Bruckner | Apr 23, 2017 6:25:42 PM