PEC Update, November 6, 2006
Dear PEC Supporters:On November 2nd, students, alumnae, and donors filed a second lawsuit in our fight to preserve R-MWC as a woman's college. This second suit is based on the laws governing the purposes for which a charitable corporation may use its assets under Virginia law.
While the breach of contract lawsuit filed by the students October 6th seeks to stop the college from implementing the strategic plan until the four-year contract for a woman's college education is honored for all current students, the charitable trust complaint comes at the strategic planning decision from a different angle.
The basic argument of the charitable trust suit can be summarized as follows.
R-MWC is a charitable corporation, both because it holds IRS tax exempt status and by its definition under Virginia law. As such, its assets are subject to special protection. Specifically, "the assets of a charitable corporation incorporated in or doing any business in Virginia shall be deemed to be held in trust for the public for such purposes as are established by the governing documents of such charitable corporation." (Va. Code section 2.2-507.1). These special trust law protections exist to prevent a charitable corporation from soliciting donations for one cause and then using those assets for purposes different from those for which donors contributed the assets, unless they follow the procedures outlined below.
Corporate law and trust law are interrelated for a charitable corporation, because the purposes of the corporation, as described in that corporation's governing documents, establish the purposes for which the charitable trust assets may be used. Assets donated to a charitable corporation which has a "limited" corporate purpose are deemed to be donated for that limited purpose - and only that purpose – in this case, for a woman's college.
Donors and/or beneficiaries of the donations may enforce the use of these gifts for the purposes for which they were given. Virginia Code Section 57-57(N) explicitly provides that:
"No person shall use or permit the use of the funds raised by a charitable solicitation for any purpose other than the solicited purpose or, with respect to funds raised by general appeals, the general purposes of the charitable or civic organization on whose behalf the solicitation was made."
Until the adoption of the Strategic Plan, the "general purposes" of R-MWC, from its Articles of Incorporation, were stated as follows:
"to conduct, maintain and operate a college, or university, or institution, under the name of Randolph-Macon Woman's College, for the higher education and culture, primarily of women, and for their instruction and training in the liberal arts..."
By adoption of the Strategic Plan the Board of Trustees changed the charitable purposes of the trust, but under Virginia law this cannot be done without first petitioning a Virginia circuit court for permission to do so. Our argument is that the charitable corporation--here R-MWC--must convince the court that it is "impossible, impracticable, unlawful, or wasteful" to use the assets for their original purpose. In trust law, such an action is called "Cy Pres", or in other words, an action to allow a charitable corporation holding assets in trust to change the purposes of the trust.
We believe that R-MWC cannot demonstrate that it is "impossible, impracticable, unlawful, or wasteful" to operate R-MWC as a woman's college, because other women's colleges, even those in Virginia, are doing well with smaller endowments than R-MWC. Unlike other former women's colleges such as Wheaton and Goucher, R-MWC is not at some historic low point in enrollment or in finances. This week's issue of Newsweek makes it abundantly clear that Sweet Briar, Hollins and Mary Baldwin have found winning formulas for success, and PEC is convinced that R-MWC simply won't be able to show why it cannot similarly do so.
As you know from our October 22nd supporter update, PEC has tried repeatedly to meet with the trustees to discuss the future of the college. We have been rebuffed. We even went so far as to provide all of the trustees with a draft copy of this charitable trust lawsuit prior to their October meeting (in addition to our more than 50 pages of research in "20 Reasons Why You Should Change Your Vote" and "What Every Trustee Should Know"). Again, they refused to meet with us, claiming the litigation made it impossible, even though the terms of the proposed meeting were such that nothing discussed could be used in litigation. Yet they still have not agreed to meet with PEC.
So it is with regret but determination that PEC supports the filing of this second suit. We need you to support this filing as well. Please keep up your emails and letters to the trustees. Please go to the college-sponsored town meeting in your area and ask the trustees the hard questions that you have about their decision. If you support trying to save our college through litigation, please continue to donate to PEC's legal fund. Because we were forced to use a multi-lawsuit approach, the costs mount daily. We are receiving some pro bono assistance from alumnae and parents who donate generously of their time, but we need additional financial support. If you've pledged to PEC, but have not paid, we ask that you send your pledge now. If you've given previously to PEC, but can give again, we ask that you give generously to this second lawsuit. We believe in the merits of these suits, and if the Board persists in its intransigence and continues to refuse all overtures, this litigation will be the ONLY way to save our college.
We strive to maintain an open accounting of our work, so as always, all of the past PEC updates, copies of the lawsuits, PEC press releases and PEC research can be found on our website at www.PreserveEducationalChoice.org (please see the PEC Timeline and Press areas in particular). You'll also find current articles documenting how other women's colleges are thriving and having some of their best years in decades. Likewise, you can read letters from people like past administrators of R-MWC, outlining their concerns and suggestions for how to reverse the issues at hand.
For information on making and fulfilling a pledge to PEC please go to the PEC website as well (www.PreserveEducationalChoice.org). You can mail a check or make your donation on the website directly.
It is more important now than ever that you spread the word about PEC's efforts, and encourage others to join our growing list of supporters. We suspect that the majority of alumnae don't even know that PEC is working to save their school, so it's important that you find alumnae who were previously out of touch, and educate them on the situation—that PEC is their best hope for saving their school. Start by forwarding this email update to your class secretary or obtaining the email addresses of your class and send the email for your class secretary. All reasonable entreaties have been dismissed by the board. PEC, through its support of the plaintiffs in these two lawsuits, is now the last line of defense for our beloved Alma Mater.
Let wisdom rise!
PS - Some PEC supporters have requested more information about our law firm DurretteBradshaw. The following information is taken from their website www.DurretteBradshaw.com:
DurretteBradshaw is engaged in complicated legal matters in the national and international arenas. The firm concentrates on four core practice areas: Commercial and Complex Litigation, Bankruptcy Law, Health Law, and Business Law.
Wyatt B. Durrette, Jr. has been named as one of 2007's Best Lawyers in America.
The following (more than half of DurretteBradshaw's attorneys) have been selected by their peers to be included in Virginia Business magazine's "Legal Elite":
Wyatt B. Durrette, Jr
Harlan L. Horton
John B. Russell, Jr.
Kenneth D. McArthur, Jr
Peter E. Broadbent III
Bruce M. Marshall
William J. Seidel
Roy M. Terry
The firm is currently embroiled in one of the largest antitrust actions in U.S. history: In Re Brand Name Prescription Drugs Antitrust Litigation. DurretteBradshaw filed antitrust lawsuits in federal court in Richmond (subsequently transferred to Chicago and then New York) on behalf of 200 Virginia businesses and assisted the nationally-known, New York law firm of Boies, Schiller & Flexner in managing this litigation which involves more than three dozen other law firms around the U.S. and nearly 4,000 American businesses.
In a case described by a UVA law professor and commentator Kent Sinclair as "perhaps one of the most complex cases litigated in the modern era [in Virginia]," Wyatt Durrette and Barrett Pope won after a six-week trial when a jury returned the then-largest conspiracy verdict against a commercial lender in Virginia history.
DurretteBradshaw and its Bankruptcy Practice Group chairman, Roy Terry, are the judicially-appointed Receiver tasked with unraveling an international securities fraud scheme (Ponzi) and returning investor funds totaling in excess of $100 million. In discharging its duties to recover assets, the firm is working with attorneys and accountants in the UK who are performing similar functions with respect to the schemes perpetrated there. A court-approved cooperation agreement with the UK Liquidator is believed to be the first of its kind.
The firm's Health Law Practice Group garnered national attention for leading a coalition of Virginia health care providers and consumers in a four-year legislative campaign to outlaw kickback-driven prescription drug switching in Virginia.
DurretteBradshaw enjoys the status of having successfully prosecuted and defended clients in Virginia business conspiracy trials with both results upheld by the Virginia Supreme Court.
Under the leadership of DurretteBradshaw's Commercial Litigation Practice Group, a coalition of law firms from around the country just broke new ground in class action jurisprudence by filing a class action on behalf of Virginia indirect purchasers of Dynamic Random Access Memory Chips in the United States District Court for the Eastern District of Virginia based solely upon Virginia state law.
Wyatt Durrette is the editor of the first-ever book on civil discovery in Virginia and fellow litigator Barrett Pope co- authored a chapter. DurretteBradshaw has served as lead counsel in cases involving two of the largest attorney fee awards recovered in Virginia—one by the court and one from a jury.
DurretteBradshaw attorneys represent health care providers before health regulatory boards and other administrative agencies throughout Virginia as well as on the federal level.
The firm is currently on the Executive Committee in three major class actions pending in federal courts in San Francisco, New York and Boston.
Wyatt Durrette won the first age discrimination case against a United States airline.
DurretteBradshaw's Health Law Practice Group has represented more than 300 Virginia health care provider businesses. Its client list includes several of the largest pharmacy businesses in Virginia, some of the largest hospitals and health systems in Virginia, and two of the largest medical practices in Virginia and the Southeastern United States.
DurretteBradshaw is designated an "AV-rated" law firm by the Martindale-Hubbell Legal Directory. Martindale is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the Bar and the Judiciary. The Ratings fall into two categories—legal ability and general ethical standards. An "AV-rating" is the highest of the rankings.
PEC Board
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