The jury in the lawsuit against Oberlin College resumed deliberations today after attorneys for both sides wrapped up their closing arguments on punitive damages. Oberlin’s attorneys earlier called college officials to plead poverty, noting that the $11 million award for damages to the Gibson’s bakery business was large enough to get the point across. There’s no need to “pour gasoline on fires,” Oberlin’s vice president argued during testimony, and a real chance that the college could be forced to shut its doors:
Representing the Gibson family, attorney Owen Rarric said that the college has over $1.4 billion in total assets. He pointed out that the college’s endowment is $887 million. He stated that annual student charges for tuition and room and board are roughly $70,000.
Oberlin attorney Matthew Nakon responded that the college has been operating in an unsustainable deficit situation year after year — a situation caused largely by substantial declines in enrollment numbers. Mr. Nakon said that outside of a small portion of the endowment, the college has little to no discretion over how the endowment is spent.
Instead, individual donors hold this discretion. He also added that roughly 90% of Oberlin students are on scholarships.
Ms. Vasquez-Skillings emphasized that enrollment numbers have declined, and that the college has been operating at an unsustainable deficit. “Ultimately what the punitive damages portion intends is to teach an institution not to pour gasoline on fires. What will it take to get them to change their attitude? What will it take to get others, similarly situated, to change their attitude?”
Legal Insurrection has covered the trial since the beginning, and is currently live-blogging today’s events. Last night Daniel McGraw reported on the testimony regarding the school’s finances in more detail. Oberlin president Carmen Twillie Ambar argued that the school simply didn’t have the resources to sustain a large punitive award:
Oberlin College was so hellbent on getting the message out that their cash liquidity was in such dire straits — as the eight-person jury was figuring out if they wish to add $22.4 million to the school’s legal verdict bill — that they brought out the school’s president, Carmen Twillie Ambar to the stand to tell that part the story.
“We’ve created deficits … and over the next ten years, if this continues, that is unsustainable and we will not exist,” Ambar told the jury. She even indicated the school’s grants — about $60 million a year from the school, and lots of students get those scholarships as only 10% of them pay the full $70,000 a year — were important to preserve as “the accessibility of education” was a key component of the school’s purpose.
Later testimony and documentation painted a somewhat rosier picture of Oberlin’s finances, however:
When the plaintiffs went over the IRS Form 990 (the required non-profit filing) and the school’s annual financial reports, it seemed like the Oberlin College’s monies had measurable value and were robust. At least to someone like me who doesn’t have much money. [View Oberlin College’s 2017 Form 990 — the 2018 Form 990 is not yet publicly available]
The college has more than $1 billion in funds and net assets according to the latest IRS 990 form, an endowment fund that had grown from $440 million to $887 million in the last 20 years, and because of its non-profit status, pays no taxes on any property it owns.
It also had 18 members of their administration making more than $100,000 a year. The president and chief financial officer of the school were both making more than $500,000 a year.
In other words, it’s not exactly Slumdog Millionaire at Oberlin. Even if the school was in poor shape, though, that’s not an argument for taking it easy on them. It’s more of an argument that the school should have been a lot more careful about facilitating a rhetorical lynch mob in the first place. When Oberlin coddled, pandered, and encouraged the torches-and-pitchforks assault on the Gibsons, they should have calculated that the fire could burn them down as well.
Still, there’s a good chance that this argument will be academic anyway, pun intended. Eleven million dollars in actual damages seems rather large for defamation in relation to a local bakery business and its owners, even though the insults here were fairly extensive. The school will likely use some of its considerable wealth to challenge the damages award, and an appellate court could well knock it down — perhaps significantly. That would limit the range for a punitive award, which means that the jury’s decision today may not matter much in the end.
Even so, the Gibsons have prevailed, and colleges around the country have indeed been taught a lesson. Their attorney made it plain in closing argument:
“Because the Gibson family represents all of us and we are at a tipping point now,” Plakas told the jury. “This case is about fairness. It is about our youth’s education and its importance. You, as a jury, are helping your community right now, but you are also helping the national community.”
There is a price for slander and defamation, and schools had better be very very careful about stoking mobs rather than educating adults. Their endowments might depend on it.
Update: Sure enough, the jury socked it to Oberlin:
Daniel McGraw, our reporter in the courtroom, reports that in addition to the $11.2 million compensatory damages awarded last Friday, the jury awarded a total of $33 million in punitive damages, which will probably be reduced by the court to $22 million because of the state law cap at twice compensatory (it’s not an absolute cap, but probably will apply here). That brings the total damages to $33 million. We will have the breakdown soon. The jury also awarded attorney’s fees, to be determined by the judge.
The Gibsons won’t spend the money yet; Oberlin will appeal the award, surely. Better yet, they might want to settle this with a sincere and heartfelt mea culpa to save a few million off their endowment.