Oberlin’s insurer is unlikely to cover the Gibson lawsuit award
Oberlin’s insurer is highly unlikely to cover Oberlin’s liabilities against Gibson’s Bakery.
It makes sense; why should an insurer be liable for the willful and knowing wrongdoing of the insured? Here’s a more technical statement of the situation, written by the insurance company’s lawyers prior to the verdict:
While the Lexington policy potentially provides coverage in relation to “personal and advertising injury,” defined to include defamation and/or disparagement in certain circumstances, the Lexington policy excludes any such coverage if “personal and advertising injury” is caused “with the knowledge that the act would violate the rights of another … ,” or if the insured published material it knew to be false. Further, the Lexington policy provides coverage for punitive damages insurable by law, but only where the corresponding award of compensatory damages is also covered by the Lexington policy. In this action, plaintiffs Gibson Bros., Inc., Allyn Gibson, and David Gibson allege that defendants Oberlin and Ms. Raimondo published material that falsely characterized the bakery owned by plaintiffs (“Gibson’s”) as being a racist establishment. While such allegations potentially implicate “personal and advertising injury,” plaintiffs also alleged that the statements were published with malice, were intended to injure plaintiffs’ business reputation, and were part of a purported campaign to harm plaintiffs. If it is established that the defendants knew the alleged statements were false, or if the defendants knew their alleged acts would violate plaintiffs’ rights, the Lexington policy would exclude coverage for any resultant damage.
Of course, to many universities 11 million dollars is just chump change. Even if the award climbs to 33 million when punitive damages are included, a lot of elite universities would find this relatively easy to pay. My sense, though, is that Oberlin has had some financial difficulties even before this, and that it therefore could be a significant hit for the school.
[ADDENDUM: One possible or even probable consequence is that Oberlin sues the insurer and tries to force it to cough up the money.]
Good. Hit Oberlin’s endowment. Fire the people responsible.
If the insurer doesn’t have to pay the damages and it is Oberlin who’s on the hook for the money, it will bankrupt them. No loss as far as I’m concerned.
Oberlin’s endowment is $887m. That’s more that Creighton’s and less than Santa Clara’s and Carleton’s.
And only 2,800 undergrads. A fabulously wealth school. That endowment should generate $50m per year.
Cornhead:
I’m going on the fact that budget and financial issues have been reported for years there. For example, see this as well as this.
The issues may not be large, but they have existed. Falling enrollment is a big part of that, and if the lawsuit causes it to fall further, that’s a problem too.
I would be very pleased this hurts them. Very pleased. Something has got to be done to make the adults act like adults.
I doubt that Oberlin had any prior deep routed animus toward Gibsons. Oberlin attacked Gibsons as a sop to their SJW element.
What care has the SJW element for the Oberlin fine? They and their professors are the source of this cancer.
What consequence applies to the SJW fanatics?
The Oberlins are the SJW element’s cannon fodder.
The thirty-three million ought to return one mill two at 4%. Presume they take half for operations and leave half in the endowment, that’s $600k income per year they don’t have for the next few years’ budget.
Has to come from some place and that, annually, until expenses drop naturally, retirees not replaced, etc. and endowment increases. The latter presumes the usual suspects keep sending money.
The following is Oberlin’s reaction. This ought to impress the jury looking at punitive numbers. Plus anybody else who’s wondering if the college is capable of learning. Or if its arrogance is insurmountable.
Oberlin just sent this blast email:
Dear Members of the Oberlin Community:
I am writing to update you on the lawsuit that Gibson Bros., Inc. filed against Oberlin College and Vice President and Dean of Students Meredith Raimondo in the Lorain County Court of Common Pleas in November 2017.
Following a trial that spanned almost a full month, the jury found for the plaintiffs earlier today.
We are disappointed with the verdict and regret that the jury did not agree with the clear evidence our team presented.
Neither Oberlin College nor Dean Meredith Raimondo defamed a local business or its owners, and they never endorsed statements made by others. Rather, the College and Dr. Raimondo worked to ensure that students’ freedom of speech was protected and that the student demonstrations were safe and lawful, and they attempted to help the plaintiffs repair any harm caused by the student protests.
As we have stated, colleges cannot be held liable for the independent actions of their students. Institutions of higher education are obligated to protect freedom of speech on their campuses and respect their students’ decision to peacefully exercise their First Amendment rights. Oberlin College acted in accordance with these obligations.
While we are disappointed with the outcome, Oberlin College wishes to thank the members of the jury for their attention and dedication during this lengthy trial. They contributed a great deal of time and effort to this case, and we appreciate their commitment.
Our team will review the jury’s verdict and determine how to move forward.
Donica Thomas Varner
Vice President, General Counsel & Secretary
Isn’t Oberlin one of the most egregious colleges as far as curtailing conservative speech?
Oberlin is where Lena Dunham concocted her almost certainly fabricated story of being sexually assaulted while a student. Her story was fishy enough, and strongly challenged by an individual who believed he was falsely accused in her telling of the story, that Random House inserted a clarification that sounded more like a disclaimer in subsequent printings of Dunham’s “book”. Oberlin must be proud of Dunham – she’s a reflexively mindless leftist who wreaks havoc on the lives of innocent bystanders.
Naturally there must have been substantial evidence proving Oberlin’s statement utter crap and a damnable lie, but, you know…
Donica Thomas Varner is General Counsel at Oberlin. She didn’t stop this early on. She did reign in the Dean of Students. She hired the trial team. She should be fired. But she won’t.
Gage County, Nebraska got hit for a multi-million dollar judgment and had no insurance. There was an insurance coverage lawsuit.
Oberlin’s lead defense counsel is/was Josh Mandel. Name sound familiar? A failed R potential candidate at one time for Sherrod Brown’s (OH) US Senate seat. What a putz.
I was under the impression he was a conservative.
My mistake.
I hope very much that the hit is so damaging, and their finances already so precarious, that they are forced to choose between shutting down or submitting to an outside purchase/takeover.
Such an outcome would be sufficient to serve to frighten the other leftist campus enclaves into imposing discipline on social justice insanity. The motive of self-preservation might be able to do what mere logic could not.
Not likely, I suppose. But we can hope.
So Oberlin has a nice endowment but they’ve been running a deficit for years. They can pay the Gibson damages from the endowment but if so, they will be eating into their principle and their current finances are unsustainable in the medium-term anyway.
Cool.
Richard — so, Oberlin pretty much called the jury deplorable racist oppressors, since the verdict was exactly that “Oberlin College AND Dean Meredith Raimondo defamed a local business AND its owners, and they HAD endorsed statements made by others.”
The verdict is justice of the non SJW kind. Get woke, go broke kind of justice. Well deserved.
tonypete – I did a little duckduckgo snooping and while I can’t say for sure I think it is possible that the Oberlin lead attorney is a different Josh Mandel than the Republican senate candidate. Two pieces of evidence – 1) different middle initial at least going by Wikipedia 2) I found a Josh Mandel with the correct MI who not only is an attorney in Ohio but attended Oberlin. He seems awfully young but on his firm’s web page (Taft Law) it says “commercial litigation – education litigation” which seems to fit the bill. MI is based on a court filing reproduced at Legal Insurrection – “Defendant’s Attorney Josh M Mandel”.
Yes indeed further searching revealed that it is the law firm of the “other” Josh Mandel that represented Oberlin in the case so the Republican former Senate candidate was not involved.
Yeah, it’s two different Joshes 😉 Mandel
Defense counsel is a job, not an political statement.
I just laughed for a very long time.
We need to see more like this.
Oh, come on, you’re Joshing me!
Been said the folks named as potential defendants in the Covington. case(s) are “concerned”.
“concerned”
Hopefully they had to make an extra trip to the laundry.
The college may not be able to take the money from the endowment funds.
Endowments are “permanently restricted funds” and usually have a restriction to use of the principal and interest. For example, someone may given money to construct a building and includes an endowment amount where the investment income can be used to maintain that building. Or, funds are given to endow a position in a certain department. In many cases, the principal has to remain intact and only the earnings can be used for the specific activity.
IF the restriction document is well-written, there may be no accounting/legal way for the school to use the money for payment of the lawsuit. There is a good possibility that the documents also specify that if the purpose no longer exists, then the endowment has to be transferred to another institution. For example, if the endowment funds an academic chair in nonprofit accounting and the college shuts down the business school, the funds may have to be transferred to another college with a nonprofit accounting professor.
The school may already be using the endowment funds to their legal limits to free up other sources of funds to operate the school. If I was on the audit team, I would be paying close attention to the transactions of the endowment fund.
Neo’s Inside Higher Ed link of 12/2017 includes this: Oberlin “does not draw enough of its cash from charging students for tuition, room and board, according to a letter publicly posted in October by Chris Canavan, the chair of the Oberlin Board of Trustees.”
So, unlike all others, Oberlin has not played the financial game of continually inflating its charges to students, who must then turn to The Obama-created Federal Student loan program and incur ever-larger debts for basically worthless degrees in X-studies and the social non-sciences. A career in classical music after graduating from Oberlin’s music school is also a path to near-starvation.
Oberlin faculty and staff salaries have been frozen for some time, which is no big deal in our non-inflationary times, despite the faculty bleatings.
Oberlin regrets its failure to ding its students harder!
Wiki says “its most popular majors over the last ten years have been (in order) English, Biology, History, Politics, and Environmental Studies”. Try to find a non-waiter job with any one of these. Using them for graduate school admission also leads to dead ends.
Such an outcome would be sufficient to serve to frighten the other leftist campus enclaves into imposing discipline on social justice insanity.
Not yet but a few more might get their attention. Covington will be one and there are some Title IX suits from men coming along. The True the Vote case is also a welcome sign that the worm might turn.
The insurance carrier (Lexington is part of AIG – a prior employer of mine) is almost certainly funding the defense. There will have to be a separate action to determine if there is coverage for the award. The punitive damages are probably not covered either way (most states’ do not permit punitive damages to be paid by insurance)
The college may not be able to take the money from the endowment funds.
Liz: I asked earlier about that and when no one replied, I assumed it wasn’t a problem. But you sound like you know better.
So if Oberlin is running a yearly deficit, where is the money made up from? Do they sell bonds?
Huxley: the operating deficits are covered to some substantial degree by outsiders’ donations.
Soros, anyone?
And, no, Oberlin and its ilk cannot effectively sell bonds, which require market-makers, with Wall St taking big bites to bring said bonds to market; to maintain a market for a few mill. per year just ain’t worth it. Bonds are just one form of a huge number of debt vehicles. Easier to mortgage a campus building or two!
A yearly megabuck deficit is pretty modest these days.
Cicero: Thanks!
So an $11 mil payout, much less $33 mil if the punitive damages max out, will be a big deal for Oberlin.
Good.
According to the latest, Oberlin sent a legally stupid letter to its community distorting the case and insulting the jury before the trial is over:
Substantively, the email is infuriating to anyone who has followed the case. Oberlin College and Raimondo were not “held liable for the independent actions of their students.” Rather, the defendants were held liable for their own conduct in aiding and abetting the publication of libelous documents, interference with business, and intentional infliction of emotional distress. Let me repeat, it was the college’s and Raimondo’s own conduct that was at issue before the jury. That the General Counsel of Oberlin College doesn’t understand that — even if she disagrees with the jury conclusion — tells me something went very wrong with the way this case was handled internally at Oberlin College.
https://legalinsurrection.com/2019/06/oberlin-college-mass-email-criticizing-jurors-could-influence-punitive-damages-hearing-in-gibsons-bakery-case/
Huxley: Yes, I’ve done nonprofit accounting for a number of years, though I never worked at an university. If I remember correctly, there are different accounting standards for private colleges vs a public university. Here is an interesting explanation of some of the complexities of college accounting.
https://www.gma-cpa.com/blog/8-must-know-accounting-financial-reporting-issues-for-private-schools
And – I found the 2018 financials here –
https://www.oberlin.edu/sites/default/files/content/controller/documents/reports/oc_2018_afs_for_website_v2_revised_2019-01-07.pdf
They do have bonds, but through a Ohio Higher Education Commission.
Liz: Thanks, too! And for the links.
The College had $184.0 million of outstanding bonded debt at June 30, 2018. During the prior year, the College issued bonds in the original principal amount of $39.8 million plus a bond premium of $3.5 million. A portion of the proceeds were used for an advance refunding of the 2009 bonds with a par value of $16.0 million. The remaining funds are being utilized to support capital renovations and improvements.
–Oberlin 2018 Report
So Oberlin does have debt in bonds to help manage their deficits. An $11-33 mil won’t kill them, but it will hurt.
Generally speaking, I am a fan of higher education, but if American higher education sees its role as one of leftist indoctrination and radical activism, then it needs to be slapped down hard until it gets the message.
Oberlin will just be bailed out by the Department of Education, meaning the tax payer, and things will go on as usual.
Oberlin will just be bailed out by the Department of Education
I doubt that DeVoss will let that happen.
Ohio law generally prohibits insurability of punitive damages.
We must act decisively to close our budget gap – even if it takes some years to balance the budget – because failing to do so imperils Oberlin. The peril isn’t insolvency and collapse; we can always spend down the endowment to survive for decades. The peril we face is mediocrity and irrelevance, which is what will come if our decisions are increasingly driven by short-term financial exigencies. If we don’t take note of the red light flashing in the distance, we’ll have to slam on the brakes when we get to it, making draconian cuts in short order that will almost certainly undermine what makes Oberlin great.
https://www.oberlin.edu/sites/default/files/content/office/general-counsel/board-documents/3c_ltr_to_community_6-11-2018.pdf
Then I guess Oberlin can shift funds out of the endowment without too much trouble, though of course they would prefer not to.
Lawyers win, either way, as they get a significant chunk of so called punitive damages. Which is strange.
Not likely, I suppose. But we can hope.
A Leftist like Hussein or Bill Ayers, would not hope. They would fund the campaign themselves, get rich off the kickbacks, and continue the war.
Perhaps a crucial strategic difference between how certain patriots in the USA think vs their de tractors and traitors.
The best would be if somebody offers Oberlin a “loan”. The interest would then be paid from the endowment’s interest/income.
Compared to home loans, getting endowments and nations in your debt is a sure money maker. Just look at the Federal Reserve and centralized banking.
Glad Oberlin lost — they were defaming an innocent local baker. Primarily for SJW virtue signaling purposes.
The arrogance of the elite snobs is so infuriating. The Oberlin Board of Directors should fire their president, and most colleges that lose lawsuits should be firing their presidents, so that the presidents of colleges stop putting up with, and even encouraging,
badillegal student behavior. Not just bad, rude, and insensitive, but also illegal. Defamation is illegal, and should be illegal, and those who do it should be punished by the legal system.There’s certainly a strong feeling that, had Trump lost and Hillary won, such court cases would be much more likely to accept PC crimes or let the PC criminals off with a slap on the wrist.
Lena Dunham is a graduate of Oberlin – that’s all you need to know about the quality of education there.
This is what happens when you let indignation of the times be ruled as a “right” and as “right.” This is also what happens when those who control the money in a more objective fashion do not bow down to the indignation.
Huxley – I finally went through the financials in a bit more detail and this is what I found interesting about the investments/endowments. Please note, I’ve been out of the business of doing the debits/credits for a while, but I think I can still read audit reports.
TLDR: the college should be able to use their unrestricted endowment funds to pay the judgment. But, it could be tight on cash flow.
1. The school has a total of $996,440,000 in investments. The majority of the funds are in “endowment funds” and state that there are 1,700 “endowment” funds. There are funds in annuity and trusts, plant restricted funds, and trusts held by others. The annuity, trusts and plant funds are in conservative investments. The endowment funds are investing in a wide variety of assets.
2.They do investment pool accounting for the endowment funds – the investments have 5% cash, 25% equities, and 70% in alternative assets which includes hedge funds (35%!), private credit, private equity/venture capital (22%!), and real estate investments. They also mention that 34% of their investments are not liquid and an additional 9% have a time frame of 3 years, so not that liquid.
3. The Balance Sheet lists Endowments as $887,392,000 and footnote 2 lists the amount as $886,976,000. Yes, it may be considered to be a small difference, but I usually like the footnotes to agree to the balance sheet. Maybe that’s why they didn’t indicate which footnotes related to the line items on the financial statements. But – Unrestricted Endowment is $301,056,000, Temp restricted = $309,581,000 and Perm restricted = $276,330,000.
4. Footnote 1 describes the accounting policies. The Board specifically resolved that if the donor did not specifically state that capital gains are part of the corpus, then it is fair game for use. ” In general, the donors of these assets permit the use of all or part of the cumulative earnings and gain, both realized and unrealized, on related investments for general or specific purposes.”
The way I am reading the note – If I gave $1,000 as an endowment in 1900 and the document did not specifically discuss the treatment of capital gains, the balance of the endowment would still be $1,000. This concept may help for current ops but it seems to void the concept of an endowment to grow and fund future operations. I wonder when the Board decided this accounting of endowments, perhaps during a period of tight money or when they could not find all of the proper documentation??
That explains how the unrestricted endowment, also known as board-designated endowment is so large. And what the Board has designated, they can redesignate to another purpose such as to pay a court ordered judgment.
5. Finally, footnote 14 – “The College is involved in litigation and is subject to certain claims that arise in the normal course of operations… In the opinion of management, the ultimate disposition of such litigation and claims will not have a material adverse effect on the College’s operations or financial position.” The final footnote states that “There are no subsequent events that require disclosure.” It will be interesting to check out the footnotes for this fiscal year.
Interesting set of financials….
Sorry for the italics – I did a lot of cut/paste and I guess copied a code for italics…
Liz: Thanks for the research.
35% in hedge funds! That’s an eye-opener. I guess that’s a big part of the gains in the endowment in recent years. But it could sure come back to bite them.
Liz – thanks for doing the deep dive. One of our sons is an accountant, and my dad would have been but he skipped college and went straight to work after WW2.
“The school has a total of $996,440,000 in investments.”
That is nearly a billion dollars!
Does this mean the Gibson’s are the epitome of “speaking truth to power” that the left used to celebrate?
😉
35% in hedge funds! That’s an eye-opener. I guess that’s a big part of the gains in the endowment in recent years. But it could sure come back to bite them.
Hedge funds are hedged using options trading and other methods, to prevent losses from being crippling. Fixed assets can only accrue income if they are not liquidated. That makes them better for long term profit, but not so good for debt payment or cashing out.
They just can’t sell equities whenever they want, due to taxation issues.
That is nearly a billion dollars!
Just imagine how many lifetimes American slaves would have to pay into the IRS for that amount.
Liz: That’s good information for those of us that like market wars ; )
They also mention that 34% of their investments are not liquid and an additional 9% have a time frame of 3 years, so not that liquid.
41% being more or less fixed isn’t that bad, in terms of liquidity. No wonder these Leftist universities are like age old aristocratic fiefdoms.
They have the economic capital to back up their Baronies and Dukedoms. They won’t be able to graduate to “rape whoever they want and get away with it” until they get Hollywood director level capital however. They have far to go on the way of the “Decadent Overlord” and the “Evil Aristocrat”.
From personal experience, I can tell you that insurance coverage attorneys are very, very tough; they are the junkyard dogs of law. If Oberlin’s is a “burning policy” (that is, legal fees are deducted from the coverage amount) they will use every nickel of the policy limits they can get away with.
From Proverbs:
“When justice is done, it is a joy to the righteous.”
From 42 years of practicing law:
“When justice is done, it is a surprise to the righteous.”