Update: Emu Lawsuit

UPDATE:EMU LAWSUIT

By Ted Sylvester

Three court hearings and much legal posturing later, the case of Eric Jackson vs. the Eastern Michigan University Foundation is still undecided. As reported in last month's AGENDA (Trouble at EMU" by Eric Jackson), Jackson's lawsuit is aimed at opening the foundation's university-related activities to public scrutiny under the state's sunshine laws. Jackson, an EMU alumnus and associate editor of AGENDA, filed suit in April 1992 after being denied access to foundation information. Jackson's suit maintains that the relationship between EMU and the foundation is so intertwined that the foundation should be considered a public, not private body.

On Sept. 9, Washtenaw Circuit Court Judge Kurtis T. Wilder heard oral arguments in the case. As plaintiff, Jackson argued that the foundation was created by the regents of EMU to do business for the university and should be open to the state's Freedom of Information Act and Open Meetings Act. Jackson reminded the court that these statutes are based upon the people's right to know about dealings in the public domain, like how their tax dollars or tuition money is being spent. EMU, said Jackson, has set up the foundation as a satellite Corporation to "hide public business from public view."

Jackson outlined for the court those facts which he found on the public record or Information he obtained from the foundation through legal interogatories related to the suit.

• EMU has provided office space, materials and a secretarial staff to the foundation.
• Foundation offices and registered corporate address are in Welch Hall, EMU's administrative building.
• EMU President William Shelton incorporated the foundation as the result of an October 1989 board of regents resolution.
• On March 24, 1992 EMU regents approved a resolution to transfer the university's $7.7 million endowment to the foundation. EMU regents have transferred control of the scholarship fund to the foundation.
• EMU regents appointed an ad hoc committee to create the foundation's financial plan.
• EMU officials, according to the bylaws of the foundation, will occupy significant positions in the the foundation.
• EMU is in the process of transfering to the foundation many of the university's money-making assets, such as a golf course and hotel owned by the university.
• The foundation's articles of incorporation stipulate that the foundation is organized to receive, hold, invest and administer funds on behalf of EMU.

On behalf of the foundation, attorney Michael Brown argued that the case is about "accountability" and, as a private non-profit Corporation, the foundation is ac

(see EMU, page 8)

EMU (from page one)

countable to the IRS and Michigan's attorney general. If the court rules in favor of Jackson, Brown maintained, the corporation's meetings and books would be open to anyone, "therefore evaporating any semblance of privacy that this private corporation is supposed to enjoy." Competitors such as golf course operators, said Brown, would be able to obtain internal documents and information from the foundation "to gain a competitive advantage." Brown further argued that while EMU is an admitted "public" body, subject to FOIA and OMA, the foundation is "private" and not subject to the same statutes.

As to Jackson's arguments that EMU created the foundation, Brown took the position that Shelton did not sign the articles of incorporatlon in his capacity as president of EMU but was acting "on behalf of the foundation." (In wrltten arguments previously filed with the court, 'however, the foundation admitted that Shelton was acting in his capacity as president of EMU when he filed the articles of incorporatlon.)

At one point, Brown appeared to attack Jackson's character, accusing him of wanting "to muddy this up by bringing a lot of facts to court, a lot of facts that sound very sensationalized in the press, that will make this look like there is some really dirty dealing going on, and will probably provide Mr. Jackson with the headlines that he seeks in this case."

The law, Brown summarized, is straightforward as it applies to this case: A private corporation is not subject to FOIA and OMA.

Both attorneys cited various court decisions and case law as precedent setting and relevant to Wilder's ultimate decision.

Wilder, for his part, listened intently to both attorneys, occasionally posing a question or two. Wilder ended the hearing by ruling agalnst Jackson's motion to sanction the foundation's attorneys for fillng pleadings which they knew had no basis in fact. Wilder also denied Jackson's request for attorney's fees related to the lawsuit. As to the substance of the lawsuit, whether the foundation is a "public body" for purposes of the FOIA and OMA, Wilder took the attorney's arguments "under advisement," and predicted that he would rule on the matter in two weeks.

On Sept. 16 attorneys for both sides were called back to the courtroom by Judge Wilder to discuss whether Wilder should remove himself from the case. A possible conflict of interest was raised due to the fact that the co-manager of Wilder's election campaign, Cynthia Hudgins, is married to EMU Vice-President and acting foundation president Roy Wilbanks. Wilder permitted each side the opportunity to request his removal from the case. Both Jackson and the attomey for the foundation declined to do so.

At the hearing Wilder also addressed a request by The Ann Arbor News to become involved with the FOIA part of the lawsuit. The News submitted a motion to the court that day for permission to file an "amicus curiae" (friend of the court) brief in the lawsuit. Jackson spoke in favor of the request and the attorney for the foundation declined comment on the matter. Delaying a ruling in the lawsuit until that question was resolved, Wilder scheduled a hearing for oral arguments on the matter for one week later.

On Sept. 23 court was re-convened, this time to decide if The Ann Arbor News would be allowed to file their "amicus" brief. In the week preceding this hearing both the News and the foundation filed written arguments to the court for their positions. The oral arguments were essary because the foundation opposed the request.

Lawrence Jordan, attorney for the News, argued that as a "non-party" to the case, the News could bring to the court "additional legal authority, insight, and perhaps a slightly different point of view. " Jordan also maintained that Wilder's ruling concerning the Freedom of Information Act was important to the News and its function of informing the general public. The foundation's opposition to the request, Jordan argued, suggested that it is "no friend of the court" and is "trying to keep the court in the dark."

Jackson spoke in favor of allowing the News to file their brief.

On behalf of the foundation, attorney John Curcio called the attempt by the News to become involved in the case a 13th-round effort In a 12-round fight.

Judge Wilder ruled in favor of the News and gave the foundation until Oct. 7 to file a response to the amicus brief. Wilder predicted that he would issue a ruling on the substantive issues of the case "sometime in October." At that time Wilder could rule in favor of the plaintiff or in favor of the defendant, or decide that the whole issue must be decided by a trial. If there is to be a trial, it is tentatively scheduled for Feb. 19, 1993.