Editor’s Note: This article has been updated for clarification purposes.
Sweet Briar College in Virginia will live to see another year after a successful group effort from alumnae to raise funds to keep the school operational. However, the money will only keep the school open for so long. In order to be sustainable, the Sweet Briar administration will have to find a funding source—and fight off potential lawsuits from faculty.
The Board of Directors announced in March that Sweet Briar would be shutting its doors at the end of August 2015. A social media whirlwind followed: Facebook groups were formed to find ways to keep the school open; support from students and alum of other women’s colleges rallied to help. The news media picked up on the story and brought it to national attention. Still, initially it was not enough to fix the situation, and thus lawsuits ensued.
… the higher court said that being a trust and a non-stock corporation were not mutually exclusive in this case…
A suit was brought in late March by Ellen Bowyer, the Amherst County Attorney. Bowyer asked the court for an injunction to keep the school from closing temporarily. She claimed that Sweet Briar was a trust, and therefore would require court action to close. Sweet Briar disagreed, stating that because it did not have stockholders, it did not need the permission of the court to close.
Initially, the injunction was denied in circuit court on the grounds that the court lacked the ability to stop the school from closing. The Virginia Supreme Court did not agree with the decision, and ordered the court to reconsider it. As a part of this order, the higher court said that being a trust and a non-stock corporation were not mutually exclusive in this case, and Sweet Briar could exist as both.
While Bowyer sought the injunction, she also contacted Sweet Briar’s vice-president for finance and administration and asked him to ensure that employees maintain any documents regarding Sweet Briar. Additionally, she requested an injunction to forbid the school from using any donated money to shut down the school. The court allowed this action.
After the Amherst County Attorney filed suit, the faculty of Sweet Briar chose to also file an injunction in mid-April. They claimed that the shutdown would be a breach of contract, but the school replied with a clause from the faculty manual: that faculty can only be fired “under extraordinary circumstances because of financial exigencies.” Naturally, the faculty disagreed with this reasoning, arguing that the school was in fact not in danger of financial crisis. They believed that Sweet Briar did not do enough to stay open and chose to shut down instead of finding a way to fix the situation.
Ultimately, the decision by the Virginia Supreme Court ruled, and Sweet Briar could stay open
The judge dismissed two counts of breach of contract, but permitted the faculty to proceed otherwise. Come mid-June, the injunctions filed by the faculty were no longer necessary when all cases were dismissed due to the settlement.
Ultimately, the decision by the Virginia Supreme Court ruled, and Sweet Briar could stay open. The $12 million raised by Saving Sweet Briar, a group dedicated to the longevity of the college, will be paired with a $16 million endowment to fund the school for the 2015-2016 school year. The new president of the college, Phillip C. Stone, hopes to find a way to raise enough money to keep Sweet Briar open indefinitely.
Although this resolution may keep Sweet Briar alumnae, students, and faculty happy for the time being, the school may face challenges in the future. The over $24 million (and growing) is nothing more than a temporary solution while Sweet Briar figures out how to once again become sustainable. If the school is not able to do so quickly, it may experience the same legal nightmare it did this past spring.
If Sweet Briar students had attempted to bring suit on a contract claim, they would likely have also failed
Students were rightfully upset, but did not sue as a group alone to attempt to stop the closure, and might not have standing to do so if this happens again. The 1987 case of Aase v. State, South Dakota Bd. of Regents visited whether students had standing to sue a closing educational institute. A South Dakota Senate Bill gave the Board of Charities and Corrections (BCC) control of the University of South Dakota at Springfield. The BCC intended to transform the campus into a prison. The Bill did include a stipulation requiring the BCC to allow students to finish the 1983-1984 school year, and then finish their degrees at another school in South Dakota.
University of South Dakota students brought suit, claiming that the school was in breach of contract, among other claims. The Court determined that the students had “no contract rights . . . after the 1983-84 academic year.” Although relationships between students and schools are “contractual in nature,” the only thing a student has a right to is a tuition refund if the situation calls for it.
If Sweet Briar students had attempted to bring suit on a contract claim by themselves based on Regents, they would likely have also failed. Furthermore, the only way Sweet Briar students could possibly win on a contract claim in the future is if Sweet Briar closed in the middle of a semester, thus requiring the school to refund any tuition to the students. This differs from the claim for breach of contract that the faculty members brought, as the faculty had an existing employment contract with Sweet Briar.1
However, here a lawsuit was brought by Sweet Briar students enrolled at the time, paired with alumnae, to attempt to stop Sweet Briar from shutting down. They claimed that if the college closed, alumnae degrees would be tarnished and students would be “irreparably harmed.” Additionally, current students would have to transfer to other schools, causing significant hardship. The plaintiffs based their argument on the 1972 New York case of Galton v. College of Pharmaceutical Sciences in which alumni and students were permitted bring suit to try to keep their school from closing. This suit led to a six month injunction granted by Judge Updike on April 29, 2015. Although Judge Updike also denied the motion for a preliminary injunction requiring Sweet Briar to remain open while the case was pending.
Because all cases were dismissed based on the settlement, the faculty could again sue over the financial exigencies clause…
But what if Sweet Briar runs outs of money again in the future –will the faculty be barred from suing? Because all cases were dismissed as part of the settlement, the faculty could again sue over the financial exigencies clause, or any other contract breach that could be in question. In order for res judicata to apply, a final judgment must be entered on the claim. Here, everything was dismissed by the court before final judgments were reached.
Nonetheless, it does not seem like Sweet Briar would end up in the exact same situation again in the near future. Proper leadership will help Sweet Briar not make the same mistakes again, and as of July 2, leadership for the school had officially changed
For now, Sweet Briar College must raise enough money to stay open beyond 2016. Some wonder if it will open enrollment to men, much like Peace College (now William Peace University) in Raleigh had to when it needed to increase its revenue. It must also attract potential students who may be dissuaded from applying based on the recent controversy. Of course, if Sweet Briar is able to turn itself around and once again become a thriving school, it will more easily be able to avoid the courtroom.