Oberlin pleads poverty in Gibson’s Bakery case, judge requires the College to post $36.4 million bond

Could Oberlin College, like The Evergreen State College, now be in financial difficulties because of ill-advised wokeness? If you’ve been following the story, Gibson’s Bakery sued the College after three students were caught shoplifting or beating up the shop owner (they pleaded guilty). The College and its students then tried to exact revenge, defaming the bakery, accusing it of racism (a charge that proved palpably ridiculous), and even cutting off college business with the store. A local local jury found the College guilty and fined it $11.2 million in compensatory damages and then $33 million in punitive damages, making a total of over $44 million. That was reduced to $25 million (the punitive damages were higher than allowed by Ohio law), but then the judge slapped another $6.5 million on Oberlin to cover the Gibsons’ expenses and lawyer fees.  Ergo, the college is in the hole for over $31 million.

I thought Oberlin had enough dosh in the endowment or reserves to cover that, but now, according to the Legal Insurrection site, the College has asked the judge to consider post-trial appeals and also postpone the “execution of the judgment” (i.e., Oberlin’s payout). In many cases like this, bond has to be posted by the indebted party to assure that it will be able to pay off should the judgment hold, but Oberlin requested that no bond be ordered.  See the article below for Oberlin’s pathetic plea of poverty:

The interest alone on the judgment (assuming a rate of 5%) is more than $4,000 per day, and that will presumably be added to the total fees should Gibson’s ultimately prevail. Ergo Gibson’s asked for this (indent from Legal Insurrection site; increased indent from Gibson’s appeal to the court):

The judgment interest rate in 2019 is 5%. Therefore, if appeals of this case last just three years, the total amount of post-judgment interest that Defendants will have to pay is $4,742,179.77 –which is $1,580,726.59 per year or $4,330.76 per day. [JAC: This, added to the previous award, adds up to $36 million, which is the bond that the judge just required the College to post.]

Three years appears likely for the appeals process, according to Gibson’s Bakery:

Since the jury’s verdict, Oberlin College has given every indication that they are digging in for a long battle. For instance, Oberlin College President Carmen Twillie Ambar has broadcasted plans for an upcoming “lengthy and complex legal process” in her public statements…

Defendants have already expressed that they will not accept the verdict of the Lorain County jury. They have also suggested that they will not accept any adverse decision by the Ninth District Court of Appeals and, instead, will ultimately proceed to the Ohio Supreme Court. The Supreme Court of Ohio’s 2018 Statistical Summary shows that the time from filing a jurisdictional appeal to the Supreme Court until a full merit review by that Court averages 496 days.5 As such, a three-year period of appeals (through the Ninth District and Ohio Supreme Court) is a conservative timeframe for purposes of setting the appropriate post-judgment interest amount to be included in the bond requirement.

The need for such bond is made clear by the College’s own statements about its dire financial straits. If the College is to be believed, there is serious concern about its ability to pay this sizeable judgment three years from now. At trial, and in its recent filing, the College represented that there was only $59.1 million of unrestricted endowment funds available to pay any dollar judgment and that $10 million of those funds had already been committed to pay down the College’s existing debt. [Trial Tr., June 12, 2019 at 95:13-21] There remains $190 million of existing debt on the College’s books. [Id.] The College has also testified that it has a significant operating deficit and that its deficit situation is not sustainable…. [Trial Tr., June 12, 2019 atpp. 86:1-6, 88:1-9]

Note that, like Evergreen State, Oberlin’s enrollment is also declining. This is also from the Gibson’s motion:

The College also testified at trial that they have experienced a “significant” and “steady” decline of enrollment from 2014 to 2018. [Trial Tr., June 12, 2019 at 79:4-17] In describing their economic position, the College offered Exhibit N-33 at trial, which is its May 10, 2019 report entitled “One Oberlin: The Academic & Administrative Program Review Final Report.” [Trial Tr., June 12, 2019 at pp. 99-100] In that Report, the College describes its alleged financial hardships and warns about how many other private colleges have had to close due to financial difficulties …[Ex. N-33, pp. 4-5].

Thus, we know that Oberlin College could attempt to continue using its available funds to pay down its other debts between now and the filing of a notice of appeal, thereby leaving less available to pay the judgment in this case.

Too bad for the College, as the judge, although he did allow a stay on Oberlin’s payments to the Gibsons, just ordered the College to post a $36 million bond by July 31, as detailed in the following article on the same site:

 

The judge’s decision is below, and Legal Insurrection adds this.

Will Oberlin College be able to secure a bond? Probably, but it might not be as easy as you would think. At a minimum Oberlin College would have to pledge substantial liquid collateral, perhaps even 100% of the total judgments plus enough to cover interest. The insurance companies writing these appeal bonds want to take zero risk. It’s possible that Oberlin College could get another financial institution to guarantee payment to the insurance company, but Oberlin College’s credit rating already is under pressure.

(If you’re a lawyer, let me know how a college would get a $36 million bond.)

 

 

 

25 Comments

  1. George
    Posted July 27, 2019 at 2:11 pm | Permalink

    “Total endowed funds as of June 30, 2018 were $887.4 million.” Looks like Oberlin will have to liquidate part of its endowment.
    https://www.oberlin.edu/investment/assets

  2. GBJames
    Posted July 27, 2019 at 2:17 pm | Permalink

    Sub

  3. Posted July 27, 2019 at 2:47 pm | Permalink

    Did any Oberlin administration heads roll after this debacle? I think not.

    • gravelinspector-Aidan
      Posted July 28, 2019 at 10:22 am | Permalink

      Yet?

  4. Ken Kukec
    Posted July 27, 2019 at 2:52 pm | Permalink

    Wow, hope poor Oberlin doesn’t have to go on the streets and borrow the money from a loan shark (juice on a shylock loan gonna be a lot higher than five points).

    • Randall Schenck
      Posted July 27, 2019 at 3:04 pm | Permalink

      Easy choice – Deutche bank

      • RPGNo1
        Posted July 28, 2019 at 9:24 am | Permalink

        A subtle hint to the GUSPat(“Greatest US-President of all time”)? 😉

  5. JezGrove
    Posted July 27, 2019 at 3:23 pm | Permalink

    What a shame – couldn’t happen to a nicer bunch.

  6. Posted July 27, 2019 at 3:42 pm | Permalink

    From woked to whacked! 🤪

  7. Steve Pollard
    Posted July 27, 2019 at 3:58 pm | Permalink

    As the old military saying has it: ‘If you can’t take a joke, you shouldn’t have joined’. They have brought this entire sorry business on themselves. Tough.

  8. Jon Gallant
    Posted July 27, 2019 at 4:15 pm | Permalink

    Recall that Oberlin got itself into this hole through the brilliant work of Meredith Raimondo, who had been promoted from Special Assistant for Equity, Inclusion and Diversity to Vice President and Dean of Students. Her Emails in these positions also did much to prove the Gibsons’ case against the college. The financial difficulties the college now reveals in its latest pleading make the next step easy to predict: Ms. Raimondo will no doubt be promoted to CFO.

    • BJ
      Posted July 27, 2019 at 5:04 pm | Permalink

      “The financial difficulties the college now reveals in its latest pleading make the next step easy to predict: Ms. Raimondo will no doubt be promoted to CFO.”

      It’s remarkable how people like her always seem to fail upwards in these habitats. In the social justice sphere, saying and doing the “right” things is far more important than being competent.

  9. BJ
    Posted July 27, 2019 at 5:02 pm | Permalink

    “The College has also testified that it has a significant operating deficit and that its deficit situation is not sustainable…. ”

    Hmmm. I wonder how many administrative staff the college has hired in the last few years? I remember seeing a report for a private college a few months ago (I can’t remember which) that had over 80 staff members working in various administrative positions, most of them in places like the “Diversity and Equity Office” and other, similar departments.

    The price of tuition at a school like Oberlin is already absurd and backbreaking for students. I imagine they’ll be raising those prices now, perhaps causing a further decline in enrollment.

    If I remember correctly, it was the requirement to post bond for the judgment against them that brought Gawker down, as they were forced to sell their company and its assets to Univision (I think it was Univision) because they didn’t have the money for the bond. Of course, Oberlin has nearly a billion dollars in its endowment — one of the highest in the country and more than the GDP of many countries — so I find their desperate pleas of poverty not only hollow, but pathetically uncouth. They’re the rich, privileged party in this suit that tried to destroy a mom-and-pop bakery. Then again, class/wealth is rarely considered in the oppression hierarchy they follow, unless it allows them to claim a group they don’t like isn’t oppressed.

  10. David Fuqua
    Posted July 27, 2019 at 7:22 pm | Permalink

    You are correct about the risk an insurance company is willing to take on an appeal bond – zero. A company will typically require a deposit or escrow of liquid assets equal to the likely payout after appeal.

  11. JohnE
    Posted July 27, 2019 at 8:24 pm | Permalink

    I’m a lawyer. Bonds such as this are obtained from major insurance companies (such as Prudential or Lloyd’s of London). As many others have noted, the insurer providing the bond will not want to take any risk, and will require that the university post collateral in an amount at least equal to the amount of the bond. For a bond this size, the lead insurer (whose name is on the bond) will likely sell a piece of the bond to other insurance companies, so that the lead insurer can lessen whatever risk it has. The insurer will also charge a substantial fee for providing this bond.

    As an alternative to the bond, the court would likely have allowed Oberlin to deposit $36 million in cash with the court. Obtaining a bond and paying the fee for the bond allows the university to avoid having to liquidate invested assets to come up with the cash, although they are no doubt using those assets as collateral security for the bond, such the insurer will have the right to take those assets if the insurer is ever required to make payment under the bond.

  12. Justme
    Posted July 27, 2019 at 10:33 pm | Permalink

    Wait a minute…

    Didn’t both the President and the Chairman of the Board of Trustees BOTH say that Oberlin College can pay the judgement?

    When Oberlin goes down, the only people who are responsible are the Board and the administration because, frow what I’ve read, Gibson’s tried to settle everything only to be rebuffed by the former president.

    Dollars to donuts, the President and the board will blame Gibson’s for their failure to act like mature responsible adults.

  13. Jim Swetnam
    Posted July 27, 2019 at 11:06 pm | Permalink

    Yes this was a fiasco, but I feel no schadenfreude over their troubles, if they are indeed dire. This college, after all, can claim such figures as Sinclair Lewis, Thornton Wilder, and John Wesley Powell as alumni. The fall of a great school is always a tragedy.

    https://www.ranker.com/list/famous-oberlin-college-alumni-and-students/reference

    • BJ
      Posted July 28, 2019 at 12:12 am | Permalink

      My schadenfreude doesn’t come from seeing Oberlin fail, but from their shift from education to ideology failing. It is indeed a shame to see a school as storied as Oberlin fall like this, but the people you mentioned are from many decades ago, long before the shift Oberlin has willfully embraced and promoted to their students. They were once an institution of great education, but now they are an ideological institution.

      At the end of the day, I hate to see a school with the history of Oberlin fail, but I’m glad to see them fail because of how the direction they decided to go, because of the philosophy that led them here.

      I hope events like this, those at Evergreen, and others will convince some of these famous schools to change tack (Evergreen certainly isn’t famous, but other famous and storied schools are going this way), but I don’t think they can at this point. Their administrations are full of people who want this. Their professors want this. Their students want this.

      I hope Oberlin can learn from this and return to their former glory, but it’s very, very, very unlikely.

      • Jon Gallant
        Posted July 28, 2019 at 1:26 am | Permalink

        “Their professors want this. Their students want this.” Not so fast, BJ. The professors and students of the woke variety make the most noise, but their noisiness may give a false impression of their numbers. Even at the Evergreens, Middleburys, and Oberlins, there may be a large contingent of faculty and students who do not “want this” but just keep their heads down. They may be notably
        inclined to keep heads down at places where woke illuminati dominate the administration. The track leading from grievance study departments to administration—a track greased by the Diversity bureaucracy’s incessant growth—seems to be the mechanism for this development.

        • A C Harper
          Posted July 28, 2019 at 3:19 am | Permalink

          If we were keeping score, +1 for ‘woke illuminati’.

        • BJ
          Posted July 28, 2019 at 10:57 am | Permalink

          You’re right, I used an unfair generalization. Thanks for pointing it out.

  14. DavidB
    Posted July 28, 2019 at 6:17 am | Permalink

    I should point out that while Oberlin MAY have almost $900 million in endowment, it’s likely that much of that is restricted. That is, it MUST be used for purposes dictated by the donor(s). Legally, it may be difficult to tap into that (but IANAL). Only their *unrestricted* endowment (i.e. “slush funds”) can be used (but again, IANAL).

    Of course, they can sell assets, increase tuition to make their declining applicant pool pay for it, cut salaries of faculty (but not administrators!), slash programs… you know, the usual things colleges and universities do to get funds to support stupid things.

    They (and others) might also learn a lesson. NAAAAAHHHH…..

    • John Conoboy
      Posted July 28, 2019 at 12:47 pm | Permalink

      Maybe Oberlin could have a bake sale to raise some of the money.

  15. Posted July 30, 2019 at 9:32 pm | Permalink

    sub


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