HARRISBURG — The Commonwealth Court has reversed the Court of Common Pleas of Centre County's order to deny reimbursement of attorneys fees and costs to a group of Penn State University trustees related to their efforts to access documents used in the Freeh Report.

According to the Commonwealth Court's decision, issued March 13, Penn State trustees asked the Court of Common Pleas of Centre County to reimburse their attorneys fees and costs that came about when they forced Penn State to allow them to look over corporate records.

Commonwealth Court President Judge Mary Hannah Leavitt wrote in the opinion that the Court of Common Pleas of Centre County denied the request because it found that Penn State did not deliberately act slowly or otherwise bothersome to the trustees in defending itself against the trustees' petition to compel.

According to the Commonwealth Court's opinion, the trustees asked to see the documents that Louis Freeh used in putting together his Freeh Report related to the Jerry Sandusky child sex abuse case. Leavitt wrote that the trustees sent a letter to University President Eric Barron and Board of Trustees Chairman Keith Masser, but Masser and Barron refused the trustees access to those documents in an April 17, 2015, letter.

Masser and Barron said those trustees were not allowed to or assigned to look over those documents because the documents weren't relevant for anything that the board was reviewing. Leavitt wrote that Masser and Barron wrote that letter with advice from their attorneys.

Leavitt wrote in the Commonwealth Court's opinion that the trustees filed suit against Penn State on April 20, 2015, under Section 5512(a) of the Nonprofit Corporation Law under the Pennsylvania Consolidated Statutes.

The trustees argued that since the Freeh Report ended up getting the NCAA involved and became the source of much continuing litigation, it was relevant to their duties. However, Penn State argued that the trustees would breach their duties to act in Penn State's best interests by how they used the Freeh documents.

The Court of Common Pleas of Centre County granted the trustees' petition to compel on Nov. 19, 2015, ruling that the trustees could only discuss the confidential or privileged information when in executive sessions or when talking to Penn State's counsel.

The trustees filed a motion for the Court of Common Pleas of Centre County to reconsider the denial of attorneys fees and costs. They reasoned their motion for reconsideration was because they had a right to attorneys fees under Section 5512(b) and (c) of the Nonprofit Corporation Law.

The Court of Common Pleas of Centre County granted that motion for reconsideration but turned down the trustees' request for attorneys fees and costs a second time on April 4, 2016.

The trustees appealed the decision to the Commonwealth Court on three arguments. They said that they had rights to attorneys fees under Penn State's corporate charter and bylaws, Section 5512(c) of the Nonprofit Corporation Law and Section 2503(7) of the Judicial Code.

The trustees also felt they had rights to attorneys fees under Section 2503(7) of the Judicial Code because they argued that Penn State made what the trustees felt "should have been a brief and summary proceeding" longer without good reason.

The trustees appealed that they should not have had to take legal action to get corporate records that they felt they had rights to as corporate directors and should not have had to pay expenses for the legal action.

The Court of Common Pleas of Centre County reasoned that the corporate charter does not allow trustees to be paid back for litigation expenses because "the corporate charter specifies that reimbursement will be made in accordance with the university's travel reimbursement policies."

The Commonwealth Court reversed this argument, reasoning that if the reimbursable expenses were only travel expenses, that the "other direct expenses while engaged in the discharge of their official duties" provision becomes meaningless.

Leavitt also wrote that the Board of Trustees "adopted a bylaw to provide for reimbursement of a trustee's litigation expenses."

The Commonwealth Court also remanded the case to the Court of Common Pleas of Centre County so that the Court of Common Pleas would figure out the cost of attorneys' fees and costs related to the trustees' petition to compel and their appeal.

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Organizations in this Story

Penn State University
University Park
State College, PA - 16801

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