Please join us in congratulating Shareholders Joe Galardi, Scott Atherton, and Alaina Karsten who prevailed at trial in a high-stakes corporate governance dispute. They represented the Harbor Branch Oceanographic Institute Foundation, Inc. (the “Foundation”), a non-profit charitable organization that currently controls an endowment fund valued at approximately $100 million.
The Foundation signed a contract through which it agreed to contribute money to Florida Atlantic University (“FAU”) to support oceanographic research, but that such distributions would be made in the Foundation Board’s “sole discretion.” FAU subsequently claimed that, as a result of a newly enacted law, the Foundation was prohibited from appointing new members to its Board of Directors without FAU’s approval. Had FAU’s claim been accepted by the court, it would have eventually led to FAU’s approved appointees controlling the entire Foundation Board and deciding how to distribute its $100 million dollar endowment. Following a full trial, the court rejected FAU’s Board control-related claim, finding that the newly enacted law created an unconstitutional impairment of the parties’ original contract. Under the court’s decision, the Foundation remains in control of its Board and endowment. The court further ruled that, while FAU has the right to approve the Foundation’s budget, the Foundation’s Board has “sole discretion” in determining how it wishes to distribute its funds, and the parties’ contract does not give FAU “the ability to ‘weigh in’ on” the Board’s expenditure decisions.
FAU was represented at trial by a national Am Law firm, and FAU’s trial witnesses included two former Florida Senate Presidents, one of which was elected as Florida’s Chief Financial Officer, and a former Florida Lt. Governor. Please join us in congratulating Joe, Scott and Alaina.