Judge: Penn State must pay legal defense bills of trustee under internal investigation.
“We find that the public has significant interest in this state-created university and how it's governing Board of Trustees hews to its own bylaws and treats its own members,” Gibbons ruled.
"A Lackawanna County Court judge ruled Penn State must pay a trustee's legal fees in defending himself against an internal investigation by the university.
PSU's bylaws require that the college cover legal fees of a trustee who comes under investigation, even if the probe is by the university, according to the decision reached Monday by Judge James Gibbons. In documents and proceedings, trustee Anthony Lubrano claimed the investigation is “retaliation” for his Feb. 16 resolution to rename the football field at Beaver Stadium for former football coach Joe Paterno and his wife, Sue, as well as Lubrano's comments afterward to media about PSU tuition and capital projects.
On March 28, trustee leaders reprimanded Lubrano for presenting the Paterno resolution and for his comments. The board in March began an investigation of Lubrano based on anonymous complaints from other trustees regarding the resolution and his public comments. Lubrano, of Glenmoore, Chester County, was first advised of the investigation July 18. Four days later, he requested indemnification and advancement of expenses.
PSU denied the request Aug. 7. On Aug. 25, the board gave notice of an executive session scheduled for Sept. 6 regarding the investigation. Lubrano then filed on Sept. 4 an emergency petition for a temporary injunction to pause the probe until PSU advances expenses to him so he can pay his legal bills incurred so far in the matter, as well as his future legal bills in the case.
Lubrano contended the university bylaws are a contract that provide both indemnification and advance of expenses to trustees who come under investigation. PSU disagreed and denied the request, but offered to advance $10,000 for his expenses, which Lubrano rejected.
Gibbons on Sept. 5 issued a temporary injunction and heard the case Sept. 12. Lubrano's legal bills had amounted to $140,000 from July 18 to Sept. 7. It's not clear how much has been incurred since.
Gibbons' ruling sides with Lubrano and keeps the investigation halted until PSU advances his expenses “as required by the bylaws." The order directs Lubrano to present his bills to the university as they are incurred. The nature of the investigation remains confidential but has been characterized in court proceedings as Lubrano having supposedly violated his fiduciary duty to PSU as a trustee. But the crux of the probe is not germane to the issues at hand in the injunction, which include: whether PSU is obligated to advance Lubrano's expenses in connection with its investigation of him; and whether he is entitled to have the probe halted until PSU pays his legal fees.
PSU argued Lubrano could afford to pay his own legal fees and expressed concern about the university having to issue a “blank check” to him, especially as appeals could ensue for some time. Gibbons determined the bylaws do not contain any means test and do not define reasonableness of expenses or limit them. Rather, the bylaws are “straightforward and mandatory,” in dictating that every trustee “shall be entitled as of right to have his expenses in defending any action paid in advance by the university, as incurred.”
PSU's attorney also referred to Lubrano as a “defendant” in the investigation and cited an exception for covering fees of defendants. But Gibbons noted Lubrano has not been charged with anything in the matter and is not a “defendant." The judge called the terminology a “thinly veiled attempt” by PSU to avoid advancing fees as required under its bylaws. PSU's reading of its own bylaws is “strained and contrived,” the judge ruled.
PSU also argued “no public interest is served” by an injunction in the university's investigation of complaints raised about a trustee. Gibbons rejected that notion, too, noting PSU was created in 1855 by an act of the state Legislature, and as a state university, PSU is partly supported by taxpayer funds.
“We find that the public has significant interest in this state-created university and how it's governing Board of Trustees hews to its own bylaws and treats its own members,” Gibbons ruled.
“We find that the public has significant interest in this state-created university and how it's governing Board of Trustees hews to its own bylaws and treats its own members,” Gibbons ruled.
"A Lackawanna County Court judge ruled Penn State must pay a trustee's legal fees in defending himself against an internal investigation by the university.
PSU's bylaws require that the college cover legal fees of a trustee who comes under investigation, even if the probe is by the university, according to the decision reached Monday by Judge James Gibbons. In documents and proceedings, trustee Anthony Lubrano claimed the investigation is “retaliation” for his Feb. 16 resolution to rename the football field at Beaver Stadium for former football coach Joe Paterno and his wife, Sue, as well as Lubrano's comments afterward to media about PSU tuition and capital projects.
On March 28, trustee leaders reprimanded Lubrano for presenting the Paterno resolution and for his comments. The board in March began an investigation of Lubrano based on anonymous complaints from other trustees regarding the resolution and his public comments. Lubrano, of Glenmoore, Chester County, was first advised of the investigation July 18. Four days later, he requested indemnification and advancement of expenses.
PSU denied the request Aug. 7. On Aug. 25, the board gave notice of an executive session scheduled for Sept. 6 regarding the investigation. Lubrano then filed on Sept. 4 an emergency petition for a temporary injunction to pause the probe until PSU advances expenses to him so he can pay his legal bills incurred so far in the matter, as well as his future legal bills in the case.
Lubrano contended the university bylaws are a contract that provide both indemnification and advance of expenses to trustees who come under investigation. PSU disagreed and denied the request, but offered to advance $10,000 for his expenses, which Lubrano rejected.
Gibbons on Sept. 5 issued a temporary injunction and heard the case Sept. 12. Lubrano's legal bills had amounted to $140,000 from July 18 to Sept. 7. It's not clear how much has been incurred since.
Gibbons' ruling sides with Lubrano and keeps the investigation halted until PSU advances his expenses “as required by the bylaws." The order directs Lubrano to present his bills to the university as they are incurred. The nature of the investigation remains confidential but has been characterized in court proceedings as Lubrano having supposedly violated his fiduciary duty to PSU as a trustee. But the crux of the probe is not germane to the issues at hand in the injunction, which include: whether PSU is obligated to advance Lubrano's expenses in connection with its investigation of him; and whether he is entitled to have the probe halted until PSU pays his legal fees.
PSU argued Lubrano could afford to pay his own legal fees and expressed concern about the university having to issue a “blank check” to him, especially as appeals could ensue for some time. Gibbons determined the bylaws do not contain any means test and do not define reasonableness of expenses or limit them. Rather, the bylaws are “straightforward and mandatory,” in dictating that every trustee “shall be entitled as of right to have his expenses in defending any action paid in advance by the university, as incurred.”
PSU's attorney also referred to Lubrano as a “defendant” in the investigation and cited an exception for covering fees of defendants. But Gibbons noted Lubrano has not been charged with anything in the matter and is not a “defendant." The judge called the terminology a “thinly veiled attempt” by PSU to avoid advancing fees as required under its bylaws. PSU's reading of its own bylaws is “strained and contrived,” the judge ruled.
PSU also argued “no public interest is served” by an injunction in the university's investigation of complaints raised about a trustee. Gibbons rejected that notion, too, noting PSU was created in 1855 by an act of the state Legislature, and as a state university, PSU is partly supported by taxpayer funds.
“We find that the public has significant interest in this state-created university and how it's governing Board of Trustees hews to its own bylaws and treats its own members,” Gibbons ruled.
