University Successfully Defended Against Fraud Claims

Client:	Non-profit religious university
Representation:	Defense of suit for fraud and breach of fiduciary duty
Date:	September 2009
Locations:	U.S. District Court for the Southern District of Florida

Summary:

Schiff Hardin's client, a non-profit religious university with locations in several states, owned a Christian content radio station. When the school sold the station to a public broadcasting concern, the new owners changed the station's format from Christian content to classical music.

Two former listeners who had made charitable donations to the station subsequently sued our client, its board of regents, its executives and others claiming that they had fraudulently induced listeners to make charitable donations to the station while secretly planning to sell it and "divert" the sale proceeds for "improper" purposes. The plaintiffs sought a permanent injunction to stop the sale of the radio station or, alternatively, a constructive trust, along with an accounting and money damages.

The plaintiffs based their claims on the common law of fraud, alleged violations of state statutes governing solicitations by charitable organizations; alleged violations of the state's Deceptive and Unfair Trade Practices Act; alleged breaches of fiduciary duties; and alleged breaches of implied or express contracts. In effect, the plaintiffs claimed that because they had donated to the radio station, they had the right to stop the sale and to dictate that the format of the radio station must remain an all-Christian content.

Following discovery, the United States District Court for the Southern District of Florida granted our clients's motion for summary judgment. The court found no evidence that any charitable contributions to the radio station had been fraudulently induced or otherwise improperly or deceptively solicited. Indeed, the court affirmatively found that "the evidence presented by the defendants establishes that the donations were used to advance the station's Christian mission." The court noted that in connection with the sale, recent radio station donors were offered a refund of their donations. Further, the court rejected the plaintiffs' claims that their status as periodic donors conferred standing to dictate the format of the radio station indefinitely or gave them a stake in the broadcast license.