amicus curiae statement of todd j zywicki 0910

8/8/2019 Amicus Curiae Statement of Todd J Zywicki 0910

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TABLE OF CONTENTS

TABLE O r AUTHORITIES iiSTATEMENT OF INTEREST OF AMICUS CURIAE 1STATEMENT OF FACTS 3SUMMARY OF ARGUMENT 3ARGUMENT 4I. BACKGROUND: GOVERNANCE AT DARTMOUTH 4II. RECOGNITION OF THE APPELLANTS AS THIRD-PARTYBENEFICIARIES OF THE 1891 AGREEMENT IS LEGALLYREQUIRED, APPROPRIATE, AND IN THE PUBLIC INTEREST 13

ORAL ARGUMENT 26CONCLUSION 27

TABLE OF CONTENTSTABTE OF AUTHORITIES ..... iiSTATEMENT OF INTEREST OF AMICUS CUNAE ............ 1STATEMENT OF FACTS ................ .......3SUMMARY OF ARGUM8NT............. ,.................,.3ARGUMENT ..,....,....4

I. BACKGROLIND: GOVERNANCE AT DARTMOUTH ........,.,.,.4II. RECOGNITION OF TI{E APPELLANTS AS THIRD-PARTYBENEFICIARIES OF TFIE 1891 AGREEMENT IS LEGATLYREQUIRED, APPROPRIATE, AND IN Tlm PUBLIC INTEREST ......... 13

ORAL ARGUMENT......,.,. ....,26CONCLUSION ..,...,,27


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TABLE OF AUTHORITIES

FEDERAL CASESAbrams v. United States, 250 U .S . 616, 630 (1919) 8Forman v. Forman, 217 N .E .2d 645 (N .y. 1966) 20

STATE CASESGrossman v. Murray, 144 N .H . 345, 348 (1999) 17

BOOKS, JOURNALS AND PERIOD ICALSMARTIN ANDERSON , IM POSTERS IN THE TEMPLE (1992) 14L eonard Bacon, R esponsib ility in the M anagem ent of Socie ties, THE NEWENGLANDER (1847) 22D aniel L . B ennet, Bureaucra t U , FORBES (July 13, 2009) 14Jo se C ab ran es, Myth and Reality of University Trusteeship in the Post-Enron Era,FORDHAM LAW REV IEW (2007) 14, 23R ichard Chait, The Gremlins of Governance: A Trusteeship Q&A with RichardChait, Research Professor at the Harvard Graduate School of Education,TRUSTEESH IP (Ju ly/A ugust 2009) .23, 23A NTH ON Y K RO NM AN , ED UCA TION 'S EN D: W HY O UR CO LLEG ES A NDUN IVERSIT IES H AVE G IVEN U P ON THE MEAN ING OF LIFE (2008) 14H ARRY LEW IS, EX CELLEN CE W ITH OU T A SO UL: H ow A G REA T U NIV ERSITYFORGOT H IGHER EDUCATION (2006) 14 , 16D rew M iller, Serving as a Responsible Trustee, ESSAYS IN PERSPECT IVE ,INSTITUTE FOR EFFECTIVE GOVERNANCE IN H IGHER EDUCATION (2005) 24 , 25S he ri Q ualters, Nonprofits Scramble Under New Scrutiny, 30 NAT 'L L . J 1 (2007) 13LEON BURR RICHARDSON , H ISTORY OF DARTMOUTH COLLEGE (1932) 5Norman 1 . S ilber, Anticonsultative Trends in Nonprofit Governance, OREGONLA W REV IEW .. .. .. ..25

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TABLE OF AUTHORITIESFEDERAL CASESAbrams v. United States,25} U.S. 616, 630 (1919) ."'..'......'....8Formqnv. Forman,2l7 N.E.2d 645 G\f.Y. 1966) "."."'.."'.".20STATE CASESGrossmanv. Murray,l44 N.H. 345,348 (1999)....... ..."..".....17BOOKS. JOURNALS AND PEzuODICALSMeRrrNAoeRsoN,IveostERSINTHETpvtple (1992)....... ..'...'."..".....'.14Leonard Bacon, Responsibility in the Management of Societies, THe NewENcLnNon (1847) ....'..'.'..22Daniel L, Bennet, Bureaucrat U, FoRnes (July 13, 2009) .'."..14Jose Cabranes, Myth and Reality of University Trusteeship in the Post-Enron Era,FoRouev Lew Rvtpw (2007) "..'14,23Richard Chait, The Gremlins of Governance; A Trusteeship Q&Awith RichardChait, Research Professor at the Harvard Graduate School of Education,TRusrpnsHre (July/August 2009) ..23,23ANrHoNv KRoNtrRN, EoucRttoN's END: WHv Oun ColI.eces eNoUNrvsRsrrrES HAVE GIvBN Up oN THE MEANING oF Llne (2008) ."..' '...'.. ..'............14HnRRy LewlS, EXCplt t tCe WITUOUT A SOUL: HOw e GnE.r UNIveRSttvFoRcor HrcuER ErucertoN (2006) .'."'.'...'.."74,16Drew Miller, Serving as a Responsible Trustee, EssRvs IN PERSPECTIVE,INsrtrurn ron ErpecrIVE GovERNANCE IN HIGHER Enuc,uoN (2005) ......."...'.24,25Sheri Qualters, Nonprofits Scramble Under New Scrutiny,30 NAT'L L. J 1 (2007) ".'..'.'..'.."....13LeoN Bunn RrcHRRosoN, HISToRY oF DARTMouTH CoLLEGE (1932)'. ."......'...."'...."5Norman I. Silber, Anticonsultative Trends in Nonprofit Governance, OReGONLew Ravnw .............. ...'."'25


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HARVEY A . S ILVERGLATEAND JOSEPH MALCHOW, DARTMOUTH COLLEGE ,THEBA TILE OVER PARITY , AND THE LEGAL NOTION O F FIDUCIARY DUTY (2009) .4MAXWELL L . S TEARNSAND TODD 1. ZYWICKI. PUBLIC CHOICE CONCEPTSANDApPLICATIONS IN LAW (2009) 7Barbara E Taylor, R ichard P. Chait and Thomas P. Holland, The New Work of theNonprofit Board, HARVARD BUSINESS REVIEW (Sep-Oct 1996) 23, 24CENTER FOR SOCIAL PHILANTHROPY, TELLUS INSTITUTE,EDUCATIONAL ENDOWMENTS AND THE FINANCIAL CRISIS: SOCIALCOSTS AND SYSTEMIC RISKS IN THE SHADOW BANKING SYSTEM(2010) 10, 15,20Robert J W eber, Approval Voting, 9 J. Econ. Perspectives 39 (1995) 7Todd 1. Zywicki, Institutional Review Boards as Academic Bureaucracies: AnAcademic and Experiential Analysis, 101 Northwestern U . L. Rev. 861 (2007)............................................................................................ " 2, 14

RESTATEMENTS AND OTHER AUTHORITIES3 Fletcher Cyclopedia of the Law of Corporations 844.10 (2008) 21Guidebook/or New Hampshire Charitable Nonprofit Organizations, Office of theNH Attorney General, Charitable Trust Unit (2d ed. 2003) 21JOHN E . MURRY, JR , CORBIN ON CONTRACTS , 37: 8 18R estatem ent (Second) of Contracts 302 17, 18,27R estatem ent (Second) of Contracts 304 17Restatem ent (Second) of Judgm ents 56 25Revised M odel Nonprofit Corporation Act 8.30(a) 21

13 W illiston on Contracts 37: 8 19

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HnRvEv A. Su.vpncLATE AND Josepu Melcnow, DRnrvrouru CollpcE, THEBarrle Oven Pazurv, AND rHE LEcar- NouoN or FroucreRy Dury (2009) ..............4Mexwell L, SrEenNs ANo Tooo J. Zywrcrr. Puet.rc Cuolcn CoNceprs eNoAppr.rcRrroNs w Lew (2009) ................7Barbara E Taylor, Richard P. Chait and Thomas P. Holland, The New Work of theNonprofit Board, HeRvnno Busr'ress Rp,vrew (Sep-Oct 1996) .........23,24CENTER FOR SOCIAL PHILANTHROPY, TELLUS INSTITUTE,EDUCATIONAL ENDOV/MENTS AND THE FINANCIAL CRISIS: SOCIALCOSTS AND SYSTEMIC zuSKS IN THE SHADOW BANKING SYSTEM(2010) ..1.0,75,20Robert J Weber, Approval Voting,9 J. Econ. Perspectives 39 (1995) .....,.... ................7Todd J. Zywicki,Institutional Review Boards as Academic Bureaucracies: AnAcqdemic and Experiential Analysis,101 Northwestern U. L. Rev. 861 (2007) 2,74RESTATEMENTS AND OTHER AUTHORITIES3 Fletcher Cyclopedia of the Law of Corporations $ 844.10 (2008) .........21Guidebookfor New Hampshire Charitable Nonprofit Organizations, Office of theNH Attorney General, Charitable Trust Unit (2d ed.2003) ......................21JonN E. MunRv, JR, CoRelrl oN CoNTRAcrs, $ 37:8 ..,....,.. ......,,...,..........18Restatement (Second) of Contracts $ 302..... ...............I7, 18,27Restatement (Second) of Contracts $ 304..... .........17Restatement (Second) of Judgments $ 56 ..............25Revised Model Nonprofit Corporation Act $ 8.30(a) ..............2113 Williston on Contracts $ 37:8 .......... .,..,..........,19

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STATEMENT OF INTEREST OF AMICUS CURIAETodd 1. Zywicki is George Mason University Foundation Professor of Law at George

Mason University School of Law and Trustee Emeritus and 1988 graduate of DartmouthCollege. 1 He is Senior Scholar of the Mercatus Center at George Mason University, SeniorFellow of the James Buchanan Center for Political Economy Program on Philosophy, Politics,and Economics at George Mason, Senior Fellow of the Goldwater Institute, and Fellow of theInternational Centre for Economic Research in Turin, Italy. Professor Zywicki has taughtContracts law for over ten years and also teaches bankruptcy, contracts, commercial law,business associations, law and economics, and public choice and the law. He has authored over70 articles in leading law reviews and peer-reviewed economics journals. His work has beencited 724 times in legal treatises and law reviews and he is one of the top 50 most downloadedlaw authors at the Social Science Research Network. He was editor ofthe Supreme CourtEconomic Review (2001- 2002) and has served as co-editor since 2006. He has taught atVanderbilt Law School, Georgetown Law Center, Boston College Law School, and MississippiCollege School of Law. Professor Zywicki was a fall 2008 Searle Fellow at George MasonUniversity School of Law and was a 2008-2009 National Fellow at Stanford's HooverInstitution. In 2009 he was elected a Trustee of Yorktown University.

Professor Zywicki has lectured and consulted throughout the world, including withforeign governments. In 2006 he served on the Department of Justice Study Group on"Identifying Fraud, Abuse and Errors in the United States Bankruptcy System." From 2003 to2004, he was Director of the Office of Policy Planning, Federal Trade Commission. He has

IProfessor Zywicki received an A.B. cum Laude with high honors in his major from Dartmouth. He holds an M.A.in Economics from Clemson University and a J.D. from the University of Virginia.

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STATEMENT OF INTEREST OF AMICUS CURIAETodd J. Zywicki is George Mason University Foundation Professor of Law at George

Mason University School of Law and Trustee Emeritus and 1988 graduate of DartmouthCollege. I He is Senior Scholar of the Mercatus Center at George Mason University, SeniorFellow of the James Buchanan Center for Political Economy Program on Philosophy, Politics,and Economics at George Mason, Senior Fellow of the Goldwater Institute, and Fellow of theInternational Centre for Economic Research in Turin, Italy. Professor Zywicki has taughtContracts law for over ten years and also teaches bankruptcy, contracts, commercial law,business associations, law and economics, and public choice and the law. He has authored over70 articles in leading law reviews and peer-reviewed economics journals. His work has beencited724 times in legal treatises and law reviews and he is one of the top 50 most downloadedlaw authors at the Social Science Research Network. He was editor of the Supreme CourtEconomic Review (2001- 2002) and has served as co-editor since 2006. He has taught atVanderbilt Law School, Georgetown Law Center, Boston College Law School, and MississippiCollege School of Law. Professor Zy.tvicki was a fall 2008 Searle Fellow at George MasonUniversity School of Law and was a2008-2009 National Fellow at Stanford's HooverInstitution. In 2009 he was elected a Trustee of Yorktown University.

Professor Zywicki has lectured and consulted throughout the world, including withforeign governments. In 2006 he served on the Department of Justice Study Group on"Identifying Fraud, Abuse and Errors in the United States Bankruptcy System." From 2003 to2004, he was Director of the Office of Policy Planning, Federal Trade Commission. He has

rProfessor Zywicki received an A.B. cum Laude with high honors in his major from Dartmouth. He holds an M.A.in Economics from Clemson University and a J.D. from the University of Virginia.


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testified 13 times before the Congress and is a frequent print and broadcast commentator? Hehas published law review articles, spoken at professional conferences, and testified before theBankruptcy Rules Committee of the Federal Judicial Conference on fiduciary duties of lawyersand management in bankruptcy' and has published on university governance and administration.4

Dartmouth alumni elected Professor Zywicki to the Board of Trustees ("Board") in 2005;he served until 2009, when a majority of the Board, for the first time ever, denied an alumnitrustee a second term.' His Dartmouth service has given Professor Zywicki first-handknowledge of the subject of this lawsuit: the actions of the Board in destroying parity, the 119-year-old balance between "alumni trustees," nominated via election by Dartmouth Collegealumni, and "charter" trustees, nominated and elected by the board. Alumni and charter trusteeswere equal in number from the time when the Association of Alumni of Dartmouth College("Association") and the Board approved an 1891 Agreement establishing parity, until theBoard's violation of that agreement in September of2007.6

The Association's meeting notes regarding adoption of the 1891 Agreement expressedthe hope that "Alumni should understand and feel that they were to have a constant, personal

2 Professor Zywicki has been a commentator in the Wall Street Journal, New York Times, Washington Post,Washington Times, Forbes, Nightline, The Newshour with Jim Lehrer, Fox and Friends, Lou Dobbs Radio Show,Neil Cavuto Show, and The Laura Ingraham Show. He contributes to the highly regarded legal web log The VolokhConspiracy and The Atlantic magazine's The Atlantic Business Channel.3 Professor Zywicki is a member of the Governing Board and the Advisory Council for the Financial ServicesResearch Program at George Washington University School of Business, the Board of Directors of the Bill of RightsInstitute, the Executive Committee for the Federalist Society's Financial Institutions and E-Commerce PracticeGroup, the Advisory Council of the Competitive Enterprise Institute, the Program Advisory Board of the Foundationfor Research on Economics and the Environment and the Advisory Council of the Center para el Analisis de lasDecisiones Publicas, Universidad de Francisco Marroquin, Guatemala City, Guatemala. He is currently the Chair ofthe Academic Advisory Council for the following organizations: The Bill of Rights Institute, the film "We thePeople in IMAX," and the McCormick-Tribune Foundation "Freedom Museum" in Chicago, Illinois.4 Todd J. Zywicki, Institutional Review Boards as Academic Bureaucracies: An Academic and ExperientialAnalysis, 101 NORTHWESTERN U. L. REv. 861 (2007).5 As described infra p. 6, since 1990 the Board itself has held the power to reelect alumni trustees following theirfirst term.6 The Board also includes the Governor of the State of New Hampshire and the President of Dartmouth College, exofficio.

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testified 13 times before the Congress and is a frequent print and broadcast commentator.' H.has published law review articles, spoken at professional conferences, and testified before theBankruptcy Rules Committee of the Federal Judicial Conference on fiduciary duties of lawyersand management in bankruptcy3 and has published on university governance and administration.a

Dartmouth alumni elected Professor Zywicki to the Board of Trustees ("Board") in 2005;he served until 2009, when a majority of the Board, for the first time ever, denied an alumnitrustee a second term.s His Dartmouth service has given Professor Zywickifirst-handknowledge of the subject of this lawsuit: the actions of the Board in destroying parity, the 119-year-old balance between "alumni trustees," nominated via election by Dartmouth Collegealumni, and "charter" trustees, nominated and elected by the board. Alumni and charter trusteeswere equal in number from the time when the Association of Alumni of Dartmouth College("Association") and the Board approved an 1891 Agreement establishing parity, until theBoard's violation of that agreement in September of 2007.6

The Association's meeting notes regarding adoption of the 1891 Agreement expressed,he hope that "Alumni should understand and feel that they were to have a constant, personal

2 Professor Zywicki has been a commentator in the L\tall Street Journal, New York Times, LI/ashington Post,lI/ashington Times, Forbes, Nightline, The Newshour with Jim Lehrer, Fox and Friends, Lou Dobbs Radio Show,Neil Cvuto Show, and The Laura Ingraham Show. He contributes to the highly regarded legal weblog The VolokhConspiracy and The Atlantic magazine's The Allantic Business Channel.3 Professor Zywicki is a member of the Governing Board and the Advisory Council for the Financial ServicesResearch Program at George Washington University School of Business, the Board of Directors of the Bill of RightsInstitute, the Executive Committee for the Federalist Society's Financial Institutions and E-Commerce PracticeGroup, the Advisory Council of the Competitive Enterprise Institute, the Program Advsory Board of the Foundationfor Research on Economics and the Environment and the Advisory Council of the Center para el Analisis de lasDecisones Publicas, Universidad de Francisco Marroquin, Guatemala City, Guatemala. He is currently the Chair ofthe Academic Advisory Council for the following organizations: The Bill of Rights Institute, the frlm "We thePeople in IMAX," and the McCormick-Tribune Foundation "Freedom Museum" in Chicago, Illinois.o Todd I. Zywicki, Institutional Review Boards as Academic Bureaucracies; An Academic and ExperientialAnalysis,l0l NoRTHwESTERN U. L. REV. 861 (2007).5 As described infra p.6, since I 990 the Board itself has held the power to reelect alumni trustees following theirfirst term.6 The Board also includes the Governor of the State of New Hampshire and the President of Dartmouth College, exfficio.


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responsibility for the college, an annually recurring obligation to discharge for her which theycould not throw off or leave to the Board of Trustees or any other persons.l" ProfessorZywicki's concern for Dartmouth motivates this amicus submission urging the Court to reversethe Grafton Superior Court's grant of summary judgment and reinstate Appellants' suit seekingto enforce the 1891 Agreement and restore parity. This matter raises critical public policyconcerns. Parity plays a vital role in ensuring the good governance of Dartmouth College. Itselimination carries serious consequences for the College and for the community that dependsupon it, and promotes detrimental trends within higher education, with far-reaching deleteriousresults. Professor Zywicki's intimate knowledge of the lawsuit's background, his expertise inthe law of contracts and business associations, his scholarly commentary on higher educationgovernance, his extensive board service with nonprofit organizations, and his experience as aformer trustee at Dartmouth uniquely qualify him to assist the Court as to the duties of nonprofitboards.

STATEMENT OF FACTSAmicus hereby adopts the Appellants' Statement of the Facts.Amicus has included an additional section here, titled, "Background: Governance at

Dartmouth" in order to present additional information that amicus hopes will assist the Court toplace this dispute in its historical and legal context. A set of documents, including many writtencontemporaneously with the events described herein, is attached as an Appendix.

SUMMARY OF ARGUMENTThe Superior Court erred in granting the College's Motion for Summary Judgment

because the undisputed facts establish that Appellants are third-party beneficiaries of the 1891Agreement, with standing to enforce the agreement. Recognition of a right to performance of the7 Meeting of the Dartmouth Association of Alumni, Minutes and Adopted Documents (June 24, 1891), at App. 7.

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responsibility for the college, an annually recurring obligation to discharge for her which theycouid not throw off or leave to the Board of Trustees or any other persons."T ProfessorZywicki's concern for Dartmouth motivates this qmicus submission urging the Court to reversethe Grafton Superior Court's grant of summary judgment and reinstate Appellants' suit seekingto enforce the 1891 Agreement and restore parity. This matter raises critical public policyconcerns. Parity plays a vital role in ensuring the good governance of Dartmouth College. Itselimination carries serious consequences for the College and for the community that dependsupon it, and promotes detrimental trends within higher education, with far-reaching deleteriousresults. Professor Zywicki's intimate knowledge of the lawsuit's background, his expertise inthe law of contracts and business associations, his scholarly commentary on higher educationgovernance, his extensive board service with nonprofit organizations, and his experience as aformer trustee at Dartmouth uniquely qualify him to assist the Court as to the duties of nonprofitboards.

STATEMENT OF FACTSAmicus hereby adopts the Appellants' Statement of the Facts.Amicus has included an additional section here, titled, "Background: Governance at

Dartmouth" in order to present additional information that amicus hopes will assist the Court toplace this dispute in its historical and legal context. A set of documents, including many writtencontemporaneously with the events described herein, is attached as an Appendix.

SUMMARY OF ARGUMENTThe Superior Court erred in granting the College's Motion for Summary Judgment

because the undisputed facts establish that Appellants are third-party beneficiaries of the 1 891Agreement, with standing to enforce the agreement. Recognition of a right to performance of the7 Meeting of the Dartmouth Association of Alumni, Minutes and Adopted Documents (June24,l89l), at App, 7.

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Agreement is appropriate to effectuate the intention of the parties to the contract in light of thepressing need for alumni involvement to reinvigorate Dartmouth's governance and preserve itsexcellence.

As outlined herein, a critical purpose of the 1891 Agreement was to benefit the Collegeby giving its alumni the ability to oversee its good management. The Agreement lived up to itsambitious goals for well over a century, until the Board's vote to destroy it created the need forthe present litigation to preserve the alumni's involvement. The vote to end parity was only oneelement of a broad campaign by entrenched Dartmouth insiders to undermine the exercise ofindependent oversight by alumni trustees and, in particular, by petition alumni trustees such asProfessor Zywicki. The trend on Dartmouth's Board in recent years, as elsewhere in highereducation, has been toward the erosion of good governance and fiduciary duty, properlyunderstood. This trajectory is dangerous and damaging to Dartmouth, to New Hampshire, and tothe world of higher education. The critical need to preserve the alumni's right to parity andability to participate in the oversight of their College is thus a significant public policy concern,which the Superior Court erred in failing to even acknowledge in determining theappropriateness of recognition of the Plaintiffs as third-party beneficiaries. The Plaintiffs' statusgives them a right to a single judgment on the merits of their claim.

ARGUMENT1. Background: Governance At Dartmouth8

At stake in this case are fundamental principles: the independence of trustees, the properobject of fiduciary duty and loyalty, and freedom of speech (a vital component of academic

8 See also H ARV EY A . SIL VE RG LA TE A ND JO SEPH M ALC HO W, D AR TM OU TH CO LLEG E, TH E BA TTLE O VE R PA RITY ,A ND TH E LEG AL NO TIO N O F F ID UCIA RY DU TY (2009), availab le athttp://www.dartblog.com/dataJ2009/09/008625.php. fo r a step-by-step synopsis of the Board 's m ulti-year effort toupend the 1891 A greem ent and a broader d iscussion of fiduciary duty than is contained in th is brief.

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Agreement is appropriate to effectuate the intention of the parties to the contract in light of thepressing need for alumni involvement to reinvigorate Dartmouth's govemance and preserve itsexcellence.

As outlined herein, a critical putpose of the 1891 Agreement was to benefit the Collegeby giving its alumni the ability to oversee its good management. The Agreement lived up to itsambitious goals for well over a century, until the Board's vote to destroy it created the need forthe present litigation to preserve the alumni's involvement. The vote to end parity was only oneelement of a broad campaign by entrenched Dartmouth insiders to undermine the exercise ofindependent oversight by alumni trustees and, in particular, by petition alumni trustees such asProfessor Zywicki. The trend on Dartmouth's Board in recent years, as elsewhere in highereducation, has been toward the erosion of good governance and fiduciary duty, properlyunderstood, This trajectory is dangerous and damaging to Dartmouth, to New Hampshire, and tothe world of higher education. The critical need to preserve the alumni's right to parity andability to participate in the oversight of their College is thus a signif,rcant public policy concern,which the Superior Court erred in failing to even acknowledge in determining theappropriateness of recognition of the Plaintiffs as third-party beneficiaries. The Plaintiffs' statusgives them a right to a single judgment on the merits of their claim.

ARGUMENTI. Background: Governance At Dartmouths

At stake in this case are fundamental principles: the independence of trustees, the properobject of f,rduciary duty and loyalty, and freedom of speech (a vital component of academic8 See also lleRvey A. SnveRclATE AND JosEpH MALCHow, DARTMouTH CoLLEGE, THE BATTLE OvER PARITY,AND rHE LEGALNoTToN oF FrDUcrARy Dury (2009), available athttp://www.dartblog.com/dafa/2009/09/008625.php, for a step-by-step synopsis of the Board's multi-year effort toupend the 1 891 Agreement and a broader discussion of hduciary duty than is contained in this brief.


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freedom and fiduciary duty) at Dartmouth. The 1891 Agreement's goal was to ensure goodgovernance and wise use of alumni contributions in an era when College administrators and life-appointed trustees recklessly managed the College's finances and neglected its academics." Asthe Association's minutes of June 24, 1891 noted, the Association and the Board believed thatallowing alumni to elect half the trustees would "create and preserve the live, constant, activeinterest of the alumni in the college and their cooperation in its affairs," ushering in "a new era ofprosperity for the College," and "a warmer interest and closer relation between the Board ofGovernment and the Alumni would strengthen the college, and promote its welfare andusefillness."lo The Agreement unquestionably achieved these goals.

Alumni trustee candidates may be placed on the ballot by nomination by the AlumniCouncil ("Council"), or by "petition" with 500 alumni signatures. II This second method is theonly route to election not substantially controlled by the Dartmouth administration, the Board'sGovernance Committee, or the Council, which effectively operates as an arm of the Board andadministration in making its nominations.Y Because of high hurdles to qualify for the ballot andthe alumni's measured use of the option, petition trustee candidacies are rare and successfulefforts rarer still. Historically, the availability of petition trustee candidacies has served as asafety valve: alumni elect petition trustees to effect change when the College strays from itsmission. In 1980, after a decade of turmoil, the alumni elected Dr. John Steel III as petition

9 Petition ~ 7; LEONBURRRICHARDSON,HISTORYOFDARTMOUTHCOLLEGE,578-79 (1932).10 Meeting of the Dartmouth Association of Alumni, supra n. 7.11 The Alumni Council is an unelected body of class and regional College officers and heads of various "affinitygroups," which was created by but is distinct from the Association. The Association is elected by and represents theentire alumni body. Since 1990, in the typical election for an open alumni trustee seat the Council nominates threecandidates for whom alumni can vote, or four nominees if two seats are to be elected.12 For example, although the Alumni Council 's authority to nominate candidates for alumni trustee positions derivesfrom a delegation of authority from the Association of Alumni to the Alumni Council, the official slate is selectedprimarily through a collaborative process between the Board of Trustees' Nominating and Governance Committeeand the Nominating Committee of the Alumni Council, rather than independently by alumni.

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freedom and fiduciary duty) at Dartmouth, The 1891 Agreement's goal was to ensure goodgovernance and wise use of alumni contributions in an era when College administrators and life-appointed trustees recklessly managed the Coilege's finances and neglected its academics.e Asthe Association's minutes of June 24,1891noted, the Association and the Board believed thatallowing alumni to elect half the trustees would "create and preserve the live, constant, activeinterest of the alumni in the college and their cooperation in its affairs," ushering in "a new era ofprosperity for the College," and "a warrner interest and closer relation between the Board ofGovernment and the Alumni would strengthen the college, and promote its welfare andusefulness."l0 The Agreement unquestionably achieved these goals.

Alumni trustee candidates may be placed on the ballot by nomination by the AlumniCouncil ("Council"), or by "petition" with 500 alumni signatures.l' This second method is theonly route to election not substantially controlled by the Dartmouth administration, the Board'sGovernance Committes, or the Council, which effectively operates as an arm of the Board andadministration in making its nominations.12 Because of high hurdles to qualify for the ballot andthe alumni's measured use of the option, petition trustee candidacies are rare and successfulefforts rarer still. Historically, the availability of petition trustee candidacies has served as asafety valve: alumni elect petition trustees to effect change when the College strays from itsmission. In 1980, after a decade of turmoil, the alumni elected Dr. John Steel III as petition

e Petition !f 7; LEoN BuRR RIcHARDSoN, HrsroRy oF DARrMourH CoLLEGE,578-79 (1932).r0 Meeting of the Dartmouth Association of Alumni , supra n. '1 .t' The Alumni Council is an unelected body of class and regional College officers and heads of varous "affinitygroups," which was created by but is distinct from the Association. The Association is elected by and represents theentire alumni body. Since 1990, in the typical election for an open alumni frustee seat the Council nominates threecandidates for whom alumni can vote, or four nominees if two seats are to be elected.12 For example, although the Alumni Council's authority to nominate candidates for alumni trustee positions derivesfrom a delegation of authority from the Association of Alumni to the Alumni Council, the official slate is selectedprimarily through a collaborative process between the Board of Trustees' Nominating and Governance Committeeand the Nominating Committee of the Alumni Council, rather than independently by alumni.


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Professor Zywicki's April 2009 removal made that threat, previously hypothetical, 16real. 17 The threat of removal by the trustees encourages an unhealthy groupthink, a "go along toget along" mentality, and chills exercise of independent judgment and performance of fiduciaryduty properly defined. Culminating in the board-packing plan two years ago that destroyedparity and relegated alumni-elected trustees to permanent minority status, the Board's mountingdisdain for student and alumni input has finally realized its end-point: a token minority ofalumni-elected Board members serve at the pleasure of the Board majority.

The majority consolidated its extraordinary illegitimate power in still other ways. Itrewrote the Trustee Charge as a veritable loyalty oath designed, in part, to limit trustees' abilityto use their own best judgment in executing their duties and to silence public expression ofdissenting viewpoints. 18 The version adopted by the Board on June 7, 2007 judges trusteebehavior by standardless criteria. For instance, it requires trustees to "act in the best overallinterest of Dartmouth" and to "[r]epresent Dartmouth positively in words and deeds, particularlyand proactively to Dartmouth constituents"-requirements defined ad hoc by arbitrary Boarddiscretion. 1 9 This great irony apparently escaped the Board - that the highest governing

"head-to-head" election contests-reinstating a system virtually identical to that abandoned in 1990. An amendmentto the alumni constitution ratified the Board's mandated changes. The Board offered no justification for its assertedbeliefthat approval voting was unfair or that the mandated alternative was superior. In fact, substantial expertcommentary concludes the opposite. See Robert Z. Norman, A Look at the Trustee Voting System, THE DARTMOUTH(March 27, 2007), available at http://thedartmouth.com/2007/03/27/opinionJlook; Robert 1. Weber, Approval Voting,91. ECON. PERSPECTIVES 39 (1995); MAxWELL 1.STEARNS&TODD J. ZYWICKI, PUBLIC CHOICE CONCEPTS ANDApPLICATIONS IN LAW, Chapter 3, Appendix A (online supplement) (2009) (analyzing and comparing efficiency ofalternative voting regimes). These facts strongly suggest that the Board's motivation was to frustrate petition trusteecandidacies, not to improve the actual fairness of the voting system.16 Reelection of trustees was a routine matter before the election of the petition trustees and the Board had neverpreviously denied a trustee reelection, although it had attempted to deny Dr. Steel his seat, as described supra n. 13.1 7 See Letter from Todd Zywicki to The Men and Women of Dartmouth (Apr. 13J 2009), at App. 13.18 Following the 2007 changes the Charge is now titled the' Statement on Governance and Trustee Responsibilities."19 A February 2007 draft would have added that trustees must "[e'[xercise substantial self-restraint from taking apublic position on issues prior to Board opportunity for deliberation or action," "[rjefrain from engaging in anyactivity that causes, or may be reasonably foreseen to cause, damage to Dartmouth," and "[p)ublicly support Boarddecisions." In addition to mandating public "support" even from trustees who conscientiously disagree, the Chargeincluded a prior restraint on speech, a notion at war with the performance of fiduciary duty properly understood. Dr.Rodgers secured a confidential legal opinion regarding the illegality of the proposed Charge, and the Board, after

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Professor Zywicki's April 2009 removal made that threat, previously hypothetical,l6real.tT The threat of removal by the trustees encourages an unhealthy groupthink , a"go along toget along" mentality, and chills exercise of independent judgment and performance of fiduciaryduty properly defined. Culminating in the board-packing plan two years ago that destroyedparity and relegated alumni-elected trustees to permanent minority status, the Board's mountingdisdain for student and alumni input has finally rcalized its end-point: a token minority ofalumni-elected Board members serve at the pleasure of the Board majority.

The majority consolidated its extraordinary illegitimate power in still other ways. Itrewrote the Trustee Charge as a veritable loyalty oath designed, in part, to limit trustees' abilityto use their own best judgment in executing their duties and to silence public expression ofdissenting viewpoints. ls The version adopted by the Board on June 7 ,2007 judges trusteebehavior by standardless criteria. For instance, it requires trustees to "act in the best overallinterest of Dartmouth" and to "[r]epresent Dartmouth positively in words and deeds, particularlyand proactively to Dartmouth constituent5"-sqrilsments defined ad hoc by arbitrary Boarddiscretion. te Thir great irony apparently escaped the Board - that the highest governing"head-to-head" election contests-reinstating a system virtually identical to that abandoned in 1990. An amendmentto the alumni constitution ratified the Board's mandated changes. The Board offered no justification for its assertedbelief that approval voting was unfair or that the mandated alternative was superior. In fact, substantial expertcommentary concludes the opposite. See Robert Z. Norman, A Look at the Trustee Voting System, THE DARTMOUTH(March 27,2007), available at http://thedartmouth.com/2007103/27/opinion/look; Robert J. Weber, Approval Voting,9 J. EcoN. PERSPECTTVES 39 (1995); MAXWELL L. STEARNS & TODD J. ZywrcKr, Puelrc CHorcr CoNCEprs ANDAPPLICATIoNS IN LAw, Chapter 3, Appendix A (online suppement) (2009) (analyzing and comparing efficiency ofalternative voting regimes). These facts strongly suggest that the Board's motivation was to frustrate petition trusteecandidacies, not to improve the actual fairness of the voting system.16 Reelection of trustees was a routine matter before the election of the petition trustees and the Board had neverpr a trustee 13.'t Todd zytt oo7 chan ies."le 7 draft wpublic position on issues prior to Board opportunity for deliberation or action," "fr]efrain from engaging in anyactivity that causes, or may be reasonably foreseen to cause, damage to Dartmouth," and "[p]ublicly support Boarddecisions." In addition to mandating public "support" even from trustees who conscientiously disagree, the Chargeincluded a prior restraint on speech, a notion at war with the performance of fiduciary duty properly understood. Dr.Rodgers secured a confidential legal opinion regarding the illegality ofthe proposed Charge, and the Board, after


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authority at an institution of higher learning had gagged its own members from participating inwhat Justice Holmes described as a free marketplace of ideas. See Abrams v. United States, 250u.s. 616,630 (1919) (Holmes, 1, dissentingj.i' '

Presumably relying on these vague, unexplained guidelines, the majority forced ProfessorZywicki off the Board. Under rules adopted by the majority, the reelection of trustees initiallyelected by Alumni in democratic elections is decided behind closed doors. Professor Zywickihas been given no explanation, no tally of the secret vote, and no opportunity to learn the chargesagainst him. Dr. Rodgers has written publicly that during the trustees' deliberations on ProfessorZywicki's reelection-a process he characterized as a "kangaroo court"-many factuallyincorrect statements were made, which Professor Zywicki had no opportunity to rebut."

The danger in the vague Trustee's Charge is manifest in its application to ProfessorZywicki in contrast to non-petition trustees. One likely factor in Professor Zywicki's expulsionwas a speech he made at an academic conference two years earlier in which he criticized theboard-packing plan and opined on the declining state of higher education and growing threat ofmal-administration. By contrast, trustees who asserted that Dartmouth was harmed by alumnielections were not disciplined.r' Even more telling, the Board's crackdown on independenttrustees has brought adverse publicity, criticism from commentators on governance, two alumnilawsuits, and the alienation ofthousands of alumni and donors. Yet a majority of trustees have

criticizing and threatening disciplinary action against Dr. Rodgers for discussing confidential Board matters with hisown attorney, backed down from the worst of these proposed changes, avoiding a public fiasco.20 Holmes wrote that "when men have realized that time has upset many fighting faiths, they may come to believeeven more than they believe the very foundations of their own conduct that the ultimate good desired is betterreached by free trade in ideas -- that the best test of truth is the power of the thought to get itself accepted in thecompetition of the market, and that truth is the only ground upon which their wishes safely can be carried out. That,at any rate, is the theory of our Constitution." Id.21 TJ. Rodgers, Op-Ed, Hang One, Warn a Thousand, THEDARTMOUTH,Apr. 22, 2009, available athttp://thedartmouth.com/2009/04/22/opinion/rodgers, at App. 16-17.22 The Board also took no action against trustees who criticized the petition trustees at Dartmouth events, butdisciplined Zywicki for his remarks about the Board at an academic conference before a non-Dartmouth audience.

8

authority at an institution of higher learning had gagged its own members from participating inwhat Justice Holmes described as a free marketplace of ideas, See Abrams v. United States,250U.S. 616, 630 (1919) (Holmes, J., dissenting).20

Presumably relyng on these vague, unexplained guidelines, the majority forced ProfessorZywicki off the Board. Under rules adopted by the majority, the reelection of trustees initiallyelected by Alumni in democratic elections is decided behind closed doors. Professor Zywickihas been given no explanation, no tally of the secret vote, and no opportunity to leam the chargesagainst him. Dr. Rodgers has written publicly that during the trustees' deliberations on ProfessorZywicki's reelection-a process he characterized as a "kangaros ss1f"-6any factuallyincorrect statements were made, which Professor Zywicl


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persuaded themselves that such actions were consistent with the Board's mandate to "representDartmouth positively in words and deeds" and were taken "in the overall best interests ofDartmouth." The majority conflated fealty to itself with the interests of the College.

By any honest measure of fiduciary duty properly defined, the performance of the fourrecently elected petition alumni trustees has benefited Dartmouth. They share a commitment torenewing an emphasis on undergraduate education, making Dartmouth affordable, guaranteeingfreedom of speech, and reducing the size and improving the effectiveness of the bureaucracy.They share a willingness to criticize the administration in Dartmouth's interest. Their messageresonated with alumni. The alumni in 2004 shared Dr. Rodgers' anger that the Board hadeliminated the College's swimming and diving teams instead of cutting burgeoning, unnecessaryadministrative costs. Dr. Rodgers advocated eliminating a speech code imposed by PresidentJames Wright and Dean James Larimore.23 After election, Dr. Rodgers concluded thatDartmouth's teaching was underfunded: the College heavily relied on temporary teachers, therewere many oversubscribed classes, and hence education plans of certain majors were disrupted.

Upon election, Dr. Rodgers worked with trustees and administrators and achieved repealof the speech code in part by publicizing the issue.24 The petition trustees met with professors inthe College's most over-subscribed departments to discuss how to reduce the problem, andfaculty hiring was accelerated. Professor Zywicki made undergraduate education a major plankin his electoral platform, and as a trustee he advocated for, and achieved, the creation of aStanding Committee on Academic Excellence and Mission.

23 The statements at issue are available at http://www.thefire.org/public/pdfs/5622_3832.pdf.24 Letter from Robert B. Donin, General Counsel, Dartmouth College, to David French, President, Foundation forIndividual Rights in Education (FIRE) (May 2, 2005), at http://www.thefire.org/public/pdfs/5619_3830.pdf. As aresult of the change, Dartmouth received FIRE's "green light" ranking regarding free speech and academicfreedom-the only Ivy League institution to hold that distinction.

9

persuaded themselves that such actions were consistent with the Board's mandate to "representDartmouth positively in words and deeds" and were taken "in the overall best interests ofDartmouth." The majority conflated fealty to itself with the interests of the College.

By any honest measure of fiduciary duty properly defined, the performance of the fourrecently elected petition alumni trustees has benefited Dartmouth. They share a commitment torenewing an emphasis on undergraduate education, making Dartmouth affordable, guaranteeingfreedom of speech, and reducing the size and improving the effectiveness of the bureaucracy.They share a willingness to criticizethe administration in Dartmouth's interest. Their messageresonated with alumni. The alumni in2004 shared Dr. Rodgers' anger that the Board hadeliminated the College's swimming and diving teams instead of cutting burgeoning, unnecessaryadministrative costs. Dr. Rodgers advocated eliminating a speech code imposed by PresidentJames Wright and Dean James Larimore.23 After election, Dr. Rodgers concluded thatDartmouth's teaching was underfunded: the College heavily relied on temporary teachers, therewere many oversubscribed classes, and hence education plans of certain majors were disrupted.

Upon election, Dr. Rodgers worked with trustees and administrators and achieved repealof the speech code in part by publicizing the issue.2a The petition trustees met with professors inthe College's most over-subscribed departments to discuss how to reduce the problem, andfaculty hiring was accelerated. Professor Zywicki made undergraduate education a major plankin his electoral platform, and as a trustee he advocated for, and achieved, the creation of aStanding Committee on Academic Excellence and Mission.

23 The statements at issue are available at http://www.thefire.org/public/pdfs/5622_3832.pdf.'o Letter from Robeft B. Donin, General Counsel, Darlmouth College, to David French, President, Foundation forIndividual Rights in Education (FIRE) (May2,2005),at http://www.thefire.org/public/pdfs/5619_3830.pdf. As aresult of the change, Dartmouth received FIR-E's "green light" ranking regarding free speech and academicfreedom-the only Ivy League institution to hold that distinction.


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The petition trustees attempted to exercise financial oversight, working to stem runawaygrowth of expenses so as to avoid layoffs. Unfortunately, many of their warnings weredisregarded. Dartmouth is in dire need of financial oversight. During the 2008-2009 financialcrisis, Dartmouth's endowment lost 23 percent of its value." and its bond rating has recentlybeen downgraded due to "operating deficits, a decline in the college's endowment, and its debt10ad.,,26 These serious financial problems are the result, in part, of governance weaknesses onthe Board, including conflicts of interest created by Board members from the finance industrywhose firms provide investment management services to Dartmouth" Dartmouth is "one of themost disconcerting cases in this respect" among the New England schools examined in a 2010Tellus Institute study.28 Since Professor Zywicki's removal the Board appointed yet anotherCharter Trustee whose firm manages a significant Dartmouth investment.i" Professor Zywickiattempted to address the issue of such conflicts of interest with the Board's InvestmentCommittee during his last year on the Board.

The petition trustees have not been mere oppositionists; they have pointed out problemsand proposed solutions. Alumni responded to this active role by their elected representativeswith a remarkable 38-percent turnout in an alumni constitutional referendum, and the decade-plus downward trend in the percentage of alumni giving to the Dartmouth Fund reversed in 2004,when Dr. Rodgers was elected.

25 CENTER FOR SOC IA L PHI LANTHROPY, T ELLU S IN STI TU TE , EDUCATIONAL ENDOWMENTS ANDTHE F INANC IA LC RIS IS : S OC IA L C OST S A ND SY ST EM IC R IS KS IN T HE S HA DOW B AN KIN G S YS TEM 14 (2010), a thttp://www.tellus.orgipublications/files/endowmentcrisis.pdf.26 S co tt C ar ls on , Dartmouth College, Its Bond Rating Downgraded, Takes On More Debt, THE CHRON IC LE O FH IGHER EDUCAT ION , Ma y 2 6,2 00 9, a va il ab le o nlin e a t h ttp :/ /c hr on ic le .c om / new s/a rt ic le /6 53 1/ da rt mo ut h- co ll eg e-its-bond-rating-downgraded-takes-on-m ore-debt. A ccording to one calculation, the deterioration in its rating w illcost D artm outh $400,000 to $800,000 in increased in terest expenses. Seehttp://www.dartblog.com/data/2009/05/008602.php.27 CENTER FOR SOC IA L PHI LANTHROPY, supra n. 25 , at 40-41.28Id. at 41 .29Id. at 41 ,54 (concerning management of Dartmouth funds by W illiam Helman IV 's venture capital firm G reylockPartners).

10

The petition trustees attempted to exercise financial oversight, working to stem runawaygrowth of expenses so as to avoid layoffs. Unfortunately, many of their warnings weredisregarded. Dartmouth is in dire need of financial oversight. During the 2008-2009 financialcrisis, Dartmouth's endowment lost 23 percent of its value ,2s and its bond rating has recentlybeen downgraded due to "operating deficits, a decline in the college's endowment, and its debtload."26 These serious financial problems are the result, in part, of governance weaknesses onthe Board, including conflicts of interest created by Board members from the finance industrywhose firms provide investment management services to Dartmouth.2T Dartmouth is "one of themost disconcerting cases in this respect" among the New England schools examined in a 2010Tellus Institute study.28 Since Professor Zywicki's removal the Board appointed yet anotherCharter Trustee whose firm manages a significant Dartmouth investment,2e Professor Zywickiattempted to address the issue of such conflicts of interest with the Board's InvestmentCommittee during his last year on the Board,

The petition trustees have not been mere oppositionists; they have pointed out problemsand proposed solutions. Alumni responded to this active role by their elected representativeswith a remarkable 38-percent tumout in an alumni constitutional referendum, and the decade-plus downward trend in the percentage of alumni giving to the Dartmouth Fund reversed in 2004,when Dr. Rodgers was elected." CENTER FoR SoctAL PHILANTHRoPv, TELLUS INSTITUTE, EuucRrtoN.L ENoowtvlNTS AND THE FtNANctALCntsrs: Socr.r- Cosrs eNo Sysrsurc RrsKS rN THE SHADov/ BANKING SysrEM V (2010), athttp: / ww w .te I lus. orglpubl icati ons/fi les/endowmentcrisis.pdf.'o Scott Carlson, Dartmouth Cotlege, Its Bond Rating Downgraded, Takes On More Debt,'IltrCHRoNIcLE oFHIGHER EDUCATION, |y'.ay 26,2009, available online at http://chronicle.com/news/articlel653l/dartmouth-college-its-bond-rating-downgraded-takes-on-more-debt. According to one calculation, the deterioration in its rating willcost Darlmouth $400,000 to $800,000 in increased nterest expenses. Seehttp://www.darlblog.com/ data/2009 /05/008602.php.'' Ceure R FoR SoctAL PHtLANTHRopy, supra n.25, ar 40-47.t' Id. at 4r." Id. at4l, 54 (concerning management of Dafimouth funds by William Helman IV's venture capital frrm GreylockPartners).

10


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The petition trustees' attempts to address the College's problems resulted in the Boardmajority seeing them as the enemy. Peter Fahey, the trustee whom Dr. Rodgers succeeded,called them a "radical cabal" trying to "hijack" the College. One reason for this hostile treatmentis the growing belief that Board seats should be awarded to financial largesse rather than to skilland a commitment to governance. On August 7, 2007, charter trustee Brad Evans told studentleaders that positions on the Board should be reserved for alumni who can donate large amounts,arguing that a major problem of petition candidate success was that it took seats from largedonorsr'" At the September 7,2007 meeting at which the Board-packing plan was instituted, theBoard was informed that overall alumni giving had been rising since the election of petitiontrustees and that the College's capital campaign was "over performing" in smaller gifts, though"under performing" with regard to "principal" gifts of five million dollars and larger over fiveyears. Despite a large body of evidence to the contrary, it was speculated that governance issueswere discouraging a few large donors." The Board's solution to this imagined problem was toabolish parity and aim to fill charter trustee Board seats with large donors. The Board was awarethat the decision would be unpopular with alumni, as indeed it was: a 2007 poll by theAssociation found that 92 percent of alumni supported parity.32 The Board cynically hoped thatan anticipated decrease in alumni contributions resulting from the elimination of parity could beoffset by rich new Board members.

30 David Nachman, Student Leaders Meet Trustee, SUPERDARTMOUTH(Aug. 7,2007), available athttp://superdartmouth.blogspot.coml2007/08/student-Ieaders-meet-trustee.html. Charter trustee Pamela Joynerstated more brazenly that a seat on the Board "should be a reward for your largesse."31 Letter from Dr. Rodgers (May 11,2007) at App. 18 effectively rebuts the view that the petition trustees harmDartmouth. Amicus notes that the Trustee Charge requires that trustees "[sJerve Dartmouth as a whole, rather thanthe interests of any constituency," presumably including the large donor constituency. The Board's willingness toconflate, and even subordinate, governance issues (as opposed to programmatic decisions) to the appeasement of aparticular constituency demonstrates the Board majority's inconsistent application of stated principles.32 Letter from Frank Gado, Bert Boles, Tim Dreisbach, David Gale, Alex Mooney, and Marji Grant Ross, DartmouthAssociation of Alumni Executive Committee, to Dartmouth Alumni (Mar. 12, 2008), at App. 24.

11

The petition trustees' attempts to address the College's problems resulted in the Boardmajority seeing them as the enemy. Peter Fahey, the trustee whom Dr. Rodgers succeeded,called them a "radical cabal" trying to "hijack" the College. One reason for this hostile treatmentis the growing belief that Board seats should be awarded to hnancial largesse rather than to skilland a commitment to govemance, On August 7,200J, charter trustee Brad Evans told studentleaders that positions on the Board should be reserved for alumni who can donate large amounts,arguing that a major problem of petition candidate success was that it took seats from largedonors.30 At the September 7,2007 meeting at which the Board-packing plan was instituted, theBoard was informed that overall alumni giving had been rising since the election of petitiontrustees and that the College's capital campaign was "over performing" in smaller gifts, though"under performing" with regard to "principal" gifts of five million dollars and larger over fiveyears. Despite a large body of evidence to the contrary, it was speculated that governance issueswere discouraging a few large donorr.3' Th. Board's solution to this imagined problem was toabolish parity and aim to fill charter trustee Board seats with large donors. The Board was awarethat the decision would be unpopular with alumni, as indeed it was: a2007 poll by theAssociation found that 92 percent of alumni supported paty.32 The Board cynically hoped thatan anticipated decrease in alumni contributions resulting from the elimination of parity could beoffset by rich new Board members.

30 David Nachman, Student Leaders Meet Trustee, SuppR DnnrMourH (Aug. 7, 2007), available athttp://superdarlmouth.blogspot.com/2007/08/student-leaders-meet-frustee.html. Charter trustee Pamela Joynerstated more brazenly that a seat on the Board "should be a reward for your largesse."t' Letter from Dr. Rodgers (May 11,2001) at App. 18 effectively rebuts the view that the petition trustees harmDafmouth. Amicus notes that the Trustee Charge requires that trustees "[s]erve Dartmouth as a whole, rather thanthe interests of any constituency," presumably includingthe large donor constituency. The Board's willingness toconflate, and even subordinate, governance issues (as opposedto programmatic decisions) to the appeasement of aparticular constituency demonstrates the Board majority's inconsistent application of stated principles.t'Leter from Frank Gado, Bert Boles, Tim Dreisbach, David Gale, Alex Mooney, and Marji Grant Ross, DartmouthAssociation of Alumni Executive Committee, to Dartmouth Alumni (Mar.72,2008), at App.24.l1


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Commentators on governance have widely criticized the actions of the Board majority.As THEWALLSTREETJOURNALwrote in an editorial on September 11, 2007, the Board's choiceto destroy parity was motivated by a desire to suppress genuine oversight: "the independenttrustees were willing to dissent from the insular uniformity of modern higher education, so theyhad to be neutered before they might actually make a difference.Y' Similarly, discussing theBoard's dismissal of Zywicki, Anne Neal, President of the American Council of Trustees andAlumni, wrote: "The academy's runaway costs, diffuse curricula, and disconnect from thepublic's concerns have everything to do with the go-along-get-along mindset that prevails ongoverning boards. That mindset must change.r''" Shortly after institution of the board-packingplan, distinguished Dartmouth economics professor Meir Kohn wrote that the elimination ofparity had to be understood in the context of the peculiar problems of nonprofit governance:

It is not that administrative misbehavior is unusually bad at Dartmouth. What isunusual is the ability of Dartmouth alumni to elect to the board some trustees nothand-picked by the administration. This peculiarity offered a potential mechanismof governance, and a number of alumni were sufficiently public-spirited to try toturn this potential into reality .... With remarkable brutality, the administrationand its friends on the board have acted to neutralize it. Contrary to thepronouncements of the Ministry of Truth, the board did not vote to strengthengovernance at Dartmouth: it voted to prevent it. With this avenue cut off, weremain without any effective mechanism of governance. There is therefore noconstraint on the potential misbehavior ofthis or any future administration.35

In fact, despite the self-serving claims of the Board majority, virtually the entire reform agendathey imposed-a larger, less-transparent, less-independent Board ties more closely tointerlocking financial relationships between trustees and the institution and run more tightly by asmall group of executive committee members-squarely contradicts the best practices

33 Editorial, Dartmouth Diminished, The Wall Street Journal (Sept. 11,2007), available athttp://online.wsj.com/article/SB 118947940651923528.html, at App. 26.34 Anne D. Neal, OpEd, Firedfor Doing His Job, THEWASHINGTONEXAMINER(May 27, 2009), available athttp://www.washingtonexaminer.comiopinion/columns/OpEd-ContributorlFired-for-doing-his-job-46270992.html.35 Meir Kohn, OpEd, ExtraCurricular, THEDARTMOUTHOct. 3, 2007), available ath ttp ://th ed ar tm ou th .c om /2 00 7 II 0 10 3/0 pin io nlk oh n/.

12

Commentators on governance have widely criticized the actions of the Board majority,As THe Wlt SrRepr JouRNeL wrote in an editorial on September 11,2007, the Board's choiceto destroy parity was motivated by a desire to suppress genuine oversight: "the independenttrustees were willing to dissent from the insular uniformity of modern higher education, so theyhad to be neutered before they might actually make a difference."33 Similarly, discussing theBoard's dismissal of Zywicki. Anne Neal, President of the American Council of Trustees andAlumni, wrote: "The academy's runaway costs, diffuse curricula, and disconnect from thepublic's concerns have everything to do with the go-along-get-along mindset that prevails ongoveming boards. That mindset must change."34 Shortly after institution of the board-packingplan, distinguished Dartmouth economics professor Meir Kohn wrote that the elimination ofparity had to be understood in the context of the peculiar problems of nonprofit govemance:

It is not that administrative misbehavior is unusually bad at Dartmouth, What isunusual is the ability of Dartmouth alumni to elect to the board some trustees nothand-picked by the administration. This peculiarity offered a potential mechanismof governance, and a number of alumni were sufhciently public-spirited to try toturn this potential into reality. . . .With remarkable brutality, the administrationand its friends on the board have acted to neutralize it. Contrary to thepronouncements of the Ministry of Truth, the board did not vote to strengthengovernance at Dartmouth: it voted to prevent it. With this avenue cut off, weremain without any effective mechanism of governance. There is therefore noconstraint on the potential misbehavior of this or any future administration.3s

In fact, despite the self-serving claims of the Board majority, virtually the entire reform agendathey imposed-a larger, less-transparent, less-independent Board ties more closely tointerlocking financial relationships between trustees and the institution and run more tightly by asmall group of executive committee members-squarely contradicts the best practices33 Editorial, Dartmouth Diminished,The Wall Street Journal (Sept. 11,200'7), available athttp ://onl ine. wsj. com/arti cle/S B I 1 894794 0 6 5 1923 528.html, at App. 26.'o Anne D. Neal, OpEd, Firedfor Doing His Job,TutWASHINcroN ExAMINER (May 27,2009), available athttp://www.washingtonexaminer.com./opinion/columns/OpEd-Contributor/Fired-for-doing-his-job-46270992.html." Meir Kohn, OpEd, ExtraCunicular,THEDARTMouTH (Oct. 3, 2007), available athttp://thedartmouth.com/2 007 I I 0 I 03 I opinion/kohn/.

t2


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recommended by experts in non-profit governance since the enactment of the Sarbanes-Oxleylaw, especially in higher education.i"

Dartmouth alumni are legendary for commitment, and their ability to elect half the Boardhas fed this loyalty-as the framers of the 1891 Agreement predicted. That governance structureworked for more than a century, enabling Dartmouth to become the nation's finest college.VThe Board has sought to excuse dismantling this structure with a claim that recent trusteeelections have become "divisive," as ifpublic debate of big issues, like the balance betweenresearch and teaching, is harmful. In fact, publicly available figures show that the petitiontrustees have not decreased alumni support/" The Board's transfer of oversight power, oncevested in 69,000 intelligent alumni, to a hand-picked Governance Committee of five at theexpense of the College's contractual promise-that Dartmouth would be led by those who loveit-is bad governance and against public policy.II. Recognition of the Plaintiffs as Third-Party Beneficiaries of the 1891 Agreement is

Legally Required, Appropriate, and in the Public InterestUniversity governance is beset by an inherent structural problem that results in the

systematic promotion of the interests of permanent constituencies-faculty and administration-at the expense of the interests of transient students. In for-profit corporations, accountability toshareholders restricts management and employees from pursuing self-interest at the corporation'sexpense. In the university setting, by contrast, the attenuated ownership of the organizationcreates potential for faculty and administration to effectively operate the institution for theirrather than the students' benefit. As a result, faculty have become the defacto owners of the

36 Sheri Qualters, "Non profits Scramble Under New Scrutiny," The National Law Journal, Vol. 30, No.1, p.I, Sept.3,2007.37 In the latest u . s . News & World Report rankings, Dartmouth is No.1 in the category, "Best Colleges:Undergraduate Teaching at National Universities." See http://colleges.usnews.rankingsandreviews.comibest-colleges/national-ut-rank.38 See Rodgers' letter, supra n. 31.

13

recommended by experts in non-prof,rt governance since the enactment of the Sarbanes-Oxleylaw, especially in higher education.36

Dartmouth alumni are legendary for commitment, and their ability to elect half the Boardhas fed this loyalty-as the framers of the 1891 Agreement predicted. That governance structureworked for more than a century, enabling Dartmouth to become the nation's finest college.3TThe Board has sought to excuse dismantling this structure with a claim that recent trusteeelections have become "divisive," as if public debate of big issues, like the balance betweenresearch and teaching, is harmful. In fact, publicly available figures show that the petitiontrustees have not decreased alumni support.3s The Board's transfer of oversight power, oncevested in 69,000 intelligent alumni, to a hand-picked Governance Committee of five at theexpense of the College's contractual promise-that Dartmouth would be led by those who loveit-is bad governance and against public policy.il. Leeally Required. Appropriate. and in the Public Interest

University governance is beset by an inherent structural problem that results in thesystematic promotion of the interests of permanent constituencies-faculty and administration-at the expense ofthe interests oftransient students. In for-profit corporations, accountability toshareholders restricts management and employees from pursuing self-interest at the corporation'sexpense. In the university setting, by contrast, the attenuated ownership of the organizationcreates potentiai for faculty and administration to effectively operate the institution for theirrather than the students' benefit. As a result, faculty have become the de faclo owners of the36 Sheri Qualters, "Nonprofits Scramble Under New Scrutiny," The National Law Journal, Vol. 30, No. 1, p.l, Sept.3,2001,37 In the latest U.S. News & I(orld Reporl rankings, Dartmouth is No. 1 in the category, "Best Colleges:Undergraduate Teaching at National Universities." See http://colleges.usnews.rankingsandreviews.com,/best-col leges/nati onal-ut-rank.38 See Rodgers' letter, supra n. 37.

l3


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academic enterprise, resulting in a tendency for professors to offload teaching responsibilitiesonto poorly-paid inexperienced graduate students and to force curriculum and teachingrequirements to conform to their parochial intellectual interests, even at America's leadinginstitutions." Burgeoned by the past decade's roaring endowment returns, administrators haveobtained near- absolute control over budgetary and operational decisions, leading to a dramaticincrease in the size and expense of university administrations-by one estimate administrativespending grew two to three times as rapidly as educational expenditures from 1995-2004.40

Given the systemic biases of university operations, trustees bear substantial responsibilityto oversee self-dealing by these entrenched permanent constituencies. They often fail abysmallyat this task. Neglecting energetic oversight, trustees defer to presidents and administrators. AsJose A. Cabranes, ajudge on the Second Circuit Court of Appeals, former General Counsel ofYale University, and a veteran of four prominent university boards has noted, trustees, who areoften business executives, "prefer to be the sort of trustees that they would hope to have on theirown boards"-that is, "'team players' who do not disturb the peace of the executive.,,41 Trusteesare often chosen on the basis of friendship and promises of financial support to the currentpresident, a process that tends to self-select regime loyalists. Presidents of private universities,for example, frequently serve on boards' nominating and governance committees, a practice

39 See H AR RY LEWIS , E XC EL LE NC E W IT HO UT A SO UL : H ow A G REA T U NIV ER SITY FO RG OT H IG HE R ED UC ATIO N(2006); A NTH ON Y K RO NM AN , ED UCA TIO N'S EN D: W HY O UR C OLLEG ES A ND U NIV ER SITIES H AV E G IV EN U P O N T HEM EA NIN G O F L IF E (2008 ); M AR TIN A ND ER SO N, IM PO ST ER S IN T HE T EM PL E (1 992).40 See D aniel L. B ennet, Bureaucrat U, FORBES (July 13,2009) (citing study by the Delta Cost Project using U .SDepartment of Education data), available at http:/ /www.forbes.com/forbes/2009/0713/opinions-coIIege-tuit ion-teachers-on-m y-m ind .htm l; Z yw icki, supra n. 4 (com paring "empire bu ilding" tendencies of un iversityadm inistrations to governm ent bureaucracies).41 Jo se C ab ra ne s, Myth and Reality of University Trusteeship in the Post-Enron Era, FO RD HAM LAW R EV IEW V ol.76, 966 (2007).

14

academic enterprise, resulting in a tendency for professors to offload teaching responsibilitiesonto poorly-paid inexperienced graduate students and to force curriculum and teachingrequirements to conform to their parochial intellectual interests, even at America's leadinginstitutions.3e Burgeoned by the past decade's roaring endowment returns, administrators haveobtained near- absolute control over budgetary and operational decisions, leading to a dramaticincrease in the size and expense of university administrations-by one estimate administrativespending grew two to three times as rapidly as educational expenditures from 1995-2004.40

Given the systemic biases of university operations, trustees bear substantial responsibilityto oversee self-dealing by these entrenched permanent constituencies. They often fail abysmallyat this task. Neglecting energetic oversight, trustees defer to presidents and administrators. AsJose A. Cabranes, a judge on the Second Circuit Court of Appeals, former General Counsel ofYale University, and a veteran of four prominent university boards has noted, trustees, who areoften business executives, "prefer to be the sort of trustees that they would hope to have on theirown boards"-that is, "'team players' who do not disturb the peace of the executive."al Trusteesare often chosen on the basis of friendship and promises of financial support to the currentpresident, a process that tends to self-select regime loyalists. Presidents of private universities,for example, frequently serve on boards' nominating and govemance committees, a practice

3e .See H.RRy LEwrs, ExcELLENCE WltHout e Sour-: How A Gneer UNIVERSTTv FoRGor HIcHER EouclrtoN(2006); ANTHoNv KRoNMAN, EDUCATToN's ENn: WHv OUR CoLLEcES AND UNrvERSrrrES n.vp GrvpN Up oN rHEMEANTNG oF LrFE (2008); MARTTN ANDERSON, IMposrERS rN rHE TEMPLE (1992).a0 See Daniel L. Bennet, Bureaucrat U, FoRBES (July 13, 2009) (citing study by the Delta Cost Project using U.SDepartmentofEducation data),availableathpillwww.forbes.com/forbes/200910713/opinions-college-tuition-teachers-on-my-mind.html; Zywicki, suprq n.4 (comparing "empire building" tendencies of universityadministrations to government bureaucracies).o' Jose Cabranes, Myth and Reality of University Trusteeship in the Post-Enron Era, FORDHAM LAw Rvlew Vol.76,966 (2007).l4


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condemned in public corporations and at public universities because of its potential for abuse butwhich prevailed at Dartmouth until the petition trustees objected.Y

Board members frequently are not only major donors, but count their alma maters asmajor clients. Such conflict-of-interest transactions may chill oversight and add tooverinvestment in risky assets such as those that led to Dartmouth's liquidity crisis, a shortfallrecently requiring $560 million in bond financing.l'' The Tellus Institute's Center for SocialPhilanthropy has recently concluded that Dartmouth's "deep dependence on trustees' ownbusinesses for endowment management seems disproportionate.?" The devastating results aresuffered by the "students, faculty, staff, alumni, and local communities" who "bear the severestsocial and economic consequences" of such poor govemance.Y The Tellus Institute determinedthat 275 jobs have been lost in the Upper Valley since 2008 as a result of Dartmouth's financialdifficulties, resulting in estimated annual economic losses of more than $30 million-a numberwhich does not account for the "wider social costs" of Dartmouth's endowment decline.46 TheTellus Institute's dramatic conclusions are, sadly, not surprising to amicus and other observers ofproblems in Dartmouth's governance in recent years, as the role of independent board oversighthas been diminished and even trivialized as Board members are pressured to be team players anddiscouraged from casting a critical eye on the Board itself.

The unique governance structure erected by the 1891 Agreement created checks andbalances that historically helped insulate Dartmouth from these baleful trends. Vigorous alumni

involvement provides an unbiased, long-term, educated approach that counterbalances the self-42 See Letter from Anne Neal, President, American Council of Trustees and A lumni (ACTA), to ExecutiveCommittee, Dartmouth Association of Alumni 2 (July 30, 2007), at App. 28. Ms. Neal notes that Dartmouth'sPresident even participated in the germ ination of the Board-packing plan, which would determ ine how futuretrustees w ould be selected .43 See Carlson, supra n. 26; CENTER FOR SOCIAL PH ILANTHROPY , supra n. 25.44 CENTER FOR SOCIAL PH ILANTHROPY , supra n. 25, at 41.45Id. at 12.46Id. at 6l.

15

condemned in public corporations and at public universities because of its potential for abuse butwhich prevailed at Dartmouth until the petition trustees objected.a2

Board members frequently are not only major donors, but count their alma maters asmajor clients. Such conflict-of-interest transactions may chill oversight and add tooverinvestment in risky assets such as those that led to Dartmouth's liquidity crisis, a shortfallrecently requiring $560 million in bond hnancing.a3 Th" Tellus Institute's Center for SocialPhilanthropy has recently concluded that Dartmouth's "deep dependence on trustees' ownbusinesses for endowment management seems disproportionale."44 The devastating results aresuffered by the "students, faculty, stafi alumni, and local communities" who "bear the severestsocial and economic consequences" of such poor governance,45 The Tellus Institute determinedthat275 jobs have been lost in the Upper Valley since 2008 as a result of Dartmouth's financialdifficulties, resulting in estimated annual economic losses of more than $30 million-a numberwhich does not account for the "wider social costs" of Dartmouth's endowment decline.o6 TheTellus Institute's dramatic conclusions are, sadly, not surprising to amicus and other observers ofproblems in Dartmouth's governance in recent years, as the role of independent board oversighthas been diminished and even lurivialized as Board members are pressured to be team players anddiscouraged from casting a critical eye on the Board itself.

The unique governance structure erected by the 1891 Agreement created checks andbalances that historically helped insulate Dartmouth from these baleful trends. Vigorous alumniinvolvement provides an unbiased, long-term, educated approach that counterbalances the self-a2 SeeLetter from Anne Neal, President, American Council of Trustees and Alumn (ACTA), to ExecutiveCommittee, Dartmouth Association of Alumni 2 (July 30,2007), at App. 28. Ms. Neal notes that Dartmouth'sPresident even participated in the germination of the Board-packing plan, which would determine how futuretrustees would be selected.4.3 See Carlson> supra n. 26; CetreR FoR SocIAL PHILANTHRO py, supra n.25.oo CENTEn roR SoctAL PHILANTHRO py , supra n. 25 , al 4l .ot Id. at 12.46\d, at6l.

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interest of faculty and administrators, and the tendency toward lax oversight by trustees. Alumniare thus the stakeholders who are most analogous to shareholders in public corporations.YAlumni have the experience and knowledge to be vigorous, intelligent advocates forundergraduate education and to bring a broader perspective to governance." At Dartmouth,parity has created a unique institution: an Ivy League college where undergraduate educationremains the central mission. Parity serves the interests of Dartmouth as well as those of highereducation generally by preserving this alternate, salutary governance model.

The Superior Court's grant of summary judgment in this case was in error for the reasonsdescribed in the brief of Appellants, and also because the lower court failed to give anyconsideration to the fundamental public policy implications of allowing Dartmouth'sadministration to make a game-changing assault on a power structure that has served Dartmouth,and indirectly the state of New Hampshire, well for more than a century. The small state hasbeen able to produce and nurture an academic institution of international prominence andimportance in part due to the support and oversight of Dartmouth's alumni, which has ensuredDartmouth's prosperity and, through the oversight mechanism provided by parity, its excellence.The destruction of parity is a devastating loss for Dartmouth, and for New Hampshire. Theimplications of that loss must playa role in the outcome of a case of paramount publicimportance. Sound public policy concerns support the conclusion that non-profits with multi-billion dollar endowments, thousands of employees, and a massive economic impact should havemore, not less, oversight from truly independent trustees. A hand-picked majority of trustees,

47 Harvard Dean Harry Lewis has similarly argued that Harvard's alumni-elected Board of Overseers should engagein more vigorous oversight and cease "functioning as the University's honorees and cheerleaders rather thangovernors." See LEWIS,supra n. 39 at 263.48 For instance, when Zywicki was elected to the Board, he became the only full-time academic serving on theBoard, offering a perspective that alumni quite reasonably thought relevant to the Board's responsibilities. Sincethen, the alumni have elected Stephen Smith, another full-time academic.

16

interest of faculty and administrators, and the tendency toward lax oversight by trustees. Alumniare thus the stakeholders who are most analogous to shareholders in public corporations.aTAlumni have the experience and knowledge to be vigorous, intelligent advocates forundergraduate education and to bring a broader perspective to governance.os At Dartmouth,parity has created a unique institution: an Ivy League college where undergraduate educationremains the central mission. Parity serves the interests of Dartmouth as well as those of highereducation generally by preserving this alternate, salutary govemance model.

The Superior Court's grant of summary judgment in this case was in error for the reasonsdescribed in the brief of Appellants, and also because the lower court failed to give anyconsideration to the fundamental public policy implications of allowing Dartmouth'sadministration to make a game-changing assault on a power structure that has served Dartmouth,and indirectly the state of New Hampshire, well for more than a century, The small state hasbeen able to produce and nurture an academic institution of international prominence andimportance in part due to the support and oversight of Dartmouth's alumni, which has ensuredDartmouth's prosperity and, through the oversight mechanism provided by parity, its excellence,The destruction of parity is a devastating loss for Dartmouth, and for New Hampshire. Theimplications of that loss must play a role in the outcome of a case of paramount publicimportance. Sound public policy concerns support the conclusion that non-profits with multi-billion dollar endowments, thousands of employees, and a massive economic impact should havemore, not less, oversight from truly independent trustees. A hand-picked majority of trustees,a7 Harvard Dean Harry Lewis has similarly argued that Harvard's alumni-elected Board of Overseers should engagein more vigorous oversight and cease "functioning as the University's honorees and cheerleaders rather thangovernors." See LEwtS, supra n. 39 at 263 .a8 For instance, when Zywlckiwas elected to the Board, he became the only full-time academic serving on theBoard, offering a perspective that alumni quite reasonably thought relevant to the Board's responsibilities. Sincethen, the alumni have elected Stephen Smith, another full-time academic.

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many whose firms earn millions of dollars every year from managing the College's investments,should not be allowed to simply abrogate independent oversight by fiat.

This Court must consider the public policy implications when deciding whether torecognize Plaintiffs as third-party beneficiaries of the 1891 Agreement with the right toenforcement unless the alumni vote specifically to give up these rights. A beneficiary of apromise is an intended beneficiary "if reco gnition of a right to performance in the beneficiary isappropriate to effectuate the intention of the parties and ... the circumstances indicate that thepromisee intends to give the beneficiary the benefit of the promised performance." Restatement(Second) of Contracts 302(1 )(b). 49 An intended beneficiary has standing to bring an action toenforce the promise. ld. 304 ("A promise in a contract creates a duty in the promisor to anyintended beneficiary to perform the promise, and the intended beneficiary may enforce theduty.") To take the second part ofthe Restatement's test first, history makes it clear that theAssociation of Alumni, to which Dartmouth made a promise in the 1891 Agreement, intended togive the benefit of that promise to individual alumni. Dartmouth promised that "the graduates ofthe College" could "nominate a suitable person for election" to trusteeship.i'' The Association'srole was to provide a vehicle for election, but the Association itself was never given the power toelect trustees without the participation of the alumni themselves. The power to vote-to electhalf of Dartmouth's trustees and have a voice in governance-was intended to be held andexercised by each individual alumnus. The benefit of Dartmouth's promised performance was

intended for alumni individually, not for the Association of Alumni. Indeed, because the49 New Hampshire follows the Restatement (Second) of Contracts. See, e.g., Grossman v. Murray, 144 N.H. 345,348 (1999). The test that it outlines is therefore the applicable test for purposes of New Hampshire law.50 The Association's notes, contemporaneously adopting the Agreement, state that the Board's "resolves," includingthe guarantee that alumni could "nominate a suitable person for election," "were adopted on the part of the Boardwith the clear understanding and assurance ... that the persons so nominated by the Alumni will be elected by theBoard to such Trusteeships." Meeting of the Dartmouth Association of Alumni, supra n. 7. Thus, while thelanguage of the resolution speaks of nomination, the alumni are the actual electors of alumni trustees and the Boarddoes not have the choice under the contract's terms to refuse to "elect" the trustees chosen by alumni.

17

many whose firms earn millions of dollars every year from managing the College's investments,should not be allowed to simply abrogate independent oversight by fiat,

This Court must consider the public policy implications when deciding whether torecognize Plaintiffs as third-party beneficiaries of the 1891 Agreement with the right toenforcement unless the alumni vote specifically to give up these rights. A beneficiary of apromise is an intended beneficiary "if recognition of a right to performance in the beneficiary isappropriate to effectuate the intention of the parties and . , . the circumstances indicate that thepromisee intends to give the beneficiary the benefit of the promised performance ," Restatement(Second) of Contracts $ 302(1)(b).ae An intended beneficiary has standing to bring an action toenforce the promise. Id. 304 (*A promise in a contract creates a duty in the promisor to anyintended beneficiary to perform the promise, and the intended beneficiary may enforce theduty.") To take the second part of the Restatement's test first, history makes it clear that theAssociation of Alumni, to which Dartmouth made a promise in the 1891 Agreement, intended togive the benefit of that promise to individual alumn| Dartmouth promised that "the graduates ofthe College" could "nominate a suitable person for election" to trusteeship.50 The Association'srole was to provide a vehicle for election, but the Association itself was never given the power toelect trustees without the participation of the alumni themselves. The power to vote-to electhalf of Dartmouth's trustees and have a voice in governance-was intended to be held andexercised by each individual alumnus. The benefit of Dartmouth's promised performance \Masintended for alumni individually, not for the Association of Alumni, Indeed, because theon New Hampshire follows the Restatement (Second) of Contracts. See, e.g.,Grossman v. Murray, 144 N.H. 345,348 (1999). The test that it outlines is therefore the applicable test for purposes of New Hampshire law.50 The Association's notes, contemporaneously adoptlng the Agreement, state that the Boardis "resolves," inctudingthe guarantee that alumni could "nominate a suitable person for election," "were adopted on the part of the Boardwith the clear understanding and assurance . . . that the persons so nominated by the Alumni will be elected by theBoard to such Trusteeships." Meeting of the Dartmouth Associaton of Alumni, supra n.7. Thus, while thelanguage of the resolution speaks of nomination, the alumni are the actual electors of alumni trustees and the Boarddoes not have the choice under the contract's terms to refuse to "elect" the trustees chosen by alumni.

17


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Association is a non-corporate entity, only individual alumni can be the true beneficiaries of the1891 Agreement. The contract itself only makes sense as a contract made and administered onbehalf of individual alumni as the true parties to whom the benefit of the contract flowed, andthose alumni should have the right to enforce the benefit of the bargain. In fact, much of theconsideration to be provided to Dartmouth was for individual alumni to act or refrain fromaction, in addition to the actions of the Association. It is because the alumni gained a personalstake in Dartmouth's governance in the 1891 Agreement that they have reacted with such loyaltyand generosity. Dartmouth graduates have provided almost all of the $2.6 billion endowmentand provide, extraordinarily, over 40 percent of Dartmouth's expenses yearly.

The first part of the test for whether the alumni are intended beneficiaries of the 1891Agreement asks if "recognition of a right to performance in the beneficiary is appropriate toeffectuate the intention of the parties." Restatement (Second) of Contracts 302(1)(b) (emphasisadded). The Agreement is clear that the intention of the parties was to give alumni a voice inDartmouth's future in exchange for their support. The Association not only does not vote for orselect trustees, it also does not make contributions to the College and does not serve as a vehiclefor, or exercise any control over, contributions by alumni. The fact that both the benefit of a votefor trustees and the obligation to support the College are held by individual alumni establishesthat recognition of an alumni right to enforce the Agreement is appropriate.

The test for appropriateness also invites a broader inquiry. The use of the term"appropriate" signals the influence of Professor Corbin in preparation of the SecondRestatement. JOHNE. MURRAY,JR., CORBINONCONTRACTS,Vol. 9 44.4 n. 5 (Rev. ed. 2007):

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Association is a non-corporate entity, only individual alumni can be the true beneficiaries of the1891 Agreement. The contract itself only makes sense as a contract made and administered onbehalf of individual alumni as the true parties to whom the benefit of the contract flowed, andthose alumi should have the right to enforce the benefit of the bargain. In fact, much of theconsideration to be provided to Dartmouth was for individual alumni to act or refrain fromaction, in addition to the actions of the Association. It is because the alumni gained a personalstake in Dartmouth's governance in the 1891 Agreement that they have reacted with such loyaltyand generosity. Dartmouth graduates have provided almost all of the $2.6 billion endowmentand provide, extraordinarily, over 40 percent of Dartmouth's expenses yearly.

The first part of the test for whether the alumni are intended beneficiaries of the 1891Agreement asks if "recognition of a right to performance in the beneficiary is appropriate foeffectuate the intention of the parties." Restatement (Second) of Contracts $ 302(1)(b) (emphasisadded). The Agreement is clear that the intention of the parties was to give alumni a voice inDartmouth's future in exchange for their support. The Association not only does not vote for orselect trustees, it also does not make contributions to the College and does not serve as a vehiclefor, ot exercise any control over, contributions by alumni. The fact that both the benefit of a votefor trustees and the obligation to support the College are held by individual alumni establishesthat recognition of an alumni right to enfor