Transparent GMU v. George Mason Univ.

835 S.E.2d 544

TRANSPARENT GMU, et al.

v.GEORGE MASON UNIVERSITY, et al.

Record No. 181375

Supreme Court of Virginia.

December 12, 2019

Evan D. Johns (Appalachian Mountain Advocates, on briefs), for appellants.

Toby J. Heytens, Solicitor General (Mark R. Herring, Attorney General; Michelle S. Kallen, Deputy Solictor General; Carrie S. Nee, Senior Assistant Attorney General; David G. Drummey, Senior Assistant Attorney General; Brittany M. Jones; Brian Walther, on brief), for appellee George Mason University.

Matthew A. Fitzgerald, Richmond (Sean F. Murphy ; McGuireWoods, Tysons, on brief), for appellee George Mason University Foundation, Inc.

Amici Curiae: The Brechner Center for Freedom of Information, Student Press Law Center, National Freedom of Information Coalition, Society of Professional Journalists, Reporters Committee for Freedom of the Press, and the George Mason University Chapter of the American Association of University Professors (Leslie Paul Machado ; LeClairRyan, Alexandria, on brief), in support of appellants.

Amicus Curiae: The Virginia Coalition for Open Government (Christopher E. Gatewood ; Threshold Counsel, Richmond, on brief), in support of appellants.

Amicus Curiae: The Virginia Business Higher Eduation Council (Edward J. Fuhr, Richmond; Eric H. Feiler ; Johnathon E. Schronce, Richmond; Hunton Andrews Kurth, on brief), in support of appellees.

Amici Curiae: The Alumni Association of the University of Virginia, the College Foundation of the University of Virginia, the Jefferson Scholars Foundation, the University of Virginia Darden School Foundation, the University of Virginia Investment Management Company, and the University of Virginia Law School Foundation (John P. O’Herron ; ThompsonMcMullan, Richmond, on brief), in support of appellees.

PRESENT: All the Justices

OPINION BY JUSTICE CLEO E. POWELL

Transparent GMU and Augustus Thomson (collectively, "Transparent") appeal from the judgment of the Circuit Court of Fairfax County ("circuit court") dismissing with prejudice its first amended verified petition for writ of mandamus. Transparent sought to obtain donor information under the Virginia Freedom of Information Act ("VFOIA"), Code §§ 2.2-3700 et seq ., from George Mason University ("GMU") and the George Mason University Foundation, Inc. ("the Foundation"). The questions before us on appeal involve whether the Foundation, a privately held corporation, established to raise funds and manage donations given for the benefit of GMU, is subject to VFOIA. We conclude that the Foundation’s records are not subject to disclosure under VFOIA.

I. BACKGROUND

A. History of GMU

In 1949, an exploratory committee, in conjunction with the University of Virginia ("UVA"), was formed to assist in creating a demand for higher education in Northern Virginia. In 1955, UVA’s Board of Visitors approved the establishment of a branch college to serve Northern Virginia. The General Assembly thereafter enacted legislation establishing the George Mason College of the University of Virginia ("the College") "subject to the supervision, management, and control of the [UVA] Rector and Visitors." 1959 Acts ch. 60 [H 59] (Apr. 27, 1959).

The College opened in Fairfax County as a two-year institution in 1964. Due to the rapidly increasing population in Northern Virginia, UVA requested that the General Assembly authorize the College’s expansion into a four-year institution. In 1966, the General Assembly approved the request and the College became a four-year degree-granting institution while remaining under UVA’s direction. 1966 Acts ch. 68 [H33] (Mar. 1, 1966).

In 1972, George Mason University officially separated from UVA and became its own public institution of higher education. 1972 Acts ch. 550 [H210] (Apr. 7, 1972). The General Assembly included GMU in the Code as an "educational institution[ ]" and "public [body] ... as [a] governmental instrumentalit[y] for the dissemination of education." Code § 23-14 (now Code § 23.1-1101 ).

Today, GMU continues to operate as a public institution of higher education and is managed by a board of visitors whose members are appointed by the Governor. Code §§ 23.1-1500, -1501. In addition to conferring degrees and managing GMU’s academic programming, "[t]he board shall appoint all teachers, staff members, and agents and fix their salaries and generally direct the affairs of [GMU]." Code § 23.1-1503(A). The General Assembly encourages all of the Commonwealth’s public institutions of higher education "to increase their endowment funds and unrestricted gifts from private sources and reduce the hesitation of prospective donors to make contributions and unrestricted gifts." Code § 23.1-101(1). As relevant to the issues before us in this case, each public institution of higher education is further authorized by the General Assembly to "[c]reate or continue the existence of one or more nonprofit entities for the purpose of soliciting, accepting, managing, and administering grants and gifts and bequests, including endowment gifts and bequests and gifts and bequests in trust." Code § 23.1-1010(3).

B. History of the Foundation

The George Mason College Foundation, Inc. ("College Foundation") was incorporated by three local businessmen and members of the College’s Advisory Committee in February 1966, just prior to the General Assembly’s acceptance of the College as a four-year degree granting branch of UVA. The College Foundation’s Articles of Incorporation listed the three men as members of the initial Board of Trustees who would manage the College Foundation during its first year of operation. The College Foundation’s stated purposes of accepting gifts and donations was "exclusively educational and charitable." The College Foundation was "operated exclusively to receive, hold, invest and administer property and to make expenditures to or for the benefit of [the College]." In addition, the College Foundation "promote[d] the advancement and further[ed] the aims and purposes of [the College] ... as an institution of higher education by the development and application of financial resources." The Board of Trustees approved Bylaws for the College Foundation in November 1966.

Two years after the creation of GMU, in 1974, the George Mason College Foundation officially changed its name to "The George Mason University Foundation, Inc." On October 30, 1991, Articles of Incorporation signed by Carrington Williams created "The George Mason University Educational Foundation, Inc." ("Educational Foundation").¹ These Articles of Incorporation gave the Educational Foundation the authority to issue 1,000 shares of common stock to the George Mason University Foundation.

On July 1, 1992, the George Mason University Foundation transferred over $21 million in assets to the Educational Foundation in exchange for all of the Educational Foundation’s shares of stock. This transfer represented all of the George Mason University Foundation’s assets other than the telecommunications assets of Capitol Connection and F Corporation. The George Mason University Foundation became "The George Mason University Instructional Foundation, Inc." in August 1993. In October 1993, the Educational Foundation was renamed to The George Mason University Foundation, Inc. (the current Foundation).

Today, the Foundation continues to operate as a private non-stock corporation organized under the laws of Virginia. The Foundation and GMU regularly enter into a series of contractual arrangements, one of which is the Affiliation Agreement. The Affiliation Agreement governs the relationship between GMU and the Foundation wherein they "acknowledge that each is an independent entity." The Affiliation Agreement also provides that "[GMU] recognizes that the Foundation is a private corporation with the authority and obligations to keep all records and data confidential with the requirements of law." The Affiliation Agreement confirms the Foundation’s purpose as caretaker and manager of funds from private donors intended to benefit GMU, in accordance with the intent of those donors. GMU also acknowledges that the Foundation controls the decision of whether to accept or reject donor gifts.

C. Circuit Court Proceedings

On April 5, 2017, Transparent filed VFOIA requests with GMU and the Foundation seeking the following:

For the years of 2008 through 2012, any grants, cooperative agreements, gift agreements, contracts, or memoranda of understanding (including any attachments thereto) involving a contribution to or for [GMU] from any of [several charitable foundations under Charles Koch, Claude R. Lambe, and David Koch].

GMU responded that it did not have any of the requested records in its possession. The Foundation responded that it was not a public body and its records were not public records subject to VFOIA.

Transparent thereafter filed a verified petition for mandamus, injunctive, and declaratory relief ("original petition") against GMU and the Foundation. Among the theories for relief, Transparent asserted that "[a]s an alter-ego of [GMU], the Foundation must be considered a public body subject to [VFOIA], and the Foundation and/or [GMU] therefore denied [Transparent] their rights under [VFOIA] by failing to adequately process their request." Transparent claimed that GMU delegated "important public functions" to the Foundation and GMU "continues to exercise control over these functions," including establishing policies for the Foundation’s acceptance of gifts and fund disbursement, providing the salary for the Foundation’s president and Chief Executive Officer, and requiring the Foundation to consult with GMU "regarding the Foundation’s fund-raising and donor acquisition programs and the Foundation’s gift management and gift acceptance policies." Transparent further alleged that "at all relevant times, [GMU] and the Foundation have acted as a single entity," and that GMU’s employment of the Foundation as an alter-ego denied their VFOIA rights.

GMU and the Foundation...