Thursday, December 6, 2018

University asks for, and gets, mediation agreement with its foundation that might settle lawsuits

Photo by Miles Maguire

A foundation official said he was optimistic but cautious about the outcome of scheduled negotiations.
By Miles Maguire
The legal battle between the UW Oshkosh Foundation and the University of Wisconsin System Board of Regents may be coming to a close as both sides have agreed to mediation.

The two parties are scheduled to meet Dec. 21.

A pair of unfavorable court rulings, a looming deposition of UW Oshkosh Chancellor Andrew Leavitt and the defeat of Republican Gov. Scott Walker all could be factors pushing the regents to look for a resolution.

“They approached us to see if we would be willing to sit down,” said Tim Mulloy, the chairman of the foundation.  

He said he was “optimistic” that a settlement could be reached, but he also expressed caution about the outcome of the negotiations.

Neither the university nor the UW System would comment on the mediation plan.

One reason for optimism is that the scope of the differences between the two sides has been greatly reduced. In addition the foundation has said that it would be willing to transfer ownership of two campus buildings that it owns to the university if the state would pay off about $8 million in outstanding debt.

Both buildings are being used by the university without charge. The foundation says they are worth far more than $8 million based on their cost of construction, but the UW System has not conceded this point.

If the building transfer occurred, the foundation would be able to exit bankruptcy, and the university would have complete control over these facilities.

A stumbling block is language in the current state budget that says that UW System regents cannot transfer funds to the foundation without legislative approval.

The mediation was ordered Dec. 6 by U.S. District Judge William C. Griesbach based on a joint agreement between the foundation and the board of regents.

Griesbach also issued an order that blocks the foundation from collecting on a judgment it has won against the state. While ruling for the state, Griesbach acknowledged that the foundation is suffering “reputational harm” and suggested that his temporary order would be no more than a “short stay.”

Griesbach did not rule on the validity of either side’s arguments but only noted that the UW System had more to lose if it was ordered to pay up now but later won on appeal.

Two courts that have delved into the matter have largely rejected the UW System’s legal argument that it does not have to make good on promises from two former university officials.

But Griesbach noted that those two officials face trial on misconduct charges, which “raises serious questions as to their authority to bind the board in the manner alleged.”

If mediation fails, the foundation will return to its plan to force Leavitt to answer questions under oath about his communications with foundation donors. The foundation alleges that these communications upended several planned gifts, including one for $2 million in exchange for naming rights to the school’s Alumni Welcome and Conference Center.

Foundation supporters are hoping that the incoming administration of Gov.-elect Tony Evers will be less interested in pursuing this litigation. But a law passed in early December might subject such a change in legal strategy to review by the legislature.

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