Fraternity Lawsuits against Colgate University
Free Association for Everyone but DKE
Stalinist Russia and the Nanny-state in Hamilton
Coercive Land Grab Portends End of Greek Life
Colgate Views Involved Parents as a Problem
Practical Advice for Fraternities In Free Speech Battles on Campus
Expectations for Fraternity and Sorority members
Congress Weighs
In on Students Rights
Frat Boys at Bay
The National Trend to Eliminate Greek Life
Mu of DKE Amended Complaint
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
Civil Case No.: 05-cv-0245
Judge Gary L. Sharpe
(Magistrate Di Bianco)
SECOND AMENDED COMPLAINT FOR DAMAGES,
INJUNCTIVE AND DECLARATORY RELIEF
(Jury Trial Demanded)
Plaintiffs,
Delta Kappa Epsilon (DKE) Alumni Corporation
c/o Philip J. Wolfenden
66 Wellington Street West
Suite 4200, Toronto Dominion Bank Tower
Box 20, Toronto-Dominion Centre
Toronto, Ontario M5K 1N6
Canada
and
MU of DKE Foundation
110 Broad Street
Hamilton, New York 13346
c/o Thomas P. Halley
2 Walnut Hill Road
Poughkeepsie, New York 12603
and
Sam Higgins, President
Local Chapter of Mu of Delta Kappa Epsilon
108 Broad Street
Hamilton, New York 13346
vs.
Defendants.
Colgate University
c/o 13 Oak Drive
Hamilton, New York 13346
and
Rebecca Chopp, President
Colgate University
13 Oak Drive
301 James B. Colgate Hall
Hamilton, New York 13346
and
John A. Golden
Chair, Colgate Trustees
13 Oak Drive
301 James B. Colgate Hall
Hamilton, New York 13346
I. INTRODUCTION
Plaintiffs’ complaint for injunctive and declaratory relief is based on Colgate’s violations of: (1) federal anti-trust law; (2) the First Amendment of the U.S. Constitution, as applied through common law principles under federal and New York state common law; (3) New York’s General Business Law §349; and (4) New York’s common law, including: (a) implied contract/public policy; and (b) promissory estoppel.
Plaintiffs seek permanent injunctive relief to stop Colgate from: (1) requiring that Colgate own the DKE house as a condition of allowing DKE undergraduates to live there and to be recognized as a fraternity; (2) requiring that DKE give Colgate access to the DKE library and the right of first refusal to buy the DKE library as a condition of selling the DKE house to Colgate; (3) prohibiting DKE and Colgate undergraduates who live in university-owned housing from associating and assembling at the DKE house if Colgate does not own it; (4) prohibiting DKE and Colgate undergraduates who live in university-owned housing from associating and assembling at the DKE library unless Colgate has access to it; (5) otherwise denying DKE undergraduates any rights or privileges enjoyed by other Colgate students because DKE has not sold its house to Colgate or provided it access to the DKE library; and (5) prohibiting Colgate from monopolizing, attempting to monopolize, or conspiring to monopolize the market for residential services to students matriculating on campus at Colgate University in Hamilton, New York. Plaintiffs’ declaratory relief seeks a determination that Colgate’s conduct is illegal on the grounds listed above. Plaintiffs also request applicable damages.
Colgate’s “New Vision for Residential Education” (“New Vision”) requires its students to live in university-owned housing. Colgate is using the plan to put DKE out of the residential services business after almost 150 years.
Although Colgate says DKE need not sell its house under the “New Vision” plan, no DKE undergraduates or Colgate students, even those who choose to live in university-owned housing, will be able to use or to associate at the DKE house unless Colgate owns it. This renders DKE’s house virtually useless and unmarketable.
Colgate’s “New Vision” thus forces DKE to sell its house because Colgate has monopolized the major residential services market in Hamilton, New York and eliminated potential buyers of DKE’s residential services. Colgate can then raise prices for residential services without regard to cost or inflation and without losing any residential services market share.
If DKE fails to sell its house to Colgate, then Colgate will exploit its monopsony power in Hamilton as the major buyer of large residences for residential services to its students and buy the DKE house, which will unlikely survive in Colgate’s monopolized residential market, for far less than market value. This allows Colgate to control the price of available large homes in Hamilton that can be purchased for residential services for its students.
Even in the broader competitive market of other universities with which
it competes for students, Colgate still can exercise monopoly power in
the residential services market because students focus on the sticker
price of tuition when making their consumer choices of competing schools
and they will not likely choose another school over Colgate because its
residential services costs are relatively higher. Colgate thus can raise
its prices for residential services in this broader market without regard
to cost or inflation and not lose students to competing universities.
Finally, Colgate’s restriction that no DKE undergraduate or other
Colgate student living in university-owned housing can use or associate
at the DKE house unless Colgate owns it, or can use or associate at the
DKE library unless Colgate has access to it, violates Colgate’s
enforceable promises to students that, even as a private institution,
Colgate will honor students’ civil and constitutional rights.
II. JURISDICTION AND VENUE
1. This Complaint is filed and this action is instituted under Sections 4 and 16 of the Clayton Act (15 U.S.C. §§15 and 26), for injuries to plaintiffs’ business and property by reason of defendants’ violation of Section 2 of the Sherman Act (15 U.S.C. §2), and to enjoin the defendants from continuing to commit such violation in the future.
2. This Court has jurisdiction over the federal claims pursuant to 28 U.S.C. §1331 and 1337(a). Jurisdiction over the New York common law pendant claims arises under 28 U.S.C. 1367(a). This Court also has jurisdiction over this action pursuant to the Declaratory Judgment Act, 28 U.S.C. §§2201 and 2202.
3. Venue is proper here under 28 U.S.C. §1391(b).
III. PARTIES
4. Plaintiff, Delta Kappa Epsilon Alumni Corporation (DKE Corporation), is a non-profit corporation that runs and maintains the DKE fraternity house. The DKE fraternity house provides residential services to Colgate undergraduates who are members of DKE fraternity. DKE recruits men who combine in equal proportions “the gentleman, the scholar, and the jolly good fellow.” Its members engage in expressive association, including blood drives, fundraising, and community action programs.
5. Plaintiff, MU of DKE Foundation (DKE Foundation), is a non-profit foundation that owns the DKE library next to the DKE fraternity house and owns the DKE house mortgage. The DKE library is a separate building without windows and a bathroom used primarily as a library and an occasional meeting place.
6. Plaintiff, Sam Higgins, is an undergraduate at Colgate and the President of the local Mu Chapter of Delta Kappa Epsilon. He is eligible to live in the DKE house in the 2005-06 academic semester.
7. Defendant, Colgate University (Colgate or the University), is a non-profit corporation primarily with an academic purpose.
8. Defendant, Rebecca Chopp, is Colgate’s President who is appointed by Colgate’s Board of Trustees and is responsible for the conduct and the well-being of the University.
9. Defendant, John A. Golden, is Chairman of Colgate’s Board of Trustees, which has final authority for the conduct of Colgate.
IV. STATUTORY AND LEGAL FRAMEWORK
10. The Sherman Antitrust Act is designed to prevent restraints to free competition in business and commercial transactions which tend to restrict production, raise prices, or otherwise control the market to the detriment of purchasers or consumers. Section 2 of the Act prohibits monopolization or attempted monopolization of “any part of the trade or commerce among the several States.” 15 U.S.C. §2. Congress intended the antitrust laws to apply to a wide array of commercial conduct so as to foreclose unfair business practices wherever they occur. No blanket exemption from the antitrust law based on an organization’s non-profit status or public-service orientation exists.
11. The First Amendment of the U.S. Constitution protects every citizen’s right to engage in expressive association for the advancement of beliefs and ideas. The U.S. Supreme Court has recognized that a private party cannot rely on state action through the courts to enforce what is otherwise unconstitutional. Shelly v. Kraemer, 334 U.S. 1 (1948). New York courts have found private parties who receive state funds and are regulated by the state to be, in appropriate circumstances, state actors. Ryan v. Hofstra University, 67 Misc. 2d 651, 662-63 (N.Y. Sup. 1971).
12. New York’s General Business Law §349 creates a private right of action to enjoin deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in the State of New York. General Business Law §349 applies to colleges and universities. Brown v. Hambric, 168 Misc. 2d 502, 508 (Yonkers Ct. 1995).
13. New York common law recognizes an implied contract between a student and a university based on public policy, and where an academic institution exercises its discretion arbitrarily or irrationally, judicial intervention is warranted.
14. New York common law recognizes promissory estoppel where the following elements exist: (1) a clear and unambiguous promise; (2) reasonable and foreseeable reliance by the parties to whom the promise is made; and (3) an injury sustained and reliance on the promise. Recovery based on promissory estoppel is not dependent on the existence of a contract or the particulars of consideration. A promissory estoppel action arises out of a breached promise in circumstances under which it is fair to hold the promissor to the terms of the promise.
V. FACTS
Colgate’s Structure
15. Colgate is a liberal arts academic institution with approximately 2,800 students and 250 faculty.
16. Colgate’s corporate structure is divided into the Board of Trustees, the President, the Academic Administration, and the non-Academic Administration.
17. The Board of Trustees is a body of thirty-five members. It has final responsibility for the conduct of the University.
18. The President of the University is a member of the Board of Trustees. She is appointed by the Board of Trustees and is responsible to it for the conduct and well-being of the University.
19. The Dean of the Faculty and Provost is the Chief Academic Officer of the University and has primary responsibility for faculty personnel, curriculum, and supervision of instructional budgets. He is the Chief Officer of the University in the President’s absence.
20. The Dean of the College has primary responsibility for all matters relating to students and student activities.
21. The Office of Residential Education is directly in charge of all aspects of the University residence community.
Interstate Trade and Commerce
22. Colgate is engaged in, and the acts and policies described herein,
are in and have a substantial effect on, interstate commerce.
a. Colgate solicits applications from prospective students throughout the United States, including through use of the U.S. mail.
b. Colgate’s student body comes from 48 states and 27 countries.
c. Colgate receives much of its annual revenues from out-of-state students’ tuition.
d. Colgate solicits financial contributions from alumni living throughout the United States, including through the use of U. S. mail.
e. The services provided by Colgate require Colgate to purchase supplies from outside of the State of New York.
23. The elimination of competition in the market for residential services for Colgate students matriculating on campus is likely to result in higher prices being charged to such students, including those students whose expenses are paid by a source outside of the State of New York.
24. Colgate is in the business of providing residential services, including housing, meals and social meeting facilities, to students attending and matriculating at Colgate. Colgate provides at least 70% of the students’ residential services at Colgate.
25. Colgate advertises its tuition ($31,230), room ($3,680) and board ($3,940) separately. Colgate’s college housing or apartments are $4,100 for a room annually.
26. Colgate has five main dining locations that provide food: (1) Frank Dining Hall; (2) The Edge Café; (3) The Coop; (4) Juice Bar; and (5) Donovan’s Pub.
27. Colgate offers six different meal plans: (1) Premier Unlimited ($3,940); (2) Classic Unlimited ($3,310); (3) 14 Meal Dining Plan ($3,310); (4) 10 Meal Dining Plan ($2,625); (5) 5 Meal Dining Plan; and (6) Value Access at the Coop.
28. First year Colgate students must choose the Premier Unlimited plan and upper class students living in traditional residence halls must choose either of the Unlimited plans or the 14 meal plan.
29. Colgate’s residence halls include: (1) Andrews Hall; (2) Bryan Complex (Cobb, Crawshaw, Parke and Russell Houses); (3) Curtis Hall; (4) Cutten Complex (Brigham, Read, Shepardson, and Whitnall Houses); (5) Drake Hall; (6) East Hall; (7) Gate House; (8) Stillman Hall; and (9) West Hall.
30. Colgate University’s apartments include: (1) Newell Apartments (Buildings 1 through 4); (2) Parker Apartments (45 separate apartments); and (3) University Court Apartments (10 buildings with four apartments in each building).
31. Colgate’s college houses include: (1) Asia Interest House; (2) Bunche House; (3) Creative Arts House; (4) Cushman House; (5) Loj; (6) Harlem Renaissance Center (7) French/Italian House; (8) Class of 1934 House; (9) LaCasa Pan-Latina Americana House; (10) 84 Broad Street; (11) 92 Broad Street; (12) 94 Broad Street; and (13) 104 Broad Street.
32. The current fraternity houses at Colgate include: (1) Beta Theta Pi; (2) Delta Kappa Epsilon; (3) Delta Upsilon; (4) Kappa Delta Rho; (50) Phi Delta Theta; (6) Sigma Chi; and (7) Theta Chi. Current sorority houses include: (1) Delta Delta Delta; (2) Gamma Phi Beta; (3) Kappa Alpha Theta; and (4) Kappa Kappa Gamma.
33. Colgate allows 250 seniors to live off campus in non-university owned housing.
34. Colgate restricts the use of automobiles on campus. This restriction requires students to find residential services that are within walking distance from campus.
35. The Bunche House, located at 80 Broad Street, is the former Lambda Chi Alpha fraternity.
36. The Creative Arts House, located at 100 Broad Street, is the former Phi Psi fraternity.
37. The Cushman House, located at 102 Broad Street, is the former Phi Kappa Gamma (Fiji) Annex.
38. 84 Broad Street is the former Sigma Nu fraternity.
39. 92 Broad Street is the former Alpha Tau Omega fraternity.
40. 94 Broad Street is the former Phi Tau fraternity.
41. 104 Broad Street is the former Phi Kappa Gamma fraternity (Fiji).
42. Colgate also owns the Hamilton Initiative, LLC, a shell corporation that, excluding schools, churches and their related properties, owns most of the main commercial properties in downtown Hamilton, New York.
43. Colgate’s most recent Form 990, Return of Organization Exempt from Tax (Form 990), indicates that it owns the Colgate Inn, Palace Theater Night Club, and Hamilton Theater, all of which are located in Hamilton, New York.
44. Colgate’s Form 990 states its revenues from student tuition and fees are $77,381,140 and $16,983,224 from auxiliary operations. Revenue from the Colgate Inn is $2,409,021. Colgate also receives federal fund support in excess of $2 million.
45. The DKE house can accommodate up to 51 student residents. It operates a kitchen with a cook who provides three meals a day to upperclassmen brothers living in and outside of the house. Room rate is $2,185 per semester and board is $1,675 per semester for upperclassmen.
46. The residential services for DKE undergraduates are provided through
a contract between the DKE Foundation and the DKE undergraduates.
Relevant Markets
47. For purposes of this action, the relevant geographic market for Colgate’s residential services and rental properties is the Village of Hamilton, New York and the immediate vicinity.
48. Hamilton, New York has a population of 2,500 people, 300 fewer people than Colgate University’s student population.
49. As advertised on Colgate’s website, for many years, Colgate has been Hamilton’s major industry. Colgate’s website claims that Hamilton has changed little in size or character during the past 100 years.
50. For purposes of this action, relevant product markets are: (1) the provision of residential services to Colgate students matriculating on-campus; and (2) the ownership and operation of rental properties.
51. There is no cross-elasticity of supply or demand between residential services for students matriculating on-campus at Colgate and other residential services for the population generally.
52. There are distinct facilities for residential services for students matriculating on campus at Colgate from which the general population is excluded. Non-Colgate students cannot live in university-owned housing.
53. For the reasons set forth below, among others, Colgate students are unlikely to transfer to another college, and prospective students are unlikely to select a college other than Colgate, in response to increased prices for residential services at Colgate.
a. Students select a college or university based on a variety of factors likely to outweigh differences in the cost of residential services, including without limitation, financial aid, price of tuition, reputation of the school, legacy, curriculum and majors offered, location, sports, extracurricular activities and social atmosphere.
b. Students entering college tend to have imperfect information regarding the quality and cost of college residential services and how each will change over the four or more years they will spend in college.
c. Students enrolled in a college or university are unlikely to transfer to a different school based on the cost of residential services for many reasons, including:i. The large investment of time sunk in researching and applying to the school;
ii. Loss of financial aid;
iii. Non-transferability of credits;
iv. Establishment of relationships with faculty;
v. Social ties.
54. Alternatively, a relevant geographic market for Colgate’s residential services includes similar liberal arts colleges and universities that Colgate competes with for students. These institutions advertise their tuition and room and board separately. Colgate can raise its prices for the residential services in this market over 5% without regard to actual cost or inflation and without affecting its competitive status for students.
55. The differential in the price of tuition between liberal arts colleges with which Colgate competes for students is much less than the price these institutions charge for residential services.
Colgate’s “New Vision” and Restraints of Trade
56. On July 9, 2003, Colgate Board of Trustees Chairperson, John Golden,
announced “A New Vision for Residential Education” for Colgate.
The “New Vision,” a residential initiative, was unanimously
approved by Colgate’s Board of Trustees and publicly endorsed by
President Chopp.
57. The “New Vision” was based on a report done by the Task Force on Campus Culture (“Task Force”) over a two-year period. The Task Force was made up of trustees, faculty, students and administrators.
58. The “New Vision” will focus on providing students with the skills and experience they will need to become active citizens in a democratic society, to be able to build communities, to understand and work with people different than them, to formulate and express opinions, and to organize and lead group efforts.
59. As part of the “New Vision,” Colgate announced its intention to purchase, and to subsequently operate, all fraternity and sorority housing and other residential services at Colgate. This was allegedly based on the Task Force’s recommendations. Neither the Task Force nor the “New Vision” provides grounds specifically addressing why ownership of Greek-lettered houses is the only option to accomplish its purpose.
60. All but one of Colgate’s fraternities and sororities are on Broad Street in Hamilton, New York, interspersed with university-owned houses that also have and provide residential services to Colgate students. Colgate administrators, such as Financial Vice President, David Hale, recognized that Colgate’s purchase of the fraternities would be an emotional issue.
61. Colgate’s “New Vision” can be implemented without the sale of the DKE house or access to its library.
62. At the present time, all university policies, rules, regulations and procedures applicable to the conduct of students living in university-owned housing apply to Colgate undergraduates living in fraternities, including DKE.
63. In the fall of 2003, DKE offered Colgate a long-term lease proposal that would allow Colgate to maintain and operate the DKE house. It also suggested a Colgate resident advisor live in the DKE house. In a letter dated November 14, 2003, Colgate’s Financial Vice-President and Treasurer, David Hale, stated Colgate’s rejection of DKE’s long-term lease option, and demanded outright ownership of the DKE house as the only option.
64. Colgate will only recognize DKE if it owns the DKE house and has access to its library and the right of first refusal to purchase it. DKE undergraduates will not be allowed to enroll at Colgate in the 2005 academic year if they live in a privately-owned DKE house. DKE cannot pledge new members if it does not agree to Colgate’s terms regarding its house and library.
65. Colgate will prevent DKE undergraduates from assembling and associating at the DKE library if DKE does not sell its house and grant access of its library to Colgate.
66. Colgate’s Financial Vice President, David Hale, announced on June 22, 2004 that fraternities that remain privately owned will not be allowed to gather for meals together in their houses, and that the undergraduates who do so will be subject to discipline, including expulsion.
67. If Colgate does not own the DKE house and have access to the DKE library, Colgate intends to discipline or expel any DKE undergraduates who associate or assemble at the DKE house or library, even if the undergraduates live in university-owned housing.
68. Colgate intends to prohibit non-DKE Colgate students living in university-owned housing from using the DKE house or engaging in expressive association there unless Colgate owns the house.
69. Colgate intends to prohibit non-DKE Colgate students living in university-owned housing from using the DKE library or engaging in expressive association there unless Colgate has access to the library.
70. Colgate intends to prohibit non-DKE Colgate students living in university-owned property from using the DKE library or engaging in expressive association there unless Colgate owns the library.
71. If Colgate eliminates fraternities, Colgate students, including DKE undergraduates, will not be allowed to use or to engage in expressive association at the DKE library unless Colgate owns it.
72. Colgate charges upperclassmen students’ higher rates for overall residential services than those charged by DKE.
73. Colgate’s $725,000 offer to purchase the DKE house is below the $1.6 million insurance replacement cost of the DKE house.
74. Colgate is presently constructing a new student dormitory on the south end of Broad Street (N.Y. State Route 12B) near the Colgate infirmary. The facility will accommodate a maximum of 350 upperclassmen in an apartment setting in three separate “quads.”
Effect On Competition
75. Colgate adopted and is implementing its “New Vision” for
the purpose of eliminating competition in the market for student residential
services in and around Hamilton, New York, and the policy is having the
effect of eliminating competition in such market.
76. Colgate, on the verge of eliminating competition for student residential services, is and will be able to exercise market power in its pricing and delivery of residential services to consumers.
77. The elimination of competition in the market for student residential services will result in higher prices to student consumers without regard to cost or inflation.
78. By prohibiting DKE undergraduates who live in university-owned housing from using the DKE house unless Colgate owns it, or from using the DKE library unless Colgate has access to it, Colgate has rendered these facilities useless and diminished their market value. Colgate, as the major buyer of residences in Hamilton, New York used to house Colgate students, will benefit from its monopsony control of the Hamilton real estate market to buy the DKE house and similar houses for below market value.
79. Despite any non-commercial purpose stated by Colgate to the contrary, the true intent of the “New Vision” policy is commercial, as evidenced by Colgate’s refusal to pursue less-restrictive, non-monopolistic means of pursuing Colgate’s purported goals, such as a long-term lease of the DKE house, a Colgate resident advisor, and Colgate’s insistence upon access to and the right to purchase the DKE library, which is a non-residential facility.
80. Colgate’s commercial purpose is also demonstrated by its recognition of three non-residential Greek-lettered organizations, Phi Kappa Tau, Delta Delta Delta, and Kappa Kappa Gamma, for which Colgate intends to add to its residential services. Colgate continues to recognize these three Greek-lettered organizations, for which it intends to provide residential services, but will not recognize DKE if DKE refuses to sell its house to Colgate and provide it access to the DKE library.
81. Colgate’s commercial purpose is further demonstrated by Colgate Trustee Howard Ellins’s statements to Beta Theta Pi alumnus, Richard Greene, at a Colgate informational reception on or about August 13, 2003, in New York City, regarding the sale of fraternity property to Colgate, that “fraternities have no choice.”
82. In a March 5, 2005 comment in the Syracuse Post-Standard, Colgate’s Vice President for Communications and Public Relations, James Leach, alleged Colgate is trying, “to strengthen the Greek system by eliminating underage drinking and other problems that have plagued fraternities in the past few years.”
83. In the past few years, Colgate students living in university-owned housing have engaged in underage drinking.
84. In the past few years, Colgate students living in university-owned housing have engaged in the use of illicit drugs and controlled substances in violation of New York law.
85. Colgate male students living in university-owned housing have engaged in the harassment of female students.
86. On November 11, 2000, four young people lost their lives when an intoxicated underage member of DKE crashed his car into a tree on Oak Drive on the Colgate campus. Colgate points to this incident as one of the reasons for consideration for reform of the Greek-lettered system within the Colgate community.
87. The intoxicated underage driver who crashed his car into the tree on Oak drive on November 11, 2000 was a Colgate student.
88. At the time the intoxicated underage Colgate student crashed his car into a tree on Colgate property on November 11, 2000, Colgate had eliminated its shuttle service to transport students from downtown Hamilton to the Colgate campus.
89. As outlined in its Memorandum of Law in Opposition to Plaintiffs’ Application for an Order to Show Cause and Related Relief, page 2, Colgate believes that DKE’s less “savory” activities from 1985 are “directly relevant” to the parties’ dispute over the “New Vision” and Colgate’s need to reform the Greek-lettered system.
90. One of the incidents of DKE’s “unsavory” activities cited by Colgate is a ledger that was stolen from the DKE temple as a result of a felonious break in of the temple in 1989. The ledger described hazing and other misbehavior in violation of Colgate’s anti-hazing policy that led Colgate to close the DKE house for the 1989-1990 academic year.
91. At the time of the 1989 temple break in, Ann Lane, the Dean of Women’s Studies, knew the identity of the felons who broke into the DKE temple and refused to disclose them. Colgate failed to discipline or otherwise admonish Dean Lane for harboring known felons, or to direct her to disclose their names.
92. Litigation ultimately ensued between Colgate and DKE regarding the 1989 temple break-in and theft of the DKE ledger. Colgate ultimately settled the matter by forgiving a loan DKE owed Colgate and providing DKE with further compensation amounting to a total of approximately $80,000.
93. Colgate students living in university-owned housing have caused “other problems” as stated by Mr. Leach in Paragraph 82 above.
94. Colgate’s Post-Closing Agreement proposal to DKE (Post-Closing Agreement), Terms, Paragraph 8, requires DKE, at its expense, to maintain $1 million in liability insurance. Paragraph 9 of the Post-Closing Agreement requires DKE to indemnify and hold Colgate harmless from liability arising “from and against claims…by reason (sic) the use or occupancy of the Premises by DKE …or [its] invitees.” Colgate thus requires DKE to assume liability, even though it allegedly is buying the DKE house to reduce liability.
95. James Leach’s March 5 Post-Standard comment claims Colgate allegedly wants to strengthen the Greek system.
96. Colgate’s Option to Purchase to DKE, Schedule F, Paragraph 2(i), contemplates a scenario wherein “the fraternity/sorority system at Colgate has been eliminated.”
97. Colgate’s Post-Closing Agreement, Terms, Paragraph 6, gives Colgate “the right to change all requirements, policies, rules and procedures, [governing the Broad Street Community] without prior notice, in its sole discretion.
98. No assurances that DKE or the Greek system will always exist at Colgate are included in Colgate’s Post-Closing Agreement.
99. At its sole discretion, in accordance with the terms of the Post-Closing Agreement, Colgate can withdraw recognition of DKE and other fraternities and sororities at Colgate.
100. At its sole discretion, in accordance with the terms of the Post-Closing Agreement and the “New Vision,” Colgate can use the fraternity and sorority houses it purchases as general university housing for non-Greek lettered persons.
101. Leach’s March 5 Post-Standard comment claims Colgate’s motivation for its residential plan is “to eliminate what we call ‘policy-free zones’ on campus where situations that created problems have occurred in the past.”
102. No actual policy free zones exist at Colgate, including the DKE house and library.
103. Colgate’s Relationship Statement that governs Colgate’s fraternities, Part III, Basic Standards, requires all fraternities to comply with all university rules, regulations, and codes of conduct to remain recognized by the university.
104. Colgate need not buy DKE to hold its undergraduates accountable under the policies outlined in paragraph 103.
105. Colgate’s “New Vision” policy has resulted in Colgate being the sole buyer in the market for rental properties in and around Hamilton, New York, allowing Colgate to make “take-it-or-leave-it” below-market price offers to DKE and other Colgate fraternities and sororities.
106. The majority of available renters for residential services in Hamilton, New York are Colgate students and other members of the Colgate community who outnumber Hamilton residents.
Colgate’s Promises And Representations To Its Fraternities
107. As part of its formulation of the “New Vision,” the Colgate
trustees concluded that fraternities and sororities are an important part
of Colgate’s history and traditions and promised to preserve them.
The Trustees decided not to eliminate fraternities and sororities at Colgate.
108. Colgate’s “New Vision” acknowledges a strong tradition of Greek-lettered organizations exists at Colgate, dating back to 1856. It recognizes that Greek-lettered organizations have historically been an integral part of life at Colgate. Colgate’s trustees, administration, and faculty openly follow these principles.
109. Colgate’s website on fraternities and sororities indicates that joining a Greek-lettered organization is one of the most rewarding commitments one can make in a lifetime. The site declares that the residential aspect is an integral part of the overall Greek experience. Colgate’s trustees, administration, and faculty openly follow these principles.
110. Colgate’s Operating Principles and Standards for Greek-lettered houses (“OPSG”) confirms that fraternity houses are more than physical structures; they embody the traditions, values and history of many of Colgate’s alumni, and Colgate promises to be mindful of its role in preserving their culture. Colgate’s trustees, administration, and faculty openly follow these principles.
111. Colgate’s OPSG promises to respect students’ rights of privacy. Colgate’s trustees, administration, and faculty openly follow these principles.
112. Colgate has established a Relationship Statement with its fraternities. It states that continued recognition of fraternities is based on chapter performance. Nothing in the Relationship Statement requires Colgate’s ownership of a fraternity’s residential structure or its library for continued recognition.
Colgate’s Promises To Its Students
113. Colgate’s Student Handbook 2003-05 (“Handbook”),
title page, states that, “[T]his Handbook is not to be regarded
as a contract between the student and the University.”
114. Colgate’s “Handbook,” Forward section, states that “Colgate is a place where we care about things larger than themselves … We join and belong ….” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
115. Colgate’s Handbook promises to reduce the number of rules governing student behavior.
116. Colgate’s Handbook, Standards of Conduct and Non-Academic Policies, states that, “All members of the Colgate community are expected to adhere to local, state and federal regulations….” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
117. Colgate’s Handbook, Policy on Public Order, states that, “The university is committed to … the discharge of legal and moral responsibilities, especially as they relate to the rights of freedom of speech and peaceful assembly in the University community.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
118. Colgate’s Handbook, Code of Student’s Rights and Responsibilities (“Student Code”), states that, “Students are also members of the community at large, and no enumeration of their rights and responsibilities as students shall be deemed to conflict with rights they enjoy and rightful responsibilities they incur as citizens.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
119. Colgate’s Student Code states that, “[T]he University recognizes the need to protect the inviolability of the students’ personal and civil rights: specifically, the right to be secure in one’s person, speech, living quarters, papers, and effects against unreasonable search and seizure; and the freedom from disciplinary sanction except by due process, with avenues of recourse available when a student claims they have been subjected to prejudicial, discriminatory, or capricious treatment.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
120. Colgate’s Student Code states that, “Pursuit of a liberal education requires an atmosphere conducive to the full and free expression of opinion.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
121. Colgate’s Student Code states that, “Nothing in the Residential Hall contract may expressly or implicitly give the University Officials authority to consent to a search of a student’s room by police or other government officials without a warrant authorized by law.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
122. Colgate’s Student Code states that, “The Dean of the College may authorize a search of a student’s room in a residence hall by members of the University to determine compliance with federal, state, and local criminal law or University regulations where there is a reasonable basis to believe that a violation has occurred or is taking place.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
123. Colgate’s Student Code states that, “When a search of a student’s room has been authorized, it should be done in the presence of that student, or the students in question.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
124. Colgate’s Student Code states that, “In the absence of the student, the Dean or the Dean’s delegate shall have an officer of the living unit or an elected student representative of the association witness the search.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
125. Colgate’s Student Code states that, “When a student has been absent while his or her room was searched, the student shall be informed of the search and the basis for that search.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
126. Colgate’s Student Code states that, “When the appropriate University officials plan to seek access to a student room in a residence hall for improvement or repairs, the occupant shall be notified in advance, although there may entry without notice in emergencies where imminent danger to life, safety, health, or property is reasonably feared.” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
127. Colgate’s Student Code states that, “No student shall be discharged from his/her employment or suffer termination of student aide by the order or request of a University employee without written notice, and an opportunity to be heard by the University employee issuing such an order or request, and a right of appeal to the Dean of the College (or his or her designate).” Notwithstanding the Handbook language outlined in paragraph 113 above, Colgate’s trustees, administration, and faculty openly follow these principles.
128. Colgate’s Residential Education Handbook 2003-04 (“Residential Handbook”), Community Living, promises residential opportunities and experiences that promote the development of self-governance and independent living. The Residential Handbook promises a place for everybody in the Colgate community and guarantees that each individual has the right to be unique, to be heard, to be understood, and to be accepted and respected. Colgate’s trustees, administration, and faculty openly follow these principles.
129. Colgate’s Residential Handbook guarantees a student’s right to privacy and ensures that no unwarranted intrusion or entry into a student’s living space will occur. The Residential Handbook outlines narrow grounds for University staff to enter a student’s living space.
130. Colgate’s “New Vision” includes a Broad Street Community Program (“BSCP”) that promises students greater freedom and more responsibility for their residential communities.
131. Colgate’s BSCP establishes that residential living is fundamental to Colgate’s Greek-lettered organizations. Colgate admits that residents in fraternities are best able to form lasting bonds, live according to their founding principles, and pass on traditions and values to new members in this residential setting. Colgate’s trustees, administration, and faculty openly follow these principles.
132. Colgate’s BSCP promises free standing university-owned houses where the residents will select their own peer groups and govern their residences independently within broad University guidelines.
133. President Chopp has promised that the BSCP will give students the opportunities they want to live with their friends, to govern themselves, and to create lively and diverse social options.
134. The foundation of each house in the BSCP is a community vision plan that is a social contract between the students living in the house and Colgate’s Office of Residential Education.
135. President Chopp promised that junior and senior Colgate students in the Broad Street Community can live with a self-selected group of peers that engage in self-governance.
Colgate’s Promises About The DKE Library
136. On August 14, 2003, at a meeting at the University Club in Manhattan,
New York, convened specifically to discuss DKE and the “New Vision,”
when asked by DKE Foundation Chairman, Thomas P. Halley, whether the DKE
library would have to be part of any sale of the DKE house to Colgate
under the “New Vision,” President Chopp stated emphatically,
“Absolutely not!” Present at this meeting to ratify President
Chopp’s guarantees were Robert Tyburski, V.P. of Colgate Development,
Ruth Ann Loveless, A.V.P. of Alumni Affairs, and Colgate Trustee, Howard
Ellins.
137. The DKE library is a non-residential facility with no windows and no bathroom. It is a separate building on a divisible lot that can be maintained as a separate piece of property.
138. Colgate’s first purchase offer to DKE, dated February 18, 2004, did not expressly make any specific reference to a DKE temple, to a DKE library, or to a DKE chapel.
139. Colgate insists on terms that include the DKE library as part of the sale of the DKE house. The terms require access to the library and a right of first refusal to buy it. Colgate will not recognize DKE after April 20, 2005 if it fails to agree to these terms.
Colgate’s Violation of Implied Contract / Public Policy
140. Colgate has irrationally and arbitrarily required DKE to sell its
house and provide access to its library as a condition of DKE undergraduates’
right to live at the DKE house and to be enrolled at Colgate.
141. Colgate irrationally and arbitrarily intends to prohibit DKE and Colgate undergraduates living in university-owned housing from associating and assembling at the DKE house if it is not university-owned,or from associating at the DKE library if Colgate does not have access to it.
142. Colgate has irrationally and arbitrarily refused to accept DKE’s long term lease arrangement for the DKE house, or a live-in Colgate resident advisor, in lieu of ownership, even though these terms satisfy all of Colgate’s primary objectives under the “New Vision” and the BSCP.
Colgate’s Unconstitutionally Unenforceable Contract
To Limit Expressive Association
143. Colgate’s defense of Plaintiffs’ action here will require
this Court’s state action to enforce Colgate’s unconstitutional
administrative resolution and unilateral contract that prohibit DKE undergraduates
from free speech and expressive association at the DKE house and library
unless they are university-owned.
144. Colgate cannot ultimately prohibit through expulsion DKE undergraduates’ rights of free expression at a privately owned DKE house or library without the state action of this court’s enforcement of these restrictions.
145. Colgate has announced that Greek-lettered organizations that are in good standing and that complete the sale of their properties by April 20, 2005 will be allowed to continue housing in the fall of 2005. Colgate also has announced that the fraternities that have chosen to retain ownership of their properties will not be allowed to house students in the fall of 2005, and that Colgate will withdraw recognition of their undergraduate chapters in the summer of 2005. Colgate has identified DKE as a fraternity that did not reach agreement on the sale of its property.
VI. CAUSES OF ACTION
First Claim for Relief
Monopolization (Sherman Act, Section 2)
146. Plaintiffs incorporate herein all of the allegations set forth above as if fully restated here.
147. Defendants have engaged in the previously described anticompetitive conduct to secure and maintain monopoly power in the relevant markets. As a result of the anticompetitive conduct, Colgate has achieved the power to control prices and willfully exclude competition within the relevant markets in violation of the Sherman Act, 15 U.S.C. Section 2 , resulting in injury to the market and to the Plaintiffs as alleged herein.
148. Colgate’s attempt to acquire DKE and other Colgate fraternity and sorority houses is the result of force and coercion and not a consequence of a superior product, business acumen or accident.
149. Once Colgate monopolizes its fraternity and sorority properties, it will no longer be concerned about the inventory of available housing to students and will be free to increase prices of residential services without regard to cost or inflation or any effect on its market share for undergraduates.
Second Claim for Relief
Attempted Monopolization (Sherman Act, Section 2)
150. Plaintiffs incorporate herein all of the allegations set forth above
as if fully restated here.
151. By engaging in the acts described above, Colgate has engaged in anticompetitive conduct with the specific intent to acquire monopoly power in the relevant markets, in violation of Section 2 of the Sherman Act.
152. There is a dangerous probability that, if left unchecked, Colgate
will achieve a monopoly position in the relevant markets, especially since
Colgate admits it is the primary sponsor of business activity in Hamilton,
New York.
Third Claim for Relief
Monopsony (Sherman Act, Section 2)
153. Plaintiffs incorporate herein all of the allegations set forth above
as if fully restated here.
154. Defendants have engaged in the previously described anti-competitive conduct to secure monopsony power in the relevant markets. Colgate University is a dominant buyer with sufficient power in its purchasing market to be able to control the price offered to DKE for its fraternity house and to other fraternities and sororities for their houses. Student housing is the only practical use for the DKE house and other fraternity and sorority houses, and if the “New Vision” policy is permitted to go into effect, Colgate will be able to dictate artificially low prices for the purchase of such properties.
155. By prohibiting DKE undergraduates and other Colgate students who live in university housing from using the DKE house unless Colgate owns it, Colgate has severely impacted the value of the DKE house property and its marketability.
Fourth Claim for Relief
New York General Business Law §349
156. Plaintiffs incorporate herein all of the allegations set forth above
as if fully restated here.
157. As part of its “New Vision,” Colgate’s trustees concluded that fraternities and sororities are an important part of Colgate’s history and promised to preserve them.
158. Colgate’s “New Vision” includes a Broad Street Community Program (“BSCP”) that establishes that residential living is fundamental to Colgate’s Greek-lettered organizations. Colgate admits that, as residences, fraternities are best able to form lasting bonds, live according to their founding principles, and pass on traditions and values to new members in this residential setting.
159. Colgate’s proposal to purchase the DKE house, made in accordance with the provisions of its “New Vision” and its BSCP, is deceptive because it is intended to ensure DKE’s eventual failure. Colgate’s proposal requires various occupancy minimums of 60% and 80% of capacity that if unmet will allow Colgate to kick DKE off campus and to use the DKE house for other purposes. Historically, even as a private fraternity, DKE has rarely, if ever, been able to meet the occupancy minimums proposed by Colgate.
160. Colgate’s offer to purchase DKE, made in accordance with the “New Vision” and the BSCP, insists on access to the DKE library and an option of first refusal to buy it. This term is deceptive because it is intended to elicit a rejection by DKE, thus providing grounds for Colgate to exclude it from the BSCP and withdraw recognition from DKE as a fraternity.
161. Colgate’s purchase offer, made in accordance with the “New Vision” and the BSCP, causes immediate harm because its severe and unacceptable terms force DKE to reject it and then provide Colgate with grounds to exclude DKE from the BSCP. This fact, combined with Colgate’s directive that no Colgate undergraduate living in university housing can use or engage in expressive association at the DKE house unless Colgate owns it, leads to DKE’s financial ruin and to Colgate’s takeover of the DKE house.
162. As a result of its deceptive scheme, Colgate eventually buys DKE and other fraternity residences at bargain basement prices and, as a non profit institution, Colgate takes these valuable properties off the county property tax rolls and deprives the public at large of recurring annual tax revenues.
Fifth Claim for Relief
Common Law Implied Contract / Public Policy
163. Plaintiffs incorporate herein all of the allegations set forth above
as if fully restated here.
164. Defendants’ demand to include access to and right of first ownership of the DKE library, a non-residential facility, as part of the sale of the DKE house to Colgate, and to prevent the DKE undergraduates from associating in the library unless Colgate has access to it, is an arbitrary, irrational and bad faith act by Colgate that warrants judicial intervention as a matter of implied contract and public policy.
165. Defendants’ requirement that DKE must sell its house and grant access to and right of first ownership of its library to Colgate as a condition of the DKE undergraduates’ rights to live in the DKE house and to be enrolled at Colgate for the 2005 academic year is an arbitrary, irrational, and bad faith act by Colgate that warrants judicial intervention as a matter of implied contract and public policy.
166. Colgate’s recent directive that DKE and other Colgate undergraduates who live in university housing will not be able to use or to engage in expressive association at the DKE house unless Colgate owns it is an arbitrary, irrational, and bad faith act by Colgate that warrants judicial intervention as a matter of implied contract and public policy.
167. Colgate’s recent directive that DKE and other Colgate undergraduates who live in university housing will not be able to use or to engage in expressive association at the DKE library unless Colgate has access to it is an arbitrary, irrational, and bad faith act by Colgate that warrants judicial intervention as a matter of implied contract and public policy.
Sixth Claim for Relief
Promissory Estoppel
168. Plaintiffs incorporate herein all of the allegations set forth above
as if fully restated here.
169. Defendants, through President Chopp, have promised that the DKE library would not be part of a sale of the DKE house to Colgate under the “New Vision.”
170. Notwithstanding any documents published by Colgate that disclaim the formation of a contract, or which allow Colgate to modify the terms of the document, Defendants have published numerous documents containing promises, including the “New Vision” document, and have made numerous public statements, that the “New Vision” is solely a residential initiative. Defendants have promised that the sale of a non-residential facility like the DKE library would not be a condition for the DKE undergraduates to live at the DKE house, or to continue to be enrolled at Colgate, or to associate and assemble at the DKE library.
171. Notwithstanding any documents published by Colgate that disclaim the formation of a contract, or which allow Colgate to modify the terms of the document, Colgate’s trustees, administration and faculty have openly followed constitutional principles of due process, free speech, free association, expressive association, privacy, and unreasonable search and seizure with respect to their conduct toward and treatment of Colgate undergraduates. Colgate’s trustees, administration and faculty have openly recognized and honored Colgate students’ constitutional and civil rights, even though Colgate is a “private” institution.
172. Plaintiffs have relied on the Colgate administration’s and faculty’s promises, representations, and conduct regarding Colgate students’ constitutional and civil rights to their detriment by remaining Colgate students and have been injured as a result.
173. Notwithstanding any documents published by Colgate that disclaim the formation of a contract, or which allow Colgate to modify the terms of the document, Colgate’s trustees, President Chopp, and the Colgate administration have recognized and honored the history of fraternities at Colgate since 1856, and have promised to preserve them in a meaningful way. Colgate’s unrealistic, take-it-or-leave-it proposals to buy the DKE house are designed to assure DKE’s rejection of Colgate’s offer and DKE’s eventual demise for not being part of the “New Vision.”
174. Plaintiffs have relied on the Colgate trustees’, President Chopp’s, and the Colgate administration’s promises regarding Colgate’s intent to preserve DKE to their detriment and have been injured as a result.
VII. PRAYER FOR RELIEF
175. WHEREFORE, Plaintiffs pray that the Court:
a. Permanently enjoin Colgate from requiring that it own the DKE house as a condition of allowing DKE undergraduates to live there and to be recognized as a fraternity.
b. Permanently enjoin Colgate from requiring that DKE give Colgate unrestricted access to the DKE library and the right of first refusal to buy the DKE library as a condition of selling the DKE house to Colgate.
c. Permanently enjoin Colgate from prohibiting DKE undergraduates who live in university-owned housing from associating and assembling at the DKE house or library if these structures are not sold to Colgate.
d. Permanently enjoin Colgate from otherwise denying DKE undergraduates any rights or privileges enjoyed by other Colgate students because DKE has not sold its house or library to Colgate.
e. Permanently enjoin Colgate from monopolizing, attempting to monopolize, or conspiring to monopolize the market for residential services to students matriculating on campus at Colgate University in Hamilton, New York.
f. Declare that Colgate’s “New Vision” that requires DKE undergraduates to live in university-owned housing violates Section 2 of the Sherman Antitrust Act and thus is an anti-competitive and illegal restraint of trade.
g. Declare that Colgate’s “New Vision” that denies DKE undergraduates the right to live in the DKE house or to assemble and associate at the DKE house and library as Colgate students unless the structures are university-owned violates The First Amendment of the U. S. Constitution, as applied through Colgate’s defense relying on the state action of this Court’s jurisdiction to enforce otherwise unconstitutional terms of a unilateral contract.
h. Declare that Colgate’s “New Vision” that denies DKE undergraduates the right to live in the DKE house or to assemble and associate at the DKE house and library as Colgate students unless the structures are university-owned violates the implied contract between a private university and its students recognized by New York’s common law in that Colgate’s requirements are irrational, arbitrary and in bad faith.
i. Declare that Colgate is estopped from denying DKE undergraduates the right to live in the DKE house or to assemble and associate at the DKE house and library unless the structures are university-owned because of binding representations and promises by President Chopp and Colgate administrators who made binding promises to honor students’ constitutional and civil rights in a private setting.
j. Declare that Colgate is estopped from requiring that DKE provide Colgate unrestricted access to its library and a right of first refusal to buy the library as a condition of the sale of the DKE house based on binding promises made by President Chopp that DKE need not do so.
k. Declare that Colgate is estopped from denying non-DKE undergraduates who live in university housing the right to use the DKE house or to assemble and associate at the DKE house and library unless the structures are university-owned because of binding representations and promises made by President Chopp and Colgate administrators to honor students’ constitutional and civil rights in a private setting.
l. Declare that Colgate is estopped from requiring DKE to agree to any proposal to sell the DKE house and library under terms that DKE reasonably believes threaten its future existence.
m. Declare that DKE undergraduates shall not be denied any rights and privileges of other Colgate students based on whether DKE sells its house or library to Colgate.
n. Provide Plaintiffs with their attorneys’ fees in this action.
o. Provide DKE with damages for loss of rents and depreciation of its property.
p. Grant such other relief as the Court deems just and proper.
Respectfully submitted,
Thomas J. Wiencek (#0031465)
twiencek@brouse.com
Brouse McDowell, LPA
388 South Main Street
Suite 500
Akron, Ohio 44311-4407
(330) 535-5711, ext. 337
Fax: (330) 253-8601
Peter D. Carmen
pcarmen@mackenziehughes.com
Mackenzie Hughes, LLP
101 South Saulina Street
Suite 600
P. O. Box 4967
Syracuse, New York 13221-4967
Telephone: (315) 233-8386
Fax: (315) 474-1216
Counsel for Plaintiffs
596529.2