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Phi Delta Theta plaintiff affidavit 10/24/05
STATE OF NEW YORK
SUPREME COURT COUNTY OF MADISON
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CHARLES H. SANFORD, III, JOHN R. WILLARD,
NORMAN J. PLATT, PETER O. HANSON, et al.,
representing at least five percent of the members of
New York Zeta of Phi Delta Theta Corporation,
A New York Not-For-Profit Corporation, on behalf of
All Other Members Similarly Situated, AFFIDAVIT
Index No. 05-1514
Plaintiffs, Hon. William F. O’Brien III
-vs-
COLGATE UNIVERSITY,
a New York Not-For-Profit Corporation,
Defendant.
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STATE OF MASSACHUSETTS )
COUNTY OF PLYMOUTH ) ss:
NORMAN J. PLATT, being duly sworn deposes and says:
1. I am a 1964 graduate of Colgate University, a Brother of Phi Delta Theta, Zeta Chapter (“Phi Delt”) and a plaintiff in this case. I make this affidavit in opposition to Defendant Colgate University’s (“Colgate”) motion to dismiss.
2. I make this affidavit based upon my personal knowledge and participation in the process that lead to the sale of our Chapter House. In addition to numerous discussions and e-mails with members of our fraternity, I attended every Special Chapter Meeting held regarding Colgate’s purchase of our Chapter House: March 5, 2005, April 16, 2005 and June 4, 2005.
3. In his affidavit submitted in support of Colgate’s motion to dismiss plaintiffs’ case, Mr. Steven Zatta fails to provide the Court with many of the facts underlying the Board’s acquiescence to Colgate’s threats to extinguish Phi Delt and other Colgate fraternities and sororities (“Greek Organizations”) if the particular Greek Organization failed to sell its property to Colgate.
4. In early 2003, as part of Colgate’s New Vision for Residential Education (“New Vision”), all Colgate students (except for 250 exempt seniors) were required to reside in housing owned only by Colgate. Colgate unilaterally determined that it must purchase all privately owned fraternity and sorority houses located in Hamilton, New York to effectuate this plan. The purported purpose of the New Vision was to alleviate a pattern of conduct so as to provide more safety to Colgate students.
5. In the Fall of 2003, Bruce Clayton, Board Member of PDT Corp. also served as the President of the Colgate Alumni InterFraternity/Sorority Council (AIFSC). On November 14, 2003, Colgate’s Vice President of Business and Finance David Hale wrote a thank you letter to Bruce Clayton. A copy is attached as Exhibit A. In his thank you letter, Mr. Hale delineated the points on which Colgate and AIFSC agreed upon. Mr. Hale stated, “[w]e are pleased to have the full support of the AIFSC in implementing the programmatic elements of the New Vision for Residential Education.” (Ex. A, #2.) The AIFSC granted Colgate access to appraise and inspect property prior to the sale. (Ex. A, #3.)
6. In this letter, Colgate summarily rejected some of the fraternities’ requests for a long-term lease as opposed to sale. (Ex. A, p. 2.) Mr. Hale stated, “we must affirm the Board of Trustees’ decision that acquisition through ownership is the only way to proceed for Greek-letter houses seeking to continue their organizations at Colgate.” (Ex. A, p. 2.) Finally, Mr. Hale states, “[t]hank you again for your cooperative response and actions taken by the AIFSC since our announcement of the New Vision of Residential Education on July 8th.”
7. Indeed, pursuant to this letter of November 14, 2003, Phi Delt’s Board Member, Bruce Clayton, was committed to the sale of our house from the beginning.
8. Furthermore, Mr. Zatta fails to state in his affidavit that by letter dated June 22, 2004, Colgate’s Financial Vice President David Hale announced that Colgate “will adopt a policy that any student who participates in an unrecognized fraternity or sorority will be subject to disciplinary sanctions including, possibly, suspension or expulsion.” This letter from Hale was a response to the purported “negotiations” with Colgate.
9. Mr. Zatta also fails to mention in his affidavit that in response to these “negotiations,” on July 6, 2004, Bruce Clayton stated on our fraternity’s web site “[t]he latest news is a threat from Colgate to take sanctions against students (including possibly suspension or expulsion) if students join eating clubs or underground, unrecognized fraternities and sororities... This is like negotiating with someone who is pointing a gun at your head.” (Ex. A, p. 4.)
10. Further, on February 11, 2005, Mr. Zatta wrote to the Brothers to solicit their votes to sell the house to Colgate. He stated in part “[w]e extensively considered and explored several strategic alternatives to selling the house—including leasing the property to the University and operating as a non-residential eating, academic and social club—but the University rejected all of our compromise attempts and informed us that if we did not sell the house, we would be forced out of existence.” (Ex. A, p. 5.)
11. Indeed, on February 22, 2005, Mr. Clayton wrote “I agree that the only choice we have to continue our fraternity at Colgate is to sell the house now.” Mr. Zatta wrote “if we vote against the sale… Colgate will terminate our chapter and forbid our undergraduates from living together as a fraternity and being part of Phi Delta Theta starting next year.” (Ex. A, p.8.)
12. Mr. Zatta fails to state that on February 15, 2005, Mr. Zatta wrote to his Brothers and said, “Personally, I hate that Colgate is demanding we sell the chapter house. I firmly believe that the University could and should have reached a compromise with the Greek organizations who worked for 2 years in a united effort to find the best outcome for all involved. However, the bottom line is that if we don’t sell, the chapter will be terminated by the college and we will not have the financial resources to maintain an empty house for very long. In the end, Colgate would most definitely take our property anyway, leaving us with no house and no chapter.” (Ex. A, p. 7.)
13. Furthermore, on February 28, 2005, Mr. Clayton wrote to the Brothers to adamantly seek support for the sale. Based upon Mr. Hale’s November 2003 letter to Mr. Clayton, the University’s position was clear from 2003, and Clayton appeared to have agreed with it. It is not logical to conclude that Mr. Clayton agreed to sell to Colgate by November 2003, but then diligently tried to protect Phi Delt’s rights or seriously consider alternatives thereafter.
14. Yet in Paragraph 5 of Mr. Zatta’s affidavit, he fails to mention these threats and coercion and states only that “Colgate University offered to purchase the independently owned fraternity and sorority houses which were operating at Colgate.” Mr. Zatta fails to state that this alleged “offer” of purchase was not an “offer” at all. It was an ultimatum. If PDT Corp. refused to sell the property to Colgate, Colgate would de-recognize Phi Delt, prohibit any student from residing in the house and suspend or expel any student who did not acquiesce to Colgate’s mandates regarding the prohibition of affiliation with the fraternity itself or who continued to reside in the house.
15. In Paragraph 6, Mr. Zatta states essentially that PDT Corp. “negotiated” with Colgate for eighteen months prior to the sale. The letter to Mr. Clayton dated November 14, 2003 establishes that the alleged eighteen months of “negotiations” were lip service. Regardless of the alternatives to sale presented, Colgate summarily refused to consider them. It remained Colgate’s position throughout “negotiations” that either the individual houses would be sold to Colgate or the fraternities would cease to exist.
16. It is obvious to me that the Board never appropriately evaluated whether or not Colgate’s threat had “legal precedent” or not. Instead of seeking donations from the Brothers to hire lawyers to appropriately research Colgate’s claims, the Board merely joined in with some other fraternities who allegedly “looked into it.” The results, however, were not disclosed to the members.
17. In fact, there does not appear to be any basis for Mr. Clayton’s public comment that any alternative was “extensively” researched after November 2003. According to the November 14, 2003 letter, the University had already unilaterally foreclosed the lease alternative by November 2003, two years earlier.
18. In Paragraph 7-9 of Mr Zatta’s affidavit, he states that in February 2005, each member was sent a letter that set forth the Board’s recommendation for sale to Colgate. This letter also notified members that a meeting would be held on March 5, 2005, to vote on the sale of the property. The letter included a proxy so the member could cast his vote if he could not attend. Because a quorum could not be obtained, the meeting, and vote, was continued to April 16, 2005.
19. As stated in Mr. Zatta’s affidavit, a quorum could not be obtained at the March 5th meeting for the purpose of agreeing to the sale of the house. Therefore, the meeting was continued to April 16, 2005. Without resolution or explanation to the brotherhood at large, the Board unilaterally changed the quorum requirements, though this meeting was a continuation of the March 5, 2005 meeting.
20. Prior to the meeting, Colgate disseminated information to the Colgate Community including the Phi Delt brothers nationwide stating that the reason for the fraternity buyout was a “pattern of conduct” on fraternity row that made ownership by Colgate essential. This pattern of conduct involved crime and the use of drugs and alcohol. This information was critical in obtaining the appropriate votes to sell the house because our Brothers would never condone such activity and if this pattern of conduct created a problem for Colgate, then Colgate certainly was entitled to take the necessary disciplinary action.
21. Prior to the April vote we learned that the “pattern of conduct” was a sham, utterly false and concocted by Colgate as justification for the taking of our property. Many of the members, however, relied upon this important misinformation in casting their vote to sell the fraternity house to Colgate.
22. Indeed, by reviewing Colgate’s own publications, incidents/crimes in Colgate’s dormitories far exceeded any similar behavior in fraternity houses. Indeed, between 2001 and 2003 Colgate published that 1700 crimes and/or incidents occurred in dormitories and only 11 occurred in fraternity houses. (Ex. A, p. 11-16.)
23. After learning of Colgate’s material misrepresentation with respect to the very purpose of the buyout, we approached the Board and asked to rescind the vote and revote considering Colgate’s flagrant misrepresentation as to the purpose for the sale. Jon Robins, Esq., Non-Board Member Brother stated to me that if we challenged the sale, Colgate would make problems for the fraternity. The Board refused to consider this new material information and Colgate’s material misrepresentation and refused to permit a re-vote.
24. Furthermore, and of utmost importance, Mr. Zatta fails to state that on April 15, 2005, The Colgate Maroon-News published Dean Weinberg’s Letter to the Editor that partially retracted the most egregious of Colgate’s previous threats; to-wit, Dean Weinberg wrote, “Members of unrecognized fraternities and sororities will not be stopped from associating and gathering. Members of those organizations will continue to be recognized as brothers and sisters and will be treated the same way as every other student.”
25. Although Colgate’s previous threat of suspension or expulsion was seemingly partially retracted, Mr. Zatta and the rest of the Board utterly failed to share this material information with the Brothers during the voting process. Mr. Zatta accepted the proxies and permitted the vote to go forward without informing the Brothers that a vote against sale would not lead to expulsion of the students.
26. At the April meeting, I made a motion to void the vote because the vote was based upon materially false information. My motion was not even considered by the Board.
27. After the votes were cast and counted, and the Board obtained what
they represented was enough votes for the sale, Mr. Zatta started pounding
his pen on the desk at which he was seated stating, “I had to do
it…I had to do it.”
28. As the Court is aware, the Phi Delta Theta Chapter House was sold
to Colgate on or about May 31, 2005.
29. Mr. Zatta claims that the Board looked at the possibility of legal action at these plaintiffs’ request but that legal action “would lead to the immediate end of any chapter that participated.” He specifically stated, “[a]dditionally, if too many chapters participated in the lawsuit, Colgate told us they would simply terminate the Greek system.” (Ex. A, p. 10.)
30. In his affidavit, Mr. Zatta has failed to inform this Court that although the Board may have attended meetings and negotiations with Colgate prior to the sale, the Board, as evidenced by their own comments, never had any choice but to sell based upon the coercion and duress by Colgate. Through Colgate’s New Residential Education Plan, Colgate mandated that the Greek organizations would sell their property to Colgate or cease to exist. Giving our Board the benefit of the doubt, the Board was not given any choice.
31. Plaintiffs in this case chose not to sue the Board itself because we believed the Board, like all the non-board member brothers, were coerced into the untenable position of sale.
32. It is with great regret that I must state that the Board, particularly Zatta and Clayton, did not fully evaluate legal options to oppose the sale during the “negotiation” phase of this travesty. From the beginning, or at least from November 13, 2003, Clayton acquiesced to Colgate and agreed with the sale.
33. Furthermore, not even when it was discovered that Colgate materially misrepresented the very basis for the take-over of the fraternity houses did the Board act out against Colgate and, at least, vote to re-vote to let the members consider (1) the Dean’s retraction of the personal sanctions against students; and (2) that there was no negative pattern of behavior within the fraternity community and Colgate’s contrary claim was an absolute sham to make an excuse for the takeover of our privately owned property.
34. Indeed, now that the house has been sold, upon information and belief, in the meantime, the “Foundation” that will house the proceeds is being handled by Mr. Clayton, an investment advisor.
35. By this sale, Colgate gained the property, and PDT Corp. is left with foundation funds, the only logical purpose of which are donations to the coercive buyer, Colgate.
36. According to Colgate, plaintiffs’ lawsuit should be dismissed. To the contrary: first and foremost, because our Board and members were coerced into selling our property “with a gun to our heads” and the votes were based upon a material misrepresentation, the sale to Colgate is not protected by the business judgment rule. PDT Corp. was unable to make an informed or reasonable “judgment” with respect to the sale based upon these threats, coercion and material misrepresentation. In this case, there was no independent judgment made. Whatever decision was ultimately made was made without free will. Indeed, no rational person could say that Colgate’s proposal to sell the house or face extinction of the fraternity and expulsion of its members involved a “choice” or any type of judgment.
37. Simply put, Phi Delta Theta would not have sold its property but for the threat of extinction of its existence and expulsion of its student members, and Colgate, through its affidavit of Steven Zatta, has not even remotely addressed this fact.
38. Although plaintiffs gave the Board the benefit of the doubt and elected not to pursue the Board itself for its lack of fortitude regarding its failure to act on behalf of the Brothers and failure to protect our property interest in this lawsuit, it is now apparent from the submission of Mr. Zatta’s affidavit, from the Board’s lack of diligence in evaluating legal options prior to the sale and from the Board’s failure to take any action upon the material misrepresentations discovered during the voting process, that the Board’s loyalty to the PDT Corp. was compromised based upon Colgate’s intimidation and misleading representation.
39. Indeed, this obvious conflict of loyalty and half-hearted evaluation of alternatives to sale and plaintiffs’ demand to institute legal action against Colgate constitutes a firm basis for this derivative action.
40. It is not required under the law that plaintiffs sued the Board. The Board, however, should be made to provide the truth regarding its acquiescence to Colgate’s coercive tactics. Under the unique facts of this case, this action should not be dismissed.
41. The plaintiffs in this lawsuit want a fair and fully informed vote regarding the sale of the Chapter House. Plaintiffs firmly believe that without Colgate’s oppressive coercion and gross misrepresentation of material facts relative to the sale, and the Board’s apparent acquiescence to it, the Brothers would not have voted to sell.
42. I, therefore, request that this honorable Court deny Colgate University’s motion to dismiss our case and, if appropriate, request that plaintiffs be permitted to amend their complaint and conduct discovery on these issues.
__________________________________
Norman J. Platt
Sworn to & subscribed before me
this 21st day of October, 2005.
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Notary Public