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RACKIN v. UNIVERSITY OF PENNSYLVANIA

December 18, 1974

PHYLLIS RACKIN, Plaintiff
v.
THE UNIVERSITY OF PENNSYLVANIA, et al., Defendants



The opinion of the court was delivered by: WEINER

 Dr. Phyllis Rackin, the plaintiff in this civil rights suit has charged that the defendants, the University of Pennsylvania (hereinafter "University"), its various officers and certain tenured members of the University's English Department have discriminated against her in the terms and conditions of her employment solely on the basis of her sex. The history giving rise to the instant litigation is set forth in the plaintiff's complaint. *fn1"

 Essentially the complaint alleges that in 1962 Dr. Rackin, who had earned a Ph.D. in English, was appointed a fully-affiliated Instructor in the English Department of the University. She was promoted in June 1964 to a fully affiliated Assistant Professor of English for a three year term. Subsequently, Dr. Rackin, believing her credentials sufficient, applied for promotion and tenure within the English Department. Under circumstances which deviated from normal procedure within the University her application was denied despite two votes of approval by the tenured members of the English Department. Instead, contrary to the University's policy that every tenured faculty member is to enjoy tenure in the department in which it is earned, she was granted tenure in the College of Arts and Sciences and, over her strenuous objections was assigned to teach freshman undergraduate courses. She further claims that she has not been permitted to teach courses in the area of her scholarly specialization even though she was successful in teaching these courses for the past eight years as an untenured member of the English Department. Dr. Rackin states that she has been ousted from the English Department and has lost the privileges and prerequisites she enjoyed since 1962.

 The plaintiff asserts that this treatment was and is discriminatory based solely on the fact that she is a woman. She contends that her qualifications to become a tenured member of the English Department are unrelated to her denial of tenure as demonstrated by the fact that she has twice been approved for promotion and tenure by the persons most knowledgeable in her field of specialization, the tenured members of the English Department. Dr. Rackin has filed the instant action alleging that by their foregoing conduct the defendants have violated 42 U.S.C. §§ 1981, 1983, 1985(3), 1986 and Executive Order 11246, 30 F.R. 12319 (September 28, 1965) as amended by Executive Order 11375, 32 F.R. 14303 (October 17, 1967) and the Pennsylvania Equal Pay Act, 43 P.S. § 336.1 et seq.

 In response the defendants filed a motion to dismiss the plaintiff's complaint. Fed. R. Civ. P. 12(b). Applying the standards enunciated in Braden v. University of Pittsburgh, 477 F.2d 1 (3d Cir. 1973) we directed that discovery be completed on all issues raised by the defendants' dismissal motion. This order has been complied with and a most comprehensive record has evolved making the defendants' motion ripe for decision. We shall consider each of the defendants' contentions seriatim.

 I. 42 U.S.C. § 1983

 42 U.S.C. § 1983 provides as follows:

 
"Every person who, under color of any statute, ordinance, regulation, custom or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities, secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."

 The defendants contend that suit can not be maintained against them since they are a private institution which has not acted under color of state law. *fn2" Although the issue raised appears well-defined on its face, many courts have acknowledged that:

 
"Whether particular discriminatory conduct is private, on the one hand, or amounts to 'state action', on the other hand, frequently admits of no easy answer. 'Only by sifting facts and weighing circumstances can the nonobvious involvement of the State in private conduct be attributed its true significance.' Burton v. Wilmington Parking Authority, 365 U.S. 715, 722, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961)."

 Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 32 L. Ed. 2d 627, 92 S. Ct. 1965 (1972).

 The most recent decision on this "state action" issue emanates from the United States Court of Appeals for the Second Circuit in Jackson v. Statler Foundation, 496 F.2d 623 (2d Cir. 1974). In this case concerning the specific issue of whether several tax-exempt charitable foundations acted under color of state law the Court attempted to clarify the "state action" issue by setting forth some guidelines. They stated:

 
"A review of the 'state action' case law suggests five factors which are particularly important to a determination of 'state action': (1) the degree to which the 'private' organization is dependent on governmental aid; (2) the extent and intrusiveness of the governmental regulatory scheme; (3) whether the scheme connotes government approval of the activity or whether the assistance is merely provided to all without such connotation; (4) the extent to which the organization has legitimate claims to recognition as a 'private' organization in associational or other constitutional terms.
 
Each of these factors is material; no one factor is conclusive."

 With this background in mind we shall now consider the following facts uncovered by the plaintiff's extensive discovery.

 1. BACKGROUND OF UNIVERSITY AND COMMONWEALTH RELATIONS.

 The roots of the University spring from the union of two schools; the College, Academy and Charitable School of Philadelphia, founded in 1740 and the University of the State of Pennsylvania, created in 1779 by a legislative act which appointed thirteen public officials to the twenty-five member Board of Trustees. The union of these two institutions was precipitated by the Pennsylvania General Assembly's Act of September 30, 1791 which also provided for the University's incorporation, charter, the requirement that the Trustees of the University annually submit a financial statement to the Legislature of the Commonwealth, and the appointment of the Governor of the Commonwealth as President of the Trustees. To date the Governor remains the titular head of the Trustees of the University.

 2. COMMONWEALTH APPROPRIATION TO THE UNIVERSITY.

 According to the plaintiff the Commonwealth's financial support of the defendant antedates that of any other college or university in Pennsylvania. At the present time in terms of state support the University would be categorized in the third tier of institutions of higher learning receiving appropriations from the Commonwealth. In descending order regarding the proportion of state money received these include: (1) "State-owned" institutions which are the thirteen State Colleges and the University of Indiana of Pennsylvania; (2) the "State-related" institutions of which there are four; and (3) the "State-aided" institutions of which there are thirteen including the defendant University of Pennsylvania. *fn3" There are over 100 other institutions in Pennsylvania which do not receive any appropriations from the Commonwealth.

 Since 1903 the General Assembly has regularly appropriated monies to the University for its general maintenance, providing such funds are shown to be necessary. This condition along with 72 P.S. § 3481 *fn4" has resulted in the University submitting quarterly statements to the State Auditor General. These statements and University accounts are audited by the Commonwealth.

 As one might expect in these times of increasing government involvement the annual appropriation to the University has more than doubled over the past twelve years so that in 1973 it reached $14,368,000.00. In terms of proportion this represents approximately seven to eleven per cent (7-11%) of the University's current operating income and approximately twenty-five per cent (25%) of the University's "hard-core" budget. The University has recognized that the "strategic importance" of the Commonwealth's participation is better exemplified by its contribution to the "hard-core" budget, which, according to the University, is the critical portion of the budget, upon which the quality of basic educational enterprise depends. *fn5" The funds which the Commonwealth appropriates to the University are unrestricted and appear to be utilized throughout the University. This state money along with tuition fees are the primary factors in balancing the University's precariously balanced budget and are the University's principal source of incremental income.

 The possibility of the discontinuance of State aid to the University is an ominous thought which University officials constantly find confronting them. A memorandum which was prepared in 1967 for the benefit of the Trustees of the University contemplated this potential problem. It concluded that:

 
"An end to State assistance, even if phased over a period of years, would unquestionably demand an immediate and drastic curtailment of the University's activities. The extent of the contraction would be traumatic to the University." *fn6"

 Considering the significance of the Commonwealth's contribution to the University it is not unexpected that the State Legislature, the body who determines the final amount of the University's annual dole, wields considerable influence over the University. The University, in its negotiations with the Commonwealth for each year's appropriation, constantly is attempting to appease its benefactor's wishes so that state monies continue to flow to the University. Each annual appropriation is granted on an ad hoc basis to the "State-aided" institutions in Pennsylvania and the State Legislature is not bound to renew them. Being acutely sensitive to this situation, the University is constantly lobbying in its own behalf. As a result it continually emphasizes its contributions to the Commonwealth and on several occasions has yielded to pressure from the Commonwealth and reluctantly made commitments to give preference to residents of the Commonwealth. These include: discounting tuition for Pennsylvania residents; enrolling a minimum of seventy per cent (70%) Pennsylvanians into the School of Veterinary Medicine; enrolling a minimum of fifty per cent (50%) Pennsylvanians into the School of Medicine and the School of Dental Medicine; and increasing the value of Senatorial Scholarships which are granted solely at the discretion of State Senators.

 In addition to the University's active solicitation of aid from the Commonwealth at the University's urging an alumni committee has been formed throughout the Commonwealth to influence various State Legislators and members of the executive branch. The University and the committee members are keenly desirous of maintaining the University's status as "the only major independent institution of its kind in the country to receive an essential fraction of its income from a state." *fn7"

 3. STATE CONSTRUCTION. LEASING AND FINANCING OF BUILDINGS FOR THE UNIVERSITY.

 The Commonwealth of Pennsylvania has been an essential ingredient in maintaining, improving and expanding the physical plant of the University. The General State Authority (hereinafter "GSA"), legislated into existence in 1949 and authorized to assist "State-aided" institutions in 1955, has been the Commonwealth's primary instrumentality in financing large scale capital improvement projects for public buildings. Prior to 1963 in order for the GSA to construct a University facility, which would be financed by tax-exempt bonds issued by the GSA, the Trustees of the University were first required to convey fee simple absolute title to the tract of land and building to the GSA for $1.00. The GSA would then lease the property to the Pennsylvania Department of Public Instruction (now the Department of Education and hereinafter "Department") at an annual rent sufficient to amortize the bonds. The funds required to pay this rental were derived from the Department's annual appropriation. Finally, the Department with the approval of the Governor of the Commonwealth would sublease the facility to the "State-aided" institution for $1.00 per year.

 Ten buildings serving the University were constructed, financed and leased in this manner. *fn8" Of the total cost of $50,694,409.00 for construction of these buildings, the GSA paid $33,839,521.00. The terms of each of the subleases provide that the subject building is to be subleased exclusively for the purpose specified. The University has the sole responsibility of maintaining and repairing the leased property, while the Department is required to provide all fire and casualty insurance and in the event of any loss the GSA is to rebuild the destroyed edifice. If the University wishes to alter or add to any leased premises, it must first secure written permission from the Department. Any default in the terms of the lease by the University will result in the lessor re-entering and taking possession.

 The subleases of two of these facilities, the Van Pelt Library and the Graduate School of Fine Arts, further provide that the University surrender possession of each building after the termination of their 30 year subleases. The remaining eight subleases grant the University an option to purchase the leased premises. None of these options are exercisable until the 1990s.

 In 1963, legislation was enacted which prospectively altered the foregoing arrangement between the Commonwealth and "State-aided" institutions. Much to the University's dissatisfaction, instead of their paying a nominal $1.00 annual rent on future GSA financed projects as is the case with pre 1963 GSA financed projects, they would henceforth be compelled to pay rent over the life of the lease sufficient to amortize the bonds the GSA would float to finance these new projects. Four buildings have been constructed, financed and leased to the University pursuant to this amended legislation. *fn9" The provisions of these subleases are substantially similar to the terms of the subleases of pre-1963 buildings except that upon termination of each sublease, then the leased premises shall be conveyed over to the University for $1.00.

 In 1967 another state authority, the Pennsylvania Higher Educational Facilities Authority (hereinafter "PHEFA") was established. It has aided the University in numerous projects, the most noteworthy being the construction, financing and leasing of a $56,000,000.00 student residence complex. The arrangement between the University and PHEFA for the construction of this complex is very similar to the mechanics utilized in GSA financed projects. Prior to constructing this student residence complex the University was required to transfer its property rights within the project area to PHEFA. PHEFA then issued tax free bonds to finance the venture and the property was leased to the University for a rent sufficient to pay the principal and interest of the bonds. Upon termination of the lease in 2008, providing the University has complied with all the terms of the lease, the property shall be conveyed to the University.

 The University, because of its relationship with the Commonwealth has been able to significantly improve and expand its physical plant since 1960. According to a University source, without the benefit of this State assistance it is highly doubtful that expansion would have occurred to such a great extent. At the present time ten buildings on campus are being utilized on a virtual rent free basis and on five other buildings the University pays only the principal and tax due on the State issued tax-exempt bonds which were issued in order to finance the construction of these buildings. Furthermore, since PHEFA and GSA do issue tax-exempt bonds, they are able to raise funds at a lesser cost than the University could privately. Therefore, despite the 1963 legislation which somewhat retarded the University's expansion by terminating the rent free status of all future capital improvement projects, the University still enjoys a lower overall net cost in the financing of post 1963 projects and free rent on ten pre-1963 buildings. *fn10"

 4. FEDERAL CONSTRUCTION GRANTS AND CONTRACTS.

 The financial records of the University indicate that pursuant to the Health Facilities Research Act of 1956, 42 U.S.C. §§ 292-292j and Titles II and III of the Higher Education Facilities Act of 1963, 20 U.S.C. §§ 731-733, 741-746, *fn11" it has received over $16,000,000.00 in construction grants from the federal government. No Commonwealth relation to these funds has been demonstrated except for the fact that the University is ...


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