APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 75-2862).
Gibbons and Weis, Circuit Judges and Meanor, District Judge.*fn*
The necessity for the newly established Delaware Law School to affiliate with Widener College as a prelude to American Bar Association accreditation is the basic dispute underlying this appeal. We accept the district court's conclusions that affiliation was in the best interests of the law school as well as its students and that the procedures employed were not legally deficient. After careful consideration of this issue and others raised by the plaintiffs, we affirm the judgment of the district court refusing to sever the two institutions.
Plaintiff Plechner, a trustee of the Delaware Law School, alleged irregularities in the affiliation with Widener College in 1975, including duress and coercion by the American Bar Association. He brought suit in the Eastern District of Pennsylvania seeking various forms of relief, including an injunction to set aside the election of a new Board of Trustees by Widener. Appellant Avins, the first dean of the law school and also a trustee, intervened on essentially the same grounds. The district court dismissed the American Bar Association for lack of diverse citizenship. The plaintiff's demands for a jury were refused, and after a bench trial, judgment was entered for the defendants.*fn1
The case encompasses the brief history of the Delaware Law School as an independent institution, beginning in June, 1971 when plaintiff Alfred Avins secured a Delaware charter for the school as a nonprofit corporation. Governance was vested in a three-member board of trustees, enlarged in 1973 to seven. The charter provided that the trustees had the power to dissolve the school, donate its assets to another school, merge, or affiliate with another educational institution. Power to amend the charter was also included.
The school opened for its first evening classes in October, 1971. At the inception, Mr. Avins was the only full-time faculty member and in addition to a loan of $1,900, he advanced to the school all but $5,000 of his salary. The bulk of the initial financing, however, was obtained through tuition payments by the students. Through Avins' energy and resourcefulness, the faculty was gradually enlarged and the physical facilities, including the library, were improved in the years following. The district court remarked that Avins' achievement was astounding and that he single-handedly was responsible for the creation of a viable law school.
The school encountered some opposition in its efforts to obtain degree-granting powers and it was not until November, 1974 that the State of Delaware conferred such authority. Equally important to the students, however, was the school's accreditation by the American Bar Association. Without such approval, graduates would not be eligible to take the bar examinations in most states.
The procedures for provisional accreditation begin with an inspection by an ABA team which makes a report and recommendation to the Committee on Accreditation of the Council of the Section of Legal Education and Admission to the Bar. An affirmative recommendation by the council is reported to the ABA's House of Delegates for final action by that body.*fn2
The first catalogue of the Delaware Law School stated that ". . . it is expected that by the end of the second year of operation, the law school should be able to be ready for A.B.A. inspection." The second catalogue said that the school would be ready for an inspection in the spring of 1973. On September 15, 1973, the Board of Trustees called for an inspection as soon as possible.
In January, 1974, an ABA team visited the school and submitted an extremely adverse report. The inspectors were critical of the physical facilities, including the library; the faculty was said to have limited teaching experience, was underpaid and not full time. The report referred to the institution as a "one man law school" and recommended against accreditation.
In May and July, 1974, two additional inspections were made and while improvements were noted, the reports were unfavorable. Students and their parents became increasingly concerned about accreditation prospects. As a result of mounting pressure Avins resigned as dean. He remained on the Board, however, and was given the title of Dean Emeritus. Before his resignation became effective, Avins contacted Arthur Weeks, then a professor at Cumberland Law School of Samford University and persuaded him to become dean at Delaware.
Another ABA team inspected the school in January of 1975 and although it found substantial improvements, did not believe that the school was ready for accreditation. The following month, Dean Weeks, along with several trustees and students, appeared in Chicago before the Accreditation Committee in an unsuccessful plea for reconsideration. On his return to Wilmington, Weeks reported to the trustees and recommended that the law school affiliate with a college or university, suggesting among others Widener College and the University of Delaware. Informal comments by ABA members of the inspection team and the Chairman of the House of Delegates had indicated that affiliation with an established institution would considerably enhance the school's prospects for accreditation.
Although a number of the trustees favored affiliation with the University of Delaware, its lack of enthusiasm for the proposal in time made it apparent that hope for support from that institution was not realistic. Time exerted considerable pressure because the first class was scheduled to graduate during the summer of 1975. There were several serious discussions between the law school trustees and Widener College officials in the spring of 1975. Widener had contemplated starting its own law school but preferred to acquire the Delaware Law School if it could be accredited.
In May, 1975, after a fourth inspection, the ABA recommended accreditation if the school affiliated with either Widener or the University of Delaware. The inspectors noted that although affiliation was not required, an independent Delaware Law School could not attract the broad support it required without drastic restructuring of its governing body.
At a meeting on May 24, 1975, the law school trustees decided to accept the Widener offer of affiliation. Plaintiff Plechner was not present at the meeting and Avins abstained because of his belief that as a tenured faculty member he had a conflict of interest. Throughout the spring of 1975, there had been unrest among the student body because of the delay in accreditation. The students pressed strongly for affiliation with Widener and a small minority made Plechner and Avins the objects of threats and harassment because of their reluctance to agree.
On July 12, 1975, the trustees met and amended the charter to allow issuance of one share of stock, par value of $1.00, to Widener College. At a meeting on August 6, 1975, the by-laws were amended to enlarge the Board membership to 20, giving Widener sufficient appointees to take control. The ABA granted provisional accreditation on August 12, and on August 23, 1975, the first class was graduated.
Plechner filed suit two months later incorporating many contentions but essentially seeking to set aside the affiliation and return Delaware Law School to its original status. The district court found that no undue influence or coercion had been exerted against the Board of Trustees, the issuance and transfer of stock complied with Delaware law, the trustees were not bound to follow Avins' wishes as a "founder," and Delaware Law School had suffered no losses which could be recovered in a derivative action.
Plaintiffs have raised numerous issues on appeal, and we begin by addressing their contention that they were entitled to a jury trial.
The first complaint filed by Mr. Plechner contained six counts. The latter three included assertions that there had been violations of Section 10(b) of the Securities Exchange Act, 15 U.S.C. § 78j(b), and the Civil Rights Act, 42 U.S.C. § 1983. The complaint concluded with a request that the court grant relief by:
"A. Issuing a declaratory judgment that the contract of July 8, 1975, and the issuance of stock pursuant to its resolution of August 6, 1975, is not binding on the trustees of The Delaware Law School.
B. Ordering cancellation of the stock issued to defendant Widener College.
C. Enjoining defendant Widener College from claiming any right under said ...