Virginia Lawyers Weekly VA Lawyers Weekly
George Mason University Foundation, a private, nonprofit corporation that raises funds and manages donations to George Mason University, is not subject to the Virginia Freedom of Information Act.
Overview
Appellant, Transparent GMU, filed a VFOIA request with GMU and the GMU Foundation to obtain donor records. GMU replied it had no such records. The foundation denied the request, asserting it was not a public body and its records were not subject to VFOIA requests.
Transparent sued, arguing that the foundation was GMU’s alter ego, that GMU and the foundation have acted as a single entity and that GMU used the foundation to deny Transparent its VFOIA rights.
GMU and the foundation demurred. They contended that “Transparent failed to allege that the Foundation ‘was a device or sham used to disguise wrongs, obscure fraud, or conceal crime’ to ‘pierce the corporate veil.’” The trial court sustained the demurrers. Transparent then filed a multi-count amended complaint.
Count I alleged GMU was the legal custodian of records held by the foundation and refused to provide them. Count II alleged GMU refused to provide records regarding the transaction of public business by Bingham, a GMU vice president. Count III alleged that the foundation was a public body. Count IV alleged the foundation was supported by public funds. Count V alleged the foundation violated Transparent’s rights by refusing to provide public records.
GMU and the foundation again demurred. The trial court sustained demurrers to Count I, II, IV and V. The court conducted a bench trial on Count III and determined that the foundation was not a public body subject to VFOIA. Transparent appealed.
First impression
“The issues before us in this case are matters of first impression for the Court. VFOIA does not expressly address private nonprofit foundations that exist for the primary purpose of supporting public institutions of higher education. In order to be covered by VFOIA, the Foundation must fall within the definition of a public body and be in possession of public records. …
“Transparent argues that the circuit court erred in finding that the Foundation was not ‘an entity of’ GMU under VFOIA.’ … Code § 2.2-3701 defines ‘public body’ as including ‘any committee, subcommittee, or other entity however designated, of the public body created to perform delegated functions of the public body or to advise the public body.’ …
“We must begin with the plain language definition of the word ‘of’ as it is used in Code § 2.2-3701. … ‘Of’ is used as a function word to describe ‘from as the place of birth, production, or distribution’ or as ‘indicating the aggregate or whole that includes the part or quantity denoted by the preceding word.’ …
“The phrase ‘entity of’ can therefore be defined as an entity that was produced or distributed by a public body. There is no evidence that the Foundation was produced or distributed by GMU nor is it a part of GMU created to perform delegated functions. As the circuit court correctly found, the Foundation ‘is an independent nonstock corporation that coexists alongside’ GMU. …
“VFOIA’s definition of ‘public body’ also includes the requirement that the entity be ‘supported wholly or principally by public funds.’ … The evidence of the Foundation’s finances clearly shows the Foundation is not and has never been ‘supported wholly or principally by public funds.’ … At the time of trial, the Foundation’s assets totaled approximately $400 million.
“The Foundation manages its operations through investment income and fees imposed on gifts from private donors. … In 2016, the Foundation’s total support and revenue from private gifts and donors was $92 million. By contrast, less than $14,000 of that amount came from GMU’s public funding and that amount was used to pay student assistants. …
“Transparent next contends that the circuit court erred in concluding that the Foundation could not be considered an alter ego of GMU for purposes of VFOIA. … The evidence in the record does not support Transparent’s assertion that the Foundation operated as the alter ego of GMU. Transparent points to several facts in support of its argument.
“For example, the Foundation’s offices are located in a building that it owns and leases to GMU; Dr. Bingham serves in a dual capacity as President and CEO of the Foundation as well as a Vice President at GMU. While these facts are true, they are insufficient to support the assertion that the Foundation is GMU’s alter ego. ‘The mere showing that one corporation is owned by another or that they share common officers is not a sufficient justification for a court to disregard their separate corporate structure.’ …
“Transparent has not shown that the Foundation is GMU’s agent. The Foundation and GMU operate at arms-length and, while they collaborate for the benefit of GMU, each maintains its independent status as a private non-stock corporation and a public institution for higher education respectively. … [T]he Foundation operates independently of GMU under its own bylaws, articles of incorporation, and statutes. …
“The [circuit] court correctly found that GMU is not required to produce the Foundation’s documents merely because Dr. Bingham is a common employee of GMU and the Foundation. ‘When acting in her role as a Vice President of GMU, the University has control and custody over her work product and those records over which she is a custodian at GMU.’ However, when acting ‘[i]n her role as President of the Foundation, she is in the employ of the Foundation, and the Foundation has control and custody over her Foundation work records.’”
Affirmed.
Transparent GMU v. George Mason University. Record No. 181375 (Powell) Dec. 12, 2019 (Fairfax Cir. Ct. (Tran). Evan Dimond Johns for Appellants, David Garnett Drummey, Brian Eugene Walther, Sean Francis O’Hagan Murphy, Emily Rebecca Gantt, Toby Jay Heytens, Michelle Shane Kallen, Matthew Allen Fitzgerald, Matthew Robert McGuire, Mark Rankin Herring, Carries Smith Nee, Brittany Marie Jones for Appellees. VLW 019-6-093, 26 pp.
