IN THE COURT OF COMMON PLEAS OF CENTRE COUNTY, PENNSYLVANIA IN RE: APPLICATION BY NONPROFIT CORPORATION TRUSTEES TO COMPEL : INSPECTION OF CORPORATE : NO. -2015 INFORMATION : PETITION PURSUANT TO 15 PA. C.S.A. § 5512 TO. COMPEL INSPECTION OF CORPORATE INFORMATION Petitioners Edward B. Brown, Ill, Barbara L. Doran, Robert C. Jubelirer, Anthony P. Lubrano, Ryan J. McCombie, William F. Oldsey and Alice W. Pope, Trustees of The Pennsylvania State University duly elected by its alumni, by and through their undersigned counsel, to discharge their independent fiduciary duties as Trustees, respectfully request an Order to compel inspection,examination and copying of corporate records and documents of Respondent The Pennsylvania State University and, in support thereof, aver as follows: 1. Petitioner Edward B. Brown, III, is an adult individual and citizen of the Commonwealth of Pennsylvania with a mailing address of 2432 Bernel Road, State College, Pennsylvania. 2. Petitioner Barbara L. Doran is an adult individual and citizen of the State of New York with a mailing address of 26 E. 91" Street, New York, New York. 3. Petitioner Robert C. Jubelirer is an adult individual and citizen of the Commonwealth of Pennsylvania with a mailing address of 12 Sheraton Drive, Altoona, Pennsylvania. 4. Petitioner Anthony P. Lubrano is an adult individual and citizen of the Commonwealth of Pennsylvania with a mailing address of 1800 East Lancaster Avenue, Suite B, Paoli, Pennsylvania. 5. Petitioner Ryan J. McCombie is an adult individual and citizen of the Commonwealth of Pennsylvania with a mailing address of 1769 CambridgeDrive, State College, Pennsylvania. 6. Petitioner William F. Oldsey is an adult individual and citizen of the State of New Jersey with a mailing address of 33 Ridge View Drive, Basking Ridge, New Jersey. 7. Petitioner Alice W. Pope is an adult individual and citizen of the State of New York with a mailing address of St. John’s University, Department of Psychology, 8000 Utopia Parkway, Jamaica, New York. 8. Respondent The Pennsylvania State University (“The University”) is a non-profit corporation existing under the Pennsylvania Nonprofit Corporation Law of 1988, 15 Pa. C.S.A. § 5101 et seq., with a registered office at 208 Old Main, University Park, Pennsylvania. 9. Messrs. Brown, Jubelirer, Lubrano, McCombie and Oldsey and Mmmes. Doran and Pope (referred to collectively hereinafter as "Petitioner Trustees") are all Trustees of The University duly elected by its alumni and, as Trustees, are entrusted with managing the affairs of The University. 10. On April 15, 2015, Petitioner Trustees delivered a writtenrequest to Keith E, Masser, Chairman of the Board of Trustees of The University, and Eric J. Barron, President of The University, to inspect and examine specified corporate records in accordance with the Pennsylvania Nonprofit Corporation Law, 15 Pa. C.S.A. § 5512. (A true and correct copy of the April 15, 2015 request is attached hereto as Exhibit "A.") 11. The Pennsylvania Nonprofit Corporation Law specifically authorizes trustees! to access corporate information that relates to the performance of their duties. 15 Pa. C.S.A. § 5512 states, in pertinent part, as follows: To the extent reasonably related to the performance of the duties of the director, including those arising from service as a member of a committee of the board of directors, a director of a nonprofit corporation is entitled: (1) in person or by any attorney or other agent, at any reasonable time, to inspect and copy corporate books, records and documents and, in addition, to inspect, and receive information regarding, the assets, liabilities and operations of the corporation . .. . ' By statutory direction, The University, formerly known as The Farmers’ High School of Pennsylvania, is managed and governed by a board of trustees. § 2531-41. For purposes of the Nonprofit Corporation Law, "board of directors" and "directors" are defined as the persons vested with the management and affairs of the corporation regardless of the name by which they are designated. See 15 Pa. C.S.A. § 5103 (defining "board of directors" and "directors"). Thus, the right conferred on directors in 15 Pa. C.S.A. § 5512 applies to the Trustees of The University.15 Pa. C.S.A. § 5512(a)(1). 12. Inaccordance with this provision, Petitioner Trustees request access to all materials and documents generated, prepared, gathered, reviewed or relied upon by Freeh, Sporkin & Sullivan, LLP ("FSS") and Freeh Group International Solutions LLC ("FGIS") in investigating and preparing the July 12, 2012 Report of the Special Investigative Counsel Regarding the Actions of The University Related to the Child Sexual Abuse Committed by Gerald A. Sandusky ("the Freeh Report"), including 470 unredacted interview memoranda and communications involving FSS, FGIS, the Pennsylvania Office of Attorney General, the National Collegiate Athletic Association and/or the Big Ten Conference. These records and the records requested by Petitioner Trustees in the April 15, 2015 demand (Exhibit A) are referred to hereinafter as "the Source Material." 13. The Board of Trustees of The University, through the Special Investigations Task Force ("SITF"), retained FSS and FGIS in late 2011 to investigate the circumstances surrounding the then-alleged sexual abuse of children by former University assistant football coach Gerald A. Sandusky and to make recommendations to better enable The University to avert and/or respond toincidents of abuse in the future. FSS and FGIS conducted more than 470 witness interviews of University and non-University personnel, collected 3.5 million records from The University and other sources, collaborated with the National Collegiate Athletic Association and the Big Ten Conference concerning the investigation and preparation of the Freeh Report, and communicated with federal and state law enforcement agencies. The investigative activities are referenced and disclosed in the Freeh Report, "pursuant to the appropriate waiver of the attorney-client privilege by the Board." See Freeh Report at 10. Presumably based on the Board’s waiver of the attorney-client privilege, Louis Freeh conducted a press conference, contemporaneous with the release of the Freeh Report, at which he summarized the Freeh Report, including the conclusions and recommendations in the Freeh Report and responded to questions concerning the investigation. 14. The University paid in excess of $8.3 Million to FSS and FGIS in connection with the eight-month investigation and preparation of the Freeh Report. 15. | The Source Material which is the subject of this Petition is the property of The University and remains under the control of The University.16. By memorandum dated April 17, 2015, "the President and Board leadership" refused to allow Petitioner Trustees to inspect and examine all of the Source Material. (A true and correct copy of the April 17, 2015 Memorandum is attached hereto as Exhibit "B.") 17. _ Petitioner Trustees hereby request an order pursuant to 15 Pa. S.A. § 5512(b) compelling the requested inspection. That section states in pertinent part: If the corporation, or an officer or agent thereof, refuses to permit an inspection or obtain or provide information sought by a director or attorney or other agent acting for the director pursuant to subsection (a). . . the director may apply to the court for an order to compel the inspection or the obtaining or providing of the information. The court shall summarily order the corporation to permit the requested inspection or to obtain the information unless the corporation establishes that the information to be obtained by the exercise of the right is not reasonably related to the performance of the duties of the director or that the director or the attorney or agent of the director is likely to use the information in a manner that would violate the duty of the director to the corporation. . .. 15 Pa. C.S.A. § 5512(b).18. The Source Material is reasonably related to the performance of the duties of The University Trustees. 19. The Freeh Report has been the subject of extensive public and media attention and widespread criticism since its issuance in 2012. It served as the basis for the imposition of staggering sanctions against The University by the National Collegiate Athletic Association (some of which have since been rescinded) and by the Big Ten Conference. The Freeh Report is also the subject of pending litigation against The University brought by its former President? and the Source Material underlying the Freeh Report has been Ordered to be produced in at least two other litigation matters involving The University.? Further, the current President of The University recently criticized the conclusions in the Freeh Report and has announced that he will conduct his own official review of the materials underlying the Freeh Report. ? Graham B. Spanier v. Louis J. Freeh, Freeh Sporkin & Sullivan LLP. Freeh Group International Solutions, LLC and The Pennsylvania State University, No. 2013-2707 (Court of Common Pleas of Centre County filed March 18, 2015). > John Doe D v. The Pennsylvania State University. et al., No. 2013-2298 (Court of Common Pleas of Philadelphia County Order entered on Jan. 9, 2015); George Scott Paterno, et al. v. National Collegiate Athletic Association, Mark Emmert, Edward Ray and The Pennsylvania State University, No. 2013-2082 (Court of Common Pleas of Centre County Opinion and Order entered on September 11, 2014).20. ‘The Freeh Report and the Source Material profoundly impact the finances, operations, educational opportunities, personnel, policies, administration, reputation and very culture of The University. ‘The Petitioner Trustees’ fiduciary oversight responsibilities plainly encompass each of these subjects. 21. Petitioner Trustees seek to inspect and examine the Source Material underlying the Frech Report to inform and effectively discharge their oversight duties as Trustees, including: (a) _ to establish and oversee the implementation of a credible strategic plan to restore The University’s world-class reputation; (b) to objectively review and assess whether the Source Material supports the subjective, hyperbolic and sweeping conclusions made in the Freeh Report; (©) to ensure that University funds are properly allocated and spent, including funds that have been appropriated or may be appropriated to settle one or more lawsuits filed against The University by victims of Gerald A. Sandusky and/or others;(d) to understand and oversee the fulfillment of The University’s legal responsibilities, including, but not limited to, liabilities associated with civil actions filed against The University as a result of the Freeh Report or on the basis of matters described in the Freeh Report; (@) to independently and objectively evaluate the conclusions and recommendations in the Freeh Report for the purpose of ensuring that The University is better able to prevent and more effectively respond to incidents of abuse in the future; (f) to determine whether any person or entity exerted undue influence in connection with preparation of the Freeh Report; (g) _ to explore whether The University’s policies, rules and regulations are suitable and sufficient to prevent the type of the harm outlined in the Freeh Report; (b) to evaluate whether past and proposed expenditures of University funds relating to pending civil lawsuits and other matters are in the best interest of The University;(i) _ to evaluate and oversee personnel actions premised on the Freeh Report and the Source Material; G)__ toassess the propriety of instituting legal action on behalf of The University relating to matters addressed in the Freeh Report or circumstances surrounding issuance of the Freeh Report; (k) to objectively determine whether the conclusions in the Freeh Report mischaracterized and misrepresented an alleged institutional failure by The University and its administration and, if so, whether the SITF, the Chairman or any other Trustee knew or should have known that the Freeh Report was inaccurate; (1) to permit all Trustees to openly and fully study and evaluate The University and recommend needed changes, including changes to The University’s corporate governance; and (m) _ for other proper purposes related to the Petitioner Trustees’ discharge of their independent fiduciary duties to The University. 22. Petitioner Trustees have complied with all requirements in 15 Pa. C.S.A. § 5512 with respect to the form and manner of demanding inspectionand examination of the Source Material and the inspection sought by Petitioner Trustees is for a proper purpose. 23. The University has not shown and cannot show that the information sought by the Petitioner Trustees is not reasonably related to the performance of their duties as Trustees or that the Petitioner Trustees are likely to use the information in a way that would violate a duty owed to The University." 24. The Chairman of the Board of Trustees and unidentified “Board leadership” refuse to allow Petitioner Trustees to inspect or copy the Source Material. This refusal discourages discussion and dissent, interferes with independent Trustee oversight duties, prevents inquiry and promotes the unchecked exercise of authority by the Chairman and unidentified “Board leadership” over vitally important University matters. These are the very purported “governance” failures that the Freeh Report identified as the root cause of the underlying scandal. This secretive “us v. them” approach by the Board “ Petitioner Trustees will respect and maintain legal privilege claimed by The University with respect to identified and logged Source Material unless and until a Court finds that the asserted privilege is not applicable. Given the circumstances surrounding the engagement of FSS and FGIS including the waiver of privilege referenced in the Freeh Report, the many publications of the material underlying the Freeh Report and the court orders compelling disclosure of the same material to parties adverse to The University, it is anticipated that privilege will not be widely invoked or recognized. 12Chairman cannot be squared with the full and equal right of access to corporate information conferred by the Nonprofit Corporation Law. 25. The Chairman's continuing refusal to authorize Petitioner Trustees to inspect the Source Material violates the Pennsylvania Nonprofit Corporation Law because it creates separate classes of Trustees, some with superior rights of access to corporate information, Board leadership, and others with inferior rights, including the Petitioner Trustees. 26. In response to the Petitioner Trustees’ statutory demand to inspect and copy the Source Material, counsel for The University publicly proffered a purported “compromise” that includes production of some, but not all, of the Source Material pursuant to an appropriate confidentiality agreement. Petitioner Trustees already agreed to accept the Source Material pursuant to an appropriate confidentiality agreement. This, however, does not moot the demand to inspect because the Chairman and unidentified “Board leadership” continue to refuse to provide all of the Source Material pursuant to an appropriate confidentiality agreement. The purported public compromise is a transparent tactic intended to undermine the lawful demand to inspect the Source Material while continuing to conceal information from the Petitioner Trustees and other Trustees.27. For these reasons, University Trustees, including Petitioner Trustees, have a right to inspect and copy the Source Material pursuant to 15 Pa. CSA. § 5512. WHEREFORE, Petitioner Trustees respectfully request that the Court enter an Order compelling the inspection, examination and copying of the Source Material forthwith and awarding counsel fees to Petitioner Trustees. Respectfully submitted, L Daniel T. Brier (PA ID 53248) dbrier@mbklaw.com Donna A. Walsh (PA ID 74833) dwalsh@mbklaw.com Frank J. Brier (PA ID 73044) forier@mbklaw.com Attorneys for Petitioners, Trustees of The Pennsylvania State University Duly Elected by Its Alumni Myers, Brier & Kelly, LLP 425 Spruce Street, Suite 200 Scranton, PA 18503 Phone: (570) 342-6100 Fax: (570) 342-6147 Date: April 20, 2015VERIFICATION 1, Edward B, Brown, III, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, I have relied upon counsel in making this verification, This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unsworn falsification to authorities, which provides that if | make knowingly false statements, I may be subject to criminal penalties aa Sa Edward B. Brown, I oe 4201SRIFICATION 1, Barbara L. Doran, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel, Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, Thave relied upon counsel in making this verification. ‘This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unsworn falsification to authorities, which provides that if I make knowingly false statements, I may be subject to ceimlnak nates,VERIFICATION I, Robert C. Jubelirer, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, ‘have relied upon counsel in making this verification. This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unswom falsification to authorities, which provides that if I make knowingly false statements, I may be subject to criminal penalties. ype [1s eboney Robert C. Suir]VERIFICATIO! 1, Anthony P, Lubrano, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, Thave relied upon counsel in making this verification. is statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unsworn falsification to authorities, which provides that if make knowingly false statements, I may be subject to criminal penalties. ge Pia ze $.h0.1TVERIFICATION 1, Ryan J. MeCombie, Trustee of ‘The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, Thave relied upon counsel in making this verification. ‘This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unswom falsification to authorities, which provides that if | make knowingly false statements, I may be subject to criminal penalties. Date: _/ AU/14 Ryan J. McCombieVERIFICATION 1, William F. Oldsey, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel, Ihave relied upon counsel in making this verification. This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unswom falsification to authorities, which provides that if | make knowingly false statements, I may be subject to criminal penalties. pate: FAYYERIFICATIO! I, Alice W. Pope, Trustee of The Pennsylvania State University, hereby certify that I have read the foregoing document which has been drafted by my counsel. Factual statements contained therein are true and correct to the best of my knowledge, information and belief although the language is that of my counsel and, to the extent the content of the foregoing document is that of counsel Ihave relied upon counsel in making this verification. This statement is made subject to the penalties of 18 Pa. C.S.A. § 4904 relating to unswomn falsification to authorities, which provides that if | make knowingly false statements, I may be subject to criminal penalties Btiuw, P Alice W. Pope pate: “f= 20 = 157MEMORANDUM TO: Keith E. Masser, Chairman of the Board of Trustees Eric J. Barron, President Undersigned Alumni-Elected Trustees of The Pennsylvania State University DATE: April 15, 2015 RE: Formal Demand To Inspect and Copy Corporate Record: We, the undersigned Alumni-Blected ‘Irustees of The Pennsylvania State University, hereby formally exercise our rights to inspect and copy the materials and documents generated, prepared, gathered, reviewed or relied upon (collectively "Source Material") by Freeh, Sporkin & Sullivan, LLP ("FSS") or Freeh Group International Solutions LLC ("GIS") in investigating and preparing the Report of the Special Investigative Counsel Regarding the Actions of The Pennsylvania State University Related to the Child Sexual Abuse Committed by Gerald A. Sandusky (the "Freeh Report"), This request to inspect and copy the Source Material is made pursuant to Section 5512(a) of the Pennsylvania Nonprofit Corporation Law of 1988. This request includes, but is not limited to, the approximately 470 unredacted interview memoranda generated in connection with the investigation as well as all communications involving members of the Special Investigative Task Force of The Pennsylvania State University Board of Trustees and FSS, FGIS or the Pennsylvania Office of Attorney General and/or the NCAA, We requite access to the Source Material to fulfill our fiduciary obligations as Trustees, including to ensure that University funds are properly allocated, to understand and fulfill the University’s legal responsibilities, to evaluate the conclusions and recommendations in the Freeh Report, and to determine whether anyone, including current or former Trustee(s), exerted undue influence over the preparation of the Freeh Report. We also require access to the Source Material to independently evaluate the liabilities and operations of the University, including the University’s valuation and settlement of claims filed against the University and to independently assess whether the Freeh Report objectively, fairly and accurately summarizes the Source Material. EXHIBIT "A"April 15, 2015 i Page? Inspection of the Source Material is reasonably related to the performance of our duties and we will use the Source Material only in 2 manner consistent with our duties as ‘Trustees to the University, Please confirm in writing within two (2) business days that you will direct counsel for the University to make the Source Material available for inspection and copying by our counsel, Daniel T. Brier, In the event that the Source Materials are not made available pursuant to this demand, we will commence an action in accordance with Section '5512(b) to compel the inspection and copying of the Source Material Sincerely, Qe TL. Doran Qe Fle Robert C, Jubelirer Giller Loc Anthony P. Lubrano APF AD Ryan J. MeCombie iltad ¥. Oldsey Bice 00) Pape Alice W. PopepSEEIPI GEA alates om cine April 17, 2015 To Trustes Edward B. Brown, TIT Barbara L, Doran Robert C. Jubelirer Anthony P, Lubrano Ryan J. MeCombie William F. Oldsey Alice W. Pope Re: Formal Demand to Inspect and Copy Corporate Records Dated April 15, 2015 As you know, I represent the Pennsylvania State University. I have been asked by Chairman Masser and President Barron to respond to your memorandum dated April 15, 2015 containing a demand to inspect and copy corporate records of the University. In particular, 1 note that you have demanded “materials and documents generated, prepared, gathered, reviewed or relied upon (collectively “Source Materials”) by Freeh Sporkin & Sullivan, LLP (“FSS”) or Frech Group Intemational Solutions LLC (“FGIS") in investigating and preparing the Report of the Special Investigative Counsel Regarding the Actions of The Pennsylvania State University Related to the Child Sexual Abuse Committed by Gerald A. Sandusky (the “Frech Report”).”” President Barron and Board leadership do not agree that you have a right or duty to review the Source Materials in order to fulfill your fiduciary duties as Trustees There is no matter pending before the Board for which a review of the Source Materials is relevant, ‘There is no decision or vote you are being asked to make as Trustees that would require a review of the Source Materials. Finally, as you know, in October 2014, the Board of Trustees deliberated on a proposed resolution to review and assess the Source Materials and the Freeh Report and specifically rejected it. Instead, the Board of Trustees determined, in a different resolution approved on October 28, 2014 that it was not in the University’s best interests to conduct a reevaluation of the Freeh Report at this time. Some of the records you have requested include sensitive and private information shared by hundreds of Penn State employees, officials, and others associated with the University in exchange for a promise of confidentiality, In President Barron’s view, honoring the promises of confidentiality that were made to the University’s trustees, administration, students and staff Cente Square West + 1500 Market Steel 38 Foor « odhene: 15) EXHIBIT "B"April 17, 2015, Page 2 members is vitally important and in the University’s best interests, The very fact that you have publicly demanded to review this information is harmful to the University Furthermore, some of the documents are attorney-client communications and/or are protected by the work product doctrine and other privileges and statutory restrictions. Maintaining the protections afforded to these documents is crucial to the University’s interests, Because you do not have any right or duty to review privileged materials, for you to review these materials runs the risk of damaging the University’s privilege. ‘The University administration has directed me to work with you to reach a compromise solution that will satisfy your desire to review the Source Materials, while at the same time protecting the University’s interest in safeguarding its privileged materials and the confidentiality of individuals who were interviewed by Judge Freeh and his team, To date, Trustees Lubrano and Oldsey have refused the University’s prior offers of compromise, ‘Their ongoing refusal to review the millions of non-privileged Source Materials that the University would make available to them if they signed a confidentiality agreement is perplexing, J suggest that before pursuing this matter further, you sign a confidentiality agreement and review the non-privileged documents that we have made available to you. Any other course of action would subject the University to additional and unnecessary burdens and expenditures of resources and is not in the University’s best interest. The University is willing to provide access to the literally millions of non-privileged documents reviewed by Judge Freeh, but for the reasons set forth above, the University will not provide or grant access to the privileged and/or work product protected materials, including the interview memoranda which are subject to expectations of confidentiality and privacy, and Which do not relate to the performance of your duties as, how ep... ea, Ir. JFO:sg cc: Keith E. Masser, Chairman of the Board of Trustees Eric J. Barron, President