The family that pledged to give the University of Chicago its second-largest donation ever is suing the prestigious Hyde Park university, alleging a series of contract-nullifying failures by the school over the last two years.
The lawsuit, filed last month in U.S. District Court in Oklahoma, tells of an underwhelming bang for the donors’ 100 million bucks. Now, they’re asking a judge to void the deal and recoup the family the nearly $23 million already given to U. of C.
In 2015, The Thomas L. Pearson and The Pearson Family Foundation pledged $100 million to the U. of C. to establish The Pearson Institute for the Study and Resolution of Global Conflicts.
“At the end of this, when we look back, 10 to 20 years from now, we want to have changed, fundamentally, the way we think about global conflict,” Daniel Diermeier, then-dean of the university’s Harris School of Public Policy, said at the time.
In the two-and-a-half years since, the donors say they no longer trust U. of C. to put their money to good use.
“As a result of having breached its obligations and having engaged in deliberate misrepresentations over a period of more than two years, the U. of C. has caused the Foundation to lose all confidence that the U. of C. is an appropriate or capable steward of the Pearson Family legacy,” the suit states.
The five-count lawsuit alleges breach of contract, breach of fiduciary duty, fraudulent concealment and breach of duty of good faith and fair dealing.
The lawsuit was first reported by the university’s student newspaper, The Chicago Maroon.
The foundation’s lawsuit alleges that the university failed to hire a proper director for The Pearson Institute within the agreed upon time frame, instead reassigning current faculty member James Robinson to be the institute’s “Faculty Director.”
“Faculty Director Robinson is not tasked with, and, by U. of C.’s own admission, is not suited for, the ‘day-to-day operations’ and management role required of an Institute Director,” the lawsuit states.
The lawsuit goes on to allege that Robinson’s title was surreptitiously changed to “Institute Director” on the institute’s website just before the deadline.
The Pearsons also take issue with the faculty hired by the institute. As part of the agreement, the institute was to hire four faculty members.
The suit states the family understood that top-tier talent would be more expensive and they were willing to pay for it.
“Funding chaired professorships was essential to attract the caliber of distinguished scholars with the profile and reputation desired to establish [the institute] as a quickly emerging world class entity,” the suit states.
Only three of those positions have been filled — including Robinson’s — and the hires made so far have not been up to the Pearsons’ standards. The suit goes on to say that academic nepotism likely played a role in their hiring.
In a statement issued Monday afternoon, the University of Chicago pushed back against the lawsuit, saying it has honored the agreement struck with the Pearsons.
“The University has a demonstrated history of responsibly stewarding and administering gifts and grants of all sizes and for many purposes,” the statement said.
“The University honors its grant agreements with its donors, and it did so with the Pearsons. Further, all academic and hiring decisions are the sole purview of the University and its faculty, guided by the principle of academic freedom. The Pearsons’ complaint is without merit, and the University will vigorously defend itself against the baseless allegations.”
The suit also alleges that U. of C. failed to deliver an operating plan and budget, along with scholarships, for the institute. The required curriculum was also not developed, the suit states.
Timothy and Thomas Pearson — who had no prior connection to U. of C. — were present at the 2015 press conference to announce the donation. Thomas Pearson said that, before choosing U. of C., they considered 10 to 12 other schools.
“You made the right decision,” university president Robert Zimmer said at the time.
The Pearsons were raised in rural Iowa by a Methodist minister and college professor, both of whom were “deeply engaged in the Civil Rights Movement, nuclear disarmament and other important issues of their time,” the suit states.
“As the culmination of both Tom’s and Tim’s successful business careers, they conceived TPI and TPGF as the capstones of their life-long commitment to philanthropy and as their most important effort to create something during their lifetimes that would be consequential, significant and for the public good.”