Judge granted Oberlin College’s motion to stay execution of the judgment, but required the posting of a bond in the amount of the judgment plus three years interest as security.
The compensatory and punitive damages of $25 million (after reduction for tort reform caps), plus the over $6.5 million in attorney’s fees and costs, put Oberlin College almost $32 million in debt to Gibson’s Bakery and its owners.
Absent some judicial action, the next step would have been for the Gibsons to execute on the judgment, meaning start collecting the money through post-judgment remedies, such as seizing bank accounts and physical property.
Oberlin College, which intends to appeal once post-trial motions are over, obviously doesn’t want its bank accounts, computer equipment, and er, Dean of Students’ office furniture, seized just as the freshman class was arriving. So Oberlin College filed a motion for a stay of execution of the judgment until such time as it can appeal and obtain an appeal bond.
We covered the parties’ arguments for and against in our prior post, Gibson’s Bakery: “there is serious concern about [Oberlin College’s] ability to pay this sizeable judgment three years from now”. Gibson’s Bakery devoted much of its opposition to arguing for a bond on the basis that Oberlin College was in poor financial shape:
A stay of judgment execution is not automatic under Ohio law for private litigants. Defendants do not have some absolute right to a stay of execution. Should the Court decide, in its discretion under Civ. R. 62(A), that Defendants are entitled to bond off the execution of the judgment, then Plaintiffs request that the bond be set at $36,356,711.56….
The need for such bond is made clear by the College’s own statements about its dire fmancial straits. If the College is to be believed, there is serious concern about its ability to pay this sizeable judgment three years from now. At trial, and in its recent filing, the College represented that there was only $59.1 million of unrestricted endowment funds available to pay any dollar judgment and that $10 million of those funds had already been committed to pay down the College’s existing debt. [Trial Tr., June 12, 2019 at 95:13-21] There remains $190 million of existing debt on the College’s books. [Id.] The College has also testified that it has a significant operating deficit and that its deficit situation is not sustainable…. [Trial Tr., June 12, 2019 atpp. 86:1-6, 88:1-9]
The College also testified at trial that they have experienced a “significant” and “steady” decline of enrollment from 2014 to 2018. [Trial Tr., June 12, 2019 at 79:4-17] In describing their economic position, the College offered Exhibit N-33 at trial, which is its May 10, 2019 report entitled “One Oberlin: The Academic & Administrative Program Review Final Report.” [Trial Tr., June 12, 2019 at pp. 99-100] In that Report, the College describes its alleged financial hardships and warns about how many other private colleges have had to close due to financial difficulties …[Ex. N-33, pp. 4-5].
Thus, we know that Oberlin College could attempt to continue using its available funds to pay down its other debts between now and the filing of a notice of appeal, thereby leaving less available to pay the judgment in this case.
Judge John Miraldi has ruled, entering an Order (pdf.)(full embed at bottom of post) that grants the stay of execution, but conditions it on Oberlin College posting a $36,367,711.56 bond, the full amount requested by the Gibsons. That amount includes three years of future interest.
Clearly, Ohio Civ. R. 62(A) gives the Court great discretion in determining what conditions, if any, are proper to grant a stay of execution of the judgment and to afford security to the Plaintiffs. After considering the Parties respective briefs, the attached exhibits, and applicable precedent the Court hereby orders that the judgment is stayed, as of the date of this entry, subject to the following conditions:
1) Within seven (7) days, Defendants shall post a bond in the amount of $36,367,711.56. Failure to timely post the bond shall result in the stay being terminated. Timely posting of the bond shall stay the judgment until August 19, 2019;
2) If Defendants timely file their post-trial motions on or before August 19, 2019, the stay shall be extended until September 9, 2019. Plaintiffs shall have fourteen (14) days to respond to any post-trial motions and no reply briefs shall be accepted. The Court will rule on Defendants’ motions by September 9, 2019. See Local Rule 9(/1).
While the judge did not explain the reasons behind his requiring a bond, it’s pretty clear that he accepted that there is at least some meaningful risk that the Gibsons will not be able to collect without security.
I presume Oberlin College will post the bond.
[Featured Image: Judge John Miraldi reads punitive damages verdict][Photo credit Bob Perkoski for Legal Insurrection Foundation]
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