Transparent GMU v. George Mason University

PRESENT: All the Justices
TRANSPARENT GMU, ET AL.
OPINION BY
v. Record No. 181375 JUSTICE CLEO E. POWELL
December 12, 2019
GEORGE MASON UNIVERSITY, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
John M. Tran, Judge
Transparent GMU and Augustus Thomson (collectively, “Transparent”) appeal from the
judgment of the Circuit Court of Fairfax County (“circuit court”) dismissing with prejudice its
first amended verified petition for writ of mandamus. Transparent sought to obtain donor
information under the Virginia Freedom of Information Act (“VFOIA”), Code §§ 2.2-3700 et
seq., from George Mason University (“GMU”) and the George Mason University Foundation,
Inc. (“the Foundation”). The questions before us on appeal involve whether the Foundation, a
privately held corporation, established to raise funds and manage donations given for the benefit
of GMU, is subject to VFOIA. We conclude that the Foundation’s records are not subject to
disclosure under VFOIA.
I. BACKGROUND
A. History of GMU
In 1949, an exploratory committee, in conjunction with the University of Virginia
(“UVA”), was formed to assist in creating a demand for higher education in Northern Virginia.
In 1955, UVA’s Board of Visitors approved the establishment of a branch college to serve
Northern Virginia. The General Assembly thereafter enacted legislation establishing the George
Mason College of the University of Virginia (“the College”) “subject to the supervision,
management, and control of the [UVA] Rector and Visitors.” 1959 Acts ch. 60 [H 59] (Apr. 27,
1959).
The College opened in Fairfax County as a two-year institution in 1964. Due to the
rapidly increasing population in Northern Virginia, UVA requested that the General Assembly
authorize the College’s expansion into a four-year institution. In 1966, the General Assembly
approved the request and the College became a four-year degree-granting institution while
remaining under UVA’s direction. 1966 Acts ch. 68 [H33] (Mar. 1, 1966).
In 1972, George Mason University officially separated from UVA and became its own
public institution of higher education. 1972 Acts ch. 550 [H210] (Apr. 7, 1972). The General
Assembly included GMU in the Code as an “educational institution[]” and “public [body] . . . as
[a] governmental instrumentalit[y] for the dissemination of education.” Code § 23-14 (now
Code § 23.1-1101).
Today, GMU continues to operate as a public institution of higher education and is
managed by a board of visitors whose members are appointed by the Governor. Code
§§ 23.1-1500, -1501. In addition to conferring degrees and managing GMU’s academic
programming, “[t]he board shall appoint all teachers, staff members, and agents and fix their
salaries and generally direct the affairs of [GMU].” Code § 23.1-1503(A). The General
Assembly encourages all of the Commonwealth’s public institutions of higher education “to
increase their endowment funds and unrestricted gifts from private sources and reduce the
hesitation of prospective donors to make contributions and unrestricted gifts.” Code
§ 23.1-101(1). As relevant to the issues before us in this case, each public institution of higher
education is further authorized by the General Assembly to “[c]reate or continue the existence of
one or more nonprofit entities for the purpose of soliciting, accepting, managing, and
2
administering grants and gifts and bequests, including endowment gifts and bequests and gifts
and bequests in trust.” Code § 23.1-1010(3).
B. History of the Foundation
The George Mason College Foundation, Inc. (“College Foundation”) was incorporated by
three local businessmen and members of the College’s Advisory Committee in February 1966,
just prior to the General Assembly’s acceptance of the College as a four-year degree granting
branch of UVA. The College Foundation’s Articles of Incorporation listed the three men as
members of the initial Board of Trustees who would manage the College Foundation during its
first year of operation. The College Foundation’s stated purposes of accepting gifts and
donations was “exclusively educational and charitable.” The College Foundation was “operated
exclusively to receive, hold, invest and administer property and to make expenditures to or for
the benefit of [the College].” In addition, the College Foundation “promote[d] the advancement
and further[ed] the aims and purposes of [the College] . . . as an institution of higher education
by the development and application of financial resources.” The Board of Trustees approved
Bylaws for the College Foundation in November 1966.
Two years after the creation of GMU, in 1974, the George Mason College Foundation
officially changed its name to “The George Mason University Foundation, Inc.” On October 30,
1991, Articles of Incorporation signed by Carrington Williams created “The George Mason
University Educational Foundation, Inc.” (“Educational Foundation”). 1 These Articles of
Incorporation gave the Educational Foundation the authority to issue 1,000 shares of common
stock to the George Mason University Foundation.
1
Carrington Williams was a member of the Board of Trustees of the George Mason
University Foundation but had no known affiliation with GMU.
3
On July 1, 1992, the George Mason University Foundation transferred over $21 million
in assets to the Educational Foundation in exchange for all of the Educational Foundation’s
shares of stock. This transfer represented all of the George Mason University Foundation’s
assets other than the telecommunications assets of Capitol Connection and F Corporation. The
George Mason University Foundation became “The George Mason University Instructional
Foundation, Inc.” in August 1993. In October 1993, the Educational Foundation was renamed to
The George Mason University Foundation, Inc. (the current Foundation).
Today, the Foundation continues to operate as a private non-stock corporation organized
under the laws of Virginia. The Foundation and GMU regularly enter into a series of contractual
arrangements, one of which is the Affiliation Agreement. The Affiliation Agreement governs
the relationship between GMU and the Foundation wherein they “acknowledge that each is an
independent entity.” The Affiliation Agreement also provides that “[GMU] recognizes that the
Foundation is a private corporation with the authority and obligations to keep all records and
data confidential with the requirements of law.” The Affiliation Agreement confirms the
Foundation’s purpose as caretaker and manager of funds from private donors intended to benefit
GMU, in accordance with the intent of those donors. GMU also acknowledges that the
Foundation controls the decision of whether to accept or reject donor gifts.
C. Circuit Court Proceedings
On April 5, 2017, Transparent filed VFOIA requests with GMU and the Foundation
seeking the following:
For the years of 2008 through 2012, any grants, cooperative
agreements, gift agreements, contracts, or memoranda of
understanding (including any attachments thereto) involving a
contribution to or for [GMU] from any of [several charitable
foundations under Charles Koch, Claude R. Lambe, and David
Koch].
4
GMU responded that it did not have any of the requested records in its possession. The
Foundation responded that it was not a public body and its records were not public records
subject to VFOIA.
Transparent thereafter filed a verified petition for mandamus, injunctive, and declaratory
relief (“original petition”) against GMU and the Foundation. Among the theories for relief,
Transparent asserted that “[a]s an alter-ego of [GMU], the Foundation must be considered a
public body subject to [VFOIA], and the Foundation and/or [GMU] therefore denied
[Transparent] their rights under [VFOIA] by failing to adequately process their request.”
Transparent claimed that GMU delegated “important public functions” to the Foundation and
GMU “continues to exercise control over these functions,” including establishing policies for the
Foundation’s acceptance of gifts and fund disbursement, providing the salary for the
Foundation’s president and Chief Executive Officer, and requiring the Foundation to consult
with GMU “regarding the Foundation’s fund-raising and donor acquisition programs and the
Foundation’s gift management and gift acceptance policies.” Transparent further alleged that “at
all relevant times, [GMU] and the Foundation have acted as a single entity,” and that GMU’s
employment of the Foundation as an alter-ego denied their VFOIA rights.
GMU and the Foundation demurred to Transparent’s alter-ego theory, contending 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 circuit court sustained the
demurrer to the alter-ego theory and granted Transparent leave to amend its remaining claims.
Transparent next filed a verified first amended petition for mandamus relief (“amended
petition”), alleging two counts against GMU and three counts against the Foundation.
Transparent alleged that:
5
[Count] I: [GMU] denied [Transparent] their rights under the Act by refusing to
search for and provide requested records as the legal custodian of records held by
its agent, the Foundation, in the transaction of public business.
[Count] II: [GMU] denied [Transparent] their rights under the Act by refusing to
search for and provide requested records as the legal custodian of records
possessed and/or used in the transaction of public business by Dr. Janet E.
Bingham, an officer, employee, and/or agent of the University.
[Count] III: As an entity created to perform delegated functions of [GMU] and/or
to advise [GMU], the Foundation is a public body subject to the Act and therefore
denied the Petitioners their rights under the Act by failing to respond to their
records request.
[Count] IV: As a corporation supported principally by public funds, the
Foundation is a public body subject to the Act and therefore denied [Transparent]
their rights under the Act by failing to respond to their records request.
[Count] V: The Foundation denied [Transparent] their rights and privileges under
the Act because the requested records are public records, which the Foundation
must ensure are open to inspection and copying regardless of its status as a public
body.
The Foundation and GMU filed demurrers and GMU filed a plea in bar of sovereign
immunity. The Foundation argued that only public entities are subject to VFOIA, regardless of
whether the records requested are public records. GMU argued that it was not required to obtain
records never in its possession.
The circuit court entered a memorandum opinion and order sustaining GMU’s plea in bar
against Counts I and II, and sustaining the Foundation’s demurrer to Counts IV and V. The
circuit court began by addressing the alter-ego theory that it had dismissed, and stated that it was
dispositive that “there was no evidence that the corporate body was created as a sham entity,”
noting that Code §§ 23.1-101 2 encourages public universities to increase their endowment funds
2
Code § 23.1-101 provides:
It is the public policy of the Commonwealth that:
6
and Code § 23.1-1010 3 allows the establishment of private entities to engage in fundraising for
public institutions.
As to Counts I and II, the court determined that as a public entity, GMU was only
responsible for documents it did not possess if (1) it originally possessed the records, which was
not alleged, or (2) it knows of another public entity that possesses the records, in which case, it
need only provide contact information for that entity. The court also found that GMU was not
required to produce the Foundation’s documents merely because Dr. Janet E. Bingham (“Dr.
Bingham”) serves as both Vice President of University Advancement and Alumni Relations for
GMU and President and Chief Executive Officer of the Foundation. The court concluded that
Dr. Bingham “[w]hen 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.” In
1. Each public institution of higher education . . . shall be
encouraged in their attempts to increase their endowment funds
and unrestricted gifts from private sources and reduce the
hesitation of prospective donors to make contributions and
unrestricted gifts; and
2. Consistent with § 10 of Chapter 33 of the Acts of Assembly of
1927, in measuring the extent to which the Commonwealth shall
finance higher education in the Commonwealth, the availability of
the endowment funds and unrestricted gifts from private sources
received by public institutions of higher education . . . shall neither
be taken into consideration in nor used to reduce state
appropriations or payments and shall be used in accordance with
the wishes of the donors of such funds to strengthen the services
rendered by these institutions to the people of the Commonwealth.
3
Code § 23.1-1010(3) provides that public institutions may “[c]reate or continue the
existence of one or more nonprofit entities for the purpose of soliciting, accepting, managing,
and administering grants and gifts and bequests, including endowment gifts and bequests and
gifts and bequests in trust.”
7
sustaining the demurrer, the court “conclude[d] that, as a matter of law, where an employee of a
public body serves in an official capacity for a third party, that service does not automatically
subject documents held by that third party to VFOIA [disclosure obligations].”
As to Counts IV and V, the court held that the Foundation receives insufficient public
funds to be designated a public entity, and VFOIA only compels public entities to produce public
records. As to Count III, however, the court concluded that whether the Foundation was a public
body depended on the “totality of factors present in the relationship between the Foundation and
[GMU].”
The circuit court held a bench trial on Count III. Mary Susan Van Leunen (“Van
Leunen”), the chief financial officer of the Foundation, testified that the Foundation’s mission is
to assist GMU by accepting, managing, and investing
philanthropic funds that come in to the Foundation and we expend
those funds for the benefit of [GMU]. We also manage a real
estate portfolio for the benefit of [GMU] in most cases, and operate
really to accept and manage philanthropic funds, including our
endowments and real estate properties.
Van Leunen explained that the Foundation is managed by a Board of Trustees and that GMU
does not control the Foundation. She testified that no GMU employee, including the President,
can direct the Foundation “as to what to do or how to do it.”
Van Leunen testified that the Foundation has assets of “approximately [$]400 million”
and receives between $50 and $60 million in gifts and pledge payments annually. She stated that
gifts are assessed administrative fees and endowment accounts are assessed annual management
fees, neither of which is paid by GMU. She also stated that the Foundation receives a small
budget from GMU. In 2016, the Foundation received a budget of $13,500 and, in 2017, $13,600
from GMU, out of which student assistants were paid.
8
Van Leunen stated the Foundation is located on GMU’s campus in a building the
Foundation owns, and from which the Foundation leases offices to GMU. She testified that
Foundation staff are listed on GMU’s directory and the Foundation’s website is located on
GMU’s website for convenience. She further testified the Foundation pays more than 75% of
GMU’s president’s salary because of the limit on state funding allowed to be used for that
purpose.
Van Leunen admitted that the Foundation is designated as a “component unit” in GMU’s
accounting, and explained that this designation refers to “private independent entities.” She
explained the designation was used to reflect the Foundation as a source of potential future
financial benefit to GMU.
Van Leunen also testified that she is a member of GMU’s Gift Acceptance Committee,
which is a committee that reviews unusual gifts to GMU. She stated that she assisted in drafting
GMU’s gift acceptance policy, because it protects the Foundation from accepting gifts GMU
could not use. She explained that the Foundation’s distributions are controlled by “[t]he donors’
intentions” and that GMU does not direct or control these distributions. She further stated that
the Foundation does not engage in fundraising, but once funds are raised, the Foundation
assumes a caretaker role to manage, invest, and disburse those funds. She admitted that the 2013
affiliation agreement designates the Foundation as GMU’s “primary depository for private gifts
on behalf of the university,” and the Foundation is designated to “receive all of those private
gifts.”
On July 5, 2018, the circuit court issued its letter opinion and found that the Foundation
was not a public body under VFOIA. The court first noted several facts about the relationship
between GMU and the Foundation that were similar to facts courts outside Virginia had found
9
subjected a private foundation to FOIA disclosure. Those facts included: (1) GMU’s right to
audit the Foundation; (2) the Foundation’s obligation to comply with GMU’s gift management
policies; and (3) that GMU must approve any gift agreement to support a new university
program or activity. While noting those factors, the court relied on the statute and determined
that the Foundation was not a public body because the Foundation was neither “(1) wholly or
principally supported by public funds, or (2) an entity of a public body created to perform
delegated functions of a public body or to advise a public body.”
Relying on opinions of the Virginia Freedom of Information Advisory Council (“the
Advisory Council”) and the Office of the Attorney General (“the Attorney General”), the circuit
court concluded that private foundations that operate independently of the public institutions they
support are not sub-entities of that institution, and because the Foundation operates under its own
bylaws and articles of incorporation, the Foundation is not an entity of GMU, and therefore, not
a “public body.” Additionally, the court reasoned that while fundraising “strengthens the
services rendered by the public university,” under Virginia’s statutes, “[f]undraising is neither
itself a service nor a statutory objective of the public institution” and “[a]dvancing a statutory
objective is not equivalent to transacting public business.” The circuit court went on to find that
“[d]onations restricted in their use become public records once a public body accepts and makes
use of the funds in observance with their restrictions.” Regarding the Gift Acceptance
Committee, the circuit court found that it was subject to VFOIA.
In applying the same rationale that the Foundation is neither a
public body nor engaged in a public function, any such
independence or exclusion from VFOIA does not extend to the
Gift Acceptance Committee. . . . Here, [GMU] through its
personnel dictates the operations of the Gift Acceptance
Committee. [GMU’s] acceptance of any condition or restriction on
the use of donated funds necessarily produces a record that is
subject to VFOIA.
10
The circuit court dismissed the amended petition with prejudice. This appeal followed.
II. ANALYSIS
A. Standard of Review
“On issues of statutory interpretation, we review the circuit court’s decision de novo.”
Virginia Educ. Ass’n v. Davison, 294 Va. 109, 115 (2017). “When the language of a statute is
unambiguous, we are bound by the plain meaning of that language.” Conyers v. Martial Arts
World of Richmond, Inc., 273 Va. 96, 104 (2007). “Furthermore, we must give effect to the
legislature’s intention as expressed by the language used unless a literal interpretation of the
language would result in a manifest absurdity.” Id.
B. Pertinent Virginia Law
1. VFOIA
“VFOIA requires ‘public records’ to be ‘open to inspection and copying by any citizens
of the Commonwealth during the regular office hours of the custodian of such records.’” The
Daily Press, LLC v. Office of the Exec. Sec’y of the Sup. Ct. of Va., 293 Va. 551, 557 (2017)
(quoting Code § 2.2–3704(A)). “VFOIA also requires that ‘[t]he provisions of this chapter shall
be liberally construed to promote an increased awareness by all persons of governmental
activities and afford every opportunity to citizens to witness the operations of government.’”
American Tradition Inst. v. Rector and Visitors of Univ. of Va., 287 Va. 330, 339 (2014) (quoting
Code § 2.2-3700(B)). However,
a VFOIA request only applies to a “public body or its officers and
employees.” Similarly, VFOIA only applies to “public records in
the custody of a public body.” Accordingly, all private records are
exempt. These . . . [are] the basic parameters for which documents
may be requested and from whom.
11
Id. at 339-40 (quoting Code § 2.2-3701). VFOIA defines “public records” as:
all writings and recordings that consist of letters, words or
numbers, or their equivalent, set down by handwriting,
typewriting, printing, photostatting, photography, magnetic
impulse, optical or magneto-optical form, mechanical or electronic
recording or other form of data compilation, however stored, and
regardless of physical form or characteristics, prepared or owned
by, or in the possession of a public body or its officers, employees
or agents in the transaction of public business.
Code § 2.2-3701. A “public body” is defined as:
“Public body” means any legislative body, authority, board,
bureau, commission, district or agency of the Commonwealth or of
any political subdivision of the Commonwealth, including cities,
towns and counties, municipal councils, governing bodies of
counties, school boards and planning commissions; governing
boards of public institutions of higher education; and other
organizations, corporations or agencies in the Commonwealth
supported wholly or principally by public funds. It shall include
. . . (ii) 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. It shall
not exclude any such committee, subcommittee or entity because it
has private sector or citizen members.
Id.
2. Public Institutions of Higher Education and Foundations
GMU is a “public institution of higher education” as defined in Code § 23.1-100.
The board of visitors of George Mason University (the board) is a
corporation under the name and style of “The Rector and Visitors
of George Mason University” and has, in addition to its other
powers, all the corporate powers given to corporations by the
provisions of Title 13.1 except those powers that are confined to
corporations created pursuant to Title 13.1. The board shall at all
times be under the control of the General Assembly.
Code § 23.1-1500.
The General Assembly has long maintained that “the public policy of the
Commonwealth” is that
12
[e]ach public institution of higher education, the Frontier Culture
Museum of Virginia, Gunston Hall, the Jamestown-Yorktown
Foundation, the Science Museum of Virginia, and the Virginia
Museum of Fine Arts shall be encouraged in their attempts to
increase their endowment funds and unrestricted gifts from private
sources and reduce the hesitation of prospective donors to make
contributions and unrestricted gifts[.]
Code § 23.1-101(1). To that end, the General Assembly has provided public institutions of
higher education with the power to “[c]reate or continue the existence of one or more nonprofit
entities for the purpose of soliciting, accepting, managing, and administering grants and gifts and
bequests, including endowment gifts and bequests and gifts and bequests in trust.” Code
§ 23.1-1010(3). The Foundation exists as a nonprofit entity that “was created for the purpose of
advancing and furthering the aims and purposes of [GMU] and is a private corporation organized
and operated exclusively to receive, hold, invest, and administer property and to make
expenditures to or for the benefit of [GMU].”
C. VFOIA and Private Nonprofit Corporations
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. 4 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 makes several arguments that the Foundation is a public body inter alia
either as an “entity of GMU”, an “alter ego” of GMU, or is subject to VFOIA as an “agent” of
4
In 2017, legislation was proposed to amend and reenact the definition of “public body”
in Code § 2.2-3701 to include “any foundation that exists for the primary purpose of supporting a
public institution of higher education and that is exempt from taxation under § 501(c)(3) of the
Internal Revenue Code.” SB 1436, Va. Gen Assem. (Reg. Sess. 2017) (unenacted). The bill was
left in the Senate’s Committee on General Laws and Technology.
13
GMU. We disagree. We will address each of Transparent’s arguments that the Foundation is a
public body subject to VFOIA in turn.
1. The Foundation is not an “entity of” GMU for purposes of VFOIA
Transparent argues that the circuit court erred in finding that the Foundation was not “an
entity of” GMU under VFOIA. Transparent submits that the General Assembly intended to
expand the scope of VFOIA when it added the phrase “entity of” to the delegated functions
clause in Code § 2.2-3701. Under Transparent’s construction, Code § 2.2-3701 “must be read to
cover entities, including nonstock corporations that, despite their separate legal identity, were
nonetheless created to perform delegated functions of a public body.” Transparent urges us to
look at the function of the entity while the Foundation and GMU urge us to look at the origin of
the entity and whether the organizations are separate. We disagree with Transparent’s
interpretation.
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.” “This provision simply includes committees,
subcommittees, or entities within the types of public bodies covered by FOIA.” Beck v. Shelton,
267 Va. 482, 487 (2004).
While in the construction of statutes the constant endeavor of the
courts is to ascertain and give effect to the intention of the
legislature, that intention must be gathered from the words used,
unless a literal construction would involve a manifest absurdity.
Where the legislature has used words of a plain and definite import
the courts cannot put upon them a construction which amounts to
holding the legislature did not mean what it has actually expressed.
Daily Press, 293 Va. at 558 (citation omitted).
We must begin with the plain language definition of the word “of” as it is used in Code
§ 2.2-3701. See Conyers, 273 Va. at 104 (“When the language of a statute is unambiguous, we
14
are bound by the plain meaning of that language.”). “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.” Webster’s Third New
International Dictionary 1565 (1993). 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 non-
stock corporation that coexists alongside” GMU.
The analysis of RF&P Corp. v. Little, 247 Va. 309 (1994) is instructive. There we
looked to the genesis and separate corporate identity of RF&P and the Virginia Retirement
System (“VRS”) to determine whether RF&P was “of” VRS, a public body. Finding no such
evidence, we concluded that the RF&P Board was not a public body. To so find would have
“completely disregard[ed] RF&P’s corporate identity.” Id. at 316. Specifically, we stated that
[a] corporate entity cannot be disregarded unless it is proved that
the corporation is “the alter ego, alias, stooge, or dummy of the
individuals sought to be [held personally accountable] and that the
corporation was a device or sham used to disguise wrongs, obscure
fraud, or conceal crime.”
Id. at 316 (alteration in original).
As in RF&P Corp., the reality of the Foundation’s separate identity militates against a
finding that it is an “entity of” GMU. The Foundation has always operated under its own sets of
bylaws, articles of incorporation, and statutes. The first iteration of the Foundation, the College
Foundation, was created as an independent and distinct corporate entity by local businessmen.
The College at the time operated as a branch of UVA. When the General Assembly approved
the College’s expansion into a four-year degree-granting branch of UVA, the College
Foundation continued to operate under its stated charitable purposes of fundraising and
15
managing private donations. When the College separated from UVA and became GMU, the
College Foundation officially changed its name to represent the switch from college to
university. The Board of Trustees instituted a corporate reorganization in 1991 that resulted in
the structure of the current Foundation continuing with its own bylaws, articles of incorporation,
and statutes. The current Board of Trustees has 49 members of which only six have any formal
affiliation with GMU.
The manner in which the Foundation and GMU deal with each other further indicates that
they are separate entities. The record contains evidence that the Foundation and GMU regularly
enter into a series of contractual arrangements. GMU does not supervise the decision making of
the Foundation. Indeed, an Affiliation Agreement governs the relationship between GMU and
the Foundation wherein they “acknowledge that each is an independent entity.” The Affiliation
Agreement also provides that “[GMU] recognizes that the Foundation is a private corporation
with the authority and obligations to keep all records and data confidential with the requirements
of law.”
Moreover, to the extent that the organizations have different purposes, there can be no
delegation of functions from GMU to the Foundation. The statutory objectives for GMU are to
confer degrees on students and approve new academic programs. Code § 23.1-1503. By
contrast, the Foundation’s stated purpose is to serve as the caretaker and manager of funds from
private donors, intended for the benefit of GMU, in accordance with the intent of those donors.
The General Assembly has “encouraged” private fundraising in the sense that it advances the
statutory objectives of public institutions of higher education. Code § 23.1-101. The General
Assembly has not included fundraising from private sources as a government function of public
16
institutions of higher education. Therefore, there can be no delegation of public duties where the
duty does not exist.
Over the years, the Attorney General and the Advisory Council have issued opinions
addressing the status of nonprofit fundraising foundations. These advisory opinions, while not
binding on the Court, are instructive. See Code § 2.2-505 (authorizing the Attorney General to
issue advisory opinions); Code § 30-179(1) (authorizing the Advisory Council to issue advisory
opinions); Fitzgerald v. Loudoun Cty. Sheriff’s Office, 289 Va. 499, 504-05 (2015) (“Our de
novo review takes into account any informative views on the legal meaning of statutory terms
offered by those authorized by law to provide advisory opinions”); Beck, 267 Va. at 492 (“While
it is not binding on this Court, an Opinion of the Attorney General is ‘entitled to due
consideration.’”) (citation omitted). In 2009, the Advisory Council issued an opinion that
addressed the issue of whether a Foundation, which was a financial fundraising agent of a public
body was itself a public body subject to VFOIA. The opinion specifically addressed that part of
the definition of public body which includes the language “any committee, subcommittee, or
other entity however designated, of the public body created to perform delegated functions.”
Advisory Council. Op. AO-09-09 (Oct. 23, 2009). In doing so it stated “that once established,
the Foundation is a corporate entity in its own right separate from the [public agency].” Id. The
opinion then reiterated language from this Court that a corporate entity must not easily be
disregarded. Id. (citing RF&P Corp., 247 Va. at 316). Finding no reason to do so it ultimately
opined that “[a]s a separate corporation, the Foundation is not . . . [an] other entity however
designated of the [public body]” and therefore was not a public body itself subject to VFOIA.
Id.
17
The historical treatment of the statutory language strongly supports the interpretation that
the Foundation is not an entity of GMU. See Advisory Council Op. AO-01-15 (Mar. 17, 2015)
(“a private entity does not become a public body solely because the private entity provides goods
or services to a public body through a procurement transaction”); 1996 Op. Va. Att’y Gen. 15,
1996 WL 658746 (Sept. 3, 1996) (“separate, nonprofit foundations organized for the benefit of
state universities ‘need only comply with the laws that govern such corporations’” (quoting
1984-1985 Op. Va. Att’y Gen. 46). We agree with the advisory opinions and conclude that the
circuit court did not err in finding that the Foundation was a private, separate corporation and
was not an “entity of” GMU created by GMU to perform delegated functions of GMU.
2. The Foundation is not supported by public funds
VFOIA’s definition of “public body” also includes the requirement that the entity be
“supported wholly or principally by public funds.” Code § 2.2-3701. The evidence of the
Foundation’s finances clearly shows the Foundation is not and has never been “supported wholly
or principally by public funds.” Id. 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. Van Leunen testified that “[i]n any given year
[the Foundation] receive[s] between 50 and 60 million dollars in gifts and pledge payments.” 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. The Advisory Council has recognized that “nonprofit
fundraising corporations [such as the American Frontier Culture Foundation] typically raise
money from private sources, which [is] used both to support the operations of the nonprofit
corporation and to provide support to a public body.” Advisory Council Op. AO-09-09 (Oct. 23,
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2009). Instead of receiving public funds, the private nonprofit organizations, like the
Foundation, collect private donations and gifts and pass them on to the public entities, like GMU.
We agree with the circuit court’s finding that the Foundation was not “wholly or principally
supported by public funds” and as such does not fit within the definition of a “public body.”
3. The Foundation is not the alter ego of GMU for purposes of VFOIA
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. Transparent urges us to
determine that the circuit court erroneously applied Code § 23.1-1010(3) and disregarded the
factors enunciated in RF&P Corp. when it found that the Foundation was “not susceptible to a
claim of veil piercing.”
Code § 23.1-1010(3) expressly allows public institutions to “[c]reate or continue the
existence of one or more nonprofit entities for the purpose of soliciting, accepting, managing,
and administering grants and gifts and bequests, including endowment gifts and bequests and
gifts and bequests in trust.” Contrary to Transparent’s argument, we agree with the circuit court
that veil piercing is not warranted when, as here, conduct is “expressly authorized by the General
Assembly.” We also disagree with Transparent’s assertion that the circuit court disregarded
RF&P Corp. To the contrary, the circuit court considered and honored the analysis articulated in
that opinion.
As the circuit court stated, veil piercing is an “extraordinary act to be taken only when
necessary to promote justice.” C.F. Trust, Inc. v. First Flight L.P., 266 Va. 3, 10 (2003).
“[O]nly ‘an extraordinary exception’ justifies disregarding the corporate entity and piercing the
veil.” Id. (citation omitted). The Court will not disregard a corporate entity “unless it is proved
that the corporation is ‘the alter ego, alias, stooge, or dummy of the individuals sought to be
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[held personally accountable] and that the corporation was a device or sham used to disguise
wrongs, obscure fraud, or conceal crime.’” RF&P Corp., 247 Va. at 316 (alteration in original)
(citation omitted).
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.” Richfood, Inc. v. Jennings, 255 Va. 588, 592-93 (1998)
(citation and internal quotation marks omitted). Nor was there any evidence that the Foundation
was used as “a device or sham” by GMU to “disguise wrongs, obscure fraud, or conceal crime.”
RF&P Corp., 247 Va. at 316 (citation and internal quotation marks omitted). As we have
already discussed, the Foundation and GMU are independent corporate entities. While the
Foundation and GMU acknowledge that they share a unique business relationship, their
relationship is governed by formal contractual arrangements that reflect their independent status.
The circuit court did not err when it found that the Foundation is not the “alter ego” of GMU.
4. The Foundation is not the agent of GMU for purposes of VFOIA
Code § 2.2-3701 defines “public records” as materials “in the possession of a public body
or its officers, employees or agents in the transaction of public business.” Transparent argues
that the Foundation’s records are public records under VFOIA because the Foundation is the
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agent of GMU. 5 Transparent urges the Court to reverse the circuit court and order the
Foundation to disclose the requested records.
The Court has “defined the term ‘agency’ as a fiduciary relationship resulting from one
person’s manifestation of consent to another person that the other shall act on his behalf and
subject to his control, and the other person’s manifestation of consent so to act.” Acordia of
Virginia Ins. Agency, Inc. v. Genito Glenn, L.P., 263 Va. 377, 384 (2002) (citation and internal
quotation marks omitted). “While the power of control is an important factor to consider in
determining whether an agency relationship exists, ‘[a]gency may be inferred from the conduct
of the parties and from the surrounding facts and circumstances.” Id. (citations omitted). “The
question of agency vel non is one of fact for the fact finder unless the existence of an agency
relationship depends upon unambiguous written documents or undisputed facts. Moreover, the
party alleging an agency relationship has the burden of proving it.” Reistroffer v. Person, 247
Va. 45, 48 (1994) (citations omitted).
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. As we have already stated, the Foundation operates independently of
GMU under its own bylaws, articles of incorporation, and statutes.
5
In its reply brief, Transparent asserts that the circuit court never reached the issue of
whether the Foundation is GMU’s agent. The circuit court noted when sustaining the demurrer
that “the issue of whether or not the Foundation’s performance of designated public functions on
behalf of the University as its agent renders the Foundation a public body within the meaning of
VFOIA remains to be decided at trial.” Transparent had the opportunity at trial to prove that an
agency relationship existed and failed to do so. The evidence at trial supports the circuit court’s
finding that GMU and the Foundation are independent entities and that the Foundation is not
subject to VFOIA as it is not a public body nor are its records public. Based on our ruling today,
Transparent’s assertion that the circuit court failed to reach the agency question is moot.
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The Foundation’s stated purposes, obligations to its private donors, and the discretion of
its Trustees govern its operations. Moreover, the statute under which the Foundation is formed
dictates that “funds shall be used in accordance with the wishes of the donors of such funds.”
Code § 23.1-101(2). The Affiliation Agreement with GMU reiterates this statutory mandate as it
reflects the Foundation’s purpose of managing gifts in accordance with donor intent. Nor was
there evidence at trial from which one could infer an agency relationship.
The evidence at trial showed that GMU does not control the Foundation. To the contrary,
Van Leunen specifically testified, without challenge, as to the absence of control by GMU over
the Foundation. The specific questions were asked and answered as follows:
[Question:] Does [GMU] have any control over the
Foundation?
[Van Leunen:] No. The Foundation Board of Trustees oversees
and manages the operations of the Foundation.
[Question:] Can [GMU’s] president direct the Foundation on
what to do or how to do it?
[Van Leunen:] No.
[Question:] Can any [GMU] employee direct the Foundation
or its employees as to what to do?
[Van Leunen:] No.
Indeed, Van Leunen testified that on occasion the Foundation has denied GMU’s requests to
fund real estate projects. She also testified that the Foundation administers donations in
accordance with the donor’s wishes. This would be consistent with the statute and with the
Affiliation Agreement.
Even assuming arguendo that the Foundation is an agent of GMU, VFOIA still would not
apply to the Foundation’s documents. As previously stated, we held in American Tradition that
VFOIA requests “only appl[y] to ‘public records in the custody of a public body.’” 287 Va. at
22
339. Again, we find the rationale of the Advisory Council persuasive. The Advisory Council
has stated that a private entity’s records are not subject to VFOIA because “a private entity does
not become a public body solely because the private entity provides goods or services to a public
body through a procurement transaction.” Advisory Council Op. AO-01-15 (Mar. 17, 2015).
Because the Foundation is not a public body, the Foundation’s documents in its custody are not
subject to VFOIA even if the Foundation is GMU’s agent. American Tradition, 287 Va. at 339;
Code § 2.2-3701.
Finally, the Foundation documents are not subject to VFOIA because they were not
generated in the transaction of public business. The Foundation documents requested by
Transparent were:
[f]or the years of 2008 through 2012, any grants, cooperative
agreements, gift agreements, contracts, or memoranda of
understanding (including any attachments thereto) involving a
contribution to or for [GMU] from any of [several charitable
foundations under Charles Koch, Claude R. Lambe, and David
Koch].
These documents directly relate to the Foundation’s mission of managing gifts from private
donors and as such were not “prepared for or used in the transaction of public business and [are]
not public records subject to [V]FOIA.” Advisory Council Op. 14-12 (Oct. 17, 2012)
(determining that the phone bills of a member of a public university’s board of visitors who used
his cell phone to conduct public and private business were not “public records” under VFOIA
because they were not “prepared for or used in the transaction of public business”). See also
Advisory Council Op. 03-04 (Feb. 10, 2004) (determining that a discussion of public business
would not include discussions unrelated to the use of public funds “such as private fundraising
efforts”). The circuit court correctly held that records regarding donations from private donors
do not constitute the transaction of public business.
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5. Dr. Bingham
Finally, Transparent argues that the circuit court erred in granting GMU’s demurrer
because it did not consider whether Dr. Bingham in fact used or possessed the requested
Foundation documents in performing her duties as a Vice President of GMU. GMU responds
that the circuit court did not err in sustaining its demurrer because Transparent’s Amended
Petition did not allege that, Dr. Bingham prepared, owned, or possessed the records in her role as
Vice President.
Again, “public records” are writings or recordings “prepared or owned by, or in the
possession of a public body or its officers, employees or agents in the transaction of public
business.” Code § 2.2-3701. GMU is correct in its statement that “[e]ven accepting that Dr.
Bingham, at some point, accessed or used certain records ‘in the performance of fundraising and
endowment management activities,’ that alone would not be sufficient to make those ‘public
records’ subject to VFOIA.”
In sustaining GMU’s demurrer, the circuit court discussed Dr. Bingham’s roles as a Vice
President for GMU and as President and CEO of the Foundation. The court described Dr.
Bingham as wearing “two hats” in that “the functions she performs while wearing one [hat] are
not imputed to her position under the other.” The 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.”
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As we have already found, GMU and the Foundation are separate and distinct entities,
one being a public institution and the other being a private corporation. The fact that they share
a common employee “does not alter the separate character of the two” entities. RF&P Corp.,
247 Va. at 316. The circuit court stated, rightly so, that “[t]he presence of dual or multiple
officers or board members does not expose the records of both corporations to search when an
inquiry is directed at one corporation only. It is the position over which the corporation has
control, not the person.” See Washington & Old Dominion Users Ass’n v. Washington & Old
Dominion R.R., 208 Va. 1, 6 (1967) (refusing to disregard separate corporate existence of wholly
owned subsidiary even though “most of the officers and directors” of the subsidiary “have also
been officers and directors” of the parent). The circuit court did not err in concluding that
“where an employee of a public body serves in an official capacity for a third party, that service
does not automatically subject documents held by that third party to VFOIA liability.” To the
extent that while wearing her GMU hat, Dr. Bingham handled Foundation documents, these
documents remained Foundation documents and as such, were not subject to VFOIA because
“VFOIA only applies to ‘public records in the custody of a public body.’” American Tradition,
287 Va. at 339.
III. CONCLUSION
For the foregoing reasons, we will affirm the judgment of the circuit court finding that the
Foundation is not a public body subject to VFOIA. Had the General Assembly intended the
unreserved inclusion of non-profit foundations, that exist for the primary purpose of supporting
public institutions of higher education, as public bodies under VFOIA, it could have so provided,
but it has not. Policy determinations of this nature are peculiarly within the province of the
General Assembly, not the judiciary. See, e.g., Daily Press, LLC v. Office of Exec. Sec'y of
25
Supreme Court, 293 Va. 551, 557 (2017) (“Public policy questions concerning where to draw the
line with respect to VFOIA fall within the purview of the General Assembly.”).
Affirmed.
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