Midway College asks judge to seal records in lawsuit filed by seven ex-employees

gkocher1@herald-leader.comApril 3, 2014 

Former Lexington mayor Teresa Isaac is part of a lawsuit against Midway College.

MARK CORNELISON | STAFF

Midway College seeks to seal the record in a lawsuit filed by seven former employees who claim that the school breached their contracts and committed age discrimination by terminating them last fall.

The plaintiffs say their contracts were terminated because of "lack of available funding." In a motion, the college wants "the sealing of the entire record in this case" to prevent financial disclosures that could cause the private liberal arts college in Woodford County "significant harm."

Woodford Circuit Judge Paul Isaacs is scheduled to hear the motion Wednesday.

Midway College spokeswoman Ellen Gregory said she had no comment on the lawsuit or the motion seeking to seal the record.

The seven plaintiffs, who all taught in Midway College's School of Business, filed the lawsuit last month. They are Richard Berry, 61; Eric Bolland, 66; Stephen Clark, 65; Francis Fletcher, 61; Wendy Hoffman, 57; former Lexington Mayor Teresa Isaac, 58; and Saleem Mirza, 52.

Bolland was chair of the MBA division at Midway. Fletcher was chair of the Business division and had served on the board of examiners for the Malcolm Baldridge National Quality Award. (Congress established that award in 1987 to recognize U.S. companies for their achievements in quality and business performance.) Isaac was mayor of Lexington from 2003 to 2006.

On Sept. 20, 2013, the seven received letters advising them that "due to alleged financial hardships," according to the suit, Midway College was terminating its contracts "on the grounds of lack of 'available funding.'" The college argues in another motion that it was permitted to terminate the plaintiffs' employment for cause, including lack of funding.

The plaintiffs argue that the college knew or should have known whether it had the financial resources to satisfy its contractual obligations owed to those who were terminated.

An 18 percent drop in enrollment resulted in faculty layoffs that were announced in September. The new president of Midway, John Marsden, said at the time that enrollment shortfalls came both in recruitment of new students and retention of current students.

The plaintiffs dispute the contention that the college lacked available funding to satisfy its contractual obligations.

Their lawsuit alleges that the college had $5.7 million in "temporarily restricted assets which could be reallocated for any purpose by the Board of Trustees."

The plaintiffs also say that the college had "substantial assets ... from which funds could be derived to satisfy" its contractual obligations.

They also say that as of September 2013, the School of Business "had been for years, the division with the highest enrollment and which provided a positive cash flow for Midway College."

In a motion filed March 31, Midway College asks the judge to seal the record.

"There is minimal public interest in the facts of this private employment dispute," the college says. "Due to its uncertain financial state, and the vast disclosures plaintiffs demand from Midway, this lawsuit will cause Midway significant harm.

"Midway seeks to reduce the harm to its reputation, business, and past and present employees, and preserve the institution's existence, by sealing the entire record in this case," the motion says.

The college's motion says that "courts have discretion to seal records 'when interests of privacy outweigh the public's right to know.'"

Midway says the focus of the plaintiffs' case against the college "is the school's serious financial condition. The complaint refers to Midway's finances, funding and debts no less than 13 times."

The plaintiffs' first set of interrogatories, or written questions, seek the production of complete sets of audited financial statements for the fiscal years 2011, 2012 and 2013, and copies of all letters of credit and encumbrances of any assets the college had from Jan. 1, 2013, to the present.

"As disgruntled ex-employees well aware of Midway's financial state, soon to become privy to Midway's sensitive financial records and credit information, the plaintiffs are in a unique position to cause immeasurable harm to Midway under the guise of aggressive litigation strategy," the motion to seal says. "Midway has significant interest in protection from such harm."

The college also argues that "there is no legitimate public interest" at issue in the case.

"The universe of people legitimately interested in this case is limited to the parties," the college says.

Furthermore, sealing the record is vital in this case to protect the privacy of nonparties "such as Midway employees whose salaries and other sensitive information will become public knowledge if protective steps are not taken."

In the interrogatories, the plaintiffs seek "the name and age of each person who was hired by Midway College after the plaintiffs' contracts were terminated" and, among other things, "the amount and basis of compensation for each."

The Sixth Circuit Court of Appeals has ruled that such "third parties who were not responsible for the initiation of the underlying litigation ... (possess) a justifiable expectation of privacy that their names and the financial records not be revealed to the public."

The plaintiffs say the college either misrepresented its financial status to the plaintiffs in April and May 2013 when it presented letters of appointments and thereby induced the plaintiffs not to seek other employment, or the college misrepresented its lack of available funding on Sept. 20, 2013, when it gave notice of termination to the plaintiffs "based on alleged financial hardship and lack of available funding."

As a result, the plaintiffs have suffered lost wages, lost benefits and other compensatory damages.

In the age-discrimination portion of the suit, plaintiffs say they had extensive experience and qualifications in the areas in which they were assigned to teach or were eligible to teach, had received positive evaluations, and had been employees of Midway College for years before the termination of their contracts.

The suit says the college "assigned or hired individuals who were substantially younger than the plaintiffs, and who were less qualified than the plaintiffs in terms of experience and/or education, to perform assignments that the plaintiffs were performing, or were eligible to perform, at the time of their contract terminations."

The suit alleges that this conduct "constituted a pattern and practice of unlawful discrimination against the plaintiffs, based in significant part on age." The suit claims that the college also violated state law governing age discrimination.

Greg Kocher: (859) 231-3305. Twitter: @HLpublicsafety.

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