A Centre County judge has denied Penn State’s request to order a confidentiality agreement it wants Trustee Barry Fenchak to sign before providing him with the financial information he is seeking in a lawsuit.
Judge Brian Marshall wrote in an opinion and order filed Wednesday that the university has not shown adequate need for the protective order.
“The Court does not believe that it is appropriate to coerce one party into accepting a confidential agreement to which they object, and which was drafted by the other party,” Marshall wrote in denying the motion.
Fenchak filed the lawsuit against the Board of Trustees and then-Chair Matthew Schuyler in July after he said his requests for information about the management of the university’s $4.6 billion endowment and its rising administrative fees were repeatedly denied. He later amended the complaint to include information about Penn State’s 10-year athletic department deal with ticketing and fan engagement vendor Elevate, which could reportedly generate up to $1 billion in revenue.
The information is necessary to his fiduciary oversight as a trustee and he is legally entitled to receive it under Pennsylvania’s nonprofit corporation law, Fenchak argues.
Penn State initially argued that the information “is not reasonably related to” his role as a trustee and that much of what he requested “is protected by confidentiality agreements.”
In November, however, the university began making arrangements to provide Fenchak with the documentation he is seeking and provided his attorney with a proposed confidentiality agreement. Fenchak’s counsel responded with proposed edits a month later, and though Penn State says it incorporated many of those, the two sides did not reach a final agreement.
A tentatively planned meeting in December for Fenchak to review the requested financial information never occurred because Fenchak “leisurely engaged in negotiations, unnecessarily delaying a resolution to this litigation to the benefit of [Fenchak] only,” Christopher Conrad, the attorney for the Board and Schuyler, wrote in the motion requesting the protective order.
“Defendants have afforded Plaintiff the opportunity to receive information pursuant to an appropriate confidentiality agreement, but Plaintiff has not operated in good faith to permit the production of information,” Conrad wrote, arguing that Fenchak’s “goal appears to be to litigate, not to receive information.”
But Fenchak argued at a January hearing that the proposed confidentiality agreement contained several provisions with which he could not agree.
One, his attorney argued, would prohibit Fenchak from having substantive discussions with other trustees about the information he receives.
“This prohibition would be a breach of my fiduciary duty and render any information useless,” Fenchak wrote Friday on his website. “These are restrictions that, in our opinion, clearly violate Pennsylvania Title 15 Section 5512.“
The agreement, he said, also would impose updated bylaws adopted by the Board last year that, in part, give the board chair control over access to information and establish stricter rules for how trustees speak about the university and Board decisions. Fenchak views those changes as “illegal and improper.”
“In our view, and supported by evidence, these changes were enacted to pretextually silence, remove and ban from the Board any trustee attempting to exercise their fiduciary duties,” Fenchak wrote.
Marshall noted that both sides agreed Fenchak would not post confidential information on social media.
The order also affirmed that a preliminary injunction issued in October preventing the Board from voting on Fenchak’s removal remained in effect.
A committee recommended in September that Fenchak be removed as a trustee and and a vote of the full Board was scheduled for Oct. 10. The recommendation came after an investigation into a comment Fenchak made to a university staff member after a Board meeting in July.
The staff member said she was made uncomfortable by Fenchak’s remark that when he wears a ball cap, his wife says he “looks like a penis with a little hat on.” Fenchak said the comment was a reference to a line in the movie “A League of Their Own,” that he repeated as a self-deprecating, though ill-advised joke, and he regretted that he made someone uncomfortable.
Fenchak argued that the board used its updated code of conducted, which was amended after the incident, to retroactively punish him. The board, however, contended that the “inappropriate interaction” was a possible breach of his fiduciary duties under the standards in place at the time it occurred.
Marshall wrote at the time that while the court “does not condone” Fenchak’s remark and “takes allegations of sexual harassment seriously,” it “was not presented with evidence from which it can conclude that Plaintiff poses a meaningful risk to anybody…” Marshall added that he was not suggesting Fenchak should not face repercussions, but noted steps had already been taken to sanction him, including prohibiting his in-person attendance at meetings and revoking his “social privileges” as a trustee, and measures were implemented so that the employee will not be required to interact with him again.
“Plaintiff has testified to and provided uncontradicted evidence of retaliatory behavior that he has faced at the hands of Defendants since he joined the Board in July 2022,” Marshall wrote in October. “Since joining the Board, Plaintiff has made repeated requests for information that he has the right to request and likely has the right to receive as a Trustee….
“Rather than provide Plaintiff with the information that he has requested, Defendants repeatedly denied the requests and sought an opportunity like the July 19, 2024 interaction that would provide the basis to remove the Plaintiff and permanently end his probing inquiries into the health of the endowment and other university business for which he has a responsibility.”
The preliminary injunction remains in effect until it is dissolved by the court, the lawsuit is resolved or Fenchak’s elected terms on the board have ended.
Fenchak, one of the Board’s most outspoken trustees, was elected by alumni to his first three-year term in 2022. He is seeking reelection this year, and wrote on his website Friday that he has received the necessary 50 nominations to be eligible for the ballot.
Following another change enacted by the Board last year, for the first time a nominating subcommittee will review whether candidates are qualified for the ballot and can remove a candidate deemed ineligible by a screening matrix with a two-thirds vote.
“I believe I have capably demonstrated that I bring a valuable skill set to the job of trustee, including critical thinking and the ability to work with others by educating them in areas of concern they might be unaware of,” Fenchak wrote. “I have also been an ally of and supporter of the trustees who champion issues of concern to the university community.”
