THE STATE OF NEW HAMPSHIRE. Docket No. 08-E-0294

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1 THE STATE OF NEW HAMPSHIRE GRAFTON, SS. SUPERIOR COURT Docket No. 08-E-0294 B.V. BROOKS, KENNETH F. CLARK, JR., MARISA DEANGELIS KANE, JOHN H. PLUNKETT, DOUGLAS R. RAICHLE, ROBERT G. REED III, AND JOHN STEEL III, Petitioners TRUSTEES OF DARTMOUTH COLLEGE, v. Respondent MEMORANDUM OF RESPONDENT TRUSTEES OF DARTMOUTH COLLEGE IN OPPOSITION TO PLAINTIFFS' MOTION FOR RECONSIDERATION OF ORDER ON MOTION FOR SUMMARY JUDGMENT Bruce W. Felmly McLANE, GRAF, RAULERSON & MIDDLETON City Hall Plaza 900 Elm Street P.O. Box 326 Manchester, New Hampshire (603) RichardC. Pepperman, II SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York (212) Attorneys for Respondent Dartmouth College Trustees of January 27,2010

2 Petitioners seek reconsideration of the Court's January 8, 2010 Order on Motion for Summary Judgment (the "Order") on two grounds. First, they argue that the Court erred in finding that res judicata bars their lawsuit, and second, they assert that the Court incorrectly found that they were not intended third-party beneficiaries of the alleged 1891 Agreement. Both arguments are without merit. I. The Court Correctly Applied Res Judicata to Bar Petitioners' Claims. The Court correctly found that all three elements of res judicata are satisfied in this case. In their motion for reconsideration, petitioners challenge only the Court's holding that the stipulated dismissal with prejudice of the Prior Lawsuit was a final judgment on the merits, contending that the Court improperly refused, based on the Bricker doctrine, "to look behind the stipulation." (Motion at 7.) As the Court correctly recognized, under Bricker v. New Hampshire Medical Society, 110 N.H. 469, 470 (1970), "[j]udicial interference in the internal affairs of an association is strictly limited and will not be undertaken in the absence of a showing of injustice or illegal action and resulting damage to the complaining member." Petitioners argue that Bricker "was never meant to extend to actions taken by an association which materially and adversely affect the legal rights of the association's members vis-a-vis outside parties." (Motion at 8 (emphasis in original).) This argument fails under controlling Supreme Court precedent. In Brzica v. Trustees. of Dartmouth College, 147 N.H. 443, 456 (2002), seven Dartmouth alumni sued the College seeking almost the identical relief sought in this case: an order "'enjoin[ing] the Trustees from breaching their obligations under the 1891 Agreement." The Supreme Court affirmed the trial court's dismissal of the case under Bricker, holding that "[t]he relief requested... would necessarily interfere with the internal affairs of the association." Jd.

3 The Supreme Court thus has already held that Bricker applies to actions taken by the College that potentially affect the alleged "legal rights" of Dartmouth alumni under the 1891 Agreement.' Petitioners do not seriously challenge the Court's holding under Bricker that the undisputed facts here "do not show injustice or illegality." (Order at 7.) They instead resort to name calling, referring to "the Association's malodorous stipulation for dismissal" (Motion at 10) and arguing that the Association Executive Committee entered into the stipulation "with the connivance of the College" (id. at 9). The undisputed facts do not support petitioners' rhetoric. As the Court correctly found, "[v ]iewed in the light most favorable to the petitioners," the facts and allegations show that the Executive Committee "openly campaign[ ed] against the litigation" and, "[0 ]nce elected,... took measures to terminate the litigation," including "working with counsel, the respondent, and the respondent's counsel to draft the stipulation." (Order at 7.) Such actions are commonplace, not nefarious, and petitioners identify no additional facts in their motion. Petitioners also suggest that the Court should ignore Bricker in view of the Supreme Court's recent decision in In re Zachary G., 159 N.H. 146 (2009). According to petitioners, the Supreme Court declined to apply res judicata in that case "'because of the potential adverse impact... on the... interests of persons not themselves parties in the initial action.'" (Motion at 9 (quoting Zachary, 159 N.H. at 152).) Petitioners' reliance on Zachary is misplaced. In that case, the Supreme Court declined to accord preclusive effect to an earlier factual finding that two 1 Without citing any authority, petitioners assert that the College lacks standing to assert a "defense" under Bricker (Motion at 8), an argument they also raised in opposing the College's motion to dismiss. The Supreme Court rejected this argument in Brzica as well, holding that Bricker applies even if relief is sought only against the College where that relief "would necessarily interfere with the internal affairs of the association." 147 N.H. at 456. The relief requested here-for example, a ruling that the Association's duly elected Executive Committee lacked the authority to dismiss the Prior Lawsuit with prejudice-clearly would interfere in the Association's internal affairs

4 children from an abusive home could be safely returned to the home when, by the time a later proceeding took place, there had been "new incidents of abuse and neglect." Zachary, 159 N.H. at 152. "Given the overriding need to ensure that the children's best interests are properly protected" and the statutory standards applicable to proceedings for the termination of parental rights, the Supreme Court held that "collateral estoppel is no bar to reconsidering evidence from an earlier action if there exist subsequent and recent incidents of abuse and neglect substantially similar to those in the earlier, closed action." Id. The facts here are clearly distinguishable. In sum, the Court correctly found that res judicata applies in this case. That doctrine bars all of petitioners' causes of action, which are the "same" causes of action previously asserted by the Association. As the Court correctly recognized, "[i]n New Hampshire, cause of action is construed broadly." (Order at 6.) The Supreme Court has held that New Hampshire defines "cause of action collectively to refer to all theories on which relief could be claimed on the basis of the factual transaction in question." Eastern Marine Const. Corp. v. First Southern Leasing, Ltd., 129 N.H. 270, 275 (1987). Here, as the Court correctly held, "all of the legal issues now raised either were raised or could have been raised in the prior suit." (Order at 6.) Thus, all of petitioners' claims related to Dartmouth alumni's supposed right to parity and the alleged breach of the 1891 Agreement-petitioners' entire complaint-are barred by res judicata. The Supreme Court's remarks in Brzica are directly on point: The factual transaction in question is the modification to the alumni trustee election procedure that occurred in As such, the parties are now barred from bringing an action that attempts to make the same challenge, dressed up in whatever new cloth the [plaintiffs] choose to weave. The change in label is simply not sufficient to reopen the question for adjudication today. 147 N.H. at 455 (citation omitted, alteration in original). Petitioners here cannot escape res judicata simply by asserting new legal theories or arguing that they are suing both as members of - 3 -

5 the Association and as intended third-party beneficiaries. In either capacity, their suit is based on the same "factual transaction" at issue in the Prior Lawsuit and thus is barred by res judicata. II. The Court Correctly Found That Petitioners Are Not Intended Third-Party Beneficiaries. Although it was not necessary for the Court to reach the issue of standing given its ruling on res judicata, the Court also correctly held that petitioners are not intended third-party beneficiaries of the alleged 1891 Agreement for multiple, independent reasons. (Order at 8-11.) As an initial matter, the Court noted that "petitioners' claim that they are intended third-party beneficiaries is belied by their admission that the members of the Association could vote to empower the executive committee to end the alleged parity agreement." (Id. at 9.) Wholly apart from that admission, however, the Court held that "the undisputed facts do not support the petitioners' claim that they are intended third-party beneficiaries." (Id. at 11.) As the Court explained, "[t]he 1891 Agreement conferred a benefit on alumni, not each alumnus. In order to effectuate the purpose of the 1891 Agreement-giving alumni a greater role in management of Dartmouth College-it is not necessary or appropriate to recognize a right of performance in each individual alumnus." (Order at 10.) Indeed, the Court concluded, "[t]he 1891 Agreement would be entirely unworkable if it were interpreted to confer such a benefit and if such a right of performance were recognized." (Id.) In so ruling, the Court rejected petitioners' contention that all Dartmouth alumni are intended third-party beneficiaries simply because the alleged 1891 Agreement "benefits them." (Id.) Finally, the Court determined that if it were "to recognize the petitioners as intended third-party beneficiaries, it would embroil the judiciary in the internal governance of the Association," contrary to the Bricker doctrine. (Id. at 11.) Petitioners spend much of their motion for reconsideration arguing that the Court erred in relying upon their "admission," strenuously denying that they made such an admission in their opposition to the College's motion to dismiss. (Motion at 2-5.) In so doing, however, petitioners - 4 -

6 say very little, if anything, about the other independent reasons why the Court rejected their allegation that each Dartmouth alumnus is an intended third-party beneficiary of the 1891 Agreement, and thus provide no basis for the Court to reconsider its ruling. Moreover, by focusing exclusively on the statements in their brief in opposition to the College's motion, petitioners ignore their counsel's clear statement at oral argument that the College should ask Dartmouth alumni to vote whether they want to end parity, thus conceding that a majority of alumni could vote to end parity without infringing on the rights of any individual alumnus. As this Court recognized, however, neither a majority of Dartmouth alumni nor the Association Executive Committee could vote to modify or repeal the alleged 1891 Agreement if petitioners are correct that each individual alumnus is an intended third-party beneficiary and has taken any action in reliance upon the 1891 Agreement. See Restatement (Second) of Contracts 311. Lastly, petitioners assert that "the Court's ruling arises out of a misunderstanding of the Plaintiffs' claims." (Motion at 5.) According to petitioners, "[t]he right of performance at issue in this case is not the right of the Plaintiffs to individually choose Board members; it is the right of the Plaintiffs to insist that the College perform the 1891 Agreement-which, in turn, means the right to insist that the College afford them and other alumni an opportunity to participate in a process by which they may all choose half of the Board." (ld. at 6 (emphasis in original).) There was no "misunderstanding" by the Court. As the Court's Order makes clear, the Court correctly understood that petitioners argued that each individual Dartmouth alumnus has the right to enforce the 1891 Agreement. The Court concluded that the undisputed facts do not support this argument and that "[t]he 1891 Agreement would be entirely unworkable... if such a right of performance were recognized." (Id. at 10.) In fact, the Court found that "[b]y recognizing a right of performance in the petitioners, the Court would interfere with the Association's internal - 5 -

7 affairs." (Id. at 11.) Petitioners point to no new facts or law that would provide a basis for the Court to reconsider that ruling. Dated: January 27,2010 Respectfully submitted, Richard C. Pepperman, II SULLIVAN & CROMWELL LLP 125 Broad Street New York, New York (212) ~~ Bruce w. cl111iy,barno: 787 McLANE, GRAF, RAULERSON & MIDDLETON City Hall Plaza, 900 Elm Street Manchester, New Hampshire (603) Attorneys for Respondent Dartmouth College Trustees of - 6-

8 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing and any attachments were served by hand and electronic mail on Eugene M. Van Loan III, Wadleigh, Starr & Peters, PLLC, 95 Market Street, Manchester, NH 03101, on January 27,2010. Brucew~C=~