Since 1971, the Harbor Branch Oceanographic Institute (HBOI) has been a bastion of environmental preservation through its research efforts focused on issues facing coastal zones and oceans, and the impact these areas have on human health. The HBOI has contributed invaluable research through its biomedical and biotechnological studies toward discovering cures for deadly diseases as well as discovering the harmful effects that rapidly changing environmental conditions have on humans. But now, the Institute finds itself fighting another battle, one for its autonomy, against Florida Atlantic University.
A lawsuit against FAU that began in 2017 reached a final judgment in December of 2021, but the fight is far from over. The suit, filed by the Harbor Branch Oceanographic Institute Foundation, the 501(c) organization behind the Fort Pierce-based HBOI, alleged that the university had taken oversteps in their relationship with the Foundation by violating a Memorandum of Understanding (MOU) that FAU agreed to when they merged with the HBOI in 2007.
Now, the judgment of this suit is being appealed by both the Foundation and the university.
The 2007 MOU was reached after the state of Florida funded FAU’s purchase of the land, facilities, and assets of the HBOI, valued at almost $100 million. The Institute had been operating in the red for years after the death of its co-founder, John Seward Johnson Sr., heir to the Johnson & Johnson fortune. The robust endowments from the Johnson family dwindled after his death, and with operating expenses outpacing revenue, FAU provided the lifeline that prevented the Institute from collapsing.
The agreement was that the Foundation’s board of directors would have “sole discretion” over the their board members, administrative staff, funds and grants made through endowments from the Johnson family. In exchange, FAU would receive a state-of-the-art marine research facility and all the clout that comes with it.
On paper, this union would appear as mutually ideal, but the marriage has been far from perfect. According to court records, FAU attempted a “brazen power play” in 2016 to gain control of the Harbor Branch Foundation’s grant-making decisions and endowment, which as of 2020, was valued at more than $86 million.
During a December 2016 Foundation budget meeting, FAU Vice President of Research Daniel Flynn proposed that the Foundation should merge its administrative and executive functions with FAU, with the former Harbor Branch CEO and President, Katha Kissman, being replaced by Flynn himself. Three months later, the Harbor Branch Foundation filed suit.
With Daniel Flynn acting as head of the Foundation, FAU could effectively self-deal grant money from Harbor Branch, thus stripping the Foundation of their independence and allowing grants and endowment funds to go to FAU for projects that don’t further the mission of environmental preservation envisioned by John Seward Johnson Sr.
History shows this concern to be valid. In 2012, former FAU President Mary Jane Saunders requested $50,000 from the Foundation to help construct FAU’s new football field. The Foundation declined, as there was obviously no marine research value to the stadium.
Now, after five years of legal battles, the judgment has been rendered and the following declared:
— The Foundation’s budget must be approved by both the Foundation’s governing board and FAU’s board of trustees.
— All appointments made to the Foundation’s board of directors after July 1, 2018 do not require the approval of FAU’s board of trustees.
— FAU did not anticipatorily breach the Memorandum of Understanding and interpreted it in good faith.
While the Foundation will be able to maintain autonomy over who is on its board, FAU will have approval power over its budget, which is what initially caused the dispute when Flynn suggested FAU take over administrative functions of the Foundation as a way to cut costs.
Despite the verdict being seemingly lopsided toward FAU, it filed an appeal in January. Days later, the Foundation filed a cross appeal. With no date set for the new trial, and certainly no guarantee of a favorable verdict, the future of the Harbor Branch Oceanographic Institute remains in question.
