Opponents of Rider University’s $40 million deal to sell Westminster Choir College to a Chinese company have voluntarily dismissed their New York lawsuit over the sale.
U.S. District Judge Ronnie Abrams, in the Southern District of New York, granted the plaintiffs’ motion for voluntary dismissal on Oct. 2 in McMorris v. Rider University. The plaintiffs in that case, a group of Westminster alumni, parents and students, conceded the proper venue for the suit is Mercer County Superior Court, Chancery Division, where Princeton Theological Seminary v. Rider University is pending.
Abrams said the dismissal would be with prejudice unless the McMorris plaintiffs can provide an explanation by Oct. 9 on how their claims remain viable in light of assertions by Rider that they lack contractual standing to sue for breach of a 1991 merger agreement, have not identified any statements that would give rise to liability for breach of an implied contract or fraudulent inducement, and have not alleged any harm that is cognizable under Sections 349 and 350 of the New York Deceptive Business Practices Act.
The plaintiffs sought to have the sale declared illegal, claiming it violated the terms of the merger agreement between Rider and Westminster. It also claimed that allowing Rider to profit from the sale of Westminster would violate public policy.
But the McMorris plaintiffs now believe the Chancery Division is the proper venue for the dispute because the Chinese buyer of Westminster, Bejing Kaiwen Education Technology Co. Ltd., and its acquisition division, Westminster Choir College Acquisition Corp., are named as defendants in that case, plaintiffs attorney Bruce Afran said in a letter to Abrams Oct. 2. The New York court has no jurisdiction over those entities because they do not conduct any business in New York, Afran said in court papers.
“Plaintiffs believe that the gravamen of the action rests on these cy pres and related grounds now being litigated in the Chancery Division action,” Afran said.
Westminster Choir College has about 500 students at its 23-acre campus in Princeton, where it has operated since 1934. It merged with Rider in 1992, which is located seven miles away in Lawrenceville.
Rider announced in 2017 that it intended to sever the relationship and would seek a new partner. In June, Rider announced the $40 million deal to transfer the school to Kaiwen, which has agreed to continue to operate Westminster at the Princeton location for at least 10 years.
In the Chancery Division suit, Princeton Theological Seminary, an institution located about a mile from Westminster’s campus, claims the sale of Westminster’s campus would violate the terms of the trust established by Sophia Strong Taylor, who donated the land for the Westminster campus in the 1930s. The seminary’s suit says it should receive the land because Taylor specified its ownership should revert to the seminary if Westminster failed to comply with terms of the donation.
Afran and Rider’s lawyer in the case, Angelo Stio of Pepper Hamilton in Princeton, did not return calls requesting comment.