Fraternity Woes Impact Business Of Higher Education

CBS News takes a look at the possible legal and financial ramifications for colleges in the wake of recent fraternity scandals.

Monday, March 23rd 2015, 8:58 am

By: News On 6

Fraternity Woes Impact Business Of Higher Education

It's been a bad month for the nation's university Greek fraternity system. The last few weeks saw allegations of racist slurs at a University of Oklahoma fraternity, suspension of a Penn State frat over a secret Facebook page with posted photos of nude women, and racist and sexist email from a University of Maryland fraternity member.

Whether the issue is sexual harassment and assault, racism, hazing and bullying, or even accidents from drinking, such incidents raise numerous moral, ethical and social issues for the public. Universities and colleges have an additional aspect they must consider: business.

President David Boren issued a statement on Twitter over the weekend that called for students, faculty and staff to continue to treat every member of the college community with respect.

"If you become aware of any threatening behavior or other circumstance of concern, please notify OUPD immediate by calling 911.

"Retaliation and/or threats of violence will not be tolerated."

See David Boren's Message To OU Community

These higher-education corporations try to balance educational demands, liability, reputation and regulatory compliance. The mix governs how they respond as well as try to anticipate problems with populations dominated by people in, or just past, adolescence. Even if students are legally adults, they're still not yet at the most responsible stage of development.

The potential liability is one reason that university officials will react -- and possibly overreact -- to events. For example, the University of Oklahoma expelled two students identified in the video of racist chanting and shut down the local Sigma Alpha Epsilon fraternity chapter.

The action is an example of the peculiar combination of business and political pressures that come to bear on how schools react, said Stephen Trachtenberg, a partner of the law firm Rimon and president emeritus of George Washington University.

University of Oklahoma president David Boren "is thinking like a politician, and he has to position himself to the left of any potential critics, so he expels the students," Trachtenberg said. "He wants to anticipate his critics and protect himself."

Boren covered his actions by saying the students and fraternity could make use of an appeals process.

"Meanwhile, he takes dramatic action and so anticipates people saying the university isn't acting and [that] he's not doing what he should be doing."

If an appeal happens and is successful? "He now says, 'I have to do what the court tells me,'" said Trachtenberg.

As some have suggested, the University of Oklahoma could be accused of violating students' First Amendment free speech rights because it's a public institution. Should the students choose to sue the school and prevail, culminating in a judgment against the university, "that's a cost of doing business," Trachtenberg said. "It's not going to be a budget-breaking number, and it will be imposed on him [by a court]," allowing Boren to deflect criticism.

Campus problems aren't new

The result is relatively continuous dangerous or questionable behavior, rather than a rash of problems that have sprung from nowhere. "I don't think the numbers [of sexual misconduct cases on campuses] have increased," Leta Finch, practice leader for higher education at Aon Risk Solutions, told CBS MoneyWatch. "I think reporting has increased, and that's a result of awareness." Regulatory requirements have made education about the topic and official reporting mandatory.

To see how these serious problems aren't a recent development, just look at hazing, often associated with fraternities but also found in athletic teams and even school bands. According to Finch, usually one student on some campus in the U.S. dies each year from hazing. "It's tragic," she said.

For administrators and university lawyers, the problems have implications for the business aside from the moral or ethical ones. A school has to worry about potential liability and damage to its reputation and that of its employees. That's because any lawsuit will want to include the institution, given that it will have the deepest pockets for a judgment or settlement.

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