Wealthy USC donors revolt after interim president pushes out top dean over handling of misconduct cases

Dec. 4, 2018 8:15 PM PT

USC vowed to improve accountability and transparency in the wake of a scandal earlier this year in which the longtime campus gynecologist was accused of sexual misconduct against hundreds of students.

A dispute in USC’s Marshall School of Business is shaping up to be a key test of this new approach, and it’s pitting top administrators against some of the university’s major donors.

At issue is the removal of Dean James Ellis, who has led the school since 2007, over his response to sexual harassment and discrimination claims against faculty and staff.

USC’s interim president, Wanda Austin, informed Ellis earlier this fall that she planned to replace him at the close of the academic year next spring, three years before his term expired. Austin, the first woman to serve as president, as well as her supporters cast the decision as evidence that the school is addressing previous missteps.

“We learned our lesson,” Austin told The Times this week.

But influential USC benefactors are fighting the move. Pasadena billionaire Ming Hsieh, a trustee who has donated more than $85 million, hired a Century City litigator to advocate for Ellis before the USC board.

“Jim’s not going quietly and we’re not going quietly,” said Lloyd Greif, chief executive of his own investment banking firm who has donated more than $5 million to the business school. “This decision needs to be reversed.”

When USC’s trustees meet next week, Ellis’ status will be on the agenda. Board chair Rick Caruso has told fellow trustees in letters reviewed by The Times that he planned to lay out the facts behind Austin’s decision and that he was confident she acted “with due consideration and in furtherance of the university’s best interests.”

Little has been released publicly about the sexual harassment and gender-based discrimination cases Ellis has handled in his role as dean. Such complaints are investigated on a confidential basis by USC’s Office of Equity and Diversity, and Austin declined to discuss the nature or number of accusations.

An executive assistant for Ellis said the dean was unavailable for an interview. The attorney Hsieh retained, Louis “Skip” Miller, said he was representing both Ellis and the billionaire trustee. Miller said none of the accusations at issue concerned behavior by the dean himself.

In a letter Monday to colleagues at Marshall, Ellis wrote that the decision to remove him was “not based on anything I personally had done, but rather a cumulative record of OED cases from Marshall. The vast majority of these cases were never brought to my attention.”

Addressing sexual misconduct became a top priority at USC in May, when The Times revealed that the university had allowed gynecologist George Tyndall to practice on campus for three decades despite complaints to administrators about inappropriate behavior toward female patients.

The Tyndall scandal led to the resignation of President C.L. Max Nikias and the appointment of Austin, a trustee and retired aerospace executive, as interim president. Austin arrived with a mandate to help heal the campus after the scandal and address concerns by students, faculty and alumni that the administration take misconduct allegations more seriously. Within a few months of her August appointment, Austin was focused on Ellis and his school’s record on sexual harassment.

Marshall has long been one of the university’s most prestigious schools, and during his tenure, Ellis, a marketing professor, was credited with making it an even more competitive program. USC’s full-time MBA program was ranked 31st by U.S. News & World Report in 2017 and jumped 11 spots to 20th in the most recent listing. He also raised nearly $500 million for the school, according to his supporters.

Complete Coverage: USC former gynecologist Dr. George Tyndall accused of inappropriate behavior »

To examine the harassment issue, Austin turned to a law firm, Cooley LLP, to investigate and also asked an outside human-resources consultant to weigh in, according to interviews and correspondence with the trustees. Austin and Michael Blanton, the head of USC’s new office of professionalism and ethics, then met with Ellis to discuss the law firm’s findings, according to the correspondence.

Miller, Ellis’ attorney, said the meeting lasted less than 15 minutes, during which Austin informed the dean he had to leave. The attorney said Ellis was never told what he had done wrong and asserted Ellis was “pure as the driven snow” in his conduct.

“To the extent any complaint has ever come to his attention during his 11 years as dean, he’s run it down, investigated it and handled it,” Miller said.

Austin told him he would be allowed to remain until the end of the spring term and USC would pay out the three years remaining on his dean’s contract, according to correspondence from Caruso to trustees. Ellis’ annual compensation was $636,000, according to USC’s 2017 tax filing. As a tenured professor, Ellis will remain on the business school faculty.

The decision outraged Ellis’ supporters, who felt that Austin had overstepped her temporary role.

“Since when is an Interim President given the same unfettered power to make personnel decisions as a permanent President who is selected by a Search Committee after a nationwide search and given a five-year mandate to steer the University?” wrote Greif, the prominent donor and alumnus, in a four-page letter sent Friday to the business school’s advisory board.

Miller sent a letter to the 57 voting trustees, a who’s who of wealthy and powerful alumni and boosters, arguing that removing Ellis violated the trustees’ fiduciary duty to the institution because he had added so much value to the school.

“The question we therefore have is, what’s going on at USC? Is Dean Ellis being caught up in some kind of internal political move?” Miller wrote in the Nov. 20 letter.

In yet another letter, a group of more than 100 business leaders that advises the Marshall School urged the full Board of Trustees “to immediately intercede and rescind the Interim President’s misguided decision.” The group’s membership includes prominent alumni and local executives.

Austin said in an interview that she respected Ellis’ service to the university, but “I wish Jim had taken a different tack” in fighting his dismissal.

In a statement late Tuesday afternoon, she added, “The commitment we made to our university community to improve our campus culture sometimes requires us to make difficult decisions.

“We understand that there will be those who disagree, but that doesn’t mean these aren’t the right decisions to move the university forward,” Austin wrote.

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Twitter: @MattHjourno

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Twitter: @latimesharriet

UPDATES:

8:15 p.m. This article was updated with more information about the group of 100 business leaders.

This article was originally posted at 7:30 p.m.