Trustee Wins Injunction, Halting Board’s Attempt to Remove Him Over Financial Inquiries

Barry Fenchak is a member of the Pennsylvania State University Board of Trustees, specifically, one of nine Trustees elected by alumni of Penn State. Fenchak joined the Board in July 2022 and has since been involved in a contentious relationship with the University administration and other Board members.

As an investment advisor by profession, Fenchak raised concerns about what he perceived as unusually high advisory fees on the University’s $4.5 billion endowment. These fees have reportedly tripled since 2018. Additionally, Fenchak sought detailed information about a planned $700 million renovation of Penn State’s Beaver Stadium.

Throughout his tenure, Fenchak alleged that he faced retaliatory behavior, including repeated denials of his requests for information that he, as a trustee, had the right to access. The tension between Fenchak and the university administration escalated to the point where the Board accused him of violating its code of conduct. In particular, in July 2024, Fenchak allegedly made an off-color remark to a University staff person. This incident was cited as the basis for the Board’s attempt to remove Fenchak from his position.

Fenchak filed a lawsuit against the Board over access to financial information. He also sought a preliminary injunction to prevent the Board from voting on his removal.

A preliminary injunction is a temporary remedy that is granted until the parties’ underlying dispute can be fully resolved. The Court considered the following preliminary injunction factors in making its determination: (1) immediate and irreparable harm; (2) likelihood of success on the merits; (3) greater injury from refusing the injunction; and (4) public interest.

1. Immediate and Irreparable Harm: The Court found that Fenchak would suffer immediate and irreparable harm if removed from the Board. The Court emphasized that the harm extends beyond mere reputational damage or loss of position—Fenchak’s removal would impair his ability to defend his claims and prosecute his underlying lawsuit. The Board’s attempt to remove Fenchak was ostensibly based on an alleged violation of its code of conduct. However, the Court suggested that this accusation may have been a pretext for retaliatory action against Fenchak due to his probing questions about University finances, especially because the attempt to remove Fenchak came only three days after he filed a lawsuit and a trustee has never been removed from the Board before.
2. Likelihood of Success on the Merits: The Court determined that Fenchak demonstrated a reasonable probability of success on the merits of his case. This assessment was based on the evidence of retaliatory behavior presented by Fenchak, including repeated denials of his requests for information that he likely had a right to receive as a trustee. The Court’s analysis suggested that Fenchak’s claims of retaliation and breach of fiduciary duty have substantial legal merit.
3. Greater Injury from Refusing the Injunction: The Court concluded that greater injury would result from refusing the injunction than from granting it. In particular, the Board’s conduct would go unchecked and Fenchak may be unable to continue with his lawsuit if he was removed from the Board.
4. Public Interest: The Court determined that granting the injunction serves the public interest. The Court reasoned that preventing the potentially retaliatory termination of a trustee who is inquiring into University operations upholds principles of transparency and accountability in public institutions.

Therefore, the Court granted the preliminary injunction and stated that it would remain in effect until Fenchak’s lawsuit against the Board over access to financial information is resolved, his elected terms have ended, or until it is otherwise lifted by the Court. The Court also noted that steps have already been taken to sanction Fenchak, including prohibiting his in-person attendance at meetings and revoking his social privileges as a trustee.

Fenchak v. Pa. State. Univ. Board of Trustees (Pa. R. Centre Cty. Ct. C.P. October 9, 2024) No. 2024-CV-1843-CI.

Note: This case is an important reminder that attempts to remove board members who raise questions about financial practices may be viewed as retaliation.