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Stanford Drags Apple Into Court Over Lawsuit Against Dean Saloner

Former Stanford GSB professor Jim Phills

Former Stanford GSB professor Jim Phills

STANFORD ALREADY HAS SPENT HUNDREDS OF THOUSANDS OF DOLLARS IN LEGAL FEES

Stanford’s assertion of ownership over course material gains a profound element of irony when considered in light of the $1 million book advance Phills’ wife and GSB professor Gruenfeld recently earned for her forthcoming book “Acting With Power,” scheduled to be published in 2017. Gruenfeld, a GSB professor since 2000, teaches a single course, having developed it – starting around 2007, according to the GSB – on the foundation of two decades of research into power dynamics. The course’s title? Same as the book’s. Gruenfeld also sells “Acting With Power” DVDs for $95 through an online employee-training company. Many other business school professors spin course materials they’ve developed at their schools into lucrative speaking engagements, consulting gigs, and books, never having to share that income with their universities.

Phills has spun his aborted business school career into far more financially rewarding employment at Apple. Details of his income and finances have already been revealed through court filings. Working at the tech firm since 2012 has sent Phills’ income skyrocketing from less than $250,000 when he was at the GSB to $1.7 million last year. A great deal of his income, however, is going toward lawyers and court fees, as he simultaneously fights the lawsuit for wrongful dismissal and a bitter divorce battle with Gruenfeld, a board member of the women’s leadership group Lean In.

The divorce had cost Phills $260,000 in legal expenses by May 2015, according to the New York Times. Stanford, which inserted itself into the dispute in a largely unsuccessful attempt to prevent embarrassing public disclosures, has no doubt spent a hefty sum on that case. Total legal costs for Phills and Stanford in the lawsuit have not been disclosed in court (Phills told Vanity Fair earlier this year that his legal expenses were approaching $500,000, presumably including divorce-related billings), but the lawsuit has generated nearly three times the volume of legal filings as the divorce, and each side must have spent many hundreds of thousands of dollars on the fight – money that, for Stanford, could perhaps have been better spent on enhancing education for students.

SALONER AND STANFORD SUFFER SETBACKS IN LAWSUIT

Stanford and Saloner suffered a significant blow of late, when a judge threw out three claims made by the university and the business school dean in a “cross-complaint” they filed against Phills, seeking punitive, exemplary, and compensatory damages from him. The court found that Saloner’s claim of intentional infliction of emotional distress upon him by Phills did not hold up. Also the judge ruled invalid the two claims by Saloner and Stanford that Phills, who has admitted to using his wife’s passwords to access her email and social media accounts, broke U.S. and state law in accessing and saving the communications between Saloner and Gruenfeld. However, the ruling did leave open three allegations by Saloner: that Phills invaded his privacy by taking the communications; that Phills broke his employment contract; and, of relevance to Phills’ GSB teaching materials, that Phills “converted” – legalese for “stole” – Stanford property.

Saloner declined to comment on the ruling, on the advice of his lawyers, because of the ongoing litigation. He resigned from the deanship in September, effective at the end of the academic year, after Poets&Quants sent him a detailed list of questions about the lawsuit and a staff revolt against his leadership.

Phills calls the allegation that he stole university property by retaining teaching and research materials he’d created a “ludicrous and transparent attempt to intimidate me and drive up my legal costs.”

APPLE IS OPPOSING RELEASE OF THE EDUCATIONAL MATERIALS

In its latest court action, the university is seeking a court order forcing Apple to give to Stanford “all documents pertaining to Apple University courses . . . developed and/or taught by Mr. Phills.” Stanford lawyers complain repeatedly in court filings that the company hasn’t produced any of them. “Despite Stanford’s multiple attempts to meet and confer, Apple continues to assert the same objections and has not complied with its discovery obligations pursuant to the subpoena request,” the university’s lawyers write in a Dec. 10 court filing.

Apple, according to that filing, has agreed to provide Phills’ employment records, but opposes release of the educational materials, arguing that the documents are proprietary and were developed while Phills has been working at the company.