USC Trustees Slam Board Chair Caruso Over B-School Dean’s Dismissal

Rick Caruso, chair of the USC board of trustees, has come under attack by several trustees

Several members of the University of Southern California’s board of trustees, including at least two former board chairs, are heavily criticizing current Board Chair Rick Caruso for his handling of the university’s decision to fire Marshall School of Business Dean Jim Ellis. In an another development today (Jan. 21), all 116 members of the business school’s Board of Leaders urged the university’s trustees to remove Caruso and place three top USC officials, the president, provost and senior vice president, on leave pending an investigation.

In a scathing letter obtained by Poets&Quants, former Board Chair Edward P. Roski, Jr., accuses Caruso of unprofessional and reckless behavior in pushing through a board vote on Dec. 12 that supported the decision by Interim President Wanda Austin to cut short Ellis’ deanship by three years. Billionaire real estate developer Roski is among the most influential trustees of the 57 members on the board, having served as a USC trustee since 2000 and board chair for five years until 2013.

His Dec. 19th letter provides new and shocking details on a board meeting at which Caruso and Austin sought support for their highly controversial decision to terminate the deanship of Jim Ellis by the end of this academic year. Though the pair has been purposely vague about the reasons for their decision, reports in the Los Angeles Times alleged that the decision was based on a mishandling by Ellis of gender and racial bias complaints filed with USC’s Office of Equity and Diversity (OED).

CARUSO ACCUSED OF ‘BULLYING TACTICS & CENSORSHIP OF A TRUSTEE’

Former USC Board Chair Stanley Gold insisted that a trustee’s ouster be recorded in the minutes

Roski’s letter was sent to Caruso a week after the board’s vote. Among other things, he takes strong issue with Caruso’s decision to kick a prominent board member, who opposed the decision to fire Ellis, out of the meeting and to limit his comments to a single minute. The trustee, Ming Hsieh, has served on the board for more than ten years and also donated $85 million to the university. He was also one of the very few trustees who had personally examined the binders that contained the complaints in the Office of Equity and Diversity and read a report on them by the law firm of Cooley LLC. Hsieh says he found no evidence in those documents to support Ellis’ dismissal as dean (see Commentary: How USC’s Board Chair & Interim President Flunked Their First Leadership Test).

Hsieh, meantime, has also since called on Caruso to reopen the matter with the full board. In another letter obtained by Poets&Quants, he has accused Caruso of pushing through a board vote on Austin’s decision while concealing the facts which do not justify Ellis’ dismissal. “You did everything you could to make Jim look bad and make yourself look good,” wrote Hsieh, who is demanding the appointment of a special committee to examine Caruso’s role in the board vote and whether he should be forced to resign as chairman.

During the meeting, according to a board statement from Caruso,  the trustees “discussed the issue at length” and voted “overwhelmingly” in support of Austin’s removing Ellis. Less than half a dozen of USC’s trustees voted in opposition, university sources told the Los Angeles Times, though it was unclear how many of the trustees actually attended the meeting. Two former chairmen of the board, Roski and his predecessor as chair, Stanley Gold, felt so strongly about what Roski called Caruso’s “bullying tactics and censorship of a trustee” that Gold insisted his objection to Hsieh’s removal be placed in the minutes of the board meeting.

‘I HAVE NEVER BEFORE WITNESSED A MEMBER OF THE BOARD BEHAVE SO UNPROFESSIONALLY’

Former Board Chair Edward Roski heavily chastised Caruso for his handling of the board meeting

“I could literally hear the shock waves passing through my fellow trustees as you diminished Ming, first administering a loud, abrasive tongue lashing, then kicking him out of the meeting,” said Roski.

Roski told Caruso he was deeply troubled by his conduct at the meeting. “I must tell you that I have never before witnessed a member of the board behave so unprofessionally and recklessly as you did last Wednesday, let alone a chairman of the board,” wrote Roski. “You abused the trust and authority vested in you by removing a trustee from the meeting for no reason other than their position differed from your own…Your behavior shocked the conscience. I have never before seen another member of the board so callously degrade and marginalize a trustee as you did. I found your conduct extremely offensive.”

Roski, who has donated more than $48 million to USC and has his name on USC’s School of Art and Design as well as an eye institute at USC’s Keck School of Medicine, is particularly incensed at Caruso for his treatment of fellow trustee Hsieh. “Your arbitrary imposition of a one-minute speaking rule on Ming Hsieh–a rule that you pointedly did not apply to any other trustee in the meeting–unfairly muzzled a dissenting viewpoint and is contrary to good governance and the principles of free speech and intellectual discourse for which USC stands.”

‘YOU ONLY HAVE ONE MINUTE! ‘IT’S A MINUTE AND A HALF! YOU HAVE TO LEAVE!’

“When Ming dared to speak longer than the one minute you so generously allotted to him, you verbally abused him, shouting him down: ‘You only have one minute! It’s a minute and a half! You have to leave!’ You then had him escorted from the boardroom and only permitted him to return when discussion of the  Jim Ellis matter had ended.

“Rick, we don’t win arguments here by shouting louder than the next guy. You took advantage of the fact that English is Ming’s second language to stifle his ability to make his case, even though he was one of the few members of the board who had actually gone to the trouble and inconvenience of going to USC to read the Cooley report. and the dean’s personnel file. That information was pointedly not provided to board members either in advance of or during the meeting. Even the meager slides you projected on the screen during the meeting were illegible. Yet a, after thoroughly shutting down a key opponent’s viewpoint and otherwise limiting discussion, you called for a vote.”

Caruso, who responded to Roski in a letter on Dec. 21, did not take issue with Roski’s description of the meeting. But he claimed that Austin’s decision “had been thoroughly reviewed and that every board member had the opportunity to share his or her feedback with the full board and our president.” He also defended his decision to throw Hsieh out of the meeting. “Ming had retained the same attorney who is representing Dean Ellis in challenging the university’s employment decision,” wrote Caruso in a letter obtained by Poets&Quants. “While Dean Ellis has every right to challenge the decision, Ming’s retention of the same attorney creates a conflict.”

‘INSTEAD OF DAMPING THE CONTROVERSY, YOU STOKED IT’

Caruso also took offense at Roski’s suggestion that the board chair’s actions were motivated by Hsieh’s “background and position, his nationality, gender or race.” “Your accusations of racism and cultural insensitivity are baseless, offensive, and not befitting of this Board or our values,” retorted Caruso in his letter to Roski. “Your words were inappropriate for a man of your stature and frankly saddened me.”

Roski also accused Caruso of manipulating the board vote in Austin’s favor. “Rick, by preemptively silencing a board trustee, a trustee armed with the facts you deliberately chose not to make readily available to the rest of the board, you ensured that your agenda would dominate the discussion and made the vote a foregone conclusion. Instead of damping the controversy, you stoked it. This is not leadership, this is manipulation. Because you are chairman of the board of trustees, your irresponsible actions have lowered yourself, the board and the very university we are here to serve.”

In a Jan. 11th letter, Hsieh accused Caruso of leading “an opaque process whereby Jim was removed without any legitimate basis and without informing him–or the Board of Trustees–of the underlying facts. Then you orchestrated and pushed through a board ‘vote’ approving Jim’s removal, without telling the trustees the true facts and, in fact, concealing them from the Board.”

WHAT CARUSO FAILED TO TELL THE BOARD OF TRUSTEES BEFORE THE VOTE

Hsieh said that he believes Caruso stifled a fair and complete discussion at the board level “to curry favor and make yourself look good in the press as the ‘champion’ of diversity. But serving as chairman is not about making you look good. It’s about being open and honest–transparent’–and doing what’s best for USC. It’s your duty, as the Board’s fiduciary, to ensure the trustees get all the facts.”

Then, Hsieh detailed a series of ‘facts’ that will only lead to further controversy over Austin’s decision to fire the highly popular dean of the Marshall School of Business. “You didn’t tell the board that the ‘reasons’ for Jim’s removal were based on Office of Equity and Diversity (OED) complaints from 2008-2009–ancient history, when Jim was early on in his deanship and under circumstances that he inherited the problems of his predecessors,” wrote Hsieh. “You didn’t tell the board that none of the complaints were against Jim personally. You didn’t tell the board that to the extent complaints were brought to Jim’s attention, he dealt with them appropriately.

“You didn’t tell the board that, since 2015, there has been, according to OED, a noticeable decline in complaints regarding the Marshall School. You did not provide the board with any data comparing the incidence of OED complaints at Marshall to the number of complaints received at the various other schools on campus or business schools nationally so that the board would have the ability to view the Marshall School in proper context.

About The Author

John A. Byrne is the founder and editor-in-chief of C-Change Media, publishers of Poets&Quants and four other higher education websites. He has authored or co-authored more than ten books, including two New York Times bestsellers. John is the former executive editor of Businessweek, editor-in-chief of Businessweek. com, editor-in-chief of Fast Company, and the creator of the first regularly published rankings of business schools. As the co-founder of CentreCourt MBA Festivals, he hopes to meet you at the next MBA event in-person or online.