Oberlin Says It Will Pay $36.59 Million to a Local Bakery

Oberlin College, known as a bastion of progressive politics, said on Thursday that it would pay $36.59 million to a local bakery that said it had been defamed and falsely accused of racism after a worker caught a Black student shoplifting.

That 2016 dispute with Gibson’s Bakery resulted in a yearslong legal fight and resonated beyond the small college town in Ohio, turning into a bitter national debate over criminal justice, race, free speech and whether the college had failed to hold students to account.

The decision by the college’s board of trustees, announced Thursday, came nine days after the Ohio Supreme Court had declined to hear the college’s appeal of a lower-court ruling.

“Truth matters,” Lee E. Plakas, the lawyer for the Gibson family, said in an email Thursday. “David, supported by a principled community, can still beat Goliath.”

In a statement, Oberlin said that “this matter has been painful for everyone.” It added, “We hope that the end of the litigation will begin the healing of our entire community.”

The college acknowledged that the size of the judgment, which includes damages and interest, was “significant.” But it said that “with careful financial planning,” including insurance, it could be paid “without impacting our academic and student experience.” Oberlin has a robust endowment of nearly $1 billion.

The case hinged on whether Oberlin officials had defamed the bakery by supporting students who accused it of racial profiling, and the verdict, essentially finding that the officials had done so, may make other colleges and universities think twice about joining student causes, legal experts said.

“Such a large amount is certainly going to make institutions around the country take notice, and to be very careful about the difference between supporting students and being part of a cause,” said Neal Hutchens, a professor of higher education at the University of Kentucky. “It wasn’t so much the students speaking; it’s the institution accepting that statement uncritically. Sometimes you have to take a step back.”

Professor Hutchens said it also made a difference that Gibson’s was a small family business, not a large multinational corporation like Walmart or Amazon, which would be better able to sustain the economic losses from such a protest.

Oberlin is a small liberal arts college with a reputation for turning out students who are strong in the arts and humanities and for its progressive politics, leaning heavily on its history of being a stop on the Underground Railroad as well as one of the first colleges to admit Black students. Tuition at Oberlin is more than $61,000 a year, and the overall cost of attendance tops $80,000 a year. The college is also very much part of the town, which is economically dependent on the school and its students. The bakery, across the street from the college, sold donuts and chocolates, and was considered a must-eat part of the Oberlin dining experience.

The incident that started the dispute unfolded in November 2016, when a student tried to buy a bottle of wine with a fake ID while shoplifting two more bottles by hiding them under his coat, according to court papers.

Allyn Gibson, a son and grandson of the owners, who is white, chased the student out onto the street, where two of his friends, also Black students at Oberlin, joined in the scuffle. The students later pleaded guilty to various charges.

That altercation led to two days of protests; several hundred students gathered in front of the bakery, accusing it of having racially profiled its customers, according to court papers.

The lawsuit filed by Gibson’s contended that Oberlin had defamed the bakery when the dean of students, Meredith Raimondo, and other members of the administration took sides in the dispute by attending the protests, where fliers, peppered with capital letters, urged a boycott of the bakery and said that it was a “RACIST establishment with a LONG ACCOUNT OF RACIAL PROFILING and DISCRIMINATION.”

Gibson’s also presented testimony that Oberlin had stopped ordering from the bakery but had offered to restore its business if charges were dropped against the three students or if the bakery gave students accused of shoplifting special treatment, which it refused to do.

The store said that the college’s stance had driven customers away, for fear of being perceived as supporting an establishment that the college had tarred as racist.

Oberlin disputed some aspects of that account and countered that students were exercising their First Amendment right to free speech. The administration said it had only been trying to keep the peace. The college’s court papers also said that Allyn Gibson was trained in martial arts and had brought public criticism on the store by chasing the student out of the store and into public view.

In the spring, a three-judge panel of the Ohio Court of Appeals confirmed the jury’s finding, after a six-week trial, that Oberlin was liable for libel, intentional infliction of emotional distress and intentional interference with a business relationship — that it had effectively defamed the business by siding with the protesters. The original jury award was even higher, at $44 million in punitive and compensatory damages, which was reduced by a judge. The latest amount consists of about $5 million in compensatory damages, nearly $20 million in punitive damages, $6.5 million in attorney’s fees and almost $5 million in interest.

In its ruling, the Court of Appeals agreed that students had a right to protest. But the court said that the flier and a related student senate resolution — which said that the store had a history of racial profiling — were not constitutionally protected opinion.

“The message to other colleges is to have the intestinal fortitude to be the adult in the room,” Mr. Plakas said in an interview after the jury had awarded damages in June 2019.

After the 2019 jury award against Oberlin, Carmen Twillie Ambar, the college president, said that the case was far from over and that “none of this will sway us from our core values.” The college said then that the bakery’s “archaic chase-and-detain policy regarding suspected shoplifters was the catalyst for the protests.”

But in its statement on Thursday, Oberlin hinted that the protracted and bitter fight had undermined its relationship with the people and businesses in the surrounding community.

“We value our relationship with the city of Oberlin,” its statement said. “And we look forward to continuing our support of and partnership with local businesses as we work together to help our city thrive.”

Sheelagh McNeill and Jack Begg contributed research.