Newman's Own and Dead Hand Control

The nice thing about having practiced transaction law rather than litigation is that I'm not limited to asking question that I already know the answer to. So, for today's post, I'm going to ask a question I don't know the answer to: must the board of Newman's Own make specific distributions in accordance with Paul Newman's wishes from before he died?

See, that seems to be the central claim in his daughters' lawsuit against Newman's Own Foundation. Nell and Susan assert that their father directed Newman's Own Foundation to distribute at least $400,000 to each of his daughters' charitable foundations, allowing them to distribute that (small) portion of the revenue from Newman's Own according to their wishes. In fact, they claim, that was one of the conditions he imposed in licensing his name, image, likeness, etc., to Newman's Own Foundation:

The lynchpin of his plan was the royalty structure conceived of years before, through which NOF would be granted the rights to Mr. Newman’s name, image, likeness, signature, persona and related intellectual property rights in exchange for, among other things, implementing Mr. Newman’s directions for his children’s charitable giving.

While the complaint doesn't say so explicitly, I infer from reading it that there isn't any solid written evidence that this deal. But let's assume it happened. Could such a requirement be legally enforced?

On the one hand, donors absolutely can make restricted gifts, only to be used for particular charitable uses. And if that's what this is, then I would assume it's enforceable.

On the other hand, though, the alleged conditions don't just require the board to fund certain types of activities or organizations: they require Newman's Own Foundation to give a specific amount of money to a specific set of organizations. And it seems like that kind of directive could, in theory at least, force the board to violate its fiduciary duties, at least if it was sufficiently inflexible. If, for instance, the board determined that one of the daughters' foundations was mismanaged, was poorly run, or that the donation constituted prohibited inurement, for example, it seems to me that the board would have a duty not to make the contribution.

And that's not to suggest that any of the daughters' foundations are poorly run, mismanaged, or anything else. But is the possibility that they could be enough to make guaranteed funding impermissible?

My gut is that such an absolute requirement would be impermissible. But the ten minutes I spent searching didn't provide me with anything determinative, so I don't know. I would love to hear what you all think, though.

Samuel D. Brunson