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In lawsuit challenging tax-exempt status, U. requests change of jurisdiction

The University has formally requested to move a local lawsuit challenging its tax-exempt status from Morristown to Trenton, which would potentially place the lawsuit under the jurisdiction of a different judge.

Four local residents challenged the University’s position as a nonprofit organization in 2011, demanding that the University pay taxes on 19 additional properties. If approved, this demand would cost the University roughly $2.5 million, according to town tax records.

Although the University does not pay taxes on most of its property, it  spends about $10 million a year on taxes for nonexempt properties and voluntarily pays taxes on some graduate student housing, making it the largest tax contributor in town. Its voluntary payment to the town’s budget was  recently increased to $2.75 million.

However, plaintiffs argue that the University, like similar institutions in the United States, profits from inventions developed in its research facilities and has engaged in forceful litigation to protect its patents. One of the University’s most successful patents has been the cancer-fighting drug Alimta, which brought the school $524 million in licensing income in eight years, according to Bloomberg News.

The local case was originally held in Trenton but moved to Morristown after the current tax court judge retired without being immediately replaced, University Vice President and Secretary Robert Durkee ’69 told the Princeton Packet. The University filed its request because all of the parties, properties and the majority of assigned lawyers are located in Mercer County, Durkee said in a press release.

Durkee also noted that both the University and the municipality would prefer to have the rest of the case proceedings in Trenton, which is about 15 minutes away from Princeton.

Judge Vito L. Bianco of Morris County ruled against the University in June 2013 by denying its motion to have the lawsuit thrown out. Opposition representative Bruce Afran noted that the University has made another motion to dismiss the case, which will be judged on Oct. 10.

Although Afran said he cannot be certain of the University’s motives, he suspects the recent request, which was made around three years after the case first moved to Morristown, may be an attempt to garner a more favorable ruling from a different judge.

Afran alleged that, in addition to rejecting the University’s motion in 2013, Judge Bianco also said that the case presents very serious issues for nonprofits all over the country.

“The only logical reason for trying to change the case now would be for the University to try to change its luck,” Afran said, adding that the University previously offered only five witnesses for the case but is now announcing dozens, which could speak for a closer location.

“It’s also a little bit absurd for an $18 billion corporation to say that it can’t afford to have its witnesses drive 40 miles to Morristown,” Afran said, noting that the University previously engaged in patent lawsuits in other states.

Durkee said that Afran’s allegations were unfounded and based on personal speculations. He was not available for comment on this article.

If the University’s request is passed, the integrity of the court will be undermined, Afran said.

“The public will think that a large wealthy institution can get what it wants from the courts,” he explained.

Afran also said that moving the case at this point would be a waste of resources for the courts, since it would require the new judge to start over with the investigation. However, Afran said he believes the plaintiffs have a strong case no matter where the case is judged.

A decision on whether the case will be moved to Trenton will be announced some time in the next ten days, Afran said.

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