## Facts

- Ten Ohio community schools (charter schools) contracted with affiliated entities of White Hat Management, L.L.C. to run the schools’ daily operations.
- Under materially similar management agreements, White Hat assumed broad operational control, including staffing, curriculum, and administration.
- The schools paid White Hat a “continuing fee” equal to roughly 95–96% of per-pupil public funding and grants received by the schools.
- White Hat was required to provide facilities and to purchase or lease personal property needed for school operations (e.g., computers, software, furniture, equipment).
- The agreements stated White Hat would purchase on the schools’ behalf property that, due to the funding source, had to be titled in the schools’ names; otherwise, much of the personal property was titled in White Hat’s name.
- The agreements contained a post-termination “buy-back” term allowing the schools to keep property owned by White Hat only if the schools purchased it at the “then-remaining cost basis”; otherwise, White Hat claimed it could remove the property.
- After concerns about poor academic performance and spending practices, the schools sought relief including an accounting and declarations regarding rights to the personal property purchased with public funds.
- The trial court and court of appeals enforced the buy-back provision and rejected the schools’ theory that White Hat owed fiduciary duties tied to the continuing fee and purchased property.
- The Supreme Court of Ohio accepted review.

## Issues

1. Whether a private entity that manages a community school’s daily operations under contract is an “operator” under R.C. 3314.02(A)(8)(a).
2. Whether an operator owes fiduciary duties to the community school when using public funds to purchase personal property for school operations, including duties of accountability.
3. Whether a contract term requiring the schools to buy back operator-titled property at a remaining-cost basis after termination is enforceable, even when public funds financed the purchases.

## Decision

- The court held that an entity managing a community school’s daily operations pursuant to contract is an “operator” under R.C. 3314.02(A)(8)(a).
- The court held that a management company undertaking daily operation of a community school has a fiduciary relationship with the school, implicated when public funds are used to purchase personal property for school use.
- The court affirmed enforcement of the buy-back clause requiring payment of the remaining-cost basis to retain operator-titled personal property after contract termination.
- The court affirmed in part and reversed in part and remanded for an inventory of disputed property and disposition according to the contracts.

## Legal Principles

- A contract manager of a community school’s daily operations qualifies as a statutory “operator” under R.C. 3314.02(A)(8)(a).
- An operator performing governmental functions for a public community school owes fiduciary duties to the school when using public funds to acquire personal property for school operations, including obligations of loyalty and accounting tied to that spending.
- Recognition of fiduciary duties does not, by itself, transfer ownership of operator-titled property to the school; ownership and post-termination rights remain governed by the parties’ contracts unless unlawful.
- Courts may enforce unfavorable contractual allocation of property rights in the community-school context where the legislature has not prohibited the arrangement; public-policy objections alone do not justify rewriting the contract.
- When the record is unclear as to what property was acquired, with which funds, and how it was titled, a trial court may be directed to conduct an inventory and apply the contract terms to determine disposition.

## Conclusion

The Supreme Court of Ohio ruled that charter-school management companies running day-to-day operations are statutory operators and owe fiduciary duties when public funds are used to buy school property, but it still enforced a contractual buy-back provision for operator-titled assets and remanded for an inventory and contract-based disposition of the disputed property.


Hope Acad. Broadway Campus v. White Hat Mgmt., L.L.C., 46 N.E.3d 665 (Ohio 2015)