Scheuer v. Creighton University

Edwin Scheuer (plaintiff) was a tenured professor in the School of Pharmacy (the pharmacy school) at Creighton University (Creighton) (defendant), a private university in Nebraska. The pharmacy school, which was one of four schools in the Health Sciences Division at Creighton, had its own dean and its own budget. In 1975 Scheuer was informed that he was being terminated for financial reasons. The pharmacy school had operated at a deficit since 1971. In 1975 the vice president for the Health Sciences Division learned that it was facing a large reduction in funds and would have to operate at a $900,000 deficit for the upcoming school year, $160,000 of which was attributable to the pharmacy school, which was receiving less federal funding because of declining enrollment. The pharmacy school was moving into a new building, which was expected to create $100,000 in additional expenses. After cutting nonsalary expenses and terminating nonfaculty positions, the pharmacy school and Health Sciences Division determined that they would have to terminate four tenured faculty members. Scheuer was selected because the only class he taught, Medicinal Chemistry, could be taught by another faculty member with more seniority. The Creighton University Handbook (the handbook) provided that tenured faculty could only be terminated for cause. Financial exigency was listed as one example of cause. Scheuer brought a breach-of-contract claim against Creighton. A district court ruled for Creighton, finding that, under the handbook, the financial-exigency condition is met when a financial exigency exists within a department or program. Scheuer appealed, arguing that his contract required a showing that Creighton, not just the pharmacy school, was experiencing a financial exigency. On appeal, the American Association of University Professors (AAUP) filed an amicus brief supporting Scheuer and pointing to its recent adoption of its 1976 regulations, which defined financial exigency as an imminent financial crisis that threatened the survival of the institution as a whole. These regulations were not in effect at the time of Scheuer’s contract.