Conservative Attack Dog Bites a Liberal Watchdog

IN HIS MESSY Manhattan office, Martin Kaufman, a full-time staff attorney for the Atlantic Legal Foundation, hardly looks like a pit bull for corporate America. To some, he might resemble a lawyer working for a nonprofit agency. "They think I’m working for a bunch of rich plutocrats," Kaufman laughs. "They’d be disappointed if they saw my office."

But after eight years of legal wrangling and nearly $ 500,000 in court costs, officials for the New York Public Interest Research Group – the Ralph Nader-inspired consumer watchdog – aren’t amused by Kaufman or his conservative foundation. Last month, the consumer group won a complex federal lawsuit brought by the foundation and a group of conservative students from the State University of New York at Albany, aimed at pulling the plug on NYPIRG’s funding and student activities on state college campuses, which documents show provides about 30 percent of NYPIRG’s $ 2.7 million annual budget.

In his ruling, U.S. District Court Judge Richard Owen rejected Kaufman’s arguments that money taken from SUNY’s student activity fees – allocated by student governments and paid to 19 NYPIRG campus chapters – was an unconstitutional violation of the conservative students’ free-speech rights. Kaufman says he plans to appeal.

NYPIRG officials say the dispute is a thinly veiled attack on its basic mission by the foundation, which, they say, is largely funded by corporations and conservative philanthropies that oppose NYPIRG’s consumer-oriented campaigns on generic drugs and other issues. "We couldn’t survive without this funding," says Jay Halfon, NYPIRG’s executive director. "They were going at the core of NYPIRG, and they knew that.

They are part of a network of ultra-right foundations that want to eliminate student participation in public policy forums and wipe away NYPIRG." One of Atlantic’s prime sponsors is Pfizer Inc., a $ 6.4 billion-a-year health care and pharmaceutical corporation based in Manhattan. Pfizer’s general counsel, C.L. Clemente, has been listed among the foundation’s board of directors. And in recent years, Pfizer provided free space in its East 42nd Street offices as a contribution to the foundation.

According to NYPIRG, Pfizer and other large pharmaceutical companies lost millions of dollars in the 1980s as a result of drug-law changes pushed by NYPIRG and senior citizen groups. Halfon says NYPIRG student chapters across the state angered the corporations by conducting surveys of brand-name drug prices and lobbying hard for laws making less-expensive generic drugs more widely available.

Pfizer spokesman Rick Honey said the company favors Atlantic with "donations in cash and in kind" because of its support of "individual freedoms and private enterprise." But Honey discounted NYPIRG’s charges that Pfizer wanted to slash the consumer group’s funding. Pfizer supported the foundation’s lawsuit, Honey said, so that college students would "not be forced to contribute to causes in which they do not believe." Along with Pfizer, Kaufman acknowledged, the foundation’s $ 350,000 annual budget has included contributions from a handful of large corporations and other pro-business groups. He said the foundation is involved in other legal disputes, including the Shoreham nuclear power plant case. "I don’t think people contribute because they believe we’re anti-NYPIRG, even though they may not like what NYPIRG does," Kaufman said. "I think NYPIRG is being a bit egocentric. We just think that it’s unfair for students to have to pay for them if they don’t want to."

Created in the mid-1970s, the Atlantic Legal Foundation came of age in the early 1980s. Its stated purpose is to help defend "the free-enterprise system and private property, and the protection of fundamental individual liberties against excessive government intrusion." Tulane University professor Oliver Houck looked at the IRS filings of several conservative legal foundations, including the Atlantic foundation, and questioned their status as tax-exempt, nonprofit charities.

Lawsuits filed by such foundations "appear to be on behalf of the very corporations that are their major donors and that sit on their directing boards," Houck wrote in a 1984 Yale Law Journal article. Some of Atlantic’s donors say they give money simply because they share the same pro-business philosophy. For example, the $ 3.5 billion Lilly Endowment Inc. – one of the nation’s largest charities, which was set up by three members of the founding family of the drug giant, Eli Lilly and Co. – has given $ 130,000 to the Atlantic foundation since 1988, according to tax records. "We think they’re a worthwhile cause to fund," said Susan Conner, spokeswoman for the Lilly endowment.

"But we’re not employing them to file any lawsuit or do any work for us." Federal regulators, including the Securities and Exchange Commission, permit Pfizer and other publicly held corporations to give to charities, including legal foundations that deal with political and public policy issues, usually without shareholder review. "It’s a constant frustation to some shareholders who want to know" where corporate donations go, says Howard Sherman, of Institutional Shareholder Services Inc. of Washington. "But the SEC draws a strong line on what is corporate governance that can be reviewed by shareholders and what . . . cannot."

Thomas J. Maier