Oberlin College to pay $37 million to local bakery after students alleged racism

Ohio's Oberlin College on Thursday said it will pay nearly $37 million to a local bakery that sued the school for libel following a 2016 shoplifting incident involving three Black students.

The Ohio Supreme Court last month declined to hear Oberlin's appeal of a lower-court ruling ordering the college to pay $25 million to Gibson's Bakery, which accused the college of branding the store as racist and harming its business as result. 

"We are disappointed by the Court's decision. However, this does not diminish our respect for the law and the integrity of our legal system," Oberlin College said in a statement provided to CBS MoneyWatch. "This matter has been painful for everyone. We hope that the end of the litigation will begin the healing of our entire community."

Student protests following arrests

In November of 2016, Allyn Gibson, the son of bakery owner David Gibson, chased and tackled an Black male student he had suspected of stealing a bottle of wine. Two Black female students who were with the male student tried to intervene. All three were arrested and later pleaded guilty to misdemeanor charges.

The arrests triggered student protests outside Gibson's, where flyers accusing the owners of racist business practices were distributed. A Student Senate resolution condemning Gibsons was emailed to all students and was posted in a display case at the school's student center, where it remained for a year. Oberlin College officials ordered its campus food provider to stop buying bakery items from the century-old, family-run business.

Gibson's filed a lawsuit in November of 2017, accusing the college and a dean at the school of slandering the bakery as a "racist establishment" and hurting its business. 

A local jury awarded the Gibsons $44 million in compensatory and punitive damages in June 2019 after a five-week trial. A judge later reduced the award to $25 million.

 David Gibson died in November 2019 at age 65. His father Allyn Gibson died in February at age 93.

Plakas Mannos, the law firm representing the bakery, celebrated Oberlin's decision not to pursue additional appeals. 

"Truth still matters, and David has overcome Goliath," the law firm said in a statement to CBS MoneyWatch. "Now, the Gibsons will be able to rebuild the business their family started 137 years ago and keep the lights on for another generation." 

— The Associated Press contributed to this report