What kind of scholarships are these, exactly? There are scholarships funded by schools (when Brown University offers a scholarship for say, chemistry), as well as scholarships provided by outside groups (when the Chicago Amateur Golf League offers a golf scholarship, which can be used by the recipient at any college with a golf program) and also many degrees in between (the Duke Alumni Association offers a golf scholarship, giving first preference to Duke students, but then distributing any remaining funds to students at other schools).
The organization granting the scholarship almost always reserves the right to apply the stated criteria as it sees fit. There are published guidelines, but when it comes down to the nitty gritty, the scholarship committee may decide to make special cases that might be outside the letter of the guidelines.
Even when an individual endows a fund at a college with very specific requirements, the institution can decide to review those requirements and change them if necessary. At our school, we had a scholarship established in 1850 that provided money for a white, male student who was engaged in community service and enrolled in the Teacher Education program. Needless to say (or, I think it’s needless) the school has since dropped the white and male requirements. That’s a rather extreme example, but the point is that the estate of the original donor would not be able to challenge the decision of the school to change those guidelines. In a slightly more related (and recent) example, one year the scholarship was given to a student who was not in the Teacher Education program. He was a biology major whose work in community service was establishing weekend science clubs at local elementary schools. The school felt that this particular student best met the spirit of the scholarship, in that he was involved in both service and education.
This is a very long-winded musing on my basic question as to why this ended up in a courtroom. Were they state funded scholarships? Very few scholarships of any type are automatic (such as the National Merit Scholarship), most rely on the recommendations of a committee. That committee is charged with making exceptions as it sees fit. There are some things that impact the committee’s decisions. In the case of Student B, the college might say “hey, let’s have the kid play basketball, even if he’s failing English” but does the college really want to risk an NCAA censure over the issue? Colleges play by the NCAA’s rules for athletic scholarships, because it is in their own best interest.
Somehow I doubt the Association of American Chemists is going to boycott a college because they are up in arms about a chemistry scholarship recipient not being very good in gym.
To make a long post even longer, let’s say we now have Student C, who applied for the same scholarship as Student A. Student C also has excellent grades, AND is passing gym. What happens if Student C complains that he/she was denied the scholarship given to Student A? The scholarship committee might say that in their interview, Student C was average, but Student A presented an amazingly articulate and convincing argument as to why gym is not important in evaluting one’s future in higher education. The committee reserves the option to say that Student A, having demonstrated a more compelling and dynamic intellectual ability, best meets the criteria of the scholarship, even though Student A does not fall within the general guidelines of the scholarship.