Labrador lawsuit challenges closed-door, U of I-Phoenix purchase discussions

(UPDATED, 12:43 p.m., with additional details on the lawsuit.)

The State Board of Education broke Idaho law when it held closed-door meetings to discuss the University of Idaho’s plan to acquire the University of Phoenix, Attorney General Raúl Labrador contends in a lawsuit.

Laura Guido of the Idaho Press first reported Thursday on the lawsuit, filed Tuesday by Labrador and his solicitor general, Theo Wold. In the lawsuit, Labrador’s office asks the Ada County district court to void the May 18 State Board vote that gave the U of I the green light to pursue the purchase.

In the lawsuit, Labrador’s office chastises the State Board and the U of I for moving hastily “to acquire a for-profit college beset with financial, moral and legal challenges.”

“If the University of Idaho wants to approve the deal, it will need to do so after a public meeting,” the lawsuit says. “The people of Idaho deserve to know about a transaction of this magnitude before it happens, not to have it presented to them as a fait accompli.”

Through spokespersons, the State Board and the U of I declined comment on the lawsuit Friday morning.

Secrecy has become a recurring criticism of the U of I’s $685 million plan to buy Phoenix, a for-profit online education giant serving some 85,000 students. The U of I spent two months pursuing the purchase behind closed doors — due to a non-disclosure agreement, which university officials signed at Phoenix’s urging.

The State Board did meet to discuss the purchase in a series of three closed executive sessions, on March 22, April 25 and May 15. That third and final closed meeting took place three days before the State Board held its first public discussion of the purchase, and voted unanimously to endorse the purchase.

That May 15 meeting is central to the lawsuit.

“In effect, the May 18, 2023, vote was an illegal pro forma meeting to ratify a half-billion-dollar agreement whose terms were discussed and established outside of public view in direct contravention of Idaho’s Open Meeting Law,” the lawsuit reads.

State open meeting law allows public agencies to hold executive sessions for several reasons. The State Board cited an exemption covering “preliminary negotiations involving matters of trade or commerce in which the governing body is in competition with governing bodies in other states or nations.”

The lawsuit questions whether that exemption applies, since University of Arkansas regents voted on April 24 to walk away from a possible Phoenix purchase.

“The State Board of Education unquestioningly relied on the seller’s representation that other state universities were considering purchasing Phoenix,” the lawsuit says.

The open meetings exemption — and the question about other would-be bidders — also came up at the Statehouse last week, when the Joint Finance-Appropriations Committee met to discuss the Phoenix purchase. U of I President C. Scott Green and State Board executive director Matt Freeman said two other states were negotiating a possible purchase. Green did not go into specifics, saying only that he had heard “rumors” about other suitors.

At that hearing, Green fielded numerous questions about the secrecy surrounding the purchase. Green said the nondisclosure agreement allowed the U of I to delve deeply into Phoenix’s finances, but he said the U of I had to sign the agreement in order to have any substantive talks. “(It) was not ideal and it was probably not my preference,” Green told lawmakers.

In a statement, spokeswoman Beth Cahill said Labrador has heard from “a number of people” concerned with the process behind the Phoenix purchase.

“Labrador will do whatever is legally necessary to ensure that (the State Board) and the University of Idaho comply with Idaho’s commitment to transparency,” she said.


Kevin Richert

Kevin Richert

Senior reporter and blogger Kevin Richert specializes in education politics and education policy. He has more than 30 years of experience in Idaho journalism. He is a frequent guest on "Idaho Reports" on Idaho Public Television and "Idaho Matters" on Boise State Public Radio. Follow Kevin on Twitter: @KevinRichert. He can be reached at [email protected]

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