‘Meritless’: Idaho board wants AG Labrador’s lawsuit over University of Phoenix dismissed

The State Board of Education has asked a judge to dismiss a lawsuit from Idaho Attorney General Raúl Labrador that said the board violated the open meetings law when it secretly discussed acquiring the University of Phoenix.

Boise attorney Trudy Hanson Fouser called Labrador’s complaint “meritless.” Labrador’s allegations are “not only legally and factually incorrect but unwisely prejudice the people’s access to the truth and needlessly undermine the people’s trust in government,” Fouser wrote in the motion filed last week.

Idaho State Board of Education officials — acting in their capacity as regents for the University of Idaho — in May approved a $685 million proposal for U of I to buy the University of Phoenix, an Arizona-based for-profit university. The announcement was the first time the deal was publicly disclosed.

Fouser also told the court that Labrador’s complaint against the board should be dismissed because it was filed after a statutory deadline to challenge the decision, and because the complaint named the wrong entity. Labrador sued the Idaho State Board of Education, which also comprises the Board of Regents for U of I, but the two are distinct entities.

“You have previously expressed concern about ‘wasting taxpayer funds and resources by prolonging litigation.’ Our client strongly agrees,” Fouser wrote in a Friday letter to Labrador. “Taxpayers of the state of Idaho should not be paying for this unnecessary litigation.”

Beth Cahill, Labrador’s spokesperson, told the Idaho Statesman by email that the attorney general’s office has “no additional comment beyond what we have previously provided on the lawsuit.”

A previous comment from the office accused the state board of “wasting taxpayer funds” to “justify its failure to follow Idaho open public meeting laws, all to keep a half-billion-dollar transaction from public discourse.”

Idaho EdNews first reported the board’s motion to dismiss Tuesday.

Why Labrador sued to overturn Phoenix deal

A May 18 State Board of Education meeting was the first time the board publicly discussed the deal between the U of I and the University of Phoenix, which had been in the works for months. Board members previously mulled the deal at least three times behind closed doors, State Board President Linda Clark said during the May 18 meeting.

Idaho’s Open Meeting Law requires that all meetings of government boards be open to the public. But the law exempts “preliminary negotiations” among public officials that involve “matters of trade or commerce” and “competition with governing bodies in other states or nations.”

Board members pointed to that exception to justify their secret meetings to discuss the University of Phoenix acquisition. On June 20, Labrador asked the 4th Judicial District Court in Ada County to nullify the board’s decision to approve the deal.

When board members met privately on May 15 — three days before publicizing the University of Phoenix deal — they did not consider the meeting “preliminary negotiations” but rather “the final, or substantially final, terms of the prepared acquisition,” the attorney general alleged.

Labrador also argued that U of I no longer had competition on the deal by May 15. About three weeks earlier, trustees for the University of Arkansas, the only other bidder known to the public at the time, had voted against a proposal to buy the University of Phoenix.

Labrador asked the court to void the board’s decision to approve the deal because the May 15 meeting “did not qualify” for the Open Meeting Law exception.

U of I had competition on deal, letters say

In a Friday letter to Labrador, Fouser urged the attorney general to withdraw his “meritless” claim that the board violated the Open Meeting Law.

Fouser attached two letters, from University of Phoenix President Chris Lynne and the school’s financial advisor, that explained U of I was competing with two other universities and a private entity in its bid to buy the University of Phoenix.

“It is unclear what ‘information’ you based such allegations upon,” Fouser wrote to Labrador. “However, we write to draw your attention to the two attached letters, which demonstrate that whatever information you possessed, if any, was false.”

In addition to another unnamed state university and nongovernmental entity, officials with the University of Arkansas “still wanted to pursue a potential acquisition” after trustees rejected the proposal in April, wrote Gregory Finkelstein, managing director for Tyton Partners, University of Phoenix’s financial advisor, in a July 18 letter to U of I President C. Scott Green.

In May, U of I officials were “aware of our ongoing discussions with other potential buyers including state universities and private entities and understood that those parties remained viable alternatives,” Finkelstein wrote.

In her motion to dismiss Labrador’s complaint, Fouser rebuked the attorney general’s claim that the board members’ discussion of the deal was no longer “preliminary” when they met on May 15. All information and negotiation before the board’s May 18 decision to approve the deal is considered “preliminary,” Fouser argued.

”In Idaho, where the Legislature has not provided a definition in the statute, terms in the statute are given their common, everyday meanings,” Fouser wrote.

Labrador’s complaint also should have been filed by June 14 to satisfy a 30-day deadline to challenge decisions involving violations of the Open Meeting Law, Fouser argued.

Why State Board of Ed hired private attorney

Typically, the attorney general’s office would represent the State Board of Education in such a case, but the board members hired a private attorney because they were sued by the attorney general.

It’s not the only case in which Labrador is opposing his own client. The Idaho Department of Health and Welfare in March sued to block Labrador’s office from demanding that the department hand over records related to child care grants. Fouser is representing the department in the ongoing case.

State Board of Education members consulted with Labrador’s office before the May 15 closed door meeting to ensure it was conducted legally, according to a June 30 letter that State Board Executive Director Matt Freeman sent a letter to Labrador’s office. The deputy attorney general assigned to advise the board was present at the May meeting and raised “no concerns with its legality,” Freeman wrote.

“To adequately respond to the lawsuit, the board now requires legal counsel who is both experienced in ligation and acting independent of Attorney General Labrador,” he wrote.

Freeman said the board would forward invoices for legal expenses to Labrador’s office.