(UPDATED, 2:22 p.m., with details from the ruling and comments from the State Board of Education and the University of Idaho. UPDATED, 3:06 p.m., with comment from Raúl Labrador.)

The Idaho Supreme Court Thursday threw yet another wrench into the University of Idaho’s $685 million bid to acquire the University of Phoenix.

The court overturned an Ada County District Court ruling from January, which said the State Board of Education’s closed-door discussions of the Phoenix purchase were allowed under Idaho law.

“The district court erred in several ways,” the Supreme Court said in a 4-1 ruling issued late Thursday morning.

Thursday’s ruling kicks the 18-month-long legal battle back to District Court.

This latest development might — or might not — have an immediate impact on the U of I’s plans to acquire Phoenix, a for-profit online giant serving some 85,000 students. The Legislature slammed the brakes on the Phoenix purchase earlier this year, although the universities, the State Board and Gov. Brad Little’s office continue to discuss a possible purchase.

The parties have until June to come to terms, but Phoenix now has the option of talking to other would-be buyers.

But Thursday’s ruling represented a big win for Attorney General Raúl Labrador, who filed a lawsuit in June 2023 focused on the closed meetings that marked the earliest days of the U of I’s Phoenix courtship. However, the Supreme Court stopped short of declaring the closed meetings illegal; “We have not concluded that the Open Meetings Law was violated by the State Board,” said Justice Gregory Moeller, writing on behalf of the court.

The State Board held three executive sessions to discuss a potential Phoenix purchase, starting in March 2023. The third closed meeting took place on May 15, 2023 — only three days before the State Board held a hastily announced public meeting, and gave its green light to the Phoenix purchase. The State Board justified the closed meetings under a little-used section of state law, covering “preliminary negotiations” on a purchase that pits a state agency against “governing bodies in other states or nations.”

The 45-page Supreme Court ruling sided with Labrador on three fronts, and criticized Ada County District Judge Jason Scott, who sided with the State Board in January.

Preliminary negotiations. Labrador argued that the discussions, particularly the May 15 meeting, were not preliminary at all. The State Board and the U of I said the negotiations were in flux in the days, and even hours, leading up to the board’s May 18 vote.

In considering the case, Scott said all negotiations leading to a contract could be considered “preliminary.” This, wrote Moeller, defies the “preference for sunshine” that is at the heart of the Open Meetings Law. “The district court’s reading … effectively cloaks all negotiations and actions taken prior to a final public vote in shadow.”

Justice Colleen Zahn dissented, saying the court’s majority opinion would only create more confusion. “(It) leaves an agency to guess whether its negotiations are still preliminary, or whether they have developed to the point that they are ‘final.'”

Competition. Labrador had long questioned whether the U of I was vying with other public bidders in its pursuit of Phoenix — especially after April 25, 2023, when the University of Arkansas’ board of trustees walked away from a potential purchase. In District Court testimony in January, U of I President C. Scott Green said the U of I was in competition with multiple, unnamed public bidders.

The Supreme Court rejected a centerpiece of Scott’s ruling — which said State Board members had reason to believe that the U of I was competing with other bidders, a belief that would suffice under state law. “This statute requires that a governing body actually be ‘in competition with’ other governing bodies, not simply believe that they are or might be,” Moeller wrote.

Legal fees. Scott had awarded the State Board nearly $243,000 in attorney’s fees and costs. But with the case headed back to District Court — and the outcome in jeopardy — the question of legal fees is on hold.

On Thursday, Labrador hailed the ruling as a “sweeping reversal” of the lower court.

“After 14 months of working to ensure transparency, this is a comprehensive win for the people of Idaho and the principles of open government,” he said. “The Idaho Supreme Court agreed with my office on all three of the major issues raised and protected the right of the people to know exactly what their government officials are doing.”

In statements Thursday, the State Board and the U of I stressed that the case is not closed.

“The Supreme Court did not conclude that the (State) Board violated the Open Meetings Law,” board spokesman Mike Keckler said. “Rather, the Supreme Court held ‘that the district court applied the wrong legal standard on summary judgement due to a misinterpretation of the relevant statute.'”

“We are reviewing the ruling and will work with our Board of Regents on next steps,” U of I spokeswoman Jodi Walker said. “It remains pending litigation and we do not comment on pending litigation.”

And while the legal arguments centered on open meetings law, the case has taken on added importance. The legal battle essentially put financing of the Phoenix purchase on hold — delaying the purchase past the parties’ original deadline in May 2024. It also represented a high-stakes political showdown between two Republican adversaries: Labrador, the state’s elected lawyer, and Little, who appoints seven of the State Board’s eight members.

Click here for our exclusive, in-depth coverage of the proposed University of Phoenix purchase.