An Ada County judge has rejected an open meetings lawsuit against the State Board of Education — a potential breakthrough for the $685 million University of Phoenix purchase.

The State Board “reasonably believed” the University of Idaho was vying with other bidders for Phoenix, justifying its closed-door discussions, Ada County District Judge Jason Scott ruled late Tuesday afternoon.

Scott’s ruling clears one major obstacle blocking the U of I’s proposed Phoenix purchase — a complex and controversial deal university officials hope to close early this year. U of I officials have long said the purchase would provide the U of I with millions of dollars in revenues from Phoenix’s national operations, while downplaying the university’s financial risk, which could approach $10 million annually.

Meanwhile, Scott’s ruling also figures to reverberate in Republican Party circles. It represents a high-profile setback for Attorney General Raúl Labrador, who filed the lawsuit in June, and a victory for Gov. Brad Little and his appointed State Board members.

The case itself centered on an obscure section of state open meetings law.

Working in concert with a U of I lawyer and its in-house counsel, State Board members discussed the possible Phoenix purchase in closed executive sessions on March 22, April 25 and May 15 — before publicly supporting the deal in a May 18 public vote. The three closed meetings were based on a little-used clause that covers a competitive purchase that pits a state agency against public bidders in other states or nations.

As a result, the case focused on competition.

During a three-day trial before Scott last week, Labrador’s team argued that the State Board did not ask for specifics about competition — instead taking U of I President C. Scott Green’s word about the marketplace. And the market changed on April 24, Labrador’s team argued, when the University of Arkansas’ trustees voted to reject a Phoenix purchase.

The State Board’s legal team said competition was a recurring theme in the discussions, and board members were told Phoenix wanted to partner with a public buyer. They also argued that the board and Green had reason to believe Arkansas was still in the Phoenix sweepstakes.

In a 15-page ruling, Scott sided with the State Board members and board deputy attorney general Jenifer Marcus.

“(They) all continued to believe that the University of Arkansas was, along with others, still in competition with the University of Idaho to acquire the University of Phoenix,” Scott wrote. “Under the circumstances, the court finds that this belief was reasonable.”

Scott moved fairly quickly on his ruling — an apparent response to the push to close a purchase. The trial before Scott concluded Thursday, and Labrador’s team and the State Board’s attorneys had a Monday deadline to file their final legal arguments. Scott’s ruling came late Tuesday afternoon, minutes before the close of business.

The court decision is not the final step in the Phoenix purchase — and for the U of I and Phoenix, a nonbinding deadline looms in four months. The U of I’s accreditors still must sign off on the deal. Plus, a U of I-connected nonprofit must finance the purchase.

If a deal is not closed on May 31, the U of I or Phoenix could walk away from the table.

Reactions: ‘It is alarming to get sued by your own lawyer’

In a statement Wednesday morning, State Board President Linda Clark criticized Labrador.

“It is alarming to get sued by your own lawyer, Attorney General Labrador, for listening to the advice of his own staff,” Clark said. “The attorney general’s lawsuit has taken an extraordinary amount of time and resources over the last seven months. Regardless, we are pleased the court recognized the State Board followed the law. We are eager to put this unnecessary litigation behind us and will continue our pursuit of payment of legal fees by the attorney general’s office.”

Labrador, in turn, criticized the ruling, and didn’t rule out an appeal to the state Supreme Court.

“The law requires much more of its officials than the District Court required, and it provides much greater protection to the public than the District Court gave,” he said. “The District Court’s ruling will lead to far less government transparency and accountability. That is bad for Idaho citizens, and it defies the entire purpose of the law. We are looking closely at all appellate options to ensure Idaho’s Open Meetings Law remains a bulwark for openness and government accountability.”

In a statement Wednesday morning, the U of I said the ruling moves the Phoenix purchase toward closure.

“We appreciate the court’s decision and are pleased that the open meeting/executive session practices of our Board of Regents were found to be sound. We look forward to completing our affiliation with the University of Phoenix in the coming months and bringing this unique opportunity to the citizens of Idaho. Higher education has never been more important than now as we work to meet the workforce needs of our state. This decision helps move us closer to the goal of further improving higher education accessibility in Idaho.”

More reading: Click here for our in-depth coverage of the proposed Phoenix purchase.