The state of Idaho will pay millions in damages awarded by a jury after the owner of a now-defunct local coffee shop sued two Boise State University administrators and won, according to the lawyer representing the administrators.
In September, a jury of a dozen Ada County residents unanimously sided with Big City Coffee owner Sarah Fendley, who argued that the administrators violated her First Amendment right to free speech while conspiring to close her campus shop near the university’s library in October 2020.
The closure of the shop, just a month and a half after it opened, had centered around Fendley’s support of the thin blue line, the idea that police form the line between order and lawlessness.
A group of students saw the thin-blue-line flag, which resembles an American flag but with a blue stripe, as counter to Black Lives Matter and the racial justice movement. Fendley, who was engaged to a former Boise police officer at the time, was vocal about her support of law enforcement and displayed the flag in her downtown shop, which she permanently closed midway through the trial, the Idaho Statesman previously reported.
The jurors decided that the two administrators — Leslie Webb, the university’s former vice president of student affairs, who now works at the University of Montana; and Alicia Estey, then-Boise State’s vice president for university affairs and now its chief financial and operating officer — owe Fendley $4 million in damages, including $3 million for business losses, mental and emotional distress, personal humiliation and lost reputation, and $1 million in punitive damages against Webb.
Fendley initially sued Boise State and the administrators in their official capacities, seeking $10 million in damages, but those counts were dismissed because the U.S. Supreme Court has ruled that the 11th Amendment bars lawsuits against the state, which the university and the administrators represented. Other complaints were pared down, but much of the lawsuit was allowed to proceed.
Even though the administrators were sued as individuals, and Boise State wasn’t a defendant, the state of Idaho and its insurance will have to pay the damages because of a policy that says it will indemnify employees who are held liable for actions that occurred within the scope of their official duties.
“There is no doubt that the state of Idaho is paying for whatever judgment, if any remains after the appeal, in this case,” Keely Duke, the lawyer representing the administrators, said at a hearing Monday.
District Judge Cynthia Yee-Wallace in late December denied the administrators’ request for a new trial and lowered one portion of the damages awarded to Fendley for business losses by just over $300,000 because it was “excessive,” the judge wrote.
State’s insurance fund won’t cover punitive damages
The state of Idaho has a self-funded insurance program, known as the Retained Risk Account, which is managed by the state Department of Administration’s Risk Management Program. According to a copy of the program’s coverage document, which was obtained by the Idaho Statesman via a public records request, most state universities and colleges are covered.
Faith Knowlton, an administrator within the Division of Insurance and Internal Services at the state Department of Administration, said during the hearing Monday that the agency is responsible for paying any portion of the damages that the state’s Retained Risk Account doesn’t cover.
“Legally, the employees have to be provided with indemnification, because they were in course and scope of their job,” Knowlton said.
But the state’s Retained Risk Account does not cover any dishonest, fraudulent, criminal or malicious act, according to the document. That means insurance won’t pay the $1 million in punitive damages awarded against Webb. Punitive damages can be awarded when a defendant shows reckless or callous indifference to the federally protected rights of others, according to an order from Yee-Wallace, who presided over the trial.
Even though state law says under the Idaho Tort Claims Act that governmental entities and their employees “shall not be liable for punitive damages on any claim,” federal law, which supersedes Idaho law, does allow an award of punitive damages against state employees in cases involving constitutional actions.
Fendley’s attorney Michael Roe argued her case on the grounds that the university violated her civil rights, under section 1983 of the Civil Rights Act, by retaliating against her for exercising her right to free speech when she made a social media post supporting the thin blue line.
“Plaintiffs seek punitive damages in this case under federal law, and thus, federal law governs the standards for proving punitive damages under section 1983, not Idaho code,” Yee-Wallace wrote in an order on punitive damages in the case in 2023.
Taxpayers to foot the bill
Yee-Wallace peppered the defense with questions Monday about what funds would be used to pay the damages.
“The state of Idaho encompasses both Boise State and State Risk, right?” she said. “My very surgical, specific question is, has State Risk, the state risk insurance program, agreed that they will pay for the direct, compensatory losses that were on the verdict form in this case, assuming they survive on appeal?”
“Yes,” Duke replied.
Yee-Wallace questioned whether the remaining damages — the punitive damages — would come from a state Department of Administration fund or Boise State’s general appropriations. Either way, “it’s all taxpayer dollars,” she said. Duke said the punitive damages would come from a fund appropriated by the state of Idaho.
In a filing Jan. 3, where the defense requested relief from an appeal bond requirement, Knowlton wrote that neither Boise State nor State Risk have a specifically authorized legislative appropriation to pay the damages awarded in the case. But there “would be no issues with satisfaction of the judgment,” including attorneys fees and any interest, she said. An appeal bond is a sum of money that the appellant — in this case, the Boise State administrators — must provide to ensure the damages will be paid if the appeal is not successful.
Yee-Wallace could waive the bond requirement because the state is deemed financially stable and capable of paying the judgment if it’s upheld on appeal. She has yet to rule on the request.
“The state of Idaho is solvent,” Knowlton wrote in the filing.
Judge denies request for retrial
The court took up a handful of other matters Monday, such as Fendley’s request for attorneys’ fees and costs.
Her attorneys filed a post-trial motion in September requesting nearly $1.7 million in legal fees. The fee arrangement between Fendley and Boise law firm Givens Pursley was at first on an hourly basis at discounted rates and later converted to a contingency fee structure in mid-2023, according to the filing.
Roe, a partner at the firm and Fendley’s lead attorney, racked up about $730,000 in attorney fees alone, most of which was charged at $550 an hour, the Statesman previously reported.
Attorneys for the Boise State administrators opposed Fendley’s request for attorneys fees in their own set of post-trial motions, saying there was not enough evidence to show that the fees charged were equal to the lawyers’ actual rates.
They also asked Yee-Wallace to throw out the jury’s verdict and rule in their favor or grant a new trial. Yee-Wallace denied both requests in two orders Dec. 24, saying that there was sufficient evidence to support each element of Fendley’s First Amendment retaliation claim. She also wrote that the jury’s awards for mental and emotional distress, personal humiliation and lost reputation were supported by evidence presented during the trial and were not excessive. She said the jury’s award regarding Fendley’s business losses, however, were excessive.
In the order denying the defense’s motion for a new trial, Yee-Wallace included one stipulation, that Fendley must agree to accept a lesser amount for Big City’s losses or face a new trial. The jury had awarded Fendley $1 million in business losses as part of the $3 million in compensatory damages. But Yee-Wallace reduced the amount to $696,313.
“The Court finds that the jury’s $1 million award for business losses is not supported by the record and would not have been awarded had there not been jury decision on those damages,” she wrote in the order.
Fendley’s attorneys accepted the adjustment in a filing a few days later.
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