U.S. judge dismisses ClassWallet lawsuit

Alexia Aston

The Oklahoman USA TODAY NETWORK

The lawsuit at the center of a longrunning feud between Oklahoma Republican political rivals Gov. Kevin Stitt and Attorney General Gentner Drummond has been dismissed.

The dismissal comes Tuesday, Jan. 13, after about three years of political back-and-forth between Stitt and Drummond over who has the power to represent the state’s interest in legal battles. Stitt has repeatedly filed the lawsuit, and Drummond has repeatedly moved to dismiss it.

It remains unclear whether the latest development will be the final chapter in the dispute, as Stitt has not said whether he will pursue any other legal avenues in the case.

The lawsuit in Oklahoma City federal district court is over the misspending of about $1.7 million in federal education funds from a COVID-19

stimulus program. It centers on Stitt’s allegations that Florida-based Class-Wallet,a financial management vendor, failed to prevent the misspending of the pandemic-era funds. Drummond has argued Stitt and his administration are to blame for the mismanagement, not ClassWallet.

“This lawsuit was baseless from the outset and nothing more than a waste of taxpayer dollars,” Drummond, who’s running for governor, said. “Overwhelming evidence has shown that Gov. Stitt and his administration rejected internal controls and oversight as well as failed to use ClassWallet’s available controls, leaving his administration responsible for the payout failures that occurred.”

U.S. District Court Judge Joe Heaton said Stitt’s complaint that Class-Wallet breached its contract with the state is devoid of underlying facts regarding the nature of the payments allowable or not under the grant program.

Stitt’s office did not immediately respond to a request for comment on the ruling or next steps.

Former Attorney General John O’Connor, who Stitt appointed in 2021, filed the original lawsuit against Class-Wallet in 2022. The suit came after a U.S. Department of Education audit accused the state of failing to follow federal regulations and noted that former state schools Superintendent Ryan Walters had approved the purchases.

After Drummond succeeded O’Connor in January 2023, Drummond said he believed “state actors” should be blamed for the misspending of the federal pandemic relief funds, not Class-Wallet. He announced the state would drop the lawsuit against ClassWallet’s parent company, Kleo Inc., the vendor Stitt hired to help disburse $31 million in federal funds.

But in January 2024, OMES refiled the lawsuit. Less than two weeks later, Drummond seized control of the case and moved for it to be dismissed with prejudice, meaning it could not be refiled. That action drew critique from Stitt, who said then that Drummond “has chosen to continue operating a political office in pursuit of personal aspirations as opposed to representing the state’s interests.”

U.S. District Court Judge Joe Heaton said Stitt’s complaint that ClassWallet breached its contract with the state is devoid of underlying facts regarding the nature of the payments allowable or not under the grant program.