Former Newberg-Dundee superintendent sues district for $2.5M, claiming breach of contract

PORTLAND, Ore. (KOIN) -- The former superintendent of Newberg-Dundee Public Schools is suing the district for $2.5 million, claiming the district terminated his contract without cause.

The suit, filed in Yamhill County Circuit Court on Tuesday, states that in May 2022, Dr. Stephen Phillips was selected to serve as the district's superintendent for a three-year contract. This was after the previous superintendent was dismissed in November 2021.

Upon starting his tenure as superintendent, the suit claims roughly half the community who identified as "liberal," began distrusting Phillips because he was hired by the "conservative" school board.

The suit, which was first reported by The Oregonian/OregonLive, further claims Phillips made efforts to mend fences, bringing community leaders from opposing political views together in effort to improve relations. One of these groups reportedly met twice, drafting a letter encouraging community members to engage with each other "more positively." However, the suit claims this letter was never sent.

In July 2023, a new school board took office, with the suit stating five were more "liberal" members and two were "conservative" members.

Despite the school board reportedly stating they did not intend to replace Phillips as superintendent, the suit alleges certain members wanted Phillips terminated based on his response to LGBTQ-related conflicts within the district.

But it came to a head during the Spring of 2024 when the district was planning its annual budget. The suit claims the district received "very clean audits," appearing to have finances in order. However, on May 14, the district business manager then informed them of a "sudden" budget shortfall.

At a subsequent budget meeting on May 21, the school board allegedly read a statement blaming Phillips for the dire financial situation, which he claimed to be unfounded.

The following week, students in the district staged walk-out protests on the budget crisis, calling for Phillips to resign.

The suit alleges the "stress of the situation" affected Phillips' health, leading him to go on medical leave. A former superintendent, Paula Radich, volunteered to serve as an interim superintendent and lead the budget reductions.

Then in late July, board members informed Phillips that his contract would not be renewed, without citing a cause, the suit states.

Further, the suit notes how Phillips' contract specifies that if he is fired without cause, he is to be paid his full salary and benefits for two years, plus an additional $30,000.

The district previously said Radich will remain as superintendent while the board searches for a permanent replacement.

The district did not respond to KOIN 6 News when we reached out for comment. This story will be updated if we hear back.