K.I. v. DURHAM PUBLIC SCHOOLS BOARD OF EDUCATION

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

K.I., a minor, and J.I., individually and )

on behalf of K.I., )

)

Plaintiffs, )

)

v. ) 1:19CV857

)

DURHAM PUBLIC SCHOOLS BOARD )

OF EDUCATION and NORTH CAROLINA )

STATE BOARD OF EDUCATION, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

LORETTA C. BIGGS, District Judge.

Plaintiff J.I. brings this action individually and on behalf of her disabled daughter, K.I.,

pursuant to the Individuals with Disabilities Education Improvement Act (“IDEA”) and

related federal statutes.1 (ECF No. 22.) Plaintiffs allege that Defendants, the Durham Public

Schools Board of Education (“DPS”) and the North Carolina State Board of Education

(“SBE”), failed to provide K.I. with a free appropriate public education, as required by law.

(Id. ¶ 1.) Before the Court are motions to dismiss brought by DPS and SBE. (ECF Nos. 24;

27.) Each argues that Plaintiffs’ amended complaint should be dismissed for lack of subject-

matter jurisdiction and for failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(6) of

the Federal Rules of Civil Procedure. (ECF Nos. 24 at 1; 27 at 1.) For the reasons that follow,

1 Plaintiffs also allege Defendants violated Section 504 of the Rehabilitation Act, 29 U.S.C. § 794 et

seq. (Plaintiffs’ “Section 504” claim), and the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.

(Plaintiffs’ “ADA” claim). (ECF No. 22 ¶¶ 218–50.)

the Court concludes that it lacks subject-matter jurisdiction and therefore must grant

Defendants’ motions.

I. THE IDEA

The IDEA “offers States federal funds to assist in educating children with disabilities.”

Endrew F. ex rel. Joseph F. v. Douglas Cty. Sch. Dist. RE-1, 137 S. Ct. 988, 993 (2017). “In exchange

for the funds, a State pledges to comply with numerous statutory conditions [including that it]

must provide a free appropriate public education—a FAPE, for short—to all eligible

children.” Id. At the heart of the IDEA’s scheme for providing a FAPE to disabled children

rests the individualized education program, or IEP. Id. at 994. An IEP is a “comprehensive”

special education plan, designed by the child’s parents, teachers, and school administrators,

that is “‘tailored to the unique needs’ of a particular child.” Id. (quoting Bd. of Educ. of the

Hendrick Hudson Cent. Sch. Dist. v. Rowley, 458 U.S. 176, 181 (1982)).

To help all eligible children receive a FAPE, “school districts evaluate children to assess

any disabilities and determine their educational needs.” Seth B. ex rel. Donald B. v. Orleans Par.

Sch. Bd., 810 F.3d 961, 965 (5th Cir. 2016). Any parent who disagrees with their local school

district’s evaluation of their child “may be entitled to an independent educational evaluation

(IEE) at public expense.” Id.; see also 20 U.S.C. 1415(b)(1); 34 C.F.R. § 300.502(b)(1). When

parents and guardians disagree with their school district regarding their child’s FAPE, the

IDEA also “establishes a formal set of procedures that grant a plaintiff the right to file a civil

action in federal court.” Z.G. ex rel. C.G. v. Pamlico Cty. Pub. Sch. Bd. of Educ., 744 F. App’x 769,

776 (4th Cir. 2018). “Prior to bringing suit, however, a plaintiff must exhaust his

administrative remedies.” Id. As the Fourth Circuit recently explained, “[i]n North Carolina,

the [IDEA’s] administrative review process encompasses two steps.” Id.

First, the plaintiff must file with the Office of Administrative Hearings a petition

for an impartial hearing before an administrative law judge (ALJ). Second, the

plaintiff may appeal the decision of the ALJ to a Review Officer appointed by

the State Board of Education . . . Only after receiving the Review Officer’s

finding or decision may a plaintiff proceed to file a civil action in state or federal

court.

Id. (internal citations and quotations omitted); see also E.L. ex rel. Lorsson v. Chapel Hill-Carrboro

Bd. of Educ., 773 F.3d 509, 513–14 (4th Cir. 2014). Crucially for the resolution of this case,

failure to exhaust these state administrative procedures deprives federal courts of subject-

matter jurisdiction. Z.G., 744 F. App’x at 777; MM ex rel. DM v. Sch. Dist. Of Greenville Cty.,

303 F.3d 523, 536 (4th Cir. 2002).

II. PLAINTIFFS’ AMENDED COMPLAINT

This lawsuit concerns K.I., a minor who lives with her parents in Durham, North

Carolina. (See ECF No. 22 ¶¶ 41, 46.) Though K.I. is a bright child with “above average

cognitive abilities,” she has also been diagnosed with an anxiety disorder, Attention-

Deficit/Hyperactivity Disorder, a sensory processing disorder, a Specific Learning Disorder

with impairment in reading, Autism Spectrum Disorder, and an obsessive skin picking

disorder. (See id. ¶¶ 47–48.) From kindergarten through sixth grade, K.I. attended DPS

schools. (Id. ¶ 49.) Though she attended a local charter school for seventh and eighth grade,

K.I. plans to return to DPS for high school at the start of the 2020–2021 academic year. (See

id. ¶¶ 79, 81, 83.) This lawsuit alleges that Defendants violated the IDEA by denying K.I. a

FAPE and by requiring that her independent educational evaluators sign restrictive contracts.

During the 2016–2017 school year, when K.I. was in fifth grade, her mother submitted

a written referral to DPS asking it “to determine whether [K.I.] was eligible for services under

the IDEA.”2 (See id. ¶ 55.) Pursuant to this request, DPS “conducted a psychological,

occupational therapy, and speech/language evaluation of K.I. in July and August of 2017.”

(Id. ¶ 58.) At an Initial Eligibility Meeting held in August 2017, DPS determined that K.I. was

not eligible for IDEA services. (Id. ¶¶ 63–64.) K.I.’s parents objected to this decision and

requested IEEs at public expense. (See id. ¶ 68.) These independent evaluations were

conducted while K.I. was in the sixth grade and concluded in May of 2018. (See id. ¶ 76.) They

diagnosed K.I. with a “Specific Learning Disorder with impairment in reading, Autism

Spectrum Disorder, and Social (Pragmatic) Communication Disorder.” (Id. ¶ 75.) J.I. then

sought to hold a new IEP meeting with DPS to reconsider K.I.’s eligibility for services in light

of the IEEs, but after DPS canceled a planned meeting, J.I. enrolled K.I. in a local charter

school. (Id. ¶¶ 76–79.) K.I. started attending her new charter school in late July 2018 and was

promptly found eligible for IDEA services. (Id. ¶¶ 79–80.)

According to Plaintiffs, after K.I.’s parents requested IEEs and while K.I. was still

enrolled in her DPS middle school, DPS required the evaluators selected by the family to agree

to a contract (“the IEE Contract”) containing “several provisions that impeded K.I.’s parents’

ability to meaningfully participate” in the IEP process. (Id. ¶ 87.) For instance, the IEE

Contract barred the evaluators from providing any further services to K.I. or from serving as

expert witnesses for her parents in future proceedings. (Id. ¶ 89.) Plaintiffs allege these

2 K.I. was initially determined eligible for IDEA services in the second grade but was found ineligible

for services when she was reevaluated in the third grade. (See id. ¶ 51.)

provisions (collectively “the Limited Relationship Provisions”) “eviscerated” the

independence IEEs are meant to provide. (Id. ¶ 93.)

Meanwhile, in April of 2018, a group of education lawyers filed two complaints with

the North Carolina Department of Public Instruction (“NCDPI”),3 alleging that North

Carolina school districts in general, and DPS in particular, were violating the IDEA, in part,

by forcing independent educational evaluators to sign contracts containing restrictive terms.4

(See ECF Nos. 22 ¶ 109; 27-3 at 6, 26.) The SBE issued its final report (the “Final Report”)

on June 18, finding, in part, that the Limited Relationship Provisions in DPS’s IEE contracts

complied with the IDEA.5 (ECF Nos. 22 ¶¶ 111–13; 27-3 at 42, 48.) Plaintiffs allege in their

amended complaint that the SBE issued this blessing of the Limited Relationship Provisions

despite knowing that DPS’s IEE Contract violated federal regulations prohibiting public

agencies from imposing greater restrictions on independent evaluators than they place on their

own evaluators. (See ECF No. 22 ¶ 118.)

3 While Plaintiffs were not parties to these complaints, (see ECF No. 27-3 at 10–17, 29–36), K.I.’s

IDEA process provided some of the factual underpinnings of the complaints, (see ECF No. 24-1 at

91–92).

4 The Court considers these complaints as well as several documents attached to the Defendants’

motions to dismiss as they are integral to Plaintiffs’ complaint and their authenticity is not in dispute.

See Philips v. Pitt Cty. Mem’l Hosp., 572 F.3d 176, 180 (4th Cir. 2009); Adams v. Bain, 697 F.2d 1213, 1219

(4th Cir. 1982) (explaining that when a defendant moves to dismiss for lack of subject-matter

jurisdiction based on a complaint’s failure to allege facts on which jurisdiction can be based, the

Plaintiff is afforded “the same procedural protection as he would receive under Rule 12(b)(6)

consideration”).

5 The report was issued by the Exceptional Children Division of NCDPI. (ECF No. 27-3 at 42.) The

Exceptional Children Division “implements the requirements of the IDEA, including the

investigation and resolution of State complaints,” on behalf of the SBE. (ECF No. 24-1 at 22.)

On August 14, 2018, a few weeks after K.I. started seventh grade at her charter school,

Plaintiffs filed a petition for a due process hearing with North Carolina’s Office of

Administrative Hearings (“OAH”), alleging, among other things, that DPS and SBE had

violated the IDEA by failing to provide K.I. with a FAPE and by utilizing the Limited

Relationship Provisions in IEE contracts.6 (See id. ¶¶ 147–49.) This hearing occurred during

October 2018 and ALJ Stacey Bice Bawtinhimer (“the ALJ”) issued her final decision on April

11, 2019. (ECF Nos. 22 ¶¶ 150, 158; 24-1.)

In part, the ALJ held that the Limited Relationship Provisions used by DPS violated

the IDEA by imposing “inappropriate conditions for an IEE” in order to “thwart” J.I.’s ability

to challenge DPS’s determination that K.I. was not eligible for IDEA services. (ECF No. 24-

1 at 135–36.) According to the ALJ, the Limited Relationship Provisions “‘bought the silence’

of the independent evaluators” who examined K.I. and had a “chilling and obvious” effect on

the independent evaluators that testified at the due process hearing. (Id. at 90–91.)

Accordingly, the ALJ prohibited DPS from requiring independent educational evaluators to

sign contracts containing the Limited Relationship Provisions or similar language. (Id. at 143.)

Despite this order, however, the ALJ found that DPS had not violated K.I.’s substantive right

to a FAPE because Plaintiffs had failed to prove that K.I. required special education. (Id. at

1, 8.) Regarding the SBE, the ALJ found that Plaintiff’s lacked standing to appeal the SBE’s

Final Report regarding IEE contracts and “respectfully request[ed]” that the SBE reconsider

6 North Carolina’s OAH “is an independent, quasi-judicial agency . . . established to ensure that

administrative decisions are made in a fair and impartial manner . . . and to provide a source of

independent [ALJ’s] to conduct administrative hearings in contested cases.” N.C. Gen. Stat. § 7A-

750.

its finding that the Limited Relationship Provisions in DPS’s IEE Contract were lawful. (Id.

at 2, 144.) The ALJ concluded by advising the parties of their appeal rights. (Id. at 144.)

Key to the resolution of this case is whether Plaintiffs successfully appealed the ALJ’s

decision. DPS appealed elements of the ALJ’s decision on April 26, 2019. (See ECF No. 22

¶ 161.) On May 10, Plaintiffs filed their own notice of appeal with the OAH. (See id. ¶ 166.)

However, the State Hearing Officer assigned to review the case, Joe Walters, (“the HO” or

“Officer Walters”) concluded that Plaintiffs’ appeal was improperly filed. (See id. ¶¶ 162, 172,

174.) On May 25, Officer Walters issued his final decision regarding the portions of the ALJ’s

decision appealed by DPS. (See id. ¶ 176; ECF No. 24-2 at 2.) His final decision addressed

only issues DPS raised in its appeal and did not consider the issues Plaintiffs attempted to raise

in their May 10 filing. (See ECF No. 24-2 at 5.) The HO agreed with the ALJ that DPS’s

Limited Relationship Provision violated the IDEA. (Id. at 20, 24–25.) He then ordered DPS

to comply with the requirements of state and federal law while also concluding that he could

not grant any relief to Plaintiffs as K.I. no longer attended public school in Durham. (Id. at

24.)

On August 23, 2019, Plaintiffs filed their original complaint in this action. (ECF No.

1.) Plaintiffs amended their complaint on November 25, 2019. (ECF No. 22.) They seek:

declarations that Defendants violated the law and that K.I. was eligible for IDEA services; an

injunction prohibiting use of the IEE Contract; compensatory education and related services

for K.I.; reimbursement of their due process expenses; and attorneys’ fees and costs. (See id.

¶¶ 251–59.) In response to Plaintiffs’ amended complaint, Defendants filed the motions to

dismiss now before the Court. (ECF Nos. 24; 27.)

III. DISCUSSION

Defendants advance several arguments for dismissing Plaintiffs’ amended complaint.

According to DPS, the Court lacks jurisdiction over Plaintiffs’ IDEA, Section 504, and ADA

claims because Plaintiffs failed to exhaust their administrative remedies. (ECF No. 25 at 6–

9.) DPS further argues that Plaintiffs’ IEE contract claim is moot because DPS no longer uses

the challenged provisions, (id. at 9–12), and that Plaintiffs’ Section 504 and ADA claims fail

to state a claim upon which relief can be granted, (id. at 12–14). SBE makes similar arguments,

adding that Plaintiffs lack standing to sue it because it “took no direct action whatsoever

regarding K.I.” (ECF No. 28 at 11–20.) The Court need not address all of these arguments

because, as explained below, Plaintiffs failed to exhaust their administrative remedies, which

deprives the Court of the jurisdiction required to hear their claims.

A. Plaintiffs Failed to Exhaust Their Administrative Remedies

Administrative exhaustion of IDEA claims in North Carolina is a two-step process

requiring an administrative due process hearing conducted by an ALJ and a review of the ALJ’s

decision conducted by a state-appointed hearing officer. See, e.g., Z.G., 744 F. App’x at 776–

77. Here, Defendants argue that Plaintiffs completed the first step—seeking a due process

hearing before an ALJ—but failed to take the second—filing a proper and timely appeal of

the ALJ’s decision to the hearing officer. (See ECF Nos. 25 at 7; 28 at 16.) Plaintiffs argue in

response that they properly filed a written notice of appeal, which was then improperly denied,

and thus that they have exhausted their remedies. (See ECF No. 26 at 11.) This issue is ripe

for resolution on a motion to dismiss because “[w]hether a plaintiff has properly exhausted all

administrative remedies is a pure question of law.” See E.L., 773 F.3d at 514; see also Z.G., 744

F. App’x at 773, 776 (affirming dismissal of “IDEA and other education-related claims” for

failure to exhaust administrative remedies); O.V. v. Durham Pub. Sch. Bd. of Educ., No.

1:17cv691, 2018 WL 2725467, at *19 (M.D.N.C. June 6, 2018) (recommending dismissal of

plaintiffs’ IDEA, ADA, and Section 504 claims for failure to exhaust), adopted 2018 WL

3370644 (M.D.N.C. July 10, 2018).

North Carolina General Statutes Section 115C-109.9(a) gives a party appealing an ALJ’s

decision thirty days to file “a written notice of appeal with the person designated by the State

Board [of Education] . . . to receive notices.” N.C. Gen. Stat. § 115C-109.9(a). As the ALJ

issued her final decision on April 11, 2019, any appeals were due on May 11, 2019. (ECF No.

22 ¶ 160.) Furthermore, there is no dispute that the person designated by the SBE to receive

written notices of appeal was Teresa Silver King. (Id. ¶ 161.) Thus, Plaintiffs were required

to file a written notice of appeal with King by May 11. While Plaintiffs’ counsel did contact

King in advance of the appeals deadline to inform her that “Plaintiffs intended to submit a

Notice of Appeal,” Plaintiffs then “electronically filed their Notice of Appeal in the [OAH]”

instead. (Id. ¶¶ 164, 166.) On May 14, 2019, three days after the appeals deadline expired,

King informed Plaintiffs that she had not received a notice of appeal from them. (See id. ¶

168.) In response, Plaintiffs provided King with a copy of the notice of appeal that they had

previously filed with the OAH. (Id. ¶ 169.) Based on this apparent failure to file a written

notice with King prior to the expiration of the appeals deadline, Officer Walters concluded

that Plaintiffs failed to appeal the ALJ’s decision. (See ECF No. 24-2 at 5.)

Here, Plaintiffs failed to file a written notice of appeal with King as required by the

plain text of North Carolina law. As Plaintiffs’ amended complaint makes clear, Plaintiffs filed

with the OAH instead. Plaintiffs do not dispute that they filed with the OAH, rather, Plaintiffs

argue that King and Defendants had actual notice of their appeal prior to the May 11 deadline.7

(See ECF No. 22 ¶¶ 166–67; 34 at 4–5.) However, as previously recognized, the statute does

not require actual notice to the opposing party or the SBE’s designee concerning a party’s

attempt or intent to appeal; it requires a written notice of appeal to be filed with the designee.

N.C. Gen. Stat. § 115C-109.9(a).

The Court’s reading of the statute’s requirements is supported by the Fourth Circuit’s

treatment of the same statute in E.L. v. Chapel Hill-Carrboro Board of Education. While the facts

of E.L. are not on all fours with this case, in E.L., the Fourth Circuit rejected a plaintiff’s

contention that the “over 100 pages of written argument” she submitted to a state hearing

officer constituted an effective appeal of an ALJ’s decision despite her failure to otherwise

“properly” comply with N.C. Gen. Stat. § 115C-109.9(a). 773 F.3d at 516. This would appear

to indicate that strict adherence, rather than substantial compliance, to the statute’s

requirements is necessary to exhaust a would-be appellant’s administrative remedies.

Furthermore, such insistence on “proper” exhaustion is in no way incompatible with

the IDEA and appears to be required beyond the Fourth Circuit. As the Sixth Circuit has

explained, requiring that parties “properly present their claims to the relevant state

administrative agenc[ies]” before they file in federal court serves the valuable function of

allowing state agencies to develop factual records, correct their own mistakes, and exercise

their educational expertise. Gibson v. Forest Hills Local Sch. Dist. Bd. of Educ., 655 F. App’x 423,

432 (6th Cir. 2016) (analyzing IDEA exhaustion under a two-step administrative procedure

7 Defendants do not dispute this.

similar to North Carolina’s). The Court therefore finds that Plaintiffs failed to exhaust their

administrative remedies, meaning the Court lacks subject-matter jurisdiction unless an

exception to the IDEA’s exhaustion requirement applies.8

B. No Exception to the Exhaustion Requirement Applies

Having concluded that Plaintiffs failed to exhaust their administrative remedies, the

Court now considers Plaintiffs’ alternative argument that they were not required to exhaust

their remedies. (See, e.g., ECF No. 32 at 14–18.) The Fourth Circuit has recognized three

“narrow” exceptions to the IDEA’s administrative exhaustion requirement. Z.G., 744 F.

App’x at 777; E.L., 773 F.3d at 516; MM, 303 F.3d at 536. Plaintiffs are not required to

exhaust their administrative remedies “(1) when the administrative process would have been

futile; (2) when a school board failed to give parents proper notification of their administrative

rights; or (3) when administrative exhaustion would have worked severe harm upon a disabled

child.” MM, 303 F.3d at 536. “The party asserting an exception to the exhaustion requirement

bears the burden of proving it applies.” O.V., 2018 WL 2725467 at *13 (citing Koster v. Frederick

8 Harsh though this result may seem given Plaintiffs’ obvious efforts to exhaust their remedies and

the substantial degree to which they appear to have complied with the law, there is no indication that

the Fourth Circuit or North Carolina recognizes any kind of equitable exception to the state’s

established procedure for appealing an ALJ’s decision. Because the Fourth Circuit treats the IDEA’s

exhaustion requirement as jurisdictional, the Court lacks the authority to fashion an equitable

exception to North Carolina’s procedure. See, e.g., Staudner v. Robinson Aviation, Inc., 910 F.3d 141, 147

(4th Cir. 2018) (explaining that courts have “no authority to create equitable exceptions to

jurisdictional requirements” (quoting Bowles v. Russell, 551 U.S. 205, 214 (2007)); but see, e.g., Boggs v.

Krum Indep. Sch. Dist., 376 F. Supp. 3d 714, 720–21 & n.4 (E.D. Tex. 2019) (treating the IDEA’s

exhaustion requirement as non-jurisdictional and finding a school district was judicially estopped from

arguing that a plaintiff failed to exhaust her administrative remedies); T.H. v. District of Columbia, 255

F. Supp. 3d 55, 56–57 (D.D.C. 2017) (holding that administrative exhaustion under the IDEA is an

affirmative defense, “not a jurisdictional prerequisite to suit”).

Cty. Bd. of Educ., 921 F. Supp. 1453, 1455 (D. Md. 1996)). On a motion to dismiss, the party

“must allege facts that, if proven, would support one of the narrow exceptions to IDEA’s

exhaustion requirement.” Learning Disabilities Ass’n of Md., Inc. v. Board of Educ. of Balt. Cty., 837

F. Supp. 717, 723 (D. Md. 1993). Furthermore, to satisfy their burden, the plaintiff must

demonstrate “that the underlying purposes of exhaustion would not be furthered by enforcing

the exhaustion requirement.” O.V., 2018 WL 2725467, at *13 (quoting Learning Disabilities,

837 F. Supp. at 724). The underlying purposes of exhaustion include “allowing states to use

their special expertise to resolve educational disputes,” E.L., 773 F.3d at 514, and affording

states the opportunity to correct misconduct “without resort to lengthy and costly trial,”

Learning Disabilities, 837 F. Supp. at 724–25.

Here, Plaintiffs argue that the first exception to the exhaustion requirement applies—

that is, that they were not required to appeal to the HO because such an appeal would have

been futile. (ECF No. 26 at 11–15; 32 at 14–18.) Plaintiffs submit that exhaustion would have

been futile for two reasons. First, they contend that exhaustion was futile “due to the inherent

bias of the SBE.” (See ECF No. 26 at 12.) Second, they assert that exhaustion was futile, at

least on the IEE contract issue, because of “the ALJ and [HO’s] inability to mandate the SBE

to develop procedures to prevent future unlawful IEE contract provisions or [to] order DPS

to abandon the use of illegal contracts with other students.” (See id.) The Court will address

each argument in turn.

i. Futility of exhaustion due to bias

Though Plaintiffs have not identified—and the Court has not located—a Fourth

Circuit opinion stating as much, IDEA case law suggests that a hearing officer could be so

biased in favor of local or state educational authorities as to make administrative exhaustion

futile.9 This is consistent with the procedural safeguards of the IDEA, which guarantee that

parents and school officials be given an “impartial due process hearing.” 20 U.S.C. § 1415(f)

(emphasis added); see also James A. Rapp, 4 Education Law § 10C.12 (2020) (explaining that

impartiality is a “basic and essential” element of the IDEA process). This concern with

fairness is also reflected in the IDEA’s rule barring certain conflicted individuals, including

any person “having a personal or professional interest that conflicts with the person’s

objectivity in the hearing,” from serving as a hearing officer. See 20 U.S.C. § 1415(f)(3)(A); see

also 34 C.F.R. § 300.511(c)(i)(B). Furthermore, numerous courts have considered whether

certain individuals are sufficiently impartial to serve as hearing officers, see Rapp, § 10C.12

(collecting cases), and some have done so in the context of the futility exception to the

administrative exhaustion requirement, see Cave v. E. Meadow Union Free Sch. Dist., 514 F.3d 240,

249 (2d Cir. 2008); B.J.S. ex rel. N.S. v. State Educ. Dept./The Univ. of The State of N.Y., 815 F.

Supp. 2d 601, 610 (W.D.NY. 2011). Thus, the Court concludes that a state hearing officer’s

bias or lack of impartiality could render administrative exhaustion futile. However, hearing

officers “enjoy a presumption of honesty and integrity,” that can only be overcome by “a clear

showing of actual bias.” See Rapp, § 10C.12. Finally, as is the case generally with exceptions

to the exhaustion requirement, the burden is on the plaintiff to demonstrate this bias. See id.

Here, Plaintiffs primarily argue that exhaustion was futile because Officer Walters was

not sufficiently independent from the SBE. This argument is reflected in Plaintiffs’ briefing,

which repeatedly conflates the SBE, a defendant in this case, with the HO who heard DPS’s

9 Defendants do not argue otherwise.

appeal and who determined that Plaintiffs’ had not filed a timely appeal. (See, e.g., ECF No.

26 at 12–13.) In North Carolina, hearing officers are appointed by the SBE. N.C. Gen. Stat.

§ 115C-109.9(a). However, they are not employees of the SBE or the NCDPI. Id. § 115C-

109.9(b). Instead, they are “educator[s] or other professional[s] who [are] knowledgeable

about special education” who are tasked with making “impartial” and “independent”

decisions.10 Id. § 115C-109.9(a)-(b). Given these procedural safeguards, the Court recognizes

the distinction between the actions of the SBE and the HO.

Plaintiffs have not alleged sufficient facts in their amended complaint, taken as true, to

demonstrate that Officer Walters’s (alleged) bias against them rendered administrative

exhaustion futile. Plaintiffs contend that the Court should infer bias from Officer Walters’s

decision to reject their written notice of appeal as untimely. (See ECF No. 26 at 14.) However,

as explained above, Officer Walters correctly determined that Plaintiffs’ attempted appeal did

not comply with the requirements of N.C. Gen. Stat. § 115C-109.9(a). Plaintiffs have also

alleged that the HO rejected their notice of appeal, which was filed electronically with the

OAH, even though hearing officers routinely accept appeals filed in that manner in cases

where the SBE is not a defendant. (See ECF Nos. 22 ¶ 166; 26 at 13.) While it would be

suggestive of bias if hearing officers applied the requirements of North Carolina law selectively

in order to protect the SBE, in this case, any allegation of bias is seriously undermined by a

review of Officer Walters’s decision regarding the portions of the ALJ’s decision appealed by

DPS, which was hardly a total victory for Defendants. (See ECF No. 24-2.) As discussed

10 In E.L., the Fourth Circuit upheld North Carolina’s two-step “scheme for implementing the review

provisions of the IDEA” as “simply recogniz[ing] the state’s primary role in setting educational policy

and resolving disputes under the [IDEA].” 773 F.3d at 515.

above, Officer Walters upheld the ALJ’s finding that the Limited Relationship Provisions

violated the law—indeed, he went so far as to call them “an egregious procedural violation,

calculated to interfere with [Plaintiffs’] procedural safeguards.” (Id. at 20.) He also advised

DPS “that continued use of a contract with provisions similar to the one used in this case

would be a procedural violation of IDEA,” a warning flatly in conflict with the SBE’s prior

determination that such restrictive terms in an IEE contract were lawful. (See id. at 24.) Nor

did Officer Walters’s opinion otherwise exhibit any bias toward Plaintiffs—rather, he

expressed his “sympath[y]” for their desire to submit an appeal, while stating that “[s]trict

adherence to time restrictions [governing appeals was] required.” (Id. at 5.) The substance of

Officer Walters’s opinion is therefore inconsistent with Plaintiffs’ allegations that he was so

biased against them that their appeal through proper administrative channels was futile as a

matter of law. See C.E. v. Chappaqua Cent. Sch. Dist., 695 F. App’x 621, 624–25 (2d Cir. 2017)

(considering whether a hearing officer’s rulings during an IDEA hearing favored parents or a

school district in determining whether the hearing officer was biased).

Further, Plaintiffs’ claim that the HO’s bias rendered their exhaustion futile fails for a

second reason. Plaintiffs have not alleged facts demonstrating that the underlying purposes

of exhaustion would not be furthered in this case by enforcing the exhaustion requirement.

See O.V., 2018 WL 2725467, at *13, 19. In fact, they have not clearly addressed the underlying

purposes of the exhaustion requirement. Exhaustion is required, in part, to promote judicial

economy, and judicial economy would have been promoted by giving the HO—who, unlike

the Court, is an expert in special education law—the opportunity to review Plaintiffs’ claims.

See Hoeft v. Tucson Unified Sch. Dist., 967 F.2d 1298, 1303 (9th Cir. 1992) (“States are given the

power to place themselves in compliance with the [IDEA] . . . . Federal courts—generalists

with no experience in the educational needs of handicapped students—are given the benefit

of expert factfinding by a state agency devoted to this very purpose.”); A.H. ex rel. H.C. v.

Craven Cty. Bd. of Educ., No. 4:16-CV-282-BO, 2017 WL 3493612, at *3–4, (E.D.N.C. Aug. 14,

2017) (dismissing plaintiffs’ complaint for failure to exhaust where plaintiffs did not

demonstrate “why the underlying purposes of exhaustion . . . would not be furthered if

plaintiffs were required to exhaust their administrative remedies”).

In conclusion, given the presumption that hearing officers behave impartially, the

Court’s finding that Officer Walters followed state law in rejecting Plaintiffs’ attempted appeal,

the absence of evidence of bias in his final decision, and the Court’s interest in judicial

economy, which would have been furthered by exhaustion, Plaintiffs have failed to allege facts

that would support the narrow exception to the IDEA’s exhaustion requirement that exists

when hearing officers are so biased that appeal to them would be futile.

ii. Futility of exhaustion due to inability to provide relief

Next, Plaintiffs argue that it was futile for them to exhaust their administrative remedies

regarding their IEE contract claim because the ALJ and HO were not authorized “to mandate

the SBE to develop procedures to prevent future unlawful IEE contract provisions or [to]

order DPS to abandon the use of the illegal contracts with other students.” (See ECF Nos. 26

at 12; 32 at 15.) Their argument on this issue is brief, unsupported by citation to governing or

persuasive law, and ultimately unpersuasive. (See ECF Nos. 26 at 12; 32 at 15.) Even assuming

that Plaintiffs are correct that the ALJ and HO could not grant the injunctive relief they sought,

this would not excuse their failure to exhaust their administrative remedies because “the mere

unavailability of injunctive relief does not render the IDEA’s administrative process

inadequate.” Hoeft, 967 F.2d at 1309; see also, e.g., Student A v. S.F. Unified Sch. Dist., No. 19-cv-

03101-WHO, 2020 WL 571052, at *4 (N.D. Cal. Feb. 5, 2020) (“[F]utility or inadequacy is not

established simply because the body hearing the administrative appeal lacks jurisdiction to

provide all or some of the relief requested.” (citing Paul G. ex rel. Steve G. v. Monterey Peninsula

Unified Sch. Dist., 933 F.3d 1096, 1102 (9th Cir. 2019))); J.G. ex rel. C.G. v. Knox Cty., No. 1:19-

cv-63, 2019 WL 4451203, at *5 (E.D. Tenn. Sept. 17, 2019) (rejecting argument that an ALJ’s

inability to “fix practices or policies which will inevitably repeat themselves” excused a failure

to exhaust where exhaustion would have promoted “accuracy, efficiency, agency autonomy,

and judicial economy as [the IDEA] intended”); P.G. ex rel. R.G. v. Rutherford Cty. Bd. of Educ.,

313 F. Supp. 3d 891, 905 (M.D. Tenn. 2018) (“[P]laintiffs [must] exhaust their administrative

remedies and build a record even if the plaintiff seeks certain relief, like money damages, that

is unavailable in an IDEA administrative proceeding.”).

As the Ninth Circuit explained in Hoeft v. Tucson Unified School District, even when a state

administrative process lacks the ability to provide IDEA plaintiffs with the injunctive relief

they seek, exhaustion of administrative remedies can still promote “statutory compliance” by

correcting problems at the local level and by “alert[ing] the state to local compliance

problems.” 967 F.2d at 1309–10. Indeed, that seems to be what happened in this case.

Plaintiffs challenged the Limited Relationship Provisions that DPS incorporated into the IEE

Contract, the ALJ and HO agreed with Plaintiffs that the terms violated the IDEA, and, in

response, DPS abandoned use of the terms and now acknowledges that “the standing rule”

across North Carolina is that the Limited Relationship Provisions are prohibited. (See ECF

Nos. 24-3 ¶ 4; 25 at 9; 29 at 5.) Thus, Plaintiffs have failed to show that the inability of the

ALJ and HO to order broad injunctive relief made it futile for them to exhaust their

administrative remedies.

To summarize, the Court finds that Plaintiffs failed to exhaust their administrative

remedies, and that none of the narrow exceptions to the administrative exhaustion

requirement apply. In particular, exhaustion was not futile due to bias or the limited powers

of North Carolina’s administrative process. Thus, Plaintiffs have failed to exhaust their

administrative remedies under the IDEA, depriving the Court of subject-matter jurisdiction

over their IDEA claims. Remaining are Plaintiffs’ Section 504 and ADA claims. However, as

explained below, these claims must likewise be dismissed because of Plaintiffs’ failure to

exhaust their administrative remedies.

C. Plaintiffs’ Failure to Exhaust Requires Dismissal of Remaining Claims

Defendants argue, and Plaintiffs do not appear to contest, that Plaintiffs’ Section 504

and ADA claims are also subject to the IDEA’s administrative exhaustion requirement. (See

ECF Nos. 25 at 8–9; 28 at 15–17.) Claims brought under the Rehabilitation Act and the ADA

“are subject to the IDEA’s exhaustion requirement if those claims ‘seek relief that is also

available under’ the IDEA, namely relief for the denial of a FAPE.” Z.G., 744 F. App’x at 778

(quoting 20 U.S.C. § 1415(l)). To determine if a plaintiff seeks relief available under the IDEA,

courts “look to the substance, or gravamen, of the plaintiff’s complaint.” Id. (quoting Fry v.

Napoleon Cmty. Sch., 137 S. Ct. 743, 752 (2017)). Specifically, as the Supreme Court explained

in Fry v. Napoleon Community Schools, courts ask two hypothetical questions to determine if the

gravamen of the plaintiff’s complaint is really the denial of a FAPE. Id. “First, could the

plaintiff have brought essentially the same claim if the alleged conduct had occurred at a public

facility that was not a school . . . ?” Fry, 137 S. Ct. at 756. “[S]econd, could an adult at the

school . . . press[ ] essentially the same grievance?” Id. If the answer to these questions is no,

“then the complaint probably does concern a FAPE,” and so is likely subject to the IDEA’s

exhaustion requirement. See id. Fry also instructs courts to consider whether a plaintiff’s

complaint began its journey to court through the IDEA’s administrative process, as such an

origin provides “strong evidence that the substance of a plaintiff’s claim concerns the denial

of a FAPE.” Id. at 757.

Here, Plaintiffs have brought Section 504 and ADA claims against Defendants. (ECF

No. 22 ¶¶ 218–50.) Plaintiffs’ Section 504 claim against the SBE alleges the SBE discriminated

against Plaintiffs by “denying them the ability to access the second tier of administrative

review” under the IDEA, approving the IEE Contract, and by not retracting its conclusion

that the Limited Relationship Provisions were lawful. (See id. ¶¶ 218–26.) Plaintiffs’ Section

504 claim against DPS also grows out of the terms of the IEE Contract. (Id. ¶¶ 227–32.)

Plaintiffs’ ADA claims contain essentially the same allegations. (Id. ¶¶ 233– 50.) Applying the

Supreme Court’s guidance in Fry, the gravamen or essence of these claims is the denial of a

FAPE—indeed, Plaintiffs do not claim otherwise. A child could not bring these claims against

a non-educational public facility, an adult could not bring them alone, and Plaintiffs have

argued at length that the same conduct violated the IDEA. Plaintiff’s Section 504 and ADA

claims are therefore subject to the IDEA’s administrative exhaustion requirement and so must

likewise be dismissed. See Z.G., 744 F. App’x at 779–80.

IV. CONCLUSION

Having concluded that Plaintiffs failed to exhaust their administrative remedies under

the IDEA, that exhaustion was not futile, and that Plaintiffs were also required to exhaust

their remedies in order to bring their other education-related claims, the Court lacks subject-

matter jurisdiction to hear this case. Accordingly, Defendants’ motions to dismiss must be

granted.

For the reasons stated above, the Court enters the following:

ORDER

IT IS THEREFORE ORDERED that Defendants’ Motions to Dismiss, (ECF Nos.

24; 27), are GRANTED.

IT IS FURTHER ORDERED that Plaintiffs’ case is DISMISSED WITH

PREJUDICE.

This, the 29th day of June 2020.

/s/Loretta C. Biggs

United States District Judge