Opposition Brief — S-1 & S-2 ex rel. P-1 & P-2 v. State Board of Education

- Bupreme Court, U.S |

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\y) sep 1 1994

No. 94-227 Lora ob THE CLERK

In The

Supreme Court of the United States

October Term, 1994

S-1 AND S-2, et al.,

Petitioners,

¥.

STATE BOARD OF EDUCATION OF

NORTH CAROLINA, et al.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court of Appeals

For the Fourth Circuit

BRIEF IN OPPOSITION

MICHAEL F. EASLEY

North Carolina Attorney General

Edwin M. Speas, Jr.*, Senior Deputy Attorney General

North Carolina Department of Justice

Post Office Box 629

Raleigh, North Carolina 27602-0629

(919) 733-3786

*Counsel of Record

i

QUESTION PRESENTED

Whether petitioners qualified as prevailing parties entitled to

attorney’s fees on the theory that their dismissed lawsuit had

continuing catalytic force and was the cause of post-dismissal

events which were of no direct benefit to them?

ii

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ill

TABLE OF CONTENTS

yy. Pe Rig e 6 yy |: Vv

STAremeens: OF THE CASE .... 2... ccc cees l

REASON WHY THE WRIT SHOULD NOT BE

EAE aes ae 8

I. THE PETITION SHOULD BE DE-

NIED BECAUSE THE COURT OF

APPEALS CCRRECTLY HELD

THAT THE CATALYST THEORY IS

NOT SO BROAD AND EXPANSIVE

AS TO PERMIT PETITIONERS TO

OBTAIN PREVAILING PARTY

STATUS BASED ON EVENTS OC-

CURRING AFTER DISMISSAL OF

THEIR LAWSUIT ON THE

GROUNDS OF MOOTNESS....... 9

II. REGARDLESS OF THE CONTIN-

UED VIABILITY OF THE CATA-

LYST THEORY, PETITIONERS’

CLAIM FOR ATTORNEY’S FEES IS

FORECLOSED BY DECISIONS OF

Se 12

Ee 14

iV

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rT

Vv

TABLE OF AUTHORITIES

CASES

Dellmuth v. Muth, 491 U.S. 223 (1989) .......... 6

Farrar v. Hobby, _US. _.,

Sie Oe ee PE ee Ok ew he eS 8, 9, 12

Gregory v. Ashcroft, 501 U.S. 452 (1991) ....... 11

Hewitt v. Helms, 482 U.S. 755 (1987) ....... es

Penn. Dairies v. Milk Control Comm’n,

See Wee ee I sc Se euweieees a S 10

S-1 and S-2 v. State Bd. of Educ. of N.C.,

ree ef ee: eran aa a rare rar are 9

S-1 by and Through P-1 v. State Bd. of Educ..,

ee fl eres or eae 7, 10

S-1 v. Spangler, 832 F.2d 294 (4th Cir. 1987) .... 2,5

School Comm. of Burlington v. Department of Educ. ,

ty Se See 3 8S EASELS 3

FEDERAL STATUTES

D Sais roo ee wks ke 6

20 U.S.C. §§ 1400 et seqg., Individuals

with Disabilities Education Act .............. 1

ae el re ee eee oe 3

I Oe cs Ge’ aoe ck ole ok ew 10

STATE CONSTITUTION, STATUTES

AND SESSION LAWS

ee a bo a ce ko be eee ee leie 10

Tacs SE, UE, © EROEMEEOD 6k ee we wee 5, 6

1987 N.C. Sess. Laws, c. 1079 (1988 Sess.) ....... 5

1989 N.C. Sess. Laws, c. 1058 (1990 Sess.) ....... 7

No. 94-227

In The

Supreme Court of the United States

October Term, 1994

S-1 AN, ,-2, et al.,

Petitioners,

V.

STATE BOARD OF EDUCATION OF

NORTH CAROLINA, et al.,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court of Appeals

For the Fourth Circuit

BRIEF IN OPPOSITION

The respondents respectfully request that this Court

deny the petition for writ of certiorari seeking review of the

Fourth Circuit’s en banc opinion in this case. That opinion

is reported at 21 F.3d 49 (1994).

STATEMENT OF THE CASE

This unusual case has a long and complex histcry. In

the beginning, the issue in controversy was whether in

enacting the Individuals with Disabilities Education Act

(IDEA), 20 U.S.C. §§ 1400 et seq., Congress intended to

——————————————————

2

require the states to vest final administrative authority to

order reimbursement for private school costs in administra-

tive hearing officers and, if so, whether Congress had that

power. That issue was never resolved; it was declared moot

by the Court of Appeals in November, 1987. S-J v.

Spangler, 832 F.2d 294 (4th Cir. 1987). Now, the issue is

whether petitioners, who never obtained an enforceable

judgment, consent order or settlement agreement, are

nevertheless prevailing parties entitled to attorney’s fees

based on a letter written to the State of Vermont by the

Office of Special Education and Rehabilitation Services

(OSERS) in the United States Department of Education

(USDOE) or based on post-mootness legislation enacted by

the North Carolina General Assembly.

The events upon which petitioners claim prevailing

party status are best described chronologically.

Todd and Lisa Y. enrolled in public schools operated

by the Asheboro City Board of Education in August, 1979.

They remained enrolled in the public schools on a full-time

basis through the 1980-81, 1981-82, and 1982-83 school

years. For the 1983-84 school year, Todd and Lisa were

enrolled half-time in the public schools and half-time in a

private school. The private school costs were paid by their

parents. Following the 1983-84 school year Todd and Lisa’s

parents re-enrolled their children full-time in the public

schools but demanded that the Asheboro City Board of

Education reimburse them for the costs they had incurred by

enrolling Todd and Lisa half-time in private school. The

Asheboro City Board of Education rejected the parents’

3

demand and pursuant to state law then in effect appointed a

hearing officer, C.D. Heidgerd, to consider the parents’

demand. Mr. Heidgerd advised the parents that he did not

have the power to grant them the relief they demanded, that

is, reimbursement for the private school costs they had

incurred.

On March 28, 1985, Todd and Lisa’s parents peti-

tioned the State Board of Education to amend or interpret its

rules to grant hearing officers the power to order local school

boards to reimburse the parents of handicapped children for

private school costs. The State Board initially declined the

parents’ request on the grounds that the legal question

underlying their request, whether the IDEA requires school

systems to reimburse parents for private school costs, was

pending in the United States Supreme Court for decision.

On April 29, 1985, in School Comm. of Burlington v.

Department of Educ., 471 U.S. 359 (1985), this Court held

that the right to a free, appropriate education, under some

circumstances, encompasses the right to reimbursement for

private school costs and that 20 U.S.C. § 1415(e)(2) gives

the courts the power to order reimbursement. The issue of

whether the IDEA requires the states to confer that power on

hearing officers, however, was not addressed.

On May 1, 1985, Todd and Lisa’s parents renewed

their request to the State Board to amend or interpret its rules

to confer on hearing officers the power to order local school

boards to reimburse parents for private school costs. On

June 5, 1985, the State Board denied their request on three

grounds: (1) that State law did not authorize hearing officers

4

to order the payment of damages in the form of reimburse-

ment and the federal law did not require that hearing officers

have that power; (2) that any power the State Board itself

might have to order judicial or quasi-judicial remedies, like

reimbursement, could not be delegated to a hearing officer

absent legislative authorization; and (3) that as a matter of

public policy it ought not confer on hearing officers over

whom it had no control the power to order the expenditure

of public funds.

On August 2, 1985, Todd and Lisa Y. (as S-1 and S-

2) by and through their parents (as P-1 and P-2) (hereinafter

"petitioners") sued the Asheboro City Board of Education for

reimbursement of the private school costs they had incurred

during the 1983-84 school year and sued the State Board of

Education to enjoin it to confer the power on hearing officers

to order local school boards to reimburse parents for private

school costs. On December 31, 1986, the District Court

granted summary judgment to the petitioners on their claim

against the State Board and enjoined the State Board to cease

interpreting state law not to allow hearing officers to order

reimbursement. The State Board appealed. During the

pendency of the appeal, OSERS advised Vermont that the

IDEA "requires states to author:ze hearing officers to decide

reimbursement." See Petitioners’ Appendix pp. 49a - 54a.

The District Court’s opinion was cited as consistent with this

advice. Also, during the pendency of the appeal, the

Asheboro City Board of Education and the petitioners settled

their claim for reimbursement. On November 4, 1987, the

Court of Appeals, ex mero motu, held that the settlement of

the underlying claim for reimbursement mooted the State

5

Board’s appeal and vacated the district court’s order. In

part, that decision was based on "the difficulty and sensitivity

of the constitutional issue at the core of this controver-

sy...." 832 F.2d at 298. This matter, however, was

remanded to the District Court for determination of the

petitioners’ entitlement, if any, to attorney’s fees.

On July 8, 1988, the North Carolina General Assem-

bly amended the administrative procedures for processing

complaints by the parents of handicapped children set out in

N.C. GEN. STAT. § 115C-116. 1987 N.C. Sess. Laws, c.

1079 (1988 Sess.). See Petitioners’ Appendix pp. 57a - 58a.

Reflecting the State Board’s concern that independent hearing

officers ought not have final administrative authority to order

reimbursement or other relief, these amendments authorized

administrative hearing officers to make a recommended

decision to the State Board and authorized the State Board to

make the final administrative decision. Also reflecting the

Burlington decision, these amendments specifically authorized

the State Board to order relief to parents in the form of

reimbursement for private school costs, where appropriate.

No authority was given to hearing officers to order any

relief.

Approximately one month later (August 23, 1988),

the parents petitioned the District Court for attorney’s fees.

They found no solace in the General Assembly’s recent

amendment to N.C. GEN. STAT. § 115C-116 and observed

in their petition for fees that the "continuation of litigation

was necessary."

6

In the spring of 1989, USDOE voiced objections to

the General Assembly’s 1988 amendment to N.C. GEN.

STAT. § 115C-116 and threatened to cut off some $50 million

in federal funds to North Carolina for the education of handi-

capped children beginning with 1990 fiscal year. USDOE’s

principal objection was to the General Assembly’s decision

to place final administrative authority in the State Board

rather than in some hearing officer independent of the State

Board. The State Board urged USDOE to defer any decision

pending this Court’s decision in a case from Pennsylvania

concerning a challenge to administrative procedures similar

to North Carolina’s and in which North Carolina had filed an

amicus brief supporting Pennsylvania. That case, Dellmuth

v. Muth, 491 U.S. 223 (1989), was decided on June 15,

1989. The sole grounds for the decision was the Eleventh

Amendment. Thus, the lawfulness of Pennsylvania’s

procedure was not reached.

After an exchange of letters with the State Board,

USDOE agreed to give North Carolina until July 1, 1990 to

demonstrate that its decision to confer final decision making

authority on the State Board was lawful before terminating

funds. On February 10, 1990, the State Board, pursuant to

5 U.S.C. § 554(e), petitioned USDOE for a declaratory

ruling on this issue. USDOE declined to issue a ruling.

Faced with the potential loss of $50 million in federal

funds in the midst of a budget crisis, the General Assembly,

on July 28, 1990, again amended the administrative hearings

process set out in N.C. GEN. STAT. § 115C-116. The title

to the act reads: "An Act to Amend the Exceptional

7

Children’s Appeals Process, to Preserve Federal Funds, and

to Save the State Replacement Funds." 1989 N.C. Sess.

Laws, c. 1058 (1990 Sess.). Under these amendments, final

administrative authority on appeal from the recommended

decisions of hearing officers was transferred from the State

Board to a Review Officer. The power to enforce final

administrative orders, however, remained with the State

Board. See Petitioners’ Appendix pp. 55a - 56a.

On April 2, 1991, the parties filed stipulations for

purposes of adjudication of the plaintiffs’ request for

attorney’s fees. These stipulations described the petitioners’

claims against the State Board, summarized the General

Assembly’s amendments to the administrative hearing

processes and provided a chronology. By order dated March

30, 1992, the District Court found that the petitioners were

prevailing parties entitled to fees because "by virtue of [their]

complaint sufficient federal pressure was brought on the State

of North Carolina that Section 115C-116 was amended to

comply with federal law." (Petitioners’ Appendix p. 45a).

A panel of the Court of Appeals for the Fourth Circuit

affirmed the District Court by a divided vote reasoning that

the 1986 District Court opinion "must have alerted OSERS

to the State’s non-complying position" and "played a major

causative role in the [1987] OSERS Letter Ruling and

thereby the Department of Education’s [1989] policy posi-

tion.” S-J by and Through P-1 v. State Bd. of Educ. , 6 F.3d

160, 165 (1993). The panel opinion was subsequently

vacated by the Court of Appeals sitting en banc and the

District Court decision awarding attorney’s fees to petitioners

was reversed.

8

REASON V; HY THE WRIT

SHOULD NOT BE GRANTED

This is not a proper case for allowing the writ of

certiorari. The Court of Appeals sitting en banc held that

petitioners had failed to achieve prevailing party status

because a vacated judgment cannot serve as a catalyst for

post-litigation events. While there may be some disagree-

ment among the courts of appeal about the viability of the

catalyst theory in light of Farrar v. Hobby, _ U.S. __,

113 S. Ct. 566 (1992), petitioners have failed to identify any

disagreement among the courts of appeal about the continuing

catalytic force of a dismissed lawsuit. Moreover, petitioners’

claim to prevailing party status is foreclosed by this Court’s

holdings that the relief which forms the basis for a plaintiffs’

claim to prevailing party status must directly benefit them at

the time they obtained it.

Petitioners’ argument that the Court should grant their

writ because the Court of Appeals’ decision "dramatically

narrows the grounds for fee awards" is simply not well-

founded. The Court of Appeals’ decision in this unusual

case is sound, logical and consistent with this Court’s

decisions.

9

I. THE PETITION SHOULD BE DENIED

BECAUSE THE COURT OF APPEALS COR-

RECTLY HELD THAT THE CATALYST THEO-

RY IS NOT SO BROAD AND EXPANSIVE AS

TO PERMIT PETITIONERS TO OBTAIN PRE-

VAILING PARTY STATUS BASED ON EVENTS

OCCURRING AFTER DISMISSAL OF THEIR

LAWSUIT ON THE GROUNDS OF MOOTNESS.

Petitioners argued to the Court of Appeals that the

catalyst theory is so broad and expansive that they can obtain

attorney’s fees from respondents based on decisions made by

the North Carolina General Assembly almost three years

after their lawsuit was declared moot and the judgment in

their favor vacated. The Court of Appeals sitting en banc

rejected petitioners’ argument and held, in light of Farrar v.

Hobby, 113 S. Ct. 566, that "dismissal on appeal of an

action under 42 U.S.C. § 1983 for prudential reasons as

moot operates to vacate the judgment below [citation omit-

ted], and prevents the plaintiffs from being found prevailing

parties by virtue of post-dismissal events." S-J and S-2 v.

State Bd. of Educ. of N.C., 21 F.3d 49, 51 (1994).

The logic of this simple proposition is clear. As

Judge Wilkinson stated in his dissent from the panel opinion,

subsequently adopted by the en banc majority:

Plaintiffs’ lawsuit lost whatever force it had as

a catalyst the day it was mooted by this court.

I do not understand how moot lawsuits, in

which the possibility of relief against a party

10

is by definition foreclosed, continues nonethe-

less to function as [a] catalyst for change and

for the recovery of attorney’s fees.

6 F.3d at 169-170.

The value of this logical principle as a limit on the

amorphous catalytic theory is demonstrated by the facts of

this case. Allowing petitioners’ claim for attorney’s fees to

be pursued based on the supposed continuing catalytic force

of their mooted lawsuit would, as Judge Wilkinson observed,

expose respondents to liability for fees and at the same time

deny respondents "their right to an appeal" and "the opportu-

nity to refute the claims asserted against them."'’ 6 F.3d at

' The fundamental claim petitioners’ asserted against

respondents was that the IDEA requires North Carolina to

vest final administrative authority to resolve the complaints

of handicapped parents in administrative hearing officers

rather than in the State Board of Education, a constitutional

agency given the power by the Constitution "to supervise and

administer the free public school system.” N.C. Const. art.

II, §5. Petitioners’ claim is at odds‘ with the express

intention of Congress in establishing USDOE "to protect the

rights of State and local governments . . . in the areas of

educational policies and administration of programs and to

strengthen and improve the control of such governments. . .

over their own educational programs and policies." 20

U.S.C. § 3403(a). Petitioners’ claim is also flatly contrary

to rules of statutory construction rooted in principles of

federalism. See, e.g., Penn. Dairies v. Milk Control

Comm'n, 318 U.S. 261, 275 (1943) (intention of Congress

(continued. ..)

11

169. There is, moreover, no reasonably ascertainable limit

on the period of time a mooted lawsuit would continue to

have catalytic force or any clear measure of the level of

catalytic force a mooted lawsuit must have. Does a mooted

lawsuit continue to have catalytic force for one year, two

years or even three years? Miust a plaintiff seeking fees

based on events occurring after his lawsuit is mooted prove

that his mooted suit was the sole cause of the post-litigation

events, or only that his lawsuit was a contributing cause?

Here, petitioners seek to hold respondents liable for attor-

ney’s fees based on legislation enacted by the North Carolina

General Assembly almost three years after their claim was

declared moot and they seek to hold respondents liable for

attorney’s fees based on legislation enacted by the North

Carolina General Assembly in response to a threat by

USDOE to terminate $50 million in federal funding for the

education of handicapped children.

In the face of these facts, petitioners contend that the

Court ought to grant their petition because the Court of

Appeals’ decision "dramatically narrows the grounds for fee

awards," Petition p. 11, and is in conflict with the decisions

of other courts of appeal. /d. pp. 19-22. This claim is not

well-founded. None of the "conflicting" decisions cited by

'(.. .continued)

to regulate internal affairs of a state "is not lightly to be

inferred and ought not to be implied"); Gregory v. Ashcroft,

501 U.S. 452, 461 (1991) (Congressional intention to upset

balance of power between federal and state governments

must be "clear and manifest").

12

petitioners, and no other decision to respondents’ knowledge,

holds that a dismissed lawsuit has any continuing catalytic

force or that post-litigation events are a sufficient basis for

claiming prevailing party status. Indeed, in every case cited

by petitioners the lawsuit alleged to have catalytic force was

pending at the time the actions were taken by defendants

which allegedly gave the plaintiffs the "relief" they sought.

In short, the decision here does not dramatically

narrow the grounds for fee awards and is not in conflict with

the decisions of other courts of appeal.

Il. REGARDLESS OF THE CONTINUED VIABILI-

TY OF THE CATALYST THEORY, PETITION-

ERS’ CLAIM FOR ATTORNEY’S FEES IS

FORECLOSED BY DECISIONS OF THIS

COURT.

In Farrar, 113 S. Ct. at 573, this Court held:

"Whatever relief the plaintiff secures must directly benefit

him at the time of the judgment or settlement." (emphasis

added) Hewitt v. Helms, 482 U.S. 755, 764 (1987) is cited

in Farrar in support of this requirement. Hewitt establishes

that this requirement applies when a plaintiff seeks attorney’s

fees under a catalyst theory -- assuming that theory is viable

-- for relief obtained other than by a judgment, consent

decree, or settlement. Hewitt also illustrates plaintiffs’

failure to meet this requirement.

In Hewitt, the plaintiff, a prisoner, relied on a catalyst

theory to claim prevailing party status based on an amend-

ment to defendants’ regulations which was made after his

13

release from prison, but during the pendency of his appeal on

the merits to the Court of Appeals from an adverse decision

by the District Court. 482 U.S. at 758-59. The Court

rejected the plaintiffs’ claim for attorney’s fees without

deciding whether the catalyst theory is viable. Jd. at 763

("We need not decide the circumstances, if any, under which

this ‘catalyst’ theory could justify a fee award under § 1988

...'). The claim for fees was rejected because Helms "did

not and could not get redress" from promulgation of the

amendment to the regulations. Jd. When the amendment to

the regulations was made, "Helms had long since been

released from prison." Jd. By the time of the Supreme

Court’s decision, Helms had returned to prison and was

presumably benefiting from the new regulations in some

indirect manner. Nevertheless, "that fortuity" did not

"render him, retroactively, ‘a prevailing party’" in his

lawsuit. Id: at 764. Thus, in Farrar’s words, the amend-

ment to the regulations did not "directly benefit" Helms "at

the time" of the amendment, and therefore did not provide

any basis for him to obtain prevailing party status.

And so it is with petitioners. The relief petitioners

sought against respondents was a change in the State Board’s

rules to allow hearing officers to award reimbursement for

private school costs. They claim they obtained that relief

through 1988 and 1990 amendments by the General Assem-

bly to the administrative procedures for reviewing complaints

by parents of handicapped children. Assuming they obtained

that relief through either the 1988 or 1990 statutory amend-

ments, that relief did not directly benefit them at the time

they obtained it, i.e., in 1988 or 1990. By virtue of the

14

1987 settlement agreement between petitioners and the local

defendants, the petitioners obtained full reimbursement for

the private school costs they had incurred. Thereafter, they

had no direct or immediate interest in the scope of powers of

hearing officers. Their interest, at most, was indirect and

conjectural, arising only in the event that at some point in the

future they again decided unilaterally to place their children

in some private school, they again decided to seek reimburse-

ment for those costs and they again decided to seek adminis-

trative review of a decision by the local school board to deny

reimbursement.

CONCLUSION

The Court of Appeals’ decision is sound, logical and

entirely consistent with the decisions of this Court; it is not

in conflict with the decisions of other courts of appeal.

Respondents therefore request the Court to deny the petition.

Respectfully submitted,

MICHAEL F. EASLEY

North Carolina Attorney General

Edwin M. Speas, Jr.*

Senior Deputy Attorney General

North Carolina Department of Justice

Post Office Box 629

Raleigh, N.C. 27602-0629

(919) 733-3786

September 1, 1994 *Counsel of Record