BD. OF ED., CITY OF CINCINNATI v. DEPT. OF HEW

• Decision Date: 17 February 1987
• Docket Number: Civ. No. C-1-74-185.
• Citation: BD. OF ED., CITY OF CINCINNATI v. DEPT. OF HEW, 655 F. Supp. 1504 (S.D. Ohio 1987)
• Parties: BOARD OF EDUCATION OF the CITY SCHOOL DISTRICT OF the CITY OF CINCINNATI, et al., Plaintiffs, v. The DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

655 F. Supp. 1504

BOARD OF EDUCATION OF the CITY SCHOOL DISTRICT OF the CITY OF CINCINNATI, et al., Plaintiffs, v. The DEPARTMENT OF HEALTH, EDUCATION AND WELFARE, et al., Defendants.

Civ. No. C-1-74-185.

United States District Court, S.D. Ohio, W.D.

July 2, 1986.

Order July 8, 1986.

Consent Decree February 17, 1987.

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John A. Lloyd, Jr., Cincinnati, Ohio, for plaintiffs.

Sandra L. Beber, U.S. Dept. of Justice, Educational Opportunities, Litigation Section, Washington, D.C., Donetta D. Wiethe, Asst. U.S. Atty., Cincinnati, Ohio, for defendants.

OPINION

DAVID S. PORTER, Senior District Judge.

                               TABLE OF CONTENTS
                                                                                            Page
                     I.  PROCEDURAL POSTURE ...............................................  1508
                    II.  STANDARD OF AND RECORD FOR REVIEW ................................  1510
                   III.  FINDINGS OF FACT .................................................  1515
                         A. Background ....................................................  1515
                         B. The Emergency School Aid Act ..................................  1519
                         C. Cincinnati's 1974 ESAA Application ............................  1521
                            1. Cincinnati's Eligibility for Funding .......................  1523
                            2. Evaluation of Cincinnati's Proposal ........................  1531
                         D. Aftermath of the 1974 Ineligibility Decision ..................  1533
                         E. Cincinnati's 1976 ESAA Application ............................  1535
                            1. Cincinnati's Eligibility for Funding .......................  1536
                            2. Evaluation of Cincinnati's Proposal ........................  1537
                    IV.  CONCLUSIONS OF LAW ...............................................  1538
                         A. HEW's Ineligibility Determinations Were Contrary to Law .......  1539
                         B. HEW's Ineligibility Determinations Were Arbitrary, Capricious
                            or An Abuse of Discretion .....................................  1542
                         C. HEW's Evaluation of Cincinnati's 1976 Proposal Was Arbitrary
                            Capricious or An Abuse of Discretion ..........................  1544
                     V.  CONCLUSION .......................................................  1545
                

I. PROCEDURAL POSTURE

This case is now before this Court for final disposition pursuant to instructions of the United States Court of Appeals for the Sixth Circuit. In May 1974 the Board of Education of the Cincinnati City School District hereinafter Board filed this suit, challenging the Department of Health, Education and Welfare's HEW decision that they were ineligible for funding under the Emergency School Aid Act ESAA, 20 U.S.C. §§ 1601-19 (Supp.1974).¹ The Board sought declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202.

In April 1975, acting in the belief that the matter was submitted on the merits for judicial review on cross-motions for summary judgment (docs. 7, 11), this Court decided on the record then before it that the Board's motion should be denied while HEW's should be granted (docs. 20, 21). We determined that HEW's ineligibility determination was not arbitrary, capricious, or otherwise inconsistent with the Administrative Procedure Act, (5 U.S.C. § 706(2)(A)-(D)), the ESAA, or the regulations promulgated thereunder, 45 C.F.R. §§ 185.01 et seq. Board of Education of the City School District of the City of Cincinnati v. Department of Health, Education and Welfare, Region 5, 396 F.Supp. 203 (S.D.Ohio 1975).

On appeal the Sixth Circuit Court of Appeals affirmed our denial of the Board's motion, but reversed our grant of summary judgment to HEW. The Sixth Circuit reminded us that courts "should be slow in disposing of a case of any complexity on motion for summary judgment." Board of Education of the City School District of the City of Cincinnati v. Department of Health, Education and Welfare, Region 5, 532 F.2d 1070, 1071 (6th Cir.1976). The Court found that summary judgment was improper in this instance because all four of the grounds advanced by HEW for denial of the funds involved genuine issues of material fact. Id. The Sixth Circuit therefore ordered "the case remanded for appropriate evidentiary hearing and findings of fact." Id.

Moreover, the Court of Appeals stated that the factual issues in the school desegregation case Bronson v. Board of Education, No. C-1-74-205 (S.D.Ohio), involved many of the same issues of fact, which "should be determined either before or contemporaneously with the determination of the issues of fact in the present case." Id. We were directed "not to enter a final judgment in this present case until a final judgment has been entered in Bronson." Id. The Sixth Circuit also ordered that the $1,200,000 escrow account established by this Court's order be maintained until the final disposition of the litigation at both the trial and appellate court levels. Id.

Following the remand of this case, the Board supplemented its complaint, alleging that HEW improperly denied the school district funds again in the 1976 ESAA program for the same reasons it had improperly denied the 1974 grant application (doc. 41). This Court entered a preliminary injunction directing HEW to hold in escrow the funds requested in the 1976 application (doc. 43). After we denied HEW's motion to dissolve the preliminary injunction relating to the 1976 application (doc. 50), the parties agreed to reduce the amount to be held in escrow for the 1976 application to $1,696,762 (doc. 60). The Sixth Circuit affirmed our denial of HEW's motion for reconsideration and dissolution of the preliminary injunction, agreeing that it was proper for the supplemental proceeding on the 1976 application to be stayed pending the resolution of the Bronson litigation (doc. 62).

On June 22, 1984 a consent decree was entered in the Bronson case, thus resolving it without trial on the merits. The settlement of that case, albeit without adjudication of the issues of fact, meant that we could proceed to final judgment in this case. Therefore this case was reactivated in September 1984.

Our first goal was to comply with the Sixth Circuit's instruction that we conduct an "appropriate evidentiary hearing and findings of fact." 532 F.2d at 1071. Unfortunately the Bronson litigation offered us little guidance in resolving whatever issues of fact were common to both cases, so we sought to determine the proper procedure to follow in carrying out the Sixth Circuit's mandate. At our request, in October 1984 the parties submitted briefs on the question of the proper scope of our review in this case (docs. 67, 69, 70). With regard to the issue of the appropriate record for review, HEW also pointed out that the complete administrative record had not ever been submitted to this Court. Doc. 69 at 13. They proposed that they would assemble such a record, after which the Board would have an opportunity to file additional material. Id.

Rather than ruling immediately on the scope of and proper record for review, we waited until HEW filed what they considered to be the complete administrative record, to which extensive reference will be made herein. In addition to the documents that had been before this Court in 1975, they submitted all non-privileged documents and data gathered by HEW from the Board, and the analyses and correspondence generated within HEW during its review of the Board's 1974 and 1976 ESAA applications. Altogether, seven boxes of material were submitted.

Once the record had been supplemented, we scheduled a hearing on the adequacy of HEW's fact-finding process. At the request of counsel for the Board, this hearing was postponed to allow them enough time to review the administrative record and determine whether depositions would be necessary to supplement it. On February 6, 1985 a meeting was held with counsel for both parties at which the schedule for the hearing was discussed. See doc. 74. At the conference, counsel for the Board indicated that they were not then prepared to specify what, if any, additional discovery they wished to undertake to supplement the record.

In a letter dated February 26, 1985, counsel for the Board informed this Court that they would "argue the inadequacy of the fact-finding process basically from the `administrative record' as presented to us by the defendants." They also anticipated presenting limited testimony from John Grate, a Cincinnati School District employee who had been principally responsible for preparing and coordinating the ESAA applications. The evidentiary hearing was never held, however, because counsel for the Board ultimately decided they did not want to call any witnesses.

In the absence of any additional evidence or testimony on the adequacy of the factfinding process, the parties were asked to submit proposed findings of fact and conclusions of law addressing both the scope of judicial review and the merits of the case. After receipt of these submissions (docs. 78, 79, 80, 81), this Court called a status conference to discuss what further proceedings were appropriate in this case.

At the conference, held May 6, 1986, counsel for the Board stated that they wanted to supplement the paper administrative record submitted by HEW. Specifically, the Board wanted the Court to consider an affidavit of John Grate, which had been filed already as an attachment to the Board's memorandum opposing dissolution of the preliminary injunction (doc. 46). In addition the Board requested the inclusion of the depositions of O.O. Barr and Mary Jane Calais which had been taken in the Bronson case. After some discussion, counsel for HEW agreed that they would not object to these additions to the record (doc. 84 at 8).

The Board agreed to supply these additional documents to the Court and HEW. HEW also agreed to give the Board copies of the...