ND EX REL. GUARD. AD LITEM v. HI DEPT. OF EDUC.

• Decision Date: 05 April 2010
• Docket Number: No. 09-17543.,09-17543.
• Parties: N.D.; A.U.; C.K.; C.J.; M.D.; B.A.; G.S.; T.F.; J.K., disabled minors, through their PARENTS ACTING AS GUARDIANS AD LITEM, Plaintiffs-Appellants, v. State of HAWAII DEPARTMENT OF EDUCATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

600 F.3d 1104

N.D.; A.U.; C.K.; C.J.; M.D.; B.A.; G.S.; T.F.; J.K., disabled minors, through their PARENTS ACTING AS GUARDIANS AD LITEM, Plaintiffs-Appellants, v. State of HAWAII DEPARTMENT OF EDUCATION, Defendant-Appellee.

No. 09-17543.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 10, 2010.

Filed April 5, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Carl M. Varady, Honolulu HI; Stanley E. Levin and Susan K. Dorsey, Levin Education Access Project, Honolulu, HI, for the plaintiffs-appellants.

Mark J. Bennett, Attorney General of Hawaii, and Deirdre Marie-Iha and Holly Shikada, Department of the Attorney General, Honolulu, HI, for the defendant-appellee.

Before: JEROME FARRIS, D.W. NELSON and CARLOS T. BEA, Circuit Judges.

FARRIS, Senior Circuit Judge:

N.D., et al., disabled minors enrolled in the State of Hawaii's public school system, alleging violations of the Individuals with Disabilities Education Act, 20 U.S.C. §§ 1400-1487 (2006), appeal an order denying their motion for a preliminary injunction seeking to prevent Hawaii from shutting down public schools on seventeen Fridays and concurrently furloughing the teachers. We agree with the district court that the stay-put provision of the IDEA was not intended to cover system-wide changes in public schools that affect disabled and non-disabled children alike, and that such system-wide changes are not changes in educational placement. The district court had jurisdiction under 28 U.S.C. §§ 1331, 1343 (2006). We have jurisdiction under 28 U.S.C. § 1292(a)(1) (2006) to hear this interlocutory appeal. We affirm.

I.

The State of Hawaii is currently in the midst of a major fiscal crisis. To help alleviate the fiscal crisis, Hawaii decided to shut down the public schools for seventeen Fridays in the 2009-2010 school year. School children, disabled and nondisabled alike, would not attend school on those Fridays. The elimination of those seventeen Fridays from the school calendar constitutes a reduction in instructional days of approximately ten percent. Hawaii reached a negotiated agreement, covering the 2009-2010 and 2010-2011 school years, with the Hawaii State Teachers Association, the state teachers union, to implement furloughs of all public school teachers on the Fridays when the schools were closed. The first so-called "furlough Friday" was on October 23, 2009.

In response to the impending furloughs, N.D. requested a due process hearing on October 19, 2009 from the State of Hawaii Department of Education regarding the potential change in his individual educational program.¹ Along with this request, N.D. invoked the stay-put provisions of the IDEA. See 20 U.S.C. § 1415(j) (2006). Hawaii did not adjust the furloughs in response to the invocation of the stay-put provision and moved forward with the furloughs.

N.D. filed suit in district court on October 20, 2009, naming only the State of Hawaii Department of Education as a defendant. The plaintiffs included nine disabled children enrolled in five public schools. N.D. alleges that the furlough of the teachers and concurrent shutdown of the public schools violated his rights under the IDEA. Specifically, N.D. alleges that the furloughs constituted a change in his educational placement, and as part of his request for a due process hearing, he was entitled to remain in his then-current educational placement. N.D. moved for a temporary injunction of the furloughs. The temporary injunction was denied by the district court on October 22, 2009.²

On November 9, 2009, the district court held a hearing on whether a preliminary injunction should be issued. The injunctive relief N.D. has sought over the course of the litigation is an end to the school furloughs as they affect the plaintiffs. Prior to the hearing, N.D. submitted evidence as to the harm suffered by the disabled children as a result of the first several furlough days. Hawaii submitted evidence that it was undertaking efforts to provide the disabled children with alternate services consistent with their IEPs.

This timely appeal followed the denial of N.D.'s motion for a preliminary injunction.

II.

The State of Hawaii alleges that N.D. failed to join a necessary party, the HSTA. Hawaii alleges that the HSTA is a necessary party to the litigation because Hawaii negotiated a contract with the HSTA for the furlough days and a preliminary injunction would void that contract, affecting HSTA's contract rights. The district court failed to rule on this issue, therefore we review it de novo. UOP v. United States, 99 F.3d 344, 347 (9th Cir.1996).

The HSTA is necessary if complete relief cannot be granted without it. FED. R. CIV. P. 19(a)(1)(A); Altmann v. Republic of Austria, 317 F.3d 954, 971 (9th Cir. 2002), aff'd 541 U.S. 677, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). In the alternative, we consider whether the HSTA claims a legally protected interest in the subject of the action such that a decision without it will (1) impair or impede its ability to protect that interest; or (2) expose N.D. and the State of Hawaii to the risk of multiple or inconsistent obligations by reason of that interest. See FED. R. CIV. P. 19(a)(1)(B); Dawavendewa v. Salt River Project Agr. Imp. and Power Dist., 276 F.3d 1150, 1155 (9th Cir.2002). If the HSTA satisfies either of these alternative tests, it is necessary to the instant action and must be joined. Dawavendewa, 276 F.3d at 1155.

As to the first test, we have held that a "party to a contract is necessary ... to litigation seeking to decimate that contract." Id. at 1157. Hawaii argues that the negotiated agreement would be voided by the injunctive relief sought by N.D. because Hawaii would have to order the teachers back to school, which Hawaii alleges violates the contract. This is premised on paragraph (3)(c) of the contract which provides that the furloughs that may be implemented are subject to the condition that "all 10 month employees shall be placed on furloughs for a total of 34 days over the 2009-2011 fiscal biennium." (emphasis added). Once the furloughs have been implemented, then employees are mandatorily furloughed for 34 days over two years. There appears to be no option for recalling the teachers. Forcing the State to violate the contract would render the entire contract void because the furlough provision is the whole purpose of the contract. See Beneficial Hawaii, Inc. v. Kida, 96 Hawaii 289, 30 P.3d 895, 917 (2001).³

In this case, complete relief can be granted since an injunction would not render the contract illegal. An injunction would only require the schools to be open and the IEPs followed. The injunction does not order the State to order the teachers back to work nor does it declare the furloughs illegal. The furloughs are a byproduct of shutting the schools down. N.D. does not have to prove that the contract is illegal for the injunction to issue. The question of how Hawaii decides to staff the schools when they are open and implement the IEPs is not before us. The State has not shown that an injunction would necessarily force it to violate the contract.

Turning to the alternate test, the HSTA could be a necessary party if it claims a legally protected interest. The HSTA does not have a legally protected interest here. The negotiated agreement provides simply that Hawaii "may implement furloughs." (emphasis added). The furloughs are at the State's option, not the teachers'. If Hawaii had decided not to implement the furloughs then the teachers would have had to show up for work as usual. The HSTA interest was an ironclad guarantee of no layoffs. This guarantee gave the State the option to furlough teachers. That interest is not affected regardless of whether the furloughs were implemented. The HSTA is not a necessary party and does not have to be joined.

III.

Hawaii also argues that N.D. failed to exhaust all of his administrative remedies before coming to federal court. Whether exhaustion is required under the IDEA is a question of law that is reviewed de novo. Doe v. Arizona Dept. of Educ., 111 F.3d 678, 681 (9th Cir.1997).

It is undisputed that N.D. has not exhausted his administrative remedies. He has not completed his due process hearing. Judicial review under the IDEA in a particular case is normally available only if the plaintiff exhausts her administrative remedies. 20 U.S.C. § 1415(l) (2006); Kutasi v. Las Virgenes Unified Sch. Dist., 494 F.3d 1162, 1167(9th Cir. 2007). As we have recognized previously, the exhaustion requirement:

Recognizes the traditionally strong state and local interest in education, allows for the exercise of discretion and educational expertise by state agencies, affords full exploration of technical educational issues, furthers development of a factual record and promotes judicial efficiency by giving state and local agencies the first opportunity to correct shortcomings.

Kutasi, 494 F.3d at 1167. However, exhaustion is not required if "it would be futile or offer inadequate relief, or if the agency has adopted a policy or pursued a practice of general applicability that is contrary to the law." Doe, 111 F.3d at 681 (quotation marks and citations omitted); see Kutasi, 494 F.3d at 1167-68.

We have not yet addressed the issue of whether exhaustion is required in the context of a suit alleging violations of § 1415(j). All of our previous cases regarding exhaustion under the IDEA have dealt with requests for damages and not with the stay-put provision. See Kutasi, 494 F.3d at 1169; Blanchard v. Morton Sch. Dist., 420 F.3d 918, 919(9th Cir.2005); Robb v. Bethel Sch. Dist. #403, 308 F.3d 1047, 1048 (9th Cir.2002); Witte v. Clarke County Sch. Dist., 197 F.3d 1271, 1272 (9th Cir.1999). However, the Second Circuit addressed this precise point in Murphy v. Arlington Cent. Sch. Dist. Bd. of Educ., 297 F.3d 195 (2d Cir.2002). In Murphy, the plaintiff sued for a violation of § 1415(j) and requested funding to keep the...