Petties v. Dist. of Columbia, 10–7149.

• Decision Date: 02 December 2011
• Docket Number: No. 10–7149.,10–7149.
• Citation: 662 F.3d 564,398 U.S.App.D.C. 257,274 Ed. Law Rep. 369
• Parties: Nikita Shonta PETTIES, by her Parent and Next Friend, Judy MARTIN, et al., Appellees v. DISTRICT OF COLUMBIA, a Municipal Corporation, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

274 Ed. Law Rep. 369

398 U.S.App.D.C. 257

662 F.3d 564

Nikita Shonta PETTIES, by her Parent and Next Friend, Judy MARTIN, et al., Appellees

v.DISTRICT OF COLUMBIA, a Municipal Corporation, et al., Appellants.

No. 10–7149.

United States Court of Appeals, District of Columbia Circuit.

Argued Oct. 18, 2011.Decided Dec. 2, 2011.

Appeal from the United States District Court for the District of Columbia (No. 1:95–cv–00148).Carl J. Schifferle, Assistant Attorney General, Office of the Attorney General for the District of Columbia, argued the cause for appellants. With him on the briefs were Irvin B. Nathan, Attorney General, Todd S. Kim, Solicitor General, and Donna M. Murasky, Deputy Solicitor General. Robert C. Utiger, Attorney, entered an appearance.

Steven Ney argued the cause for appellees. With him on the brief were Jennifer Lav and Bradford P. Johnson.

Before: ROGERS, GARLAND and GRIFFITH, Circuit Judges.

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge:

The District of Columbia appeals the denial of its motion to vacate a preliminary injunction (and related orders) pursuant to Rule 60(b)(5) of the Federal Rules of Civil Procedure. The injunction was issued in 1995 in response to a class action complaint alleging that the District of Columbia was violating the Individuals with Disabilities Education Act (“IDEA”), 20 U.S.C. § 1400 et seq., by failing to timely pay private providers of special education services and thereby jeopardizing students' special education placements. In moving to vacate the injunction after fourteen years, the District of Columbia argued that because it had “cured the systemic violations of law upon which the preliminary injunction and other payment orders were predicated” and was “in compliance with the [latest] payment order,” there were “substantially changed circumstances concerning the administration and processing of provider payments” that made unnecessary and inequitable continued judicial supervision. Defs.' Mem. of P. & A. in Supp. of their Mot. to Vacate Prelim. Inj. and Payment Orders at 1, 10.

The district court denied the motion on two grounds: (1) dissolving the injunction and subsequent payment orders “would be disruptive to the status quo” and “counter-productive to the goal” of settling the case “in short order,” and (2) the District of Columbia had “overstated both the relevance and the significance” of the Supreme Court's recent decision in Horne v. Flores, 557 U.S. 433, 129 S.Ct. 2579, 174 L.Ed.2d 406 (2009). Mem. Op. and Order Sept. 30, 2010 at 2 (“Mem. Op.”). Because the district court failed to address the changed circumstances, as Horne v. Flores instructs, we reverse and remand the case for the district court to determine whether, in view of changed circumstances, the District of Columbia's Rule 60(b)(5) motion should be granted.

I.

Congress enacted the IDEA “to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepare them for further education, employment, and independent living.” 20 U.S.C. § 1400(d)(1)(A). On January 20, 1995, special education students and their parents filed a class action complaint alleging that the District of Columbia was depriving them of their civil rights under 42 U.S.C. § 1983 by refusing to provide them with a free, appropriate education as required by the IDEA. The defendants included the Superintendent of the District of Columbia Public Schools and the Director of the Special Education Branch in the Office of the Superintendent of the District of Columbia Public Schools. The plaintiffs alleged that the District of Columbia was jeopardizing students' special education placements by failing to pay private providers of special education services fully and on time. As a result, parents of special education students were being forced to choose between standing by as special education services were discontinued or paying for these services. The complaint noted, by way of example, that just days before the complaint was filed, the Chelsea School had written a letter to parents stating that because of the District of Columbia's failure to make full tuition payments for 42 of its 126 students, these students would be disenrolled unless their parents paid the tuition. The school explained that the District of Columbia had “[not] offered any assurances that the problem will be satisfactorily resolved, or, indeed, any assurance that Chelsea will be paid at all.” Compl. ¶ 23 at 13 (quoting letter of January 17, 1995 from Timothy E. Hall, Chair of the Board of Governors of the Chelsea School).

The prayer for relief sought: (1) temporary and permanent injunctive relief requiring the defendants to pay immediately and fully all debts to private providers of special education, and to give satisfactory written assurances of future timely payments; (2) regular reports from defendants on their compliance with any court order until such time as the district court determines the rights of the plaintiff class are no longer being violated or in immediate jeopardy of further violation and continued court monitoring is unnecessary; (3) payment by defendants of plaintiffs' reasonable attorneys' fees and costs; and (4) such other relief as is just and proper.

On March 17, 1995, the district court issued a preliminary injunction. The district court found that the District of Columbia had “not paid the costs of private special education placements or related services either fully or on a current or timely basis for at least the 1994–1995 school year,” and that the District of Columbia's “ongoing refusal to meet [its] financial obligations ... ha[d] placed plaintiffs' education in constant jeopardy.” Prelim. Inj. ¶¶ 3, 6. It ordered the District of Columbia to pay all outstanding debts to private providers of special education services within two weeks. In a series of subsequent payment orders, issued as late as 2009, the district court set detailed payment deadlines. On July 8, 1997, the district court appointed a Special Master to assist with implementation of a transportation services plan and later extended the Special Master's duties to include resolving payment disputes between the District of Columbia and private providers. In a status report filed on May 4, 2005, the Special Master advised that “sufficient progress has been made to merit discussion of exit criteria for the portion of the case related to payments.” Status Rpt. of Spec. Master, May 4, 2005 at 5. Referencing a meeting with the parties on April 20, 2005, the Special Master listed “four indicators” considered “necessary to ensure ... a reliable, fair and efficient payment process without judicial supervision.” Id.¹

On March 20, 2009, the District of Columbia filed a motion to vacate the preliminary injunction and related payment orders pursuant to Rule 60(b)(5). The “basic grounds” were “the changed circumstances since the preliminary injunction and subsequent payment orders were issued, the record of compliance with [its] obligations to pay private providers, and the new system for payment of private providers in the Education Reform Amendment Act of 2007,” D.C. Law 17–9. Defs.' Mot. to Vacate Prelim. Inj. and Payment Orders at 1. “Under all the facts and circumstances,” as set forth in the motion and attached exhibits, the District of Columbia argued that “it is inequitable and unnecessary to continue in effect the preliminary injunction and subsequent payment orders.” Id. D.C. Law 17–9 had shifted responsibility for the vast majority of provider payments from the District of Columbia Public Schools (“DCPS”) to the Office of the State Superintendent of Education (“OSSE”), which, in turn, had established a new automated system for tracking invoices. See generally id. at Ex. K. During the first two months that the OSSE's system was in place, all invoices were paid on time and the OSSE generated no payment disputes. See Defs.' Mem. of P. & A. in Supp. of Mot. to Vacate Prelim. Inj. and Payment Orders at 18, 21. In addition, the DCPS was paying 99% of provider invoices on time and only three disputes initiated by it had come before the district court in the previous year. See id. at 18–19. Consequently, “[n]o private schools or providers have threatened to displace DCPS students, or not take any more, or discontinue providing services to them, for many years.” Id. at 12. Concluding that there can be “no serious doubt” that the “goal” of this litigation, “to correct systemic violations of the law ... found in 1995,” has been “achieved,” the District of Columbia argued that “the changed circumstances, the evidence of [its] good faith ... and the heavy costs that this litigation continues to impose upon the taxpayers of the District of Columbia, require the vacation of the preliminary injunction and all subsequent payment orders.” Id. at 34–35.

The plaintiffs opposed the motion on the principal grounds that the District of Columbia had yet to demonstrate “sustained compliance” or to implement structural reforms identified by the Special Master to sustain compliance. See Pls.' Mem. in Opp'n to Defs.' Mot. to Vacate Prelim. Inj. and Paym't Orders at 2. Pointing to DCPS's performance in the first four months of 2009 in which it disputed 215 invoices and made 335 late payments, plaintiffs argued that the District of Columbia needed to establish a quick, effective, low-cost dispute resolution mechanism to replace the Special Master, a transparent and equitable system for setting rates for special education services, and a mechanism for monitoring the budget process to ensure sufficient funding for special education. See supra note 1. In response, the District of Columbia stated that the OSSE, which handles roughly 90% of payments to providers (as measured by dollar amount), was “in the process of developing an...