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D.C. Ass'n of Chartered Public Schools v. District of Columbia

United States District Court, D. Columbia

October 1, 2015

D.C. ASSOCIATION OF CHARTERED PUBLIC SCHOOLS, et al., Plaintiffs,
v.
DISTRICT OF COLUMBIA, et al., Defendants

         Decided September 30, 2015

          For D.C. ASSOCIATION OF CHARTERED PUBLIC SCHOOLS, Plaintiff: Carl J. Nichols, LEAD ATTORNEY, Ryan J. Huschka, WILMER CUTLER PICKERING HALE & DORR LLP, Washington, DC; Stephen Howard Marcus, LEAD ATTORNEY, Washington, DC; Sherry Ann Ingram, THE MARCUS FIRM, Washington, DC.

         For EAGLE ACADEMY PUBLIC CHARTER SCHOOL, WASHINGTON LATIN PUBLIC CHARTER SCHOOL, Plaintiffs: Ryan J. Huschka, WILMER CUTLER PICKERING HALE & DORR LLP, Washington, DC.

         For DISTRICT OF COLUMBIA, Defendant: Chad Wayne Copeland, Douglas Stuart Rosenbloom, Matthew Robert Blecher, LEAD ATTORNEYS, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Washington, DC.

         For VINCENT C. GRAY, in his official capacity as Mayor of the District of Columbia, JEFFREY S. DEWITT, in his official capacity as Chief Financial Officer of the District of Colubmia, Defendant: Douglas Stuart Rosenbloom, Matthew Robert Blecher, LEAD ATTORNEYS, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Washington, DC.

         For CENTER FOR EDUCATION REFORM, NATIONAL ALLIANCE FOR PUBLIC CHARTER SCHOOLS, FRIENDS OF CHOICE IN URBAN SCHOOLS, Movants: Dennis M. Cariello, LEAD ATTORNEY, PRO HAC VICE, HOGAN MARREN, LTD., New York, NY; Joleen Roslyn Okun, LEAD ATTORNEY, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Washington, DC.

         For S.H.A.P.P.E., MARY FILARDO, MATTHEW FRUMIN, TERRY GOINGS, RON HAMPTON, CATHY REILLY, SHARONA ROBINSON, VICTOR REINOSO, PEDRO RUBIO, STEPHEN SMITH, EBONI-ROSE THOMPSON, MARTIN WELLES, SUZANNE WELLS, 21ST CENTURY SCHOOL FUND, NANCY SARAH SMITH, FAITH GIBSON HUBBARD, Amicus: Daniel Patrick Schaefer, John Edward Heintz, LEAD ATTORNEYS, DICKSTEIN SHAPIRO LLP, Washington, DC.

         For BLACK ALLIANCE FOR EDUCATIONAL OPTIONS, Amicus: Dennis M. Cariello, LEAD ATTORNEY, PRO HAC VICE, HOGAN MARREN, LTD., New York, NY; Joleen Roslyn Okun, LEAD ATTORNEY, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Washington, DC.

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         MEMORANDUM OPINION

         TANYA S. CHUTKAN, United States District Judge.

         Plaintiffs bring this action challenging the District of Columbia's alleged inequitable funding of Washington, D.C. public charter schools as compared to traditional D.C. public schools (" DCPS" ). Plaintiffs argue that the District is required by the School Reform Act to fund all D.C. public schools -- charter schools and DCPS alike -- according to a formula based on the operating costs of the schools multiplied by the number of students at each charter school and in DCPS as a whole. Plaintiffs allege that the District has violated the School Reform Act by routinely funneling money for certain expenses to DCPS outside of the statutory formula, thereby depriving charter schools of money they would normally receive if these expenses were included in the formula calculation. Plaintiffs bring three claims: violation of Article I, Section 8 of the United States Constitution and the Home Rule Act (Count I); violation of the Supremacy Clause of the United States Constitution (Count II); and violation of the School Reform Act (Count III).

         Defendants filed a motion to dismiss for failure to state a claim upon which relief can be granted. Defendants argue that where Congress passes a law which applies exclusively to the District, as both parties agree the School Reform Act does, that law enjoys no superiority over enactments of the D.C. Council (the " Council" ) such as the school funding actions being challenged here. Therefore, according to Defendants, the District cannot have violated the Home Rule Act or the School Reform Act because the Council is permitted to amend or repeal the School Reform Act. Defendants also argue that the School Reform Act is not the supreme law of the land because Congress, in passing the School Reform Act, was acting as a local legislature for the District, and therefore Plaintiffs cannot bring a Supremacy Clause claim.

         Because it is not yet clear whether the actions of the Council impermissibly conflict with the will of Congress as set forth in the Home Rule Act and School Reform Act, Defendants' motion to dismiss Counts I and III is denied. However, because the court finds that the Supremacy Clause does not apply to Acts of Congress passed pursuant to Article I, Section 8, Clause 17 of the Constitution, and which operate exclusively within the District, Defendants' motion to dismiss Count II is granted.

         I. BACKGROUND

         In 1996, Congress embedded within its yearly appropriation bill the District of Columbia School Reform Act of 1995 (the " School Reform Act" ), Pub. L. No. 104-134, § 2002, 110 Stat. 1321 (1996) (codified as

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amended at D.C. Code § 38-1800.02 et seq. ), overhauling the District's educational system. As the Senate Report to the bill explained, " [d]espite the best efforts of the Board of Education and the dedication of the superintendent, the D.C. Public Education System is broken." S. Rep. No. 104-144, at 6 (1995). The School Reform Act attempted to address this broken system in myriad ways, including by creating commissions to study and implement reforms, instructing various stakeholders to create a master plan for moving forward, and setting out a funding mechanism to address dilapidated facilities. Importantly for this case, the School Reform Act also established public charter schools in the District. " Unlike traditional public schools, charter schools operate under charters or contracts with school districts, State education agencies, or other public institutions. They are designed by groups of parents, teachers, school administrators, other members of the community, and private corporations and are held accountable for student performance under the terms of their contracts. Also, charter schools operate with considerable autonomy from external controls such as district, State, and union requirements." Id. at 7.

         Congress designed a formula in the School Reform Act to fund both DCPS and charter schools. As the House Report explained, " [t]his uniform formula will be used to provide operating budgets on the basis of enrollment for the school system as a whole and for individual public charter schools. According to [a] January 1995 report by [the D.C. Committee on Public Education], '[o]f the 40 largest school systems in the country, the District ranked first in per pupil expenditures.' In the context of low student academic achievement, this information is disturbing and as a result the District of Columbia is directed to establish a uniform and efficient formula for funding public education. The same formula will be used for students enrolled in individual public charter schools authorized in subtitle B of this agreement and the District of Columbia Public School System . . . Such a formula will clarify and focus decisions regarding funding for public education around students' needs." H.R. Rep. No. 104-455, at 146 (1996), http://www.gpo.gov/fdsys/pkg/CRPT-104hrpt455/pdf/CRPT-104hrpt455.pdf (citation omitted). The formula involves multiplying a uniform dollar amount reflective of school operating expenses (as calculated by the Mayor and the D.C. Council in consultation with the Board of Education and the Superintendent) by the number of students in DCPS and each individual charter school. D.C. Code § 38-1804.01(b).

         Plaintiffs are two charter schools located in the District and an association that represents 39 District charter schools. The crux of this case is Plaintiffs' allegation that the District has creatively circumvented the funding formula in order to supplement DCPS's budget, to the detriment of charter schools. Plaintiffs identify four broad categories where they allege the District is violating the School Reform Act's uniform funding formula provision:

Enrollment Calculations: Defendants fail to provide D.C. Charter Schools with uniform per-student funding when they fund D.C. Charter Schools based on actual, audited student enrollment, and reduce funding to D.C. Charter Schools if actual enrollment is lower than projected, while funding DCPS based on projected, and often inflated, student enrollment . . . ;
Supplemental Funding: Defendants fail to provide D.C. Charter Schools with uniform per-student funding when they fund certain DCPS operating expenses by providing supplemental funding outside the uniform per-student funding formula without accounting for such

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funding in calculating the per-student payments made to D.C. Charter Schools for their operating expenses. Supplemental Funding includes, but is not limited to, enacting legislation to provide supplemental appropriations to DCPS but not to D.C. Charter Schools . . . reprogramming and transferring to DCPS funds previously appropriated to other D.C. government agencies . . . and paying DCPS's debts directly . . .;
Annual Budget Funding: Defendants fail to provide D.C. Charter Schools with uniform per-student funding when they fund certain DCPS operating expenses through the District's annual budget process without accounting for such funding in calculating the per-student payments made to D.C. Charter Schools for their operating expenses. Annual Budget Funding includes, but is not limited to, intra-district transfers of funds from other D.C. agencies to DCPS . . . line items in the District's annual budget that are allocated to other D.C. government agencies for services those agencies provide to DCPS without charge . . . and funding DCPS pension fund payments . . . ; and
Subsidized Services: Defendants fail to provide D.C. Charter Schools with uniform per-student funding when they fund certain DCPS operating expenses through subsidies of services provided to DCPS and do not account for those subsidies in calculating the per-student payments made to D.C. Charter Schools for their operating expenses.

(Compl. ¶ 5). Plaintiffs seek a declaration that these actions violate the School Reform Act and an injunction requiring the District to uniformly fund DCPS and charter schools pursuant to the funding formula provision of the School Reform Act.

         II. LEGAL STANDARD

         " To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (internal quotation marks and citation omitted). " The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citation omitted). Although a plaintiff may survive a Rule 12(b)(6) motion even where " recovery is very remote and unlikely," the facts alleged in the complaint " must be enough to raise a right to relief above the speculative level." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotation marks and citation omitted). Moreover, a pleading must offer more than " labels and conclusions" or a " formulaic recitation of the elements of a cause of action." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555).

         III. ANALYSIS

         a. The District Clause and the Home Rule Act

         The District of Columbia is " an exceptional community . . . established under the Constitution as the seat of the National Government." District of Columbia v. Murphy, 314 U.S. 441, 452, 62 S.Ct. 303, 86 L.Ed. 329 (1941). Article I, Section 8, Clause 17 of the United States Constitution grants Congress plenary authority over the District. See U.S. Const. art. I, § 8, cl. 17 (" The Congress shall have the power . . . [t]o exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States . . ." ) (the " District Clause" ). For most of its history, Congress exercised this legislative authority and governed the District

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directly.[1] In 1973, Congress delegated its legislative authority to the D.C. Council in the District of Columbia Self--Government and Governmental Reorganization Act, Pub. L. No. 93-198, 87 Stat. 774 (1973) (the " Home Rule Act" ). As Congress explained in the Statement of Purposes to the Home Rule Act:

Subject to the retention by Congress of the ultimate legislative authority over the Nation's Capital granted by article I, section 8, of the Constitution, the intent of Congress is to delegate certain legislative powers to the government of the District of Columbia; authorize the election of certain local officials by the registered qualified electors in the District of Columbia; grant to the inhabitants of the District of Columbia powers of local self-government; to modernize, reorganize, and otherwise improve the governmental structure of the District of Columbia; and, to the greatest extent possible, consistent with the constitutional mandate, relieve Congress of the burden of legislating upon essentially local District matters.

Id. at § 102.

         Count I of Plaintiffs' Complaint turns on the tension between Congress relieving itself of the " burden of legislating upon essentially local District matters," and its retention of " ultimate legislative authority" over the District pursuant to the District Clause. Id. The parties vigorously dispute the interplay between the District Clause and the Home Rule Act, and differ significantly in their respective interpretations of the relationship between Congress and the D.C. Council with respect to local legislation.

         Defendants argue that under the Home Rule Act, the Council has the authority to amend or repeal any Act of Congress that applies exclusively to the District unless the Home Rule Act specifically forbids it. This is in some contrast to Defendants' position at oral argument, where Defendants appeared to retreat from that position and chose not to opine on the Council's broader authority, instead arguing only that the School Reform Act does not limit the Council's authority to fund schools in the manner challenged here.

         Plaintiffs argue that once Congress legislates for the District, the Council is powerless to amend or contradict Congress' will absent specific congressional authorization. Therefore, since Congress passed the School Reform Act and required the District to use the uniform funding formula, and because Congress has not specifically delegated to the Council the authority to amend or repeal the School Reform Act, the District's actions ignoring or conflicting with the formula are unlawful.

         The parties' arguments can be stated as two sides of the same coin: Defendants argue that the Council is permitted to take any action that is not specifically prohibited, while Plaintiffs argue that the Council is prohibited from taking any action that is not specifically permitted. The issue for this court to decide, therefore, is the extent of the Council's authority once Congress has passed a law that applies exclusively to the District.

         i. The Case Law

         Defendants cite a handful of cases in which courts have held that the Council has the power to amend or repeal Acts of Congress that apply exclusively to the District. If the Council has such authority, Defendants argue, then the District cannot have violated the Home Rule Act or the School Reform Act when it passed laws related to school funding, because the

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Council can amend or repeal the School Reform Act as it pleases. For example, in District of Columbia v. Greater Washington Central Labor Council, AFL-CIO, 442 A.2d 110, 115 (D.C. 1982), the D.C. Court of Appeals held that the Council did not contravene the Home Rule Act when it passed a worker's compensation law in 1980 that repealed a preexisting congressional enactment originally passed in 1928. The D.C. Court of Appeals affirmed this understanding in McConnell v. United States, 537 A.2d 211 (D.C. 1988), explaining that in Greater Washington, " we made clear that, although the Council, under § 1-233(a)(3), may repeal a congressionally-enacted statute limited in application to the District of Columbia, the Council may not repeal a federal statute of broader application." Id. at 215 (holding that because Council-enacted legislation conflicted with nationally-applicable federal legislation, the Council had no authority to repeal the federal law); see alsoBrizill v. D.C. Bd. of Elections & Ethics, 911 A.2d 1212, 1216 (D.C. 2006) (" Because ...


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