District’s Settlement Offer, When Viewed Pragmatically, Gave Parents Substantial Justification To Reject It As Compared To The Ultimate Relief.
For those of you practicing or interested in the area governed by the Individuals with Disabilities Education Act (IDEA), this next case is must reading, especially given the lengthy discussion of fee recovery under IDEA. We only hit the highlights, but this opinion is very informative on IDEA fee-shifting considerations. It also shows the difference between California federal and state courts as far as the specificity of explanations for reductions—with no statement of decision required by state judges, as compared to need for reasoned explanations by district courts if reductions are more than a 10% “haircut.”
In T.B./Wyner v. San Diego Unified School District, No. 12-56060 (9th Cir. July 31, 2015) (published), school district must have felt emboldened after an ALJ gave them a victory on IDEA claims, after parents for the educationally disabled child (who had to be feed through a gastrostomy-tube) rejected some settlement offers by the district after trading numerous proposals. The district court definitely believed that parents were unreasonable in rejecting the school district’s settlement offers. IDEA provides that attorney’s fees should not be awarded if the child’s parents do not accept a timely settlement offer, if “the relief finally obtained by the parents is not more favorable to the parents than the offer of settlement,” and the parents’ rejection of the settlement offer was not “substantially justified.” (20 U.S.C. § 1415(i)(3)(D)(i)(III), (E).) Based on these fee shifting provisions, the district judge awarded parents about $50,000 in fees, substantially less than their requested $1.4 million.
The Ninth Circuit reversed and remanded for a fee “re-do.”
The important legal part of the decision was that the Ninth Circuit “transported” F.R.Civ.P. 68 settlement principles into IDEA, given that Rule 68 is specifically mentioned in 20 U.S.C. § 1415(i)(3)(D)(i)(I), with respect to reviewing a district court’s decision on the comparative favorability of a settlement offer and a final award under IDEA. This was important, because IDEA recognizes that this comparative analysis must be made from the perspective of the parents.
Boiling down this opinion to its essence, the federal appeals court was troubled by the fact that the school district’s settlement offer did not take into account the attorney’s fees/costs incurred by the parent in the litigation, was likely ambiguous on duration/
“stay put” provisions, was not likely so generous from a monetary settlement consideration standpoint when all of the features of the final proposal were evaluated, and did not really pragmatically gauge the settlement in terms of the relief actually granted by the ALJ. Based on all these factors, the parents’ rejection of the settlement offer did appear to be substantially justified.
But there is more. The Ninth Circuit was concerned that the district judge did not “show his math” in reaching the amount of his fee/costs award. Because the $50,000 was a substantial discount rather than just a minor haircut (about a 96.5% cut), the district court needed to explain how it reduced the billable time for each category of work and to explain by what percentage it cut the time/or why as to work on each losing issue. Lest you fee auditors or others despair, the appeals panel did recognize that a district court “may make general, across-the-board adjustments;” however, it must provide explanations when the cuts pass well beyond the safety zone of a haircut (10% as specified in Moreno v. City of Sacramento, 534 F.3d 1106, 1113 (9th Cir. 2008) [discussed in our August 2, 2008 post].) The same infirmity infected the district court’s award of nontaxable costs, reducing the costs by half for limited success—but the appeals court indicated “[o]n remand, the court should strive to explain its reductions more precisely.”