BAD IDEA: ATTORNEY’S FEES AND THE HIGH COST OF IGNORING STAY PUT IN M.R. & J.R. V. RIDLEY SCHOOL DISTRICT

A recent decision by the United States Court of Appeals for the Third Circuit calls to mind an automobile repair chain’s erstwhile slogan: “Pay me now, or pay me later,” although in this case, the more applicable variation would be:  “Pay now, or really, really pay later.”  In M.R. & J.R. v. Ridley School District, the Third Circuit expanded the bases upon which parents can obtain prevailing party attorney’s fees under the Individuals with Disabilities Education Improvement Act of 2004, or “IDEA.”  The court held that although M.R. and J.R. [“the parents”] lost their lawsuit challenging the sufficiency of the Individualized Education Program, or “IEP,” Ridley had offered their daughter, E.R., they were nonetheless entitled to prevailing party attorney’s fees for having obtained reimbursement for E.R.’s stay-put placement.

When parents request an IDEA administrative hearing to contest some aspect of a school district’s identification, evaluation, programming, or placement of their child, the district is required to maintain the last mutually agreed-upon placement during the pendency of the litigation. This is known as “stay put,” and it continues to apply even if whichever party loses at the administrative level continues to litigate the matter through the courts.  As my colleague, Melinda Kaufmann, recently discussed in an analysis of the United States District Court of Connecticut case, John Doe v. East Lyme Board of Education, http://schoollaw.pullcomblog.com/archives/violation-of-stay-put-provisions-under-the-idea-can-be-costly/ violating the IDEA’s stay put provision can prove extremely costly, the court having ordered East Lyme to reimburse over $200,000 to the Doe parents.

In Ridley, the parents rejected Ridley’s proposed IEP for their daughter, E.R., and instead unilaterally placed her in a private school, subsequently requesting an administrative, due process hearing.  Although the last mutually agreed-upon placement was within the Ridley Public Schools, the parents opted to maintain E.R. in the unilateral, private school placement.  Thus, there was essentially no stay-put placement.  That, however, changed when the administrative hearing officer found for the parents, as when a hearing officer affirms a unilateral placement, it becomes the student’s “then-current educational placement” for purposes of stay put.  Consequently, once the hearing officer issued the April 21, 2009 ruling in the parents’ favor, the student’s stay-put placement became the private school.

Ridley appealed, and the federal trial court reversed the hearing officer, which reversal the Third Circuit affirmed, holding that Ridley had offered E.R. an appropriate program and placement. While that would seem a happy outcome for Ridley, the litigation was far from over.  To the contrary, Ridley had not assumed financial responsibility for E.R.’s private school placement following the hearing officer’s decision.  Consequently, in the wake of the Third Circuit’s decision, the parents demanded reimbursement for the period of time between the hearing officer’s 2009 decision and the Third Circuit’s 2012 ruling.  Ridley declined, and the parents filed a new lawsuit.

This time, both the United States District Court and the Third Circuit Court of Appeals ruled in the parents’ favor, underscoring one of the IDEA’s inherent absurdities, for although both the trial and appellate courts held that the hearing officer had erred in finding Ridley responsible for the private school placement, that erroneous decision nonetheless obligated Ridley to pay for that placement under stay put. In other words, Ridley was responsible for paying for the private school during the three years it took to get the Third Circuit’s initial decision that, substantively, Ridley was not responsible for paying for the private school.

This, however, was not the end of the parties’ dispute. Adding insult to injury, the parents demanded prevailing party attorney’s fees for having obtained reimbursement for E.R.’s placement.  Once again the case climbed the judicial ladder to the Third Circuit.  Along the way, the trial court rejected the parents’ claim, but the Third Circuit disagreed, holding that although the parents lost their demand for a private school placement, they did prevail on “their procedural right to reimbursement [for that placement] under the IDEA’s ‘stay put’ provision.”  This “procedural success” constituted “a victory ‘on the merits,’” and as the stay-put claims were “independent of the claims and defenses” raised in the original litigation, this also established “independent merits” upon which prevailing party status could be conferred.

What Does It Mean?

Ridley epitomizes the definition of “pyrrhic victory,” for the validation of its IEP’s public school placement did not prevent the school district from having to pay for E.R.’s unilateral private school placement.  The case also underscores one of the unfortunate aspects of IDEA litigation, requiring a school district to pay for a private school placement solely because an administrative hearing officer issued a decision later deemed erroneous, and even during the period of time in which the parents unsuccessfully appealed the trial court’s reversal of the favorable administrative ruling.  Nonetheless, as unfair as this result may be, the IDEA’s mandates, however flawed, are relatively straightforward, and parties must comply with them.

Had it accepted E.R.’s placement as stay put during the three years at issue, Ridley would have been out money it would never recover, but that would have been the extent of its expenditures. By declining to recognize stay put, however, Ridley not only has to reimburse these costs – perhaps including interest as well — it must also pay prevailing party attorney fees both for the litigation establishing the parents’ right to reimbursement and for the subsequent litigation establishing their right to fees.  This payment of the parents’ costs, when combined with its own legal fees and the three years of stay put reimbursement, could ultimately result in Ridley paying close to twice what it would have paid simply for three years of stay-put tuition.  The moral of Ridley, then, is that districts ignore stay put at their own risk, and doing so will almost undoubtedly prove to be a costly miscalculation.