Parent Perspective and Prospective Services Tip the Scales in Evaluating Value of Statutory Settlement Offer

October 2015
Number 59

The Ninth Circuit Court of Appeals has warned districts that an award to parents in a due process hearing which may cost a district less than what it offered in its ten-day statutory offer does not necessarily protect the district from an attorneys’ fee demand. (T.B./Wyner v. San Diego Unified School District (9th Cir. 2015) 2015 U.S. App. Lexis 13365.) The Ninth Circuit made it clear the value of a settlement offer is about more than money.

In the recent case of T.B., ten days prior to the scheduled due process hearing, the San Diego Unified School District (SDUSD) offered T.B.’s parents a long-term settlement proposal in the amount of $150,000 per year for the next five years to end the dispute and avoid litigation. T.B.’s parents rejected SDUSD’s offer.

At hearing, T.B.’s parents litigated fifteen issues, winning on only three. As relief for prevailing on those three issues, the Administrative Law Judge (ALJ) required modification of T.B.’s individualized education program (IEP), modification of T.B.’s transition plan, and reimbursement of transportation costs. Under the fee-shifting provision of the Individuals with Disabilities Education Act (IDEA), Parents sought attorney fees in the amount of $1.4 million as a result of their limited win.

The IDEA prohibits recovery of attorneys’ fees for work performed after a written settlement offer if: (1) the offer is made more than ten days before the hearing; (2) the parents reject it; and (3) the offer is at least as good as the relief the parents secure in the hearing. (20 U.S.C. § 1415(i)(3)(D).) However, an exception exits if the parents are “substantially justified” in rejecting the offer. (20 U.S.C. § 1415(i)(3)(E).)

Using these rules as guidelines, the district court limited T.B.’s award of attorneys’ fees on two independent grounds. The court determined the relief ordered was not more favorable than what the District had offered, namely the $150,000 offered per school year, and that T.B.’s parents were not substantially justified in rejecting SDUSD’s offer. The district court gave five reasons why SDUSD’s offer was more favorable than the ALJ’s award: (1) T.B.’s parents preferred an award of money rather than placement; (2) T.B.’s mother preferred to educate T.B. at home; (3) SDUSD’s monetary offer was “exceptionally generous;” (4) the offer put to rest all disputes for the next five years; and (5) SDUSD’s offer included reasonable attorney fees. As a result, the district court awarded T.B. only $50,260.50 in attorneys’ fees and costs of $5,173.41. T.B. and his attorney of record appealed this decision to the U.S. Court of Appeals for the Ninth Circuit.

The Ninth Circuit rejected the district court’s ruling on both grounds. The Ninth Circuit first reasoned that the District’s offer would have required the parents to arrange – on their own – a complete education schedule for T.B., making the District’s proposal less favorable from the parents’ perspective and establishing that T.B.’s parents were “substantially justified” in rejecting the offer. Additionally, the Ninth Circuit rejected the district court’s rationale for reducing the fees as unreasonable, disagreeing that the demand of $1.4 million was extremely high and the parents’ unwillingness to compromise unreasonable.

Lastly, the Ninth Circuit disagreed with the district court’s determination to reduce fees because the parents lost most of the issues in the due process hearing. The Ninth Circuit noted that “failure on a claim does not automatically reduce the fee award” when the attorney work was beneficial to a successful claim. For all of these reasons, the Ninth Circuit vacated the earlier order and returned the case to the district court for a new determination on attorneys’ fees.

The T.B. decision serves as a warning that school districts should consider the parents perspective when drafting ten-day settlement offers. Although an award at hearing will cost less in strict dollars does not necessarily mean that the district will be protected against an attorney fee demand. The Ninth Circuit has made clear that it does not just come down to dollars and cents.

If you have any questions about this decision, please contact one of our nine offices located statewide. You can also visit our website, follow us on Facebook or Twitter, or download our Client News Brief App.

Written By

Sarah L. Garcia
Senior Counsel
Walnut Creek Office
sgarcia@lozanosmith.com

Jennifer Baldassari
Associate
Walnut Creek Office
jbaldassari@lozanosmith.com

©2015 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

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