The HONORABLE THOMAS M. REAVLEY, United States Circuit Judge for * the Fifth Circuit, sitting by designation.

United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 96-3669 No. 96-3886

___________ Eric Warner, a minor, by Linda Warner, * his mother, *
* Plaintiff - Appellee/ * Cross-Appellant, * Appeal from the United States
* District Court for the
v. * District of Minnesota.
* Independent School District No. 625, *
* Defendant - Appellant/ * Cross-Appellee. *

___________ Submitted: June 13, 1997 Filed: January 22, 1998

___________ Before LOKEN, REAVLEY, and JOHN R. GIBSON, Circuit Judges. *

___________ LOKEN, Circuit Judge.

After completing state administrative proceedings against Independent School District No. 625, which operates the St. Paul public schools, Linda Warner commenced this action to recover her attorneys’ fees and costs as a prevailing party under th e Individuals with Disabilities Education A ct, 20 U.S.C. §§ 1400 et seq . ("IDEA"). The-2-

district court awarded Warner $63,501.45 in fees and $5,420.00 in costs. The School District appeals. Concluding that Warner is not a “prevailing party,” we reverse.

I.

War ner's son Eric suffers from an epileptic seizure disorder. For IDE A purposes, he is "handicapped" and entitled to "special education and related services." See 20 U.S.C. § 1400(a)(1). In early 1994, while Eric was enrolled in the St. Pau l public schools in third grade, an assessment team classified him as “E/BD,” eligible for special education services because of an emotional/behavioral disorder. However, the team did not classify him as eligible for services because of a speech or languag e disorde r, or as other health impaired (“OHI”). The School District formulated a n Individual Education Plan (“IEP”) based upon the E/BD classification and, with Warner’s approval, transferred Eric to a public school offering a specialized E/B D classroom. Eric’s behavior and self-control improved that spring.
For the 1994-95 school year, Warner and the School District agreed to plac e Eric in another school offering an E/BD classroom. By mid-year, Warner was unhappy with Er ic's public school education, largely over issues unrelated to his special educatio n needs. She hired counsel and in January 1995 made numerous requests, including that Eric spend more of the school day “mainstreamed” in regu lar education classes. IDEA and Minnesota law declare a preference for educating handicapped children "in regular educational programs." 20 U.S.C. § 1414(a)(1)(C)(iv); see M inn. Stat. § 120.17, subd. 3a(4). Therefore, the School District reconvened Eric's IEP team to consider this issue.
In February, Warner removed Eric from p ublic school and placed him in private school. In early March, the School District proposed a revise d IEP for Eric's continued public school education. Warner objected, arguing that (i) Er ic should not be classified E/BD handicapped; (ii) he should be classified OHI handicapped or as a traum atic brain injury student; (iii) he is entitled to speech and language therapy; (iv) the School-3-

District transfer

red him to a more restrictive E/BD program contrary to the 1994 IEP; (v) the School District denied Eric a "f ree appropriate public education"; and therefore (vi) Warner must be reimbursed for Eric's private school expenses. The School District rejected those objections.

Follo wing unsuccessful mediation, Warner requested the due process hearin g mand ated by IDEA and Minnesota law. See 20 U.S.C. § 1415(b)(2) ; M INN

. S TAT . § 120.17 subd. 3b(e). After that hearing, the state Hearing Officer concluded that th e Sc hool District had properly classified Eric as E/BD handicapped, had provided Eric "an appropriately individualized program designed to provide educational benefit," and had placed Eric in an appropriate, partially mainstreamed education program in a physica lly safe environment. Therefore, the School District need not reimburse hi s private school expenses. How ever, the Hearing Officer ordered the School District to pro vide ten meetings of a “facilitated friendship group” to remedy its failure to kee p Warner informed and to update Eric's IEP prior to March 1995.
Warner appealed this decision to a state Hearing Review Officer

. See 20 U.S.C. § 1415(c) ; M INN

. S TAT

. § 120.17 subd. 3b(g). In a lengthy decision, the Hearin g Review Officer concluded that the School District had properl y classified Eric as E/BD han dicapped, adopted IEPs providing educational benefit, provided appropriat e placement in a least restrictive, safe environment, and provided Eric a free appropriate public education. Therefore, the Schoo l District need not reimburse Warner for Eric’s priva te school expenses. The Hearing Review Officer reversed the Hearing Officer's friendship group remedy because the School District's procedural irregularities ha d neither deprived Eric of educa tional benefit nor infringed Warner’s right to participate in the IEP process. However, despite concluding that the School District had complied with IDEA, the Hearing Review Officer ordered the School District to amend Eric' s IEP (i) to reflect Warner's c hoice of school, at her expense if private school is chosen; (ii) to permi t Warner to elect the Battle Creek Eisenmenger school, with "appropriate nursing services," if she retur ns Eric to public school; (iii) to add OHI "as a secondary§ 1415(e)( 4)(B) does not expressly authorize an award of expert witness fees. 1 The Hou se Conference Committee Report said such fees could nonetheless b e awarded, legislative history the Supreme Court has described as "an apparent effort to departfro m ordinary meaning and to define a term of art." West Va. Univ. Hosps. , Inc. v. Casey , 499 U.S. 83, 91 n.5 (1991). Given our disposition of this case, we need not address whether such an award is consistent with Casey

. -4- handicapping condition"; and (iv) to conduct an independent educational assessment of Eric and reconvene the IEP team "to implement the results of the assessment."

Ne ither party appealed the Hearing Review Officer’s decision, and it becam e final. See 20 U.S.C. §1415(e)(1) ; M INN

. S TAT . § 120.17 subd. 3b(h). Warner the n commenced this action, seeking an award of $158,753.63 in atto rneys’ fees and $5,420 in expert witness fees as the prevailing party under IDEA. See 20 U.S.C. § 1415(e)(4)(B). The district court concluded that Warner "did not succeed . . . on the actual meri ts of the claim or the relief sought," that the School District "did compl y with the IDEA," and that "the relief achieved is not mandated by IDEA. " Nevertheless, the court held that Warner was a prevailing party entitled to an aw ard of attorneys’ fees because the state administrative proceedings had “resulted in a material alteration o f the legal relationship” between the parties. Concluding that Warner's "$158,000 fe e request i s far in excess of a reasonable amount in light of the results obtained," th e court reduced the request by sixty percent and awarded attorneys’ fees of $63,501.45 plus expert witness fees of $5,420. The School District appeals. Warner cross

1 appeals, seeking the full $158,000 requested.

II.

It is settled in this and other circuits that a parent who has prevailed at the state administrative le vel may file a federal court action seeking a reasonable attorneys' fee award under IDEA. See Johnson v. Bismarck Pub. Sch. Dist. , 949 F.2d 1000, 1003 (8th Cir. 1991). If the district court applied the correct legal standard in determining-5-

a “prevailing party,” which is of course a question of law, we review its award o f attorneys' fees for abuse of discretion

. See Yankton Sch. Dist. v. Schramm , 93 F.3d 13 69, 1377 (8th Cir. 1996); Association for Retarded Citizens v. Schafer , 83 F.3 d 1008, 1010 (8th Cir.), cert. denied , 117 S. Ct. 482 (1996). Decisions construing this term in the civil rights fee-award statute, 42 U.S.C. § 1988, “are generally applicable in all cases in which Congress has authorized an award of fees to a ‘prevailing party.’” Hensley v. Eckerhart , 461 U.S. 424, 433 n. 7 (1983).

In Hewitt v. Helms , 482 U.S. 755, 760 ( 1987), the Supreme Court declared that "plaintiff [must] receive at least some relief on the merits of his claim before he can be said to prevail" for purposes of § 1988. The Court confirmed that principle in Texas State Teac hers Ass'n v. Garland Independent School District , 489 U.S. 782, 79 1 (1989), explaining that a prevailing party is " one who has succeeded on any significant claim affording it some of the relief sought." Most recently, in Farrar v. Hobby , 506 U.S. 103, 111 (1992), the Court reiterated that, “ to qualify as a prevailing party, a civil rights plaintiff must obtain at least some relief on the merits of his claim.”
Acknowledging that Warner did not succeed on the merits of her IDEA claim, the district court awarded attorneys' fees because the Hearing Review Officer's order "materially altered the legal relationship of the parties." That phrase indeed appears in the Supreme Court's prevailing party decisions. But it is the standard by which th e Court measures how much relief on the merits is sufficient to justify at least a partial fee award; it is not a basis for awarding fees to a plaintiff who did not prevail on the merits of any claim under the fee-shifting statute in question. As the Court explained in Farrar , "plaintiff 'prevails' when actual relief on the merits of his claim materiall y alters the legal relatio nship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." 506 U.S. at 111-12. Thus, the distric t court misapplied the governing prevailing party standard.The administrative proceedings satisfy Minnesota's obligation to provide du e 2 process hearings to parents if the State wishes to be eligible for federal assistance i n educating handicapped children. See § 1415(a). A party aggrieved by th e admini strative decision may appeal to either federal or state court. See § 1415(e)(2).

T he Hearing Review Officer expressly based his order for an independen t 3 educational assessment on Minn. R. 35 25.4000. He did not cite authority for ordering th e additional amendments to Eric's IEP, but Minn. R. 3525.4400, subp. 3, seems t o authorize such relief regardless of the School District's compliance with IDEA.
-6- Turning to the facts of this case, the Hearing Review Officer expressly conc luded th atthe School District did not violate IDEA. By appropriately classifying Eric' s educati onal handicap, by developing IEPs that provided Eric education benefit, b y placing Eric in appropriate school and classroom facilities, by affording Eric suitable mainstreaming opportunities, and by following procedures that allowed Warner t o participate in the IEP process, the School District provided a free appropriate publi c education, and thereby met its substantive and procedural obligation s under IDEA. See generally Board of Educ. v. Rowley , 458 U.S. 176, 187-204 (1982); Fort Zumwalt Sch. Dist

. v. Clynes , 119 F.3d 607 (8th Cir. 1997). Whatever relief the Hearing Revie w Officer provided was not relief on the merits of Warner's IDEA claim.

The Hearing Review Officer's decision culminated state administrativ e proceedings. While those proceedings were an integral part of the IDEA regime, the 2 Minnesota

hearing officers were charged with enforcing state law, including but no t limited to the mandates of IDEA. SeeM inn. Stat. §§ 120.17, subd. 3a, subd. 3b(f)(3), subd. 3b(g)(3); Minn. R. 3525.4 400. The Hearing Review Officer's authority to order the School District to amend Er ic's IEP in the absence of an IDEA violation obviously derived from state law. Minnesota could have authorized an award of attorneys' fees 3 under state law, but it has not done so.We find support for these decisions in Bray v. Alexandria Women's Health 4 Clinic , 506 U.S. 263, 285 (1993). After concluding that plaintiffs were not entitled to relief under the federal civil rig hts act, the Court denied plaintiffs attorneys' fees under § 1988 and then remanded for further consideration of pendent state law claims.
-7- From the standpoint of a fee award under IDEA, this situation is most analogous to § 1988 cases in which a federal court renders judgment against plaintiff on th e federal claim s but grants relief under pendent state law claims. In such cases, othe r circuits "have uniformly held that a plaintiff who loses on the merits of its federal civil rights claim is not a ‘prevailing party’ for purposes of an award of attorneys’ fees under 42 U.S.C. § 1988, even if it prevails on a related pendent state law claim.” National Org. for Wo men v. Operation Rescue , 37 F.3d 646, 653-54 (D.C. Cir. 1994); se e Mateyko v. Felix , 924 F.2d 824, 828 (9th Cir.), cert. denied , 502 U.S. 814 (1991), and cases cited. We invoked this principle in denying a ttorneys' fees under § 1988 in Reel 4

v. Arkansas Department of Correction , 672 F.2d 693, 697-98 (8th Cir. 1982). W e noted that the legislative history to § 1988 carved an exception to the principle fo r
cases in which relief is granted on a pendent non-federal claim to avoid reaching th e fe deral constitutional claim. But that exception does not apply here because th e Hearing Review Officer expressly rejected Warner's IDEA claims before granting relief under state law. Similarly, we have noted that a fee award may be appropriate under the catalyst theory if defendant provides a remedy to avoid litigating a federal claim. But Warner may not invoke that theory because “[a] party . . . who litigates t o judgment and loses on all of his claims cannot be said to have ‘prevailed’” as a catalyst. A.J. by L.B. v. Kierst , 56 F.3d 849, 865 (8th Cir. 1995).

For the fo regoing reasons, we conclude that Warner is not entitled to an award of attorne ys' fees and costs as a prevailing party under 20 U.S.C. § 1415(e)(4)(B ) because she lost on the merits of her IDEA claims.-8- III.

Even if Warner were an IDEA prevailing party, we would substantially reduce the award of $63,500 in attorneys' fees. Prior to the administrative hearing, the School District made a settlement offer that included vir tually all the relief later ordered by the Hearin g Review Officer, plus $8,000 in compensation and attorneys' fees. At th e subsequent hearing, Warner made it clear that she was dissatisfied with the Schoo l District for many reasons other than her IDEA complaints and intended to keep Eric in pri vate school. In both her prehearing and posthearing briefs, reimbursement o f private school expenses was the relief requested.

Viewed i n this context, it is apparent that the relief ordered by the Hearin g Review Officer did not provide immediate benefit. Rather, it was designed t o encourage Warner to return Eric to public school by cl arifying, in rather specific terms, how the School District would in that event meet its obligatio ns under state law and the IDEA -- by performing a new educational assessment, as state law require s pe riodically, see M INN

. R. 3525.2750, subpart 1; by amending Eric's IEP consisten t with the new assessment; and by placing Eric at a public school facility of Warner' s choosing that would provide him a free appropriate public edu cation in terms of special education and related services. “Whatever relief the plaintiff secures must directl y benefit him at the time of the judgment or settlement.” Farrar , 506 U.S . at 111. Merely facil itating reentry into public school is not enough. Jodlowski v. Valley Vie w Community Unit Sch. Dist. #365-U , 109 F.3d 1250, 1254 (7th Cir. 1997). While the Hea ring Review Officer's relief was not completely voluntary, like that in Combs v

. School Board , 15 F.3d 357, 360 (4th Cir. 1994), and Schmidt v. Special School District No. 1 , 77 F.3d 1084, 108 5 (8th Cir. 1996), it differed very little from what the School Dist rict voluntarily offered in settlement before the administrative hearing, which i s highly relevant to the fee award issue. See § 1415(e)(4)(D), (F). In thes e circumstances, an award of $158,000, or even $63,500, is excessive. See Parents of-9-

Student W v. Puyallup Sch. Dist. , 31 F.3d 1489, 1498 (9th Cir. 1994); Johnson v

. Bismarck Pub. Sch. Dist. , 949 F.2d 1000, 1003-04.

IV.

After reviewing the administrative record, we understand Warner's man y frust rations with the School District that led her to place Eric in private school

. Unfortunately, while her grievances were many, her IDEA claims were unsound

. When Warner turned down the School Distric t's IDEA-complying settlement offer and placed Eric in private school, s he did so at her own financial risk, including the risk of paying her own attorneys' fees to pursue IDEA claims that ultimately failed. Se e Scho ol Comm. v. Department of Educ. , 471 U.S. 359, 373-74 (1985); Salley v. St

. Tamma ny Parish Sch. Bd. , 57 F.3d 458, 468 (5th Cir. 1995). Accordingly, th e judgment of the district court is reversed and the case remanded to the district cour t with instructions to enter judgment for the School District.
JOHN R. GIBSON, Circuit Judge, dissenting.

I respectfully dissent. I would affirm the judgment of the district court an d award the fee as reduced in the district court order.

The co urt today bases its ruling primarily on the view that the Hearing Review Officer ordered a remedy "obviously derived from state law," and, looking to case s under 42 U.S.C .A. § 1988 (West Supp.1997), the district court could not award a fee where the plaintiff only prevailed on state law claims.
The court today improperly characterizes Warner's relief as grounded ex clusively in state law, based on the court's misapprehension of the reach of the Individual s with Dis abilities Education Act. The Act, 20 U.S.C. §§ 1400-1491o, sets out a program of federal assistance to state and local efforts to meet the educational-10-

needs of disabled children, but it conditions that assistance on state compliance with certain procedures and safeguards. See20 U.S.C. § 1412 ( conditioning state eligibility for assistance on complying with numerous conditions).

Whi le the district court was correct in referring to the independent educational

asses sment

ordered by the Hearing Review Officer as authorized by Minnesot a administrative rule, the state regulation must be viewed in its IDEA c ontext. The IDEA speci fically requires states to allow parents an opportunity to obtain an independen t educational evaluation of the child. 20 U.S.C. § 1415(b)(1)(A); see 34 C.F.R. § 300.503 (1997). Federal regulations authorize an independent educational evaluation conducted by a qual ified examiner not employed by the public agency responsible for the child's education, and subsection (d) specifically authorizes a Hearing Officer t o req uest such an evaluation. 34 C.F.R. § 300.503(d). This is precisely what wa s ordered in this case.

Further, the provision of special education services at the private school , Tesseract, was, as stated by the district judge, consistent with the requirements of the IDEA. The Hearing Review Officer specifically ordered nursing services at the District School in accordance with state and federal law. The Hearing Review Officer als o ordered that the IEP designate the student's primary disorder as E/B D (emotional/behavioral diso rder), but that OHI (other health impairment) be added as a secondary handicapping condition.

While t he district court and the Hearing Review Officer referred only to th e Minnesota regulations, under the cooperative arrangement fostere d by IDEA, the relief granted Eric sprang not only from the state statutes and regulations made to effectuate the federal programs, but was directly required by the federal statutes and regulations as well.-11-

The court today looks at only one-half of the coin in looking to those portions of the Hearing Review Officer's opinion and the distr ict court order stating that Warner had not succeeded in showing a violation of IDEA. To the contrary, relief authorized by both the IDEA and Minnesota statutes and regulations wa s the basis for the Hearing Review Officer's order.

The c ase before us is therefore distinguishable from Reel v. Arkansas Dept. of Corrections , 672 F.2d 693, 697-98 (8th Cir. 1982), in which the plainti ff lost his federal clai m on the merits, but sought attorneys' fees because of success on pendent stat e common law claims.
The court recognizes that 20 U.S.C. § 1415(e)(2) provides that a party aggrieved by the findings and decisions of the state agency m ay bring an action in federal or state court. Sections 1415(e)(4)(B),(C) and (D) further provide that in any action brought under the subsection , the court may award reasonable attorneys' fees to the parents or guardian of a child or youth with a disability who is the prevailing party. The relie f obt ainedby Warner was authorized by the fabric of federal and state statutes an d regulations, and justifies the fee award.

Further, I believe that the court misreads Farrar v. Hobby , 506 U.S. 103, 11 1 (1992). The district court concluded, accurately I believe , that, in the respects we have discuss ed above, Warner "did succeed in altering the legal relationship between th e parties by gaining an enf

orceable judgment that provides some relief to Eric" and thus metthe threshold requirement for prevailing party status. This court, in contrast , acknowledges that material alteration of the l egal relationship appears in the prevailing party decisions, but states it is a standard by which the court measures how much relief

on the merits is sufficient to justify at least a partial fee award, but not the basis fo r awarding fees to a plaintiff who did not prevail on the merits of any claim under the fee shifting statute. The latter conclusion is simply co ntrary to the language in both Farrar and Texas State Teachers Association v. Garland Independent School District ,-12-

489 U.S. 782 (1989), that "[t]he t ouchstone of the prevailing party inquiry must be the materia l alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute." Garland Indep. School Dist. , 489 U.S. at 789, quoted in Farrar , 506 U.S. at 111.

Th e School District's behavior has been modified in ways that directly benefi t Eric, as we have described above . The district court rejected arguments that the relief obtained was gratuitous or de minimis. I would award fees and affirm the judgment of the district court.
A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.