Court Opinion

ID: 167952
Source: CourtListenerOpinion
Date Created: 2010-08-14 10:07:13+00
Date Added: 2024-06-11T17:24:55.199563
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                      UNITED STATES CO URT O F APPEALS
                                                                     August 10, 2006
                                  TENTH CIRCUIT                   Elisabeth A. Shumaker
                                                                      Clerk of Court

HOM EW ARD BOUND, INC., on
behalf of its members,

          Plaintiff-Appellant,

v.

OKLAHO M A HEALTH CARE
                                                       No. 05-5023
AUTHORITY; OKLAHOM A
                                              (Northern District of Oklahoma)
D EPA RTM EN T O F H U MA N
                                                  (D.C. No. 85-C-437-E)
SER VIC ES; H ISSO M M EM O RIAL
CEN TER; G A TESWA Y
FOU ND ATION , INC .; PANEL
LIA ISO N ; D EPA RTM EN T O F
REHABILITA TION SERVICES;
JOSEPH A. M cCORM ICK, Trustee,

          Defendants-Appellees.

                             OR D ER AND JUDGM ENT *

Before M U RPH Y, A ND ER SO N, and O’BRIEN, Circuit Judges.

      *
       This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
I. Introduction

      This appeal arises out of a class action suit brought in 1985 by Plaintiff-

Appellant, Homeward Bound, Inc., challenging the conditions at The Hissom

M emorial Center, a state-administered institution for persons with severe mental

disabilities. In settlement of the litigation, the parties entered into a Consent

Decree (the “Decree”) requiring deinstitutionalization of class members and

provision of state-sponsored community services and supports. The district

court’s active supervision of the Decree terminated in 2004 after a finding of

substantial compliance. Under the terms of the Decree, however, the provisions

pertaining to the maintenance of a system of community services and supports

were to remain in effect permanently. Accordingly, once Defendants achieved

substantial compliance, the district court entered a permanent injunction requiring

Defendants to maintain the system of services established under the Decree. The

injunction also required that Homeward Bound demonstrate a systemic violation

that injured the class as a whole to succeed in any enforcement proceeding.

      On appeal, Homeward Bound challenges the injunction’s “class as a whole”

requirement. W e assert jurisdiction pursuant to 28 U.S.C. § 1291. Because the

injunction improperly modified the Decree, we reverse and remand with

instructions for the district court to consider w hether the modification is

warranted by changed circumstances. In the absence of a finding of changed

                                          -2-
circumstances, the portion of the A mended Permanent Injunction requiring injury

to the class as a whole should be vacated.

II. Background

      Homeward Bound, Inc. and six mentally disabled individuals (collectively

“Homeward Bound”) instituted a class action suit in 1985 against various

Oklahoma state agencies and The Hissom M emorial Center (“Hissom”), a state-

owned-and-operated institution for persons with severe mental disabilities. 1 The

suit alleged class members residing at Hissom were being abused, neglected, and

unnecessarily restrained; denied adequate food, clothing, medical care, and

habilitative services; and discriminated against based upon the severity of their

disabilities. Homeward Bound sought, inter alia, placement in the least-separate,

most-integrated community setting appropriate to each class member’s needs.

      After a bench trial, the district court entered judgment for Homew ard

Bound. The district court found Hissom could not be the least restrictive

environment for any class member and ordered deinstitutionalization. W hile the

case was on appeal to this court, Homeward Bound and Defendants entered into a

      1
        The class was certified pursuant to Rule 23(b)(2) of the Federal Rules of
Civil Procedure. It includes all persons residing at Hissom at the time suit was
filed; persons who became clients during the pendency of the action; persons
residing at home who were clients of Hissom within five years preceding the suit;
and persons who were transferred from Hissom to skilled nursing facilities or
intermediate care facilities, but remain Defendants’ responsibility. At the time
the suit was initiated, approximately six hundred mentally disabled persons were
residing at Hissom. Because Hissom closed permanently in 1994, the class is no
longer open.

                                         -3-
consent decree. The purpose of the Decree was to transition class members from

the institutional setting at Hissom into community placements w here they could

live with state-provided supports and services. To this end, the Decree required

Defendants, in consultation with class members and their parents or guardians, to

develop an exit Individual Habilitation Plan for each member of the class. The

Individual Habilitation Plan was to evaluate a range of residential placement

options and identify needed community services and supports based on each class

member’s individual needs. The Decree established a series of deadlines for

transferring class members into community settings. The Decree also contained

provisions requiring a system of independent case management, a quality

assurance program, staff training, and a phase-down of operations at Hissom.

      To oversee Defendants’ implementation of their duties, the Decree

established a review panel composed of three mental-disability experts. The

Decree tasked the review panel with resolving allegations of systemic non-

compliance that affected more than one class member. Disputes involving

placement and services for a single class member were to be resolved, according

to the terms of the Decree, through state administrative review and appeal

procedures. If those procedures failed, the dispute would be resolved by a

hearing officer appointed by the district court. Decisions of the review panel and

hearing officer w ere subject to further review by the district court.

                                          -4-
      The Decree also contained termination provisions w hich provided, in

relevant part:

             1. W ithin three (3) months following advice from defendants
      of the placement in community living arrangements of the last [class
      member] required by this Decree to be transferred from an
      institutional setting, the Review Panel shall file with the Court and
      the parties a final report, which will evaluate community placements
      and compliance with this Decree. . . . If, upon review of the report
      and any comments of the parties, the Court is satisfied that
      defendants have complied with the Decree, . . . it shall terminate its
      active supervision at that time.

             2. The provisions of this Decree pertaining to the maintenance
      of a system of community services and supports shall remain in
      effect as long as the Department maintains a program of assistance
      for the mentally retarded.

Appellants’ App. at 322–23. The district court approved the Decree and for the

next fifteen years actively supervised its implementation.

      Defendants filed a motion in 1998, and an amended motion in 2001,

seeking termination of the Decree. Defendants indicated the last class member

had been transitioned into the community and requested a finding of substantial

compliance with the Decree. In support of their contention that the Decree should

be terminated, Defendants argued the first paragraph of the Decree’s termination

provision expressly contemplates termination upon a finding of substantial

compliance. Alternatively, Defendants asserted the Decree should be terminated

pursuant to Rule 60(b)(5) of the Federal Rules of Civil Procedure, which permits

courts to relieve a party from an order if it “has been satisfied, released, or

                                          -5-
discharged . . . or it is no longer equitable that the [order] should have prospective

application.” Defendants argued the Decree was intended to remedy past illegal

conduct, not ensure future, ongoing compliance with federal law. Thus, they

contended, continued enforcement of the Decree after a finding of substantial

compliance would be inequitable.

      The district court denied the motion, expressly refusing to modify or

terminate the Decree. Instead, the district court interpreted the second paragraph

of the Decree’s termination provisions as imposing a permanent obligation on

Defendants to maintain a system of community services and supports for class

members. The court indicated it would enter a permanent injunction requiring

maintenance of the system if and when Defendants substantially complied with

the terms of the Decree.

      The district court subsequently determined Defendants had achieved

substantial compliance and terminated its active supervision. The court ordered

the parties to draft a mutually agreed upon injunction consistent with the

permanent obligations imposed by the Decree. W hen the parties were unable to

reach an agreement, the district court drafted an injunction without the parties’

consent. The court indicated the purpose of the injunction was to “memorialize

the agreements of the parties.” Appellants’ App. at 375–76. The Permanent

Injunction (the “Injunction”) issued by the district court required Defendants to

“continue the System of Supports contemplated by the Consent Decree and

                                          -6-
Related Documents.” Appellants’ App. at 380. It also expressly incorporated the

obligations and agreements contained in the Decree. The Injunction further

provided:

      If Defendants fail to offer or make available to class members this
      system of community based services and supports, but otherwise
      continue to maintain a program of assistance to persons with mental
      retardation, Plaintiffs may seek enforcement of the Permanent
      Injunction before this Court. In any such enforcement proceeding,
      Plaintiffs must demonstrate that Defendants have failed to make
      available the System of Supports contemplated by the Consent
      Decree and Related Documents and that the violation or violations
      have injured the Plaintiff Class as a whole. In other w ords, a
      violation of this Permanent Injunction must be systemic in order to
      be actionable.

Appellants’ App. at 381–82.

      Homeward Bound filed a motion to amend the Injunction. It asked the

district court to set forth Defendants’ permanent obligations in more explicit

detail instead of relying on vague references to the Decree and other documents.

Homeward Bound also asserted enforcement of the Injunction should not be

limited to violations that injure the class as a w hole. The district court

subsequently amended the Injunction, deleting references to the Decree and other

documents and inserting language from the text of the Decree in their place. The

enforcement provision, however, remained intact. On appeal, Homeward Bound

asserts the Amended Permanent Injunction (“API”) improperly modified the

Decree and rendered Defendants’ obligations under the Decree unenforceable by

conditioning enforcement on injury to the class as a whole.

                                           -7-
III. Discussion

      A.     Jurisdiction

      In furtherance of this court’s duty to satisfy itself of its power to adjudicate

every case presented, we requested supplemental briefing on jurisdiction.

Cisneros v. ABC Rail Corp., 217 F.3d 1299, 1302 (10th Cir. 2000). Federal court

jurisdiction extends only to “Cases” or “Controversies.” U.S. Const. art. III, § 2,

cl. 1. A case or controversy does not exist unless the party requesting a ruling

from this court has standing. Raiser v. United States, 325 F.3d 1182, 1183 (10th

Cir. 2002). To establish standing to appeal, an appellant must demonstrate some

injury caused by the judgment below. Uselton v. Commercial Lovelace Motor

Freight, Inc., 9 F.3d 849, 854 (10th Cir. 1993); see also Sierra Club v. Babbitt,

995 F.2d 571, 575 (5th Cir. 1993).

      After considering the parties’ supplemental briefs and undertaking an

independent review of the issue, this court has determined Homeward Bound does

have standing to appeal. To enforce the API, Homeward Bound must demonstrate

a systemic violation that injures the class as a whole. Homeward Bound alleges

the “class as a whole” requirement alters the permanent obligations imposed on

Defendants by the Decree because the Decree contemplates continuing redress for

violations that injure less than all of the class. Thus, Homeward Bound asserts

the API effectively modified the Decree and injured class members by limiting

their ability to enforce rights provided by the D ecree. Because this alleged injury

                                         -8-
is not frivolous and the injury would be redressed if Homew ard Bound were

successful in its appeal, Homeward Bound has standing. Cf. Owasso Indep. Sch.

Dist. No. I-011 v. Falvo, 534 U.S. 426, 431 (2002).

      B.     M odification of the Consent Decree

      Relying on the language of the Decree and the intent of the parties, the

district court concluded the Decree imposed permanent obligations on

Defendants. Specifically, it determined the second paragraph of the D ecree’s

termination provisions constituted a permanent injunction requiring Defendants to

maintain a system of community services and supports for class members. Thus,

while some of Defendants’ obligations toward class members under the Decree

ceased upon a finding of substantial compliance, others continued so long as

Defendants maintained a program of assistance for the mentally disabled. The

district court entered the A PI in an effort to clarify which obligations were

permanent.

      The API requires D efendants to maintain the placement of class members in

appropriate community settings and to maintain a system of community services

and supports appropriate to each class member’s individual needs. Homew ard

Bound acknowledges this requirement is consistent with the terms of the Decree

because it recognizes the placement and services provided to each class member

must be consistent with her specific needs. Homeward Bound’s claim of error

centers around the API’s enforcement provision. To succeed in an enforcement

                                         -9-
proceeding, the API requires Homeward Bound to demonstrate Defendants failed

to provide a system of community based services and supports and, as a result, the

class as a whole was injured. Homeward Bound asserts the A PI’s “class as a

whole” requirement improperly altered the Decree and rendered the required

system of individualized services and supports judicially unenforceable. In

essence, Homeward Bound contends an individual class member should be

permitted to bring suit in district court under the API to challenge her placement

and services.

      To assess Homeward Bound’s claim, we must determine whether the API is

a proper interpretation of the Decree. This court construes the terms of a consent

decree de novo, applying “traditional principles of contract interpretation.” 2

Joseph A. ex rel. Corrine Wolfe v. Ingram, 275 F.3d 1253, 1266 (10th Cir. 2002).

W e strive to give effect to the mutual intent of the parties as expressed in the

language of the decree itself. Stichting M ayflower Recreational Fonds v.

Newpark Res., Inc., 917 F.2d 1239, 1246 (10th Cir. 1990).

      2
       Defendants contend we should accord special deference to the district
court’s interpretation of the Decree. Appellate courts sometimes give district
courts broad discretion in interpreting consent decrees in situations involving “a
fact-dependent legal standard” or supervision and enforcement of long-term,
remedial, public-law litigation. Sinclair Oil Corp. v. Scherer, 7 F.3d 191, 193
(10th Cir. 1993). This deferential standard of review is not warranted, however,
when, as here, the district court is merely interpreting the scope of the parties’
settlement agreement. Id. at 194.

                                         -10-
      Permanent obligations are imposed on Defendants pursuant to the second

paragraph of the D ecree’s termination provisions. The relevant language states:

      The provisions of this Decree pertaining to the maintenance of a
      system of community services and supports shall remain in effect as
      long as the Department maintains a program of assistance for the
      mentally retarded.

Appellants’ App. at 323. This provision speaks in systemic terms, requiring

Defendants to maintain the system of community services and supports for class

members established during the district court’s active supervision of the Decree.

Although that system must provide placement and services based on each class

member’s individual needs, it is the system that Defendants must maintain, not the

placement and services provided to any particular class member. Accordingly,

only systemic violations of the Decree are enforceable now that the district

court’s active supervision of the case has ended.

      The resolution of individual grievances in federal court, the interpretation

Homeward Bound advocates, would frustrate the objective of the Decree. The

stated purpose of the D ecree is “to establish an agreed-upon framew ork for a

community service system as an alternative to institutional care for class

members.” Appellants’ App. at 295. As part of this framew ork, Defendants were

required to establish state administrative review and appeal procedures to ensure

class members, and their parents or guardians, could enforce their right to

individualized services. During the period of active district court supervision, the

                                        -11-
Decree required utilization of state administrative appeal procedures to resolve

disputes regarding placement and services provided to a single class member.

Class members could only seek review of individual grievances in the district

court if the state administrative appeal procedures, and subsequent review by a

hearing officer appointed by the district court, failed to resolve the dispute.

Given this history, permitting class members to bring individual grievances

directly in district court now that active district court supervision has ended

would be counter-intuitive. M oreover, it would circumvent the very

administrative review and appeal mechanisms established as a direct result of this

litigation. Such a result was not intended by the parties. 3

      In support of its claim that the Decree contemplates district court resolution

of individual grievances, Homeward Bound relies on Halderm an ex. rel.

Halderman v. Pennhurst State School & Hospital, 901 F.2d 311 (3d Cir. 1990).

The facts and procedural history of Pennhurst are similar to the present case.

M entally disabled residents of Pennhurst State School and Hospital brought a

class action suit against various state and county governments challenging the

care and treatment they received at the facility. Id. at 315. The parties entered

      3
       Elimination of state administrative review and appeal procedures w ould
arguably constitute a systemic violation of the Decree entitling Homeward Bound
to bring suit under the API. The district court acknowledged as much in the API
by requiring Defendants to “continue to make available to class members both
administrative and legal review of agency decisions that affect them.”
Appellants’ App. at 174.

                                          -12-
into a Final Settlement Agreement (“FSA ”), which was subsequently approved by

the district court. Id. The main text of the FSA set out the general obligations of

the parties. Id. Appendix A imposed specific obligations on the state and county

governments, requiring them to prepare a written habilitation plan for each class

member, provide community living arrangements and services, and complete an

annual review of each class member’s individual habilitation program. Id. The

FSA specified the date on which the district court’s active jurisdiction would

terminate. Id. at 318. Under the terms of the FSA , however, the obligations set

out in Appendix A were to remain in effect permanently. Id.

      The plaintiffs brought an enforcement action, claiming the defendants were

not in compliance with the FSA. Id. at 314. Although the period of active

district court supervision had expired, the district court found the defendants in

substantial noncompliance. Id. at 314, 318. On appeal, one county government

argued it was in substantial compliance because only six out of two-hundred class

members were not being provided with habilitative services. Id. at 324. The

Third Circuit rejected the county government’s argument. The court examined

the language of the FSA and the intent of the parties in entering into the

agreement and determined, “[w]hile the original suit . . . was a class action, the

obligations of the [county government] under the FSA clearly run to class

members as individuals, not as a group.” Id. The court thus concluded

compliance w as measured with respect to the services each individual class

                                         -13-
member received, not with respect to the services received by the class as a

whole. Id. Homeward Bound urges a similar ruling here.

       As an initial matter, we acknowledge the similarity between the Decree in

this case and the FSA in Pennhurst. Both documents are aimed at transitioning

mentally disabled individuals from an institutional setting to community

placements. M ore importantly, both require individualized assessment of each

class member’s needs and provision of services based on those specific needs.

The documents nonetheless differ in their description of the obligations that are to

remain in effect permanently. The FSA in Pennhurst made the requirements in

Appendix A permanent. Id. at 319. The duties imposed in A ppendix A are

phrased in individualized terms, requiring, for example, preparation of a written

habilitation plan for each class member and provision of community living

arrangements and services for each class member. Id. at 315. Accordingly, the

Third Circuit determined the obligations in Appendix A run to class members as

individuals, not in the aggregate. Id. at 324. The Decree at issue here, on the

other hand, speaks in systemic terms. It requires the system of community

services and supports for class members to remain in place permanently. As long

as D efendants maintain a system that assesses and provides services in

conformance with class members’ individual needs, they remain in compliance

with the Decree. Because the relevant language of the Decree here and the FSA

in Pennhurst differ, Pennhurst is distinguishable. W e therefore reject Homew ard

                                        -14-
Bound’s contention that the Decree requires ongoing resolution of individual

grievances in the district court. 4

       Nevertheless, the API did effectively modify the Decree by requiring any

systemic violation to injure the class as a whole before an enforcement action

could be brought. As discussed above, the district court properly determined the

permanent obligations imposed on Defendants by the Decree are systemic in

nature. The API’s requirement that a violation be systemic to be actionable is

therefore consistent with the Decree. A systemic violation, however, will not

necessarily affect the class as a whole. For example, the Decree requires

Defendants to consider a range of residential placement options for each class

member, including independent living, natural homes, adult companion programs,

shared living arrangements, foster homes, supported living arrangements, small

group homes, and small intermediate care facilities. Defendants’ elimination of

one or more of these options would arguably be a systemic change. Nonetheless,

       4
        Homeward Bound also argues the API violates Rule 23(b) of the Federal
Rules of Civil Procedure because it does not adequately protect the interests of
individual class members. Rule 23(b) is a procedural rule setting forth the
prerequisites for class certification; it does not “abridge, enlarge or modify any
substantive right.” 28 U.S.C. § 2072(b); see also Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 613–14 (1997). W e have observed the R ule’s
“procedures represent a careful balancing of the need for efficiency with the need
to ensure adequate protection for the individual members of the class.” Gottlieb
v. Wiles, 11 F.3d 1004, 1007 (10th Cir. 1993). Once a class has been certified,
however, the required balancing has been achieved. The Rule does not require
the district court to engage in this balancing when it issues all subsequent orders.
Homeward Bound’s argument to the contrary fails.

                                        -15-
such a change would not necessarily affect the entire class. Class members who

desired, or whose individual needs required, one of the remaining residential

options w ould be unharmed. Because Homeward Bound could not demonstrate

injury to the entire class, it would not be able to successfully challenge the

elimination of residential placement options, arguably a systemic change, under

the API.

      Our determination that a systemic violation need not affect the class as a

whole is further supported by the dispute resolution scheme in effect during the

period of active district court supervision of the Decree. The Decree created two

separate review mechanisms— one for systemic violations and one for individual

grievances. The Decree characterized system issues as those “affecting more than

one individual,” not the class as a whole. As this scheme demonstrates, the

Decree envisioned the existence of systemic violations that affected less than all

of the class. Because the API’s demand for injury to the class as a whole was not

contemplated by the Decree, the API effectively modified the Decree and

narrowed its scope by including this requirement.

      The district court did not indicate the API was intended to alter the terms of

the Decree. Nonetheless, because the API had the effect of modifying the Decree,

we must determine w hether the modification was proper. A district court’s

modification of a consent decree is reviewed for an abuse of discretion. Joseph

A., 275 F.3d at 1267. A district court abuses its discretion when it bases its ruling

                                         -16-
on an erroneous conclusion of law or fails to consider the applicable legal

standard upon which the exercise of its discretionary judgment is based. Kiowa

Indian Tribe v. Hoover, 150 F.3d 1163, 1165 (10th Cir. 1998); Ohlander v.

Larson, 114 F.3d 1531, 1537 (10th Cir. 1997).

      M odification of a consent decree requires a showing of a significant change

in factual or legal circumstances warranting the revision. Rufo v. Inmates of

Suffolk C ounty Jail, 502 U.S. 367, 384 (1992). After the last class member was

transferred to a community placement, Defendants filed a Rule 60(b) motion

requesting termination of the Decree. They argued termination was warranted

because the Decree’s objective, to move all class members into community

placements and provide state-sponsored supports and services, had been

accomplished. The district court denied D efendants’ motion in January 2002. It

observed modification of a consent decree is not appropriate when the alleged

change in circumstances warranting the modification was anticipated by the

parties when the decree was entered. See id. at 385. The court determined the

change in circumstances alleged by Defendants— their substantial compliance

with the Decree— was envisioned by the parties. Thus, the district court refused

to modify or terminate the Decree. Several years later, however, the district court

entered the API, effectively modifying the Decree. At that time, the court did not

vacate its prior order denying modification or termination of the Decree. Nor did

it specify any change in circumstances warranting the modification. Thus, the

                                        -17-
district court failed to consider the applicable legal standard upon which the

exercise of its discretion to modify consent decrees is based. Because the district

court failed to articulate any significant change in factual or legal circumstances,

we conclude it abused its discretion in modifying the Decree.

IV. Conclusion

      For the foregoing reasons, we REV ER SE and REM AND with instructions

for the district court to consider whether circumstances have changed since

January 2002 when it denied modification of the Decree to w arrant the class as a

whole requirement. If the district court finds there has been no change in

circumstances, it should vacate the portion of the API requiring injury to the class

as a whole to succeed in any enforcement action.

                                       ENTERED FOR THE COURT

                                       M ichael R. M urphy
                                       Circuit Judge

                                         -18-