Homeward Bound, Inc. v. Oklahoma Health Care Authority

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This order and judgment is not binding precedent, except under the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
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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.
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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.
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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
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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
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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.
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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
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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
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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.
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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
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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.
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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
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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
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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.
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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
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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
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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
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