December 2010 Archives

A federal appeals court has upheld the dismissal of a lawsuit alleging that the nation's largest teachers' union aggressively marketed retirement annuities that charged fees that were ten times as much as those for comparable products.

A three-judge panel of the U.S. Court of Appeals for the 9th Circuit, in San Francisco, ruled unanimously on Monday that the National Education Association's Valuebuilder annuities were not regulated by the federal Employee Retirement Income Security Act of 1974 and, thus, the plaintiffs' lawsuit could not go forward.

The annuity plan was challenged by NEA members who work for the South Kitsap School District, in Washington state, and the El Dorado Union High School District, in California. They alleged that the NEA worked with the Nationwide Life Insurance Co. and, after 2000, the Security Benefit Life Insurance Co. to promote to its members the Valuebuilder Plan, an annuity choice available through the employees' employer-based retirement plans.

The suit alleged that the insurance companies paid NEA royalties of as much as $2 million, which the teachers' union did not fully disclose to its members. The NEA marketed the Valuebuilder annuities provided by Nationwide and Security Benefit as the most favorable retirement option for its members, despite the fact that Valuebuilder annuities charged fees that were as much as ten times those charged on comparable annuity contracts.

The suit alleged that the NEA knowingly duped the plaintiffs into purchasing unattractive annuities by "creating an atmosphere of trust and confidence that was exploited by defendants for their financial gain."

The suit purported to represent as many as 57,000 NEA members nationwide and involve investments totaling more than $1 billion, court papers say.

The suit's theory was that by endorsing, promoting, and marketing the Valuebuilder plan, NEA created a retirement plan subject to ERISA. But both a federal district court and the 9th Circuit court held that the NEA plan was not subject to the federal law.

"It is clear from the NEA's website and the prospectuses offered by Nationwide and Security Benefit that these annuities were not established or maintained by either Plaintiffs' school district employers or by the NEA," says the 9th Circuit's Dec. 20 opinion in Daniels-Hall v. National Education Association.

"Plaintiffs have only themselves to blame for trying to fit the square peg of defendants' alleged misconduct into the round hole of an ERISA suit," the opinion adds. "The annuities at issue in this case are not regulated by ERISA, but by the securities laws."

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The general counsel of the National School Boards Association is warning the U.S. Department of Education that recent federal guidance to schools on bullying and harassment expands the standard of liability for school officials and "will invite misguided litigation."

"The expansive position on what conduct constitutes 'harassment' protected by federal civil rights laws and what remedial measures are legally required will unnecessarily complicate investigations and possibly expose school districts to liability beyond that envisioned by the Supreme Court," says the Dec. 7 letter from Francisco M. Negron Jr., NSBA's top lawyer, to Charles P. Rose, the Education Department's general counsel.

Negron stresses in the letter that the NSBA shares the Education Department's interest in reducing bullying and harassment in schools. But he cites several concerns about the Oct. 27 "Dear Colleague" letter that went out from Assistant Secretary for Civil Rights Russlynn Ali.

Education Department Press Secretary Justin Hamilton said officials have had conversations with NSBA since receiving the letter.

"We believe that the guidance is clear and lays out what all of our collective responsibilities are to protect the interests of students," Hamilton said in an interview Wednesday.

In the October guidance from the Office for Civil Rights, Ali said certain peer harassment in schools based on sex-role stereotyping or religious differences may amount to violations of existing federal civil rights laws. (Education Week had this story.)

Negron said the OCR letter "significantly expands" the standard of liability for schools over peer harassment beyond the standard established by the U.S. Supreme Court in a 1999 case, Davis v. Monroe County Board of Education. In that case, the court said schools could only be held liable for peer sexual harassment when they had "actual knowledge" of the harassment, and the activity was so "severe, pervasive, and objectively offensive" that it effectively barred the victim's access to an educational program or benefit.

By contrast, the OCR letter, Negron asserts, potentially would hold a school district liable for harassment about which "it knows or should have known," and covers harassment that is "severe, pervasive, or persistent" and that merely "interferes" with or limits participation in an educational program. Each prong of OCR's guidance softens the Davis standard, Negron said.

Negron raises several other concerns about the OCR letter. The letter states that school districts are required to eliminate harassment and the hostile environment it creates, and to prevent it from recurring. But the Supreme Court's Davis decision explicitly rejected the idea that schools must "remedy" peer harassment, Negron said.

Negron also says the OCR letter only "minimally" recognizes the First Amendment free speech rights of students and fails to recognize the constitutional limitations on school districts' ability to discipline students for protected speech.

Negron called on the Education Department it issue a document clarifying that schools must operate under multiple local, state, and federal legal requirements on harassment and bullying.

"It is our hope that through this letter, we have addressed what we see as some unintended legal and practical challenges arising from the [Dear Colleague letter]," Negron wrote.

Negron's letter was first reported this week by the NSBA's Legal Clips web site and its School Board News newspaper.

[UPDATE 11:30 a.m.] In a telephone interview Wednesday morning, Negron confirmed that he has had conversations with the Education Department since the letter. Negron described the conversations about the guidance as "constructive"

"I think we're in a cooperative position," Negron said, although he is awaiting a more detailed reply in writing from the department. "I think our questions were legitimate and they needed some clarification."

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Usually, there's a kid who will do anything to get out of physical education class.

But in California, one elementary student and his father have sued their school district for the opposite—more time in the gym. Their lawsuit alleges that the boy's school wasn't offering the amount of physical education required by state law. Now, a state appellate court has largely agreed.

The lawsuit on behalf of the boy, identified in court papers as John Doe, perhaps to avoid the wrath of those classmates unenthusiastic about structured exercise, said California law requires 200 minutes of physical education every 10 days. The Albany Unified School District, near Berkeley, offered only 120 minutes every 10 days at the boy's elementary school, the suit said.

A state trial court ruled for the school district, holding that state law sets out a common state curriculum but allows districts some flexibility in meeting the needs of their students.

In a Nov. 30 decision, however, the 3rd District California Court of Appeal ruled for the Does on what state law requires and allowed the family to correct some procedural deficiencies with their lawsuit.

"We conclude section 51210, subdivision (g), imposes a mandatory duty on school districts to include in an adopted course of study for grades one to six physical education for a total period of not less than 200 minutes each 10 schooldays," the appellate court said in its unanimous opinion in Doe v. Albany Unified School District. "Although one might reasonably question the wisdom of the Legislature micromanaging the state's education system by mandating that schools throughout the state, regardless of circumstances, provide a minimum physical education requirement, that is nevertheless precisely what the Legislature has done."

The court noted that lawmakers had made legislative findings in recent years that most children "are not physically fit" and "lead inactive lives," with 70 percent of girls and 40 percent of boys ages 6 to 12 unable to do a single pull-up.

The court ordered the trial court to allow the boy and his father to amend their suit to seek a court mandate requiring the school district to increase its physical education offerings.

In this statement on its website, the Albany district says it is considering whether to appeal the decision to the California Supreme Court.

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The U.S. Supreme Court heard arguments on Wednesday in a case involving an Arizona law that penalizes employers who hire 'unauthorized aliens."

The case of Chamber of Commerce v. Whiting (No. 09-115) doesn't directly involve schools, but educators in Arizona have closely followed immigration debates in their state. Besides the Legal Arizona Workers Act, the law at issue before the high court, there is the much-debated SB 1070, the controversial statute passed earlier this year that requires the police to check the immigration status of anyone they arrest or detain whom they believe may be in the United States illegally.

And there have been related controversies in the state that more directly involve the public schools, such as one involving citations issued by the state education department to school districts that have hired teachers who speak English with a Spanish accent. And in the spring, the state passed a law intended to eliminate ethnic studies in the schools.

What struck me about today's argument is the language the justices used to frame the debate. The question in the case is whether Arizona's law is preempted by federal immigration law, which generally is meant to be the comprehensive regulator of immigration matters. However, a 1986 federal immigration statute contains an ambiguous provision barring state and local laws that impose sanctions on employers "other than through licensing or similar laws." Arizona's effort seizes on this licensing clause and could mean the revocation of licenses for employers that knowingly hire unauthorized aliens.

Justice Samuel A. Alito Jr., who appeared sympathetic to Arizona's law, repeatedly used the phrase "illegal aliens."

What if another jurisdiction passed a law that said your general business license could be forfeited "if you knowingly hire an illegal alien?" Justice Alito asked the lawyer challenging the Arizona law.

Justice Sonia Sotomayor, who appeared somewhat less sympathetic to the state law, tended to use the phrase "undocumented aliens," though she referred to "illegal aliens" at one point before quickly correcting herself and substituting "undocumented" for "Illegal."

"[Y]ou don't disagree that Congress at least intended that if someone violated the Federal law and hired illegal aliens of Hispanic—undocumented aliens and was found to have violated it, that the state can revoke their license, correct, to do business?" Sotomayor said to Washington lawyer Carter G. Phillips at one point.

Although it is not reflected in the transcript, Justice Stephen G. Breyer, who also came across as skeptical of the Arizona law, could be heard from the press section catching himself from saying "illegal ali -", quickly substituting "illegal immigrant."

What's going on here?

The fact is, the language surrounding immigration issues is somewhat caught up in political correctness, with references to "illegal aliens" viewed as pejorative, at least by those sympathetic to immigrants.

"Scholarly and popular concerns about the phrase 'illegal alien' abound, pointing out that the phrase is racially loaded, ambiguous, imprecise, and pejorative," says a law review article cited earlier this year in an immigration case decided by the U.S. Court of Appeals for the 3rd Circuit, in Philadelphia.

The article by Beth Lyon appeared in 2004 in the University of Pennsylvania Journal of Labor and Employment Law. "Public policy regarding this [low-income immigrant worker] population is ill-informed, beginning with the simple fact that there is no settled or coherent terminology to refer to it," Lyon said in her article."Confused, pejorative, and racist terminology facilitates punitive laws and differential treatment."

Several commentators took note last December that in writing one of her first Supreme Court opinions, Justice Sotomayor used the terms "undocumented immigrants" and "undocumented workers" in a procedural case, Mohawk Industries Inc. v. Carpenter.

In October, the 3rd Circuit struck down a Hazleton, Pa., ordinance that was similar to Arizona's employer-sanctions law. In its opinion in Lozano v. City of Hazleton, the court cited Lyon's law review article as it explained the language that it would use. It noted that Hazleton "refers to persons who are not lawfully present within the United States as 'illegal aliens,'" while the law's challengers referred to such people as "undocumented immigrants."

The court said "illegal alien" was less ambiguous under federal law than "undocumented immigrant."

"Federal immigration law defines an 'alien' as 'any person not a citizen or national of the United States,''" the court noted [citations omitted]. "'Immigrant' is defined as 'every alien except an alien who is within [certain specified] classes of non-immigrant aliens,' and generally refers only to lawful permanent residents. Congress has preferred the term 'alien' to describe those persons who lack lawful immigration status."

"We will use the word 'alien' rather than 'immigrant' because 'alien' is more precise, and precision is important to discussions in this area," the 3rd Circuit said.

From the tenor of Wednesday's oral arguments in the Arizona case, it does not appear the justices are in any more agreement about the merits of the Arizona law than they are about the language that should be used in the debate.

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Just in time for the holiday season, a federal appeals court has given a boost to parents and children who challenged a Texas school district's refusal to allow elementary school students to distribute items with Christmas and other religious messages at school parties and events.

A three-judge panel of the U.S. Court of Appeals for the 5th Circuit, in New Orleans, said that it is clear that elementary-age children have First Amendment rights of free speech and to be free of religious viewpoint discrimination. The court upheld a federal district court's denial of qualified immunity to two elementary school principals in the Plano Independent School District.

The principals "have consistently argued both before the district court and this court that qualified immunity should be granted because elementary school students do not have any First Amendment rights," the 5th Circuit panel said in its unanimous Nov. 29 opinion in Morgan v. Swanson. "No law supports [their] novel proposition. It is clearly established that elementary school students have First Amendment rights."

The ruling stems from a lawsuit challenging restrictions on the distribution of a number of religious items at various school functions. One student distributed goodie bags at a school holiday party with pencils stating "Jesus is the Reason for the Season." School officials allegedly confiscated the pencils and banned them from school property, court papers say.

Another student was allegedly barred from distributing pencils at her classroom birthday party with the message "Jesus loves me, this I know, for the Bible tells me so."

Another parent alleges in the suit that students were prohibited from using the term "Christmas" at school and could not write "Merry Christmas" on holiday cards sent to retirement homes.

Since the school principals were seeking immunity at an early stage, the 5th Circuit's ruling accepts the suit's allegations as true. The lawsuit will now proceed in district court, and the families will have to prove they suffered religious-viewpoint discrimination to ultimately win the suit.

But the appeals court says school officials should have known from Supreme Court decisions and other 5th Circuit rulings that elementary school students have First Amendment speech rights as long as their speech is non-disruptive. The panel said the rights of elementary students may not be "coextensive" with those of high school students, but the younger students do have such rights.

Efforts by students to distribute such religious trinkets to their classmates have led to a number of lawsuits in recent years. In the same Plano district, a separate 5th Circuit panel last year upheld a 2005 district policy establishing time, place, and manner limits on when such materials may be distributed. The policy evolved out of some of the very controversies at issue in this week's ruling. (I blogged about that December 2009 ruling here and discussed it in a slightly different context in this Education Week story.

A Hat Tip is in order to the National School Boards Association's Legal Clips site for this case. The site also has a link to a Word document charting the many cases about the distribution of religious materials in schools.

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