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United States Supreme Court Decides That IDEA’s Exhaustion Requirement Does Not Apply When the Only Relief Sought is Money Damage

 Perez v. Sturgis Public Schools - Buelow Vetter Buikema Olson & Vliet

On March 21, 2023, the United States Supreme Court issued its decision in Perez v. Sturgis Public Schools. The case raised the question of whether a plaintiff is required to exhaust the administrative processes under the Individuals with Disabilities Education Act (IDEA) when the remedy a plaintiff seeks is not available under the IDEA. This situation arises when a plaintiff seeks compensatory damages under federal statutes like Section 504 of the Rehabilitation Act or the Americans with Disabilities Act (ADA). The Court ruled that the IDEA exhaustion requirement does not apply to claims for money damages brought under statutes other than the IDEA.

Background

The case began when a 23-year-old deaf student attending school in Michigan brought claims that he was denied a free appropriate public education (FAPE) due to the school’s failure to provide a qualified interpreter. Perez was a student in the Michigan Sturgis Public School District for eleven years. He claimed the school district failed to provide him with FAPE under IDEA by providing him with inadequate interpreters and misrepresenting his educational progress. Perez claimed that, as a result, the school district did not permit him to graduate.

Perez filed a complaint with the Michigan Department of Education alleging violations of the IDEA, the ADA, the Rehabilitation Act, and state disabilities laws. The Administrative Law Judge dismissed all claims other than the IDEA claim and one state-law claim. A hearing was scheduled for the IDEA claim, but Perez and the school settled before the hearing was held. 

Sixth Circuit Court of Appeals

Perez subsequently filed suit in federal court on the ADA claim and a state law claim, alleging the school discriminated against him by not providing the appropriate resources for him to fully participate in school as a student with disabilities. Perez sought compensatory damages for the emotional distress he endured. The District Court dismissed Perez’s suit for failing to exhaust the administrative procedures required by the IDEA when he settled with the school before his claims were adjudicated. The U.S. Court of Appeals for the Sixth Circuit affirmed the dismissal of Perez’s claims, holding that the settlement of a FAPE claim does not meet IDEA’s exhaustion requirement under 20 U.S.C. Section 1415(I), consistent with previous decisions in the Eighth and Tenth U.S. Circuit Court of Appeals. Due to the parties’ settlement of the IDEA claim, there was no administrative decision by the state to determine if Perez was denied FAPE. On that basis, the Court of Appeals for the Sixth Circuit concluded that he had no standing to seek relief in federal court.

Perez argued that seeking relief under the IDEA and exhausting administrative remedies would have been futile because compensatory damages are not available under the IDEA. He also argued that judicial estoppel would prevent the school from invoking the exhaustion requirement. Judicial estoppel doctrine serves to prevent litigants from asserting claims in a court proceeding that are directly contrary or inconsistent to a prior statement made in a previous proceeding. The Sixth Circuit Court of Appeals rejected both of these arguments. As to the futility argument, the court reasoned that the administrative process is not futile merely because it does not provide the specific relief that Perez seeks. Perez was still capable of receiving relief for his denial of FAPE under IDEA’s administrative process. Further, allowing Perez to bypass the administrative process by seeking money damages would allow anyone to bypass the administrative process simply by seeking money damages, making the exhaustion requirement pointless. As to his second argument, the court reasoned that the exhaustion of Perez’s ADA claim was not impossible because it was dismissed at the administrative level. Perez would still have been able to bring his ADA claim in federal court if he had proceeded with the administrative process under the IDEA and therefore, judicial estoppel would not be appropriate.

Supreme Court

The United States Supreme Court granted the petition to review the case on October 3, 2022 and hear oral arguments on January 18, 2023. The following questions were presented: (1) in what circumstances exhaustion of administrative remedies under IDEA should not be required when proceedings become futile, and (2) whether the exhaustion requirement in 20 U.S.C. Section 1415(I) requires exhaustion for a non-IDEA claim seeking compensatory damages that are unavailable under the IDEA. The Court did not address the first question in its decision.

The argument before the Court primarily focused on the meaning of “relief” and “remedy” as those terms are used in Section 1415(I). The school argued that “relief” means a redress from harm and not a specific remedy. It also argued that because the gravamen, or essence, of the student’s complaint related to a denial of FAPE, Perez was required to exhaust the remedies available under IDEA, consistent with the Court’s previous decision in Fry v. Napoleon Community Schools, 580 U.S. 154 (2017).

The Court disagreed with the school’s interpretation of Section 1415(I) and reasoned that the exhaustion requirement only applies to suits that “see[k] relief . . . also available under IDEA.” The Court also rejected the argument that Fry requires Perez to exhaust IDEA’s administrative processes because his case is premised on a past denial of FAPE. The Court reasoned that Fry did not address the question raised in this case, which is whether a plaintiff must exhaust IDEA’s administrative processes when the relief sought is unavailable under IDEA. Since there is no dispute that compensatory damages are unavailable under IDEA, Perez was not required to exhaust IDEA’s administrative processes. The Supreme Court reversed the judgment of the Court of Appeals and remanded the case back down to the district court for reconsideration consistent with the Supreme Court’s ruling.

Impact of Decision

This decision has significant impact on the approach school districts will utilize when defending against IDEA complaints and in settlement processes. The decision will limit school districts’ reliance on the IDEA exhaustion doctrine when money damages are sought under other federal statutes. 

If you have any questions about this Legal Update, please contact Attorney Mary Gerbig at mgerbig@buelowvetter.com or 262-364-0266, or Attorney Aleah Loll at aloll@buelowvetter.com or 262-409-7313.

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