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Recent Cases from the Public Interest Division

These are among cases handled in recent months by the Office of the Attorney General’s Public Interest Division:

NEW VISION PHOTOGRAPHY PROGRAM, INC., VS.  DISTRICT OF COLUMBIA,   13-cv-1986 (JEB)

Plaintiffs—providers of Medicaid-waiver services—had alleged that the District’s proposed termination of their provider agreement violated the federal Age Discrimination in Employment Act (ADEA) and their constitutional right to due process. Plaintiffs also alleged a number of local-law and common-law claims, including claims under the Human Rights Act (age and race discrimination), breach of contract, and intentional infliction of emotional distress.
On July 7, U.S. District Judge James E. Boasberg granted the District’s motion to dismiss, and denied plaintiffs’ motion for leave to file a second amended complaint. The court found that plaintiffs failed to state a claim under the ADEA because neither were “employees” of the District. The Court also found that plaintiffs had received (and are currently receiving) due process, via their administrative appeal and appeal to the D.C. Court of Appeals. The court denied leave to file a second amended complaint, on grounds of futility, and declined to exercise supplemental jurisdiction over plaintiffs’ local-law claims.
The case was handled by Senior Assistant Attorney General Andrew Saindon, under the supervision of Section Chief Grace Graham.

COUNCIL OF THE DISTRICT OF COLUMBIA V. GRAY, 14-cv-0655  

This case involves the validity of the D.C. Budget Autonomy Act (BAA), which was ratified by a majority of District voters in April 2013. Prior to its approval, the AG opined that the Act was invalid in that it violated the Home Rule Act and federal law, including the Anti-Deficiency Act.  In January 2014, the U.S. Government Accountability Office reached the same conclusion. On April 8, Attorney General Irvin B. Nathan issued a formal opinion concluding that the Act is a nullity. The opinion is binding on all Executive Branch officers and employees. On April 11, the Mayor sent a letter to the Chairman of the Council, explaining, yet again, his belief that the Act is a legal nullity, and that he would direct all Executive Branch employees not to comply. Also on April 11, the D.C. Chief Financial Officer (CFO) notified the Chairman that his independent review had confirmed the invalidity of the Act and that he, too, would direct the employees under his control not to comply.  
The Council filed suit in Superior Court on April 17, 2014, seeking to enjoin the Mayor from enforcing the law.  The Mayor and CFO removed the matter to federal court, and filed an answer and counterclaims.  After a hearing on May 14, U.S. District Judge Emmet Sullivan ruled on May 19 in favor of the defendants, finding that the BAA violated the Home Rule Act and federal law, and enjoined the law’s enforcement. On May 22, the Court denied plaintiff’s motion for clarification or partial stay of its previous order. The Council took an appeal to the U.S. Court of Appeals for the District of Columbia Circuit, and oral argument was held on October 17. The parties await a decision.
The case was handled by Senior Assistant Attorney General Andrew Saindon and Assistant Attorney General Nicholas Bush, under the supervision of Deputy Ellen Efros.

AMERICAN COUNCIL OF LIFE INSURERS V. DISTRICT OF COLUMBIA HEALTH BENEFIT EXCHANGE AUTHORITY, No. 14-cv-1138 (BAH)

In a decision dated November 13, U.S. District Judge Beryl Howell granted the District’s motion to dismiss this challenge to the D.C. Health Benefit Exchange’s funding mechanism. Plaintiff—a trade association of insurance companies—claimed that the District’s implementation of the federal Affordable Care Act was unconstitutional and preempted by that law, by authorizing the District to charge assessments to health insurers who did not participate in the Exchange. The court found that the ACA and its implementing regulations authorized the funding mechanism utilized by the D.C. Exchange, and did not preempt the local law. The court also held that the assessments were not an unconstitutional “taking” under the Fifth Amendment, given their minimal economic impact, and did not violate due process or equal protection, as they were rationally related to the legislative purposes behind the ACA and local law. Finally, the court held that the local law was not a violation of the “non-delegation doctrine,” which prohibits a legislature from delegating legislative authority, because the law contained sufficient guidance for the District’s exercise of discretion in funding the Exchange.
The case was handled by Senior Assistant Attorney General Andrew Saindon and Assistant Attorney General William Causey, under the supervision of Section Chief Grace Graham.

BEG INVESTMENTS, LLC v.  NICHOLAS ALBERTI, ET. AL., 13-CV-182 (RC)
On June 22, 2011, the Alcoholic Beverage Control Board issued its decision regarding Twelve Restaurant and Lounge in Northeast Washington, DC. The Board conditioned the renewal on BEG, which owns the restaurant, hiring a Metropolitan Police Department reimbursable detail (i.e, paying the department for additional officers to patrol the area around an establishment) whenever Twelve Lounge offered entertainment.  Following a motion to reconsider, the Board amended its decision to require a reimbursable detail only when the establishment provided a DJ or live entertainment.  BEG did not appeal this decision under the D.C. Administrative Procedure Act.
Instead, on February 12, 2013, BEG sued six of the seven members of the Board in their individual capacities. The complaint alleged that the Board requiring a reimbursable detail violated the federal Racketeer Influenced and Corrupt Organizations (RICO), the Equal Protection Clause, the Fifth Amendment Takings Clause, and the First Amendment as well as amounting to a conspiracy to violate RICO and the Equal Protection Clause.  BEG sought money damages, costs, fees, punitive damages, declaratory relief, and injunctive relief. BEG’s claims were largely premised on the Board’s purported lack of statutory authority to require a reimbursable detail.
On May 1, 2013, the District asked the court to decline jurisdiction because of BEG’s failure to appeal the Board’s decision and, in the alternative, to dismiss the complaint for failure to state a claim and because the Board members were entitled to qualified immunity.  BEG’s opposition to this motion included assertions not made in the complaint that the Board’s motivation in requiring a reimbursable detail was due to Twelve Lounge’s clientele (i.e., young African American men) and/or the type of music played there.    
On March 31, Judge Rudolph Contreras of the U.S. District Court for the District of Columbia granted the District’s motion.  Initially, the judge found that the court’s exercise of jurisdiction was proper because an appeal of the Board’s decision would not provide BEG with the full relief sought in the complaint. Judge Contreras then dismissed the prayers for declaratory and injunctive relief because such relief is not available against public officials in their individual capacities.  Finally, Judge Contreras addressed the merits of BEG’s claims. He dismissed the constitutional violations for failure to state a claim and ruled that the Board members were entitled to qualified immunity on the RICO and RICO conspiracy claims because the Board’s purported lack of authority to order BEG to hire a reimbursable detail was not clearly established.  Nonetheless, Judge Contreras permitted BEG 30 days to file an amended complaint re-asserting the Equal Protection Clause and First Amendment claims so that BEG could plead its assertions that the Board’s decision was based on Twelve Lounge’s clientele and/or music.
BEG has filed an amended complaint as well as moving to file supplemental claims. The District moved to dismiss and strike the claims in the amended complaint and opposed BEG’s motion as futile.  Those motions are now pending before the court.
The case was handled by Assistant Attorney General Gary Feldon, under the supervision of Section Chief Grace Graham.

SMITH V. HENDERSON  13-cv-420, JEB
On July 17, U.S. District Judge James E. Boasberg granted the District of Columbia Public Schools (DCPS) and Chancellor Kaya Henderson Summary Judgment on the challenge to DCPS's closing of 15 public schools last year.  The plaintiffs, parents and guardians of children attending the schools that were closed, alleged that the closings discriminated on the basis of race (because all the schools were in neighborhoods where a majority of residents are from minority groups) and place of residency (because all of the schools were located east of Rock Creek Park), in violation of both Title VII of the U.S. Civil Rights Act and the D.C. Human Rights Act.  They relied primarily on the fact that the schools closed were attended by a higher proportion of  minorities than DCPS schools as a whole, the history of discrimination in District public schools, and a variety of policy arguments about charter schools, teacher performance pay, and school closings generally.
The Court rejected all these arguments. Judge Boasberg ruled that the history of discrimination in the District was largely unrelated to the present motivations of the Chancellor, given structural changes in school governance, and the fact that such a long time had passed. Further, the Court found that, contrary to Plaintiffs' claims, DCPS had closed under-enrolled schools west of Rock Creek Park in the past. The Court refused to consider the policy implications of merit pay, school closings, and charter schools generally, saying that was a matter for elected public officials to decide. Finally, the Court held that just showing the schools closed were attended by more minority children than DCPS at large was not enough to prove intentional discrimination by DCPS decision makers--a necessary component of plaintiffs' federal law claims.  The Court also ruled that plaintiffs' claims under the D.C. Human Rights Act failed because the District put forth extensive evidence that the closings were justified by a legitimate purpose.
The case was handled by Assistant Attorneys General Keith Parsons and Doug Rosenbloom, under the supervision of Section Chief Grace Graham.