The opinion of the court was delivered by: Keith P. Ellison United States District Judge
Pending before the Court are Plaintiffs' Amended Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 2), Plaintiffs' Motion for Leave to Amend Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 7), Plaintiffs' Amended and Corrected Motion for Leave to Amend Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 8), and Defendants' Joint Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. No. 5). After considering the parties' filings, all responses and replies thereto, and the applicable law, the Court finds that Plaintiffs' Amended Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 2) should be denied, Plaintiffs' Motion for Leave to Amend Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 7) should be denied as moot, Plaintiffs' Amended and Corrected Motion for Leave to Amend Verified Complaint and Application for Temporary Restraining Order and Injunctive Relief (Doc. No. 8) should be granted in part as to leave to amend their complaint and denied otherwise, and Defendants' Joint Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. No. 5) should be deniedas moot without prejudice to refiling in light of Plaintiffs' second amended complaint.
This case arises from the abrupt closure of Benji's Special Educational Academy (the "Academy"), a charter school located in Houston's Fifth Ward, and the resulting disruption upon approximately 500 students and their families. Plaintiffs are parents and guardians acting as next-friends of fourteen students who receive education at the Academy pursuant to Individualized Education Programs ("IEP") mandated by the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400 et seq. The Defendants are the Academy itself, its current superintendent Ron Rowell, the members of the Board of Managers installed by the Texas Education Agency ("TEA"), and the commissioner of the TEA (the "Commissioner").
A summary of the events leading to the closure of the Academy is necessary. This summary, except as noted, does not appear to be in dispute. The Academy was granted an open-enrollment charter (the "Charter") by the Texas State Board of Education ("SBOE") on November 2, 1998. (Doc. No. 2, Plaintiff's Amended Verified Complaint ("Pl.'s Complt."), Exh. 1 at 1.) The Charter specified that it would remain in effect from November 2, 1998 through July 31, 2003, unless renewed or terminated. (Id.)Paragraph 6 of the Charter states that it may be renewed upon "timely application" by the Academy for an additional period of time determined by the SBOE. Upon the Charter's expiration on July 31, 2003, the Academy made a timely application for renewal of the charter. The renewal application has been pending ever since. The TEA has allowed the Academy to continue operating during the pendency of the renewal application. (Pl.'s Complt., Exh. 7 at 3.)
Though the circumstances leading to the current crisis have been unfolding over the last several years, the Court will focus on the events beginning in the summer before the current school year. On July 8, 2010, the Commissioner notified the Academy's then-executive director, Ms. Theaola Robinson, that he intended to appoint a Board of Managers and a new superintendent in light of the ongoing financial, academic, and governance issues with the Academy. (Pl.'s Complt., Exh. 2 and 7.) On August 19, 2010, a "record review" hearing was held to provide Ms. Robinson and the Academy with an opportunity to respond to the Commissioner's intention to appoint a Board of Managers and a new superintendent. (Pl.'s Complt., Exh. 2 at 2.) Ms. Robinson attended the August 19th hearing with her counsel, who allegedly submitted a late-filed closing statement. On September 3, 2010, the Commissioner sent a letter to Ms. Robinson and the members of the Academy's board of directors notifying them that he had decided to appoint a Board of Managers to act as the governing body for the Academy and a new superintendent for the Academy, Rick Schneider. (Pl.'s Complt., Exh. 2 at 1, 4.) Under TEC § 39.112(b), the Commissioner's appointment of a Board of Managers suspended the powers of Academy's board of directors and Ms. Robinson.
One of the Board of Managers' first steps was to post notice on September 10, 2010 of a meeting the Board would be holding on September 13, 2010. (Pl.'s Complt., Exh. 3.) The notice was accompanied by an agenda stating that one of the agenda items was "discussion and possible action on suspending school programs and/or operations due to budget shortfall." (Id. at 3. (emphasis added)) In addition, the agenda stated that the Board would consider the "assignment, reassignment, termination or other action" with respect to the school's superintendent/CEO, administrative staff, instructional staff, and other employees. (Id.) Notably, neither the notice nor the agenda referred to the possibility of the Academy's permanent closure or the Charter's revocation.
On September 14, 2010, the new superintendent, Rick Schneider, notified students' parents that the Board of Managers had voted the night before to suspend operations of the school effective at the close of that very same day (i.e. September 14th). (Pl.'s Complt., Exh. 4.) This note did not offer the parents any assistance in locating another school for their children other than attaching a list of approximately forty schools in the Houston, Aldine, and North Forest school districts with addresses and phone numbers. (Id.) Parents were told in the notice that they could pick up their childrens' school records over the next two business days during the hours of 9:00 a.m. and 3:15 p.m. (Id.) After Thursday, September 16, 2010, parents would have to contact a regional service center to request their childrens' records. (Id.)
Believing the Board of Managers' suspension of operations to be unauthorized, the Academy's former administration along with several other Academy staff members allegedly engaged in a number of disruptive actions on September 14, 2010. The staff members and former administration allegedly told students to rip up the note from Mr. Schneider to their parents relaying the fact of the Academy's suspension of operations. (Pl.'s Complt., Exh. 5, at 3.)
Further, the "former superintendent" allegedly told students during a school assembly that the TEA did not think the students were "good enough" to be at the Academy and wanted to shut down the school for that reason. (Id.) This person allegedly told the assembled students that he or she would not allow Mr. Schneider to carry out the closure of the Academy. (Id.) Both during the assembly and during an employees-only meeting that day, the "former superintendent" allegedly stated that he or she would ensure that the Academy would remain open and instructed staff to report to work in the morning as usual. (Id. at 4.) Next, this person conducted a televised press conference inside the Academy informing the public that the Academy would continue operating despite the decisions of the Board of Managers and Mr. Schneider. (Id. at 4.)
The following day, September 15, 2010, the Academy reopened as an "unaccredited private school," using the Academy's facility and school buses. (Id. at 5.) By this point, Mr. Schneider had resigned his position and been replaced by Ron Rowell as superintendent of the Academy. Mr. Rowell attempted to prepare students' records for distribution to their parents, but was refused access to these records. (Id. at 5-6.) Staff from a regional educational service center were similarly refused entrance to the Academy. (Id. at 5.)
On September 16, 2010, the Commissioner issued an order suspending the charter operations and funding of the Academy. (Id.) TEC § 12.1162(b) authorizes the Commissioner to temporarily withhold funding, suspend the authority of a charter school to operate, or "take any other reasonable action the commissioner determines necessary to protect the health, safety, or welfare of students enrolled at the school based on evidence that conditions at the school present a danger to the health, safety, or welfare of the students."*fn1 In his September 16th order, the Commissioner used the actions of the Academy's staff and former administration during the previous two days as the basis for his finding that conditions at the Academy presented a danger to the health, safety, or welfare of the students. (Id. at 6.) As required by TEC § 12.1162(d), the Commissioner scheduled a hearing for the charter holder on September 21, 2010.
The hearing mandated under TEC § 12.1162(d) was held on September 21, 2010 before the Commissioner's designee, Emi Johnson. In a report to the Commissioner dated September 22, 2010, Johnson stated that the following evidence showed that conditions at the Academy presented a danger to the health, safety, or welfare of the students: school staff instructed students to rip up the communication to parents issued by the school superintendent notifying parents that the school would suspend operations on September 14th; telling the students that TEA did not think the students were "good enough"; directing students to ride on buses and attend classes on September 15th; obstructing the superintendent's access to school records and the school facility. (Pl.'s Complt., Exh. 6.) Johnson concluded that there was no evidence that any of the conditions had changed. (Id. at 3.) Moreover, Johnson noted that there was no statement indicating that the Academy would comply with the September 13th decisions of the Board of Managers. (Id.)
After this hearing had been held, the Commissioner was required under TEC § 12.1162(e) either to cease the suspension of the Academy's operations, or to initiate an action pursuant to TEC § 12.116 to modify, place on probation, or revoke the Charter. The Commissioner elected to initiate revocation proceedings as to the Academy's Charter. On September 24, 2010, the Commissioner initiated revocation of the school's charter pursuant to TEC § 12.115(a) [providing the grounds for charter revocation] and 19 TAC § 100.1021(a). (Pl.'s Complt., Exh. 7.) In his letter, the Commissioner outlined the following grounds for revocation of the charter: (1) failure to protect the health, safety or welfare of students, see 19 TAC § 100.1022(e)(1); (2) material violations of its open-enrollment charter, see 19TAC § 100.1022(f)(1); (3) two consecutive years of unsatisfactory ratings; (4) serious unsatisfactory fiscal performance, see 19 TAC § 100.1022(c)(1)(C); (5) unsatisfactory compliance performance for three consecutive school years, see 19 TAC § 100.1022(d)(1); and (6) failure to renew a lease for the school facility, see 19 TAC § 100.1215. (Id.)
It is unclear whether the September 24th letter served merely as a notice of the Commissioner's intent to revoke the Academy's Charter, or actually revoked the Charter "effective immediately." (Id. at 1, 3.) TEC § 12.116(b) states that, when revoking or denying renewal of a charter, the Commissioner must provide an opportunity for a hearing to the charter holder and to the parents and guardians of students at the school. See also 19 TAC § 100.1021(b) (stating that the Commissioner "shall notify the charter holder before modifying, placing on probation, revoking, or denying renewal of the school's charter") (emphasis added). On the other hand, 19 TAC § 100.1022(e)(1) states that an "open-enrollment charter authorizing a charter school that fails to protect the health, safety, or welfare of the students enrolled at its school shall be revoked effective immediately."
In either case, the Commissioner's September 24th letter informed the Academy that it could request a hearing under 19 TAC § 100.1021(d) if it notified the Commissioner within ten business days. Also on September 24, 2010, the Board of Managers posted a notice of a hearing that would be held on September 27, 2010. (Pl.'s Complt., Exh. 8.) The agenda for the September 27th hearing included implementation of the Commissioner's "action[s]." On September 27, 2010, Mr. Rowell sent a communication to parents of the students reiterating that the "Board of Managers of Benji's voted on Monday evening, September 13, 2010, to suspend operations of the school effective at close of business on Tuesday, September 14, 2010." (Pl.'s Complt., Exh. 9.) The superintendent characterized the Commissioner's hearing on September 22, 2010 as resulting in a "final Order from the Office of the Commissioner to SUSPEND CHARTER OPERATIONS AND FUNDS." (Id.)
On September 27, 2010, Plaintiffs filed suit in this Court alleging that Defendants' actions to suspend operations and revoke the Charter of the Academy violated their statutory due process rights under IDEA, 20 U.S.C. § 1415, and their constitutional due process rights. In addition, Plaintiffs claim that Defendants' actions were arbitrary and capricious and violated the Texas Educational Code and the regulations promulgated thereunder. Plaintiffs seek a temporary restraining order and injunctive relief to order Defendants to refrain from closing the Academy, to rescind the notice suspending and/or terminating the Academy's operations, and to comply with the due process requirements of IDEA. Defendants have responded by moving to dismiss Plaintiffs' complaint for lack of subject matter jurisdiction. Subsequent to Defendants' motion to dismiss, Plaintiffs have filed for leave to amend their complaint.
II. MOTION FOR LEAVE TO AMEND PLEADINGS
Plaintiffs have filed two motions for leave to file a second amended verified complaint and application for a temporary restraining order and injunctive relief (Doc. Nos. 7 & 8). The Court will treat the second amended complaint attached to Doc. No. 8 (the "Proposed Second Amended Complaint") as the one Plaintiffs seek leave to file. Plaintiffs seek to amend their complaint in order to: (1) add two new plaintiffs-Randolph Nichols and Nancy Watta-who are teachers at the Academy (the "Proposed Teacher-Plaintiffs") and accredited to teach in Texas public schools; (2) add a new defendant-Rick Schneider-who served as the superintendent of the Academy between September 3, 2010 and September 14, 2010; (3) allege that the actions taken by Defendants violated the Proposed Teacher-Plaintiffs' rights to procedural due process and equal protection; and (4) add the violation of 42 U.S.C. § 1983 as a new cause of action.
A party may amend its pleadings once as a matter of course. Fed. R. Civ. P. 15(a)(1). Thereafter, pleadings may be amended "only with the opposing party's written consent or the court's leave." Fed. R. Civ. P. 15(a)(2). "The trial court should consider whether permitting the amendment would cause undue delay in the proceedings or undue prejudice to the nonmoving party, whether the movant is acting in bad faith or with a dilatory motive, or whether the movant has previously failed to cure deficiencies in his pleadings by prior amendments." Chitimacha Tribe of Louisiana v. Harry L. Laws Co., 690 F.2d 1157, 1163 (5th Cir. 1982). In the absence of any of these reasons, including futility of amendment, the leave should be "freely given." Foman v. Davis, 371 U.S. 178, 182 (1962); Fed. R. Civ. P. 15(a)(2).
The Fifth Circuit has interpreted "futility" in the context of Rule 15 to mean that "the amended complaint would fail to state a claim upon which relief could be granted." Stripling v. Jordan Prod. Co., 234 F.3d 863, 873 (5th Cir. 2000). To determine futility, a court must apply the same standard of legal sufficiency as applies under Rule 12(b)(6). Id. When considering a Rule 12(b)(6) motion to dismiss, a court must "accept the complaint's well-pleaded facts as true and view them in the light most favorable to the plaintiff." Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004). "To survive a Rule 12(b)(6) motion to dismiss, a complaint 'does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief- including factual allegations that when assumed to be true 'raise a right to relief above the speculative level.'" Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). That is, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. ---, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). A court applying the Rule 12(b)(6) standard generally cannot look beyond the pleadings when determining whether an amended complaint would be subject to dismissal for failure to state a claim. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000).
The Court believes that leave to amend should be granted. The Rule 15(a) factors favor granting leave to amend. Plaintiffs have sought to amend their complaint at an early stage in the proceedings. An amendment would not create undue delay as the parties have not yet made initial disclosures, agreed to a case management plan, or begun discovery. Defendants would not be prejudiced by an amendment because they have the opportunity to address Plaintiffs' new causes of action in a subsequent motion to dismiss or motion for summary judgment. See Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420, 426 (5th Cir. 2004) (affirming district court's denial of leave to amend complaint to add new defendant and new claims, after extensive discovery and pretrial activity, because proposed amendments would fundamentally change nature of litigation and unfairly prejudice defendant).
Defendants first argue that amendment of Plaintiffs' pleadings would be futile because the Proposed Teacher-Plaintiffs are at-will employees without a property interest in continued employment that gives rise to due process protections.*fn2 Plaintiffs' Proposed Second Amended Complaint claims that the closure of the Academy violated the Proposed Teacher-Plaintiffs' rights to procedural due process prior to dismissal from or termination of employment.*fn3 (Doc. No. 8-1 at ¶ 75.) Public employees, including teachers, are entitled to due process protections prior to termination if they have a property interest in continued employment. Bd. of Regents v. Roth, 408 U.S. 564, 576-578 (1972). In order to have a property interest, individuals must show that they have "a legitimate claim of entitlement" to continued employment rather than a "unilateral expectation of it." Id. at 577. Entitlement to continued employment may be founded upon statutory language creating such an entitlement or contractual or tenure provisions that require a hearing before dismissal or termination. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538 (1985); Perry v. Sindermann, 408 U.S. 593, 601 (1972). In addition, in the absence of an explicit contractual provision, a property interest may arise from an implied contract or mutually ...