[00:00:01] Speaker ?:
Case number 17S7155.

[00:00:53] Speaker 03:
May it please the Court, Kelly Dunbar for Public Charter School Appellants.

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If I may, I'd like to reserve three minutes for rebuttal.

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I'll begin with a word about jurisdiction before turning to the merits.

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As set forth in our supplemental brief, we believe that... I'd better have more than a word about it.

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As long as the Court would like on the jurisdictional issue.

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As set forth in our supplemental brief, for at least four reasons, the District Court had jurisdiction over this case.

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And we're confident in each of those bases, and I'm happy to answer questions about any of them.

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As we explained, this case uniquely implicates the balance of power between Congress and the district, a relationship of constitutional dimension, and that, in this case, sits at the intersection of two congressional enactments, the Home Rule Act and the School Reform Act.

[00:01:36] Speaker 03:
The simplest path to jurisdiction, however, may be through 28 USC 1367, the supplemental jurisdiction route.

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Count two of the appellant's complaint, raise the federal

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question of whether the district's district funding practices are preempted, invoking expressed preemption and obstacle preemption theories.

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And this is set forth at JA 36 through JA 38.

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The district court dismissed count two, but there is no suggestion that count two was so frivolous, such that under Steele co and Supreme Court precedent, it didn't invoke the jurisdiction of federal courts at all.

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And we'd submit that's the correct answer.

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Any finding that that was a frivolous argument would be unfounded.

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The district court cited and we've cited.

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The supremacy clause to operate has to be federal law.

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It's trumping local law.

[00:02:26] Speaker 03:
Your Honor, Article 6, the Supremacy Clause speaks of the law of the United States.

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And the unresolved question really that's actually not resolved even after the district court decision is what constitutional status does an enactment that Congress makes pursuant to its Article 1 authority for the district have vis-a-vis a conflicting district enacted law?

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And this court's decision in Callaway, for example, highlights, I think, there are a lot of unresolved issues in answering that question.

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In Callaway, this court said, for example, it can't be that a district-only congressional law is actually a local law for preemption purposes.

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Otherwise, you could have a scenario in which Congress

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pursuant to its Article 1 authority and acts a law at time 2 that's been preempted by something Congress has done previously at time 1 in the exercise of its non-legal authority and that that would create confounding problems.

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And I think we'd submit that this court's precedent and really the precedent across the country haven't answered the question of whether

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despite the fact that Congress, for section 1366 purposes, has ranked district-only congressional law as not federal law for purposes of section 1331.

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Nevertheless, whether for constitutional purposes, a district-only congressional law is superior to district law in a constitutional sense.

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And again, we don't think, however this court resolves that question.

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So would that mean that any time you have a law that Congress thought for purposes of under 1366,

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would not be one that gives rise to jurisdiction because it's local in nature that you could layer on the Supremacy Clause and get jurisdiction?

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Or is that not where your argument goes?

[00:04:14] Speaker 03:
With respect to count two of the complaint, which again is the dismissed count, and some of these issues arise under count one, really, which arose under the district clause, because as you may recall, the district court ultimately dismissed count two, but explained that the same preemption-like principles, that is attempting to ascertain what is the relationship between a congressional district-only law and a conflicting district practice, arises under the district clause.

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Our submission is that doesn't necessarily mean that Section 1366 can be overcome in every instance.

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What's unique about the School Reform Act and what you... Wait, are you talking about the District Clause or the Supremacy Clause now?

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Sorry, the Supremacy Clause.

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Let me answer to your question.

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What's unique in this circumstance is that we had a...

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Congressional Enactment, the School Reform Act, that imposed obligations directly on the mayor and the district's council's office as organs of the district's government.

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That is, Section 2401 imposes direct mandatory obligations with respect to how the district's organs of government are supposed to exercise their delegated authority with respect to public school funding.

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And again, we think it was a non-frivolous argument to say when the district takes actions that are expressly or impliedly inconsistent with that, again, under expressed preemption theories or conflict preemption theories, that that raises a federal question that's sufficient to give rise to federal questions.

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But we know that the provisions under the School Reform Act that you're relying on there, because the way your argument is sequenced, as I understand it, is

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there are provisions of the School Reform Act that are problematic for the district.

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And those provisions are problematic.

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And because the district didn't adhere to those provisions of the School Reform Act, that creates a conflict that is cognizable under the Supremacy Clause.

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So you go through the School Reform Act to get to the Supremacy Clause.

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That's correct, Your Honor.

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Just as you would, I would submit that that analysis would be similar to how you would analyze a federal preemption question in many contexts in which you have a preemptive statute that is then analyzed under the rubric of Supremacy Clause Precedent to determine... Right, so then I'm not understanding, for example, why it wouldn't mean that in any case where you have a statute that would be treated as local in character for 1366 slash 1331 purposes,

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you wouldn't just have a supremacy clause overlay that would give rise to federal question jurisdiction?

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I think the statute, what's unique about this statute, and what I submit wouldn't be the case in any sort of hypothetical locally enacted congressional laws, that the obligations at issue here are obligations that are directly imposed upon the district.

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And so this isn't a garden variety dispute about a violation of district law.

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The claim is that the district, the mayor and the district's council... So how about this?

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So in Diamond, in our decision in Diamond, the law,

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provisions, the D.C.

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Code provisions which were enacted by Congress that were at issue, prevented the Council from enacting any rule that was with respect to the jurisdiction of the District of Columbia courts.

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So that was a limitation of the Council.

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What we said was that a claim under that law wasn't enough to give rise to federal question jurisdiction because under 1366 that law deals specifically locally with DC.

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And then if you tack on a supremacy clause,

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claim in that situation, would that work or am I not understanding correctly?

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You know, it's conceivable that in that circumstance one could have stated a non-frivolous Supremacy Clause claim.

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Why wouldn't it have been equally non-frivolous as this one?

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Or is there a difference?

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I don't see a difference.

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No, I'm accepting the premise of the hypothetical that one could frame that as a Supremacy Clause problem.

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It obviously wasn't in that case.

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And I think that's a significant difference.

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And I can understand why this court might have a concern that a plaintiff or a party could make an end run around 1366 by addressing it up as a Supremacy Clause violation.

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But I'd submit, if you want to adhere to the plain text of section 1366, that's precisely what 1366 says.

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It says, for purposes of this subchapter,

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the provisions governing federal jurisdiction that a law that Congress enacts only for the district shall not give rise to federal question jurisdiction.

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However, the district court noted the same distinction in deciding this question in the preemption context that does not necessarily answer the question whether from a constitutional standpoint, again whether you're thinking of the question under the Supremacy Clause or under the District Clause,

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that the congressionally enacted law is superior to conflicting local law.

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So even if you accepted that for jurisdictional purposes, that wouldn't, given that section 1366 is expressly limited to the 1331 question.

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So what if Congress, in its statute that's at issue, say the School Reform Act, and it just says, it taps on a provision that says, by the way, we don't think this law is supreme for purposes of the Supremacy Clause.

[00:09:33] Speaker 03:
That's an interesting question.

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I think the answer, Your Honor, is probably that Congress doesn't get to define the constitutional status for constitutional purposes.

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And the reason is I think that would otherwise create problems as to whether Congress is effectively

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delegating or handing off a constitutionally assigned responsibility.

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Chief Justice Marshall, as early as Cohen versus Virginia, recognized that when Congress acts under its Article 1 Section 8 authority over the district, it may be in some sense acting as a quote-unquote local legislature, but it is still Congress acting with the national legislature.

[00:10:13] Speaker 03:
And that part of the reason the framers invested

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Congress would control over the territory that would become the seat of the government was because they recognized that there would be national level.

[00:10:22] Speaker 02:
Congress does get to define the jurisdiction of the federal courts.

[00:10:26] Speaker 02:
Congress does get to define the jurisdiction of the federal courts, right?

[00:10:29] Speaker 02:
That is correct.

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For subject matter jurisdiction purposes, correct.

[00:10:32] Speaker 03:
I'm sorry, I took the hypothetical to mean that Congress was attempting to say something, a law that it enacts was not supreme for purposes of Article 6 or Article 1.

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In which case, I would say that would raise constitutional trouble.

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Whether Congress could write a statute that says, if you want to bring a supremacy clause challenge to a local district law, you can't do so in federal court.

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I think Congress probably could do that, but I'd submit the plain text that 1366 doesn't do that.

[00:11:01] Speaker 03:
It only says that if you're bringing a challenge arising under a locally enacted law,

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that ought to go to the superior court, a constitutional claim by definition doesn't arise under the district law.

[00:11:16] Speaker 03:
It arises under the supremacy clause or the district clause.

[00:11:21] Speaker 03:
To be more precise, I think after Armstrong, the answer is it arises under a federal court's equitable authority to enjoin unconstitutional action by a state, local, or federal government official.

[00:11:33] Speaker 01:
So we have the authority to do a remedy, but that all depends on you having a federal right to enforce.

[00:11:38] Speaker 01:
And that's where I think the Armstrong problem arises for you.

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You have to figure out what your claim arises under.

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And if it's not arising under the supremacy clause, because the supremacy clause does not create individual rights, then individually enforceable rights is simply a rule of decision, then how can that be

[00:12:01] Speaker 01:
the source of federal law in which your complaint arises.

[00:12:03] Speaker 01:
It seems instead like you're rising under the School Reform Act.

[00:12:07] Speaker 03:
Your Honor, I'd submit Armstrong analyzed that question differently, which is, you recall Armstrong involved states making a challenge under the Medicaid Act.

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I think all nine justices agreed that we should abandon talking about whether there is such a thing as an implied right of action in the Supremacy Clause, but all nine justices also agreed that there is a long tradition of federal courts exercising equitable authority

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to enjoin unconstitutional state action, whether by federal, state, local government officials, and that

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equitable, federal equitable power was essentially what a preemption claim arises under.

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Then there's a separate inquiry, and this is where the justices split, as to whether Congress can withdraw equitable authority by establishing a detailed remedial scheme.

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But there was no question in Armstrong, Your Honor, as to whether the Medicaid Act itself created a private right of action that was enforceable.

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The assumption was that

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Federal courts had inherent equitable authority, and I think scholars after Armstrong have spoken of essentially a recognition that there is essentially a cause of action that arises under federal equitable principles to enjoying unconstitutional action.

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And we submit that those same principles are applicable here, whether you're thinking about that under the district clause or the supremacy clause.

[00:13:30] Speaker 01:
Sorry, I may not have satisfactorily answered the question, but again, the short version is I don't think that either before or after Armstrong... An affirmative cause of action or right, affirmative legal right is to have an injunction if you win under your other statute that they did something they weren't supposed to do.

[00:13:54] Speaker 01:
The federal equitable authority sounds to me more the remedial thing that kicks in once you've established a conflict between a state and federal law, and you're assuming under the Medicaid Act, a federal statute, so you didn't have this issue.

[00:14:13] Speaker 01:
The only thing that seems to be federal is this asserted equitable remedial power.

[00:14:20] Speaker 01:
The School Reform Act claims apply only to the district and so don't arise under federal law for those purposes.

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The relevant Home Rule Act provisions, the relevant ones here, apply only to the district and so therefore do not arise under federal law for purposes of 1331.

[00:14:39] Speaker 01:
So your position is the fact that courts have an equitable remedial authority is enough to create federal jurisdiction.

[00:14:47] Speaker 03:
That clarification helps me understand.

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I think I may have misanswered.

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Our position is that the

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under either the district clause or the supremacy clause, that a law that Congress enacts only for the district, whatever it means for Section 1331 jurisdictional purposes, is constitutionally ranked superior to conflicting district enacted law.

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That is, law enacted by the district government.

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And as the district court put it, she thought that under the district clause, the question was,

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Congress has the right to pass a superior, effectively preempting, enactment, even if

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it is directed only at the district.

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That flows inactually from the assignment of plenary authority to Congress in Article 1.

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And that, as a constitutional matter, again, whether you're thinking of this question under the Supremacy Clause or the District Clause, that statute that Congress has enacted, that it intended to be superior, serves the same role as a preempting statute in Armstrong.

[00:15:50] Speaker 03:
That is, before and after Armstrong and preemption cases,

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courts didn't look to whether the statute that was doing the preemptive work, the federal statute, created a cause of action itself.

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You have the cause of action and equity to sue to enjoin state or local action that conflicted with that superior enactment by Congress.

[00:16:09] Speaker 02:
And our position is that under the district clause... So, can't Congress deal with equity?

[00:16:14] Speaker 02:
In other words, it seems odd that Congress would have wanted to keep cases under the School Reform Act out of federal court.

[00:16:20] Speaker 02:
Let's just assume that.

[00:16:22] Speaker 02:
I mean, I don't really think you'd dispute that, actually.

[00:16:24] Speaker 02:
The school reform act of its own force doesn't give rise to federal jurisdiction.

[00:16:27] Speaker 02:
There has to be some overlay that comes from the Constitution that does so.

[00:16:30] Speaker 02:
Because I don't think your supplemental... That's right.

[00:16:32] Speaker 03:
We're not making that argument now.

[00:16:33] Speaker 02:
Right, right.

[00:16:35] Speaker 02:
So then Congress wanted to keep school reform act cases out of the federal courts and wanted them to be just litigated in the course of the District of Columbia.

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But yet...

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They were incapable of doing that because there's always, apparently, a non-frivolous supremacy slash district clause overlay that could have been tacked on to any one of those cases.

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And then they would always get to federal court.

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And then the score of format claim just comes along as a supplemental jurisdiction rider.

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And so effectively, Congress would have done nothing.

[00:17:05] Speaker 03:
Well, two responses, Your Honor.

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First is that at some point, the question as to whether the Supremacy Clause, the interaction between a district-only law and conflicting district enacted law may become a frivolous issue.

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That is, when courts actually decide the question, and the district court here did decide the question.

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One of the reasons the Supreme Court has stressed in applying the substantiality standard is where there's conflicting precedent, a federal court has to have jurisdiction to be able to decide the merits, even if it's to say the claim fails.

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And so at some point, that question may be resolved.

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But second, I'd submit, Your Honor, that particularly with respect to a jurisdictional statute like 1366, if Congress wanted to write that provision to apply to

[00:17:50] Speaker 03:
any claim in which a court in the process of adjudicating a constitutional claim that arises under federal law, that Congress wanted to say we want those in superior court as well, Congress could do that.

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But 1366 as written doesn't do that.

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It only says that claims that arise under

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a locally enacted congressional law, and I think applying straightforward preemption or district clause principles, those claims arise under the Constitution, and 1366 simply doesn't speak to claims arising under the Constitution.

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And I understand that in the course of

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adjudicating that constitutional claim, a court will pass on necessarily the meaning of the School Reform Act or the Home Rule Act.

[00:18:33] Speaker 03:
That's also true in preemption cases.

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That's also true in lots of other contexts.

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So I guess the bottom line is had Congress wanted to write a provision that not only sent all claims arising directly under the district-only congressional law to superior court,

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but also any constitutional claim which might involve interpretation of a district-only congressional law.

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It could have said so, but it didn't.

[00:18:58] Speaker 01:
It's not any constitutional claim.

[00:18:59] Speaker 01:
We're only talking about either Supremacy or District Clause.

[00:19:02] Speaker 01:
We're not talking about equal protection or First Amendment or anything like that.

[00:19:06] Speaker 03:
No, Your Honor, but I'd submit that the analysis is the same.

[00:19:08] Speaker 03:
That is, you don't think of a First Amendment claim as, I guess the point, Your Honor, is that you think- Well, first of all, it creates substantive rights.

[00:19:16] Speaker 01:
The Supremacy Clause does not.

[00:19:19] Speaker 03:
That is correct, Your Honor, but again, I think Armstrong, what Armstrong, again, to back to the Armstrong, Armstrong recognizes you have the federal cause of action effectively arising as a matter of federal equitable principles.

[00:19:29] Speaker 03:
The district clause, I think, would arise.

[00:19:31] Speaker 03:
I'm not sure there is a court decision dealing with the question of whether there is an implied right of action under the district clause.

[00:19:36] Speaker 01:
I just wanted to ask you, it's not so much an implied right of action, but do you think that, you keep saying it's a currency clause slash district clause, and we've been doing the same thing.

[00:19:45] Speaker 01:
But are they different for this purpose?

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Is there some argument that the district clause creates substantive rights against?

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Do they track one for one, or would you have an argument that Armstrong doesn't apply if we think this is really a district clause issue?

[00:20:07] Speaker 01:
who wins the tug-of-war between the Council and Congress?

[00:20:08] Speaker 03:
Well, I think, Your Honor, I do think the analysis is slightly different, and the District Court obviously assigned significance to this difference, and the fact is that, and I think we alluded to this in the opening of both my opening here and the supplemental brief, which is that

[00:20:23] Speaker 03:
Article 1, Section 8 provision regulating the relationship between Congress and the district really is a unique constitutional provision that recognizes a very unique and sui generis constitutional status between Congress and the district.

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And the idea that Congress, just as a plain interpretive matter, the idea that Congress through 1366 would have wanted to channel

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all litigation challenging district action, which is really a direct affront to an exercise of congressional authority under the district clause to superior court, I submit this doesn't make good sense of what Congress was trying to accomplish in 1366, and there's no clear evidence that that would be the case.

[00:21:03] Speaker 03:
The answer to your question, Your Honor, is that under the district clause, given the unique relationship recognized, and given that this case, under our theory again, is that Congress was exercising its constitutional authority, it wanted to do so in a comprehensive and mandatory and exclusive manner to address a problem that the local district government had been unable to fix, that is educating the district's youth.

[00:21:26] Speaker 03:
that the idea that 1366 plainly read means that that type of suit has to be brought in Superior Court isn't a fair reading of the text of 1366, given that that claim arises under the Constitution and arises under Article I. Could one of your students at Eagle Academy or Washington Latin, could you have added an equal protection claim by one of your students?

[00:21:55] Speaker 00:
and avoided.

[00:21:58] Speaker 03:
Your Honor, I believe that's certainly a possible claim.

[00:22:01] Speaker 03:
I'm aware that there has been constitutional litigation across the country with respect to charter school funding.

[00:22:08] Speaker 03:
I'm not aware of the outcome of all of those cases.

[00:22:11] Speaker 03:
I think one of the things that makes this case unique and

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to having said a little bit more than a word about jurisdiction, to just briefly touch on the merits of the case.

[00:22:19] Speaker 03:
I think what really makes this unique is that Congress itself took upon itself the, again, faced with what was a crisis in public education for many of the district's youth, took upon itself to create public charter schools as a new model of education in the district.

[00:22:37] Speaker 03:
and imposed a statutory requirement that funding be provided on a uniform per student basis to charter and traditional schools alike.

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And that funding requirement, I think is clear from the text structure purposes and legislative history of the statute, was designed to serve really important purposes to ensure that charter schools would have a chance to succeed to

[00:23:02] Speaker 03:
implement basic notions of fairness and equity for the district students.

[00:23:05] Speaker 03:
You know at the time this complaint was filed, public charter school students were 37,000 students in the district.

[00:23:11] Speaker 03:
Now I understand that number is up north of 43,000.

[00:23:14] Speaker 03:
Essentially one out of every two district students attends a public charter school.

[00:23:20] Speaker 03:
And the claims that we're presenting here are that the district, both expressly and impliedly, has taken actions that directly conflict with that uniform funding mandate.

[00:23:30] Speaker 02:
Can I ask a question just about how the merits arguments fit together?

[00:23:33] Speaker 02:
Please.

[00:23:35] Speaker 02:
So there's an argument that the district court didn't resolve, which is whether the Home Rule Act properly construed would allow DC to amend the School Reform Act.

[00:23:47] Speaker 02:
And if, just hypothetically, if I thought the Home Rule Act were best read to allow DC to amend the School Reform Act because it's a law that deals specifically with DC, then is that a viable path for reaching a resolution and then just not engaging on any of the questions of whether the path that DC has chosen in fact conflicts with the School Reform Act?

[00:24:13] Speaker 03:
I don't think so, Your Honor, because we have a

[00:24:16] Speaker 03:
We have another argument and I'd submit the easier path to resolve that question is that to the extent you think that the Congress in 1973 that enacted the Home Rule Act intended a basic repeal or intended the district to have an essential repeal or amend authority.

[00:24:32] Speaker 03:
that the later Congress, in enacting the School Reform Act, impliedly withdrew any such authority with respect to at least the central mandatory terms of the School Reform Act.

[00:24:42] Speaker 03:
That is, following the path of analysis, this court adopted and shook, which looked at a very similar circumstance.

[00:24:50] Speaker 02:
So I get that argument.

[00:24:51] Speaker 02:
And I know you can't abandon it.

[00:24:53] Speaker 02:
I'm not asking you to.

[00:24:54] Speaker 02:
So it's true, I think, that if Congress, just to make it easy, if hypothetically they added a particular provision that said,

[00:25:01] Speaker 02:
the provision of the Home Rule Act that otherwise would allow the amendment of repeal doesn't apply to the School Reform Act, then that authority doesn't exist.

[00:25:09] Speaker 02:
And you're saying that there was something functionally equivalent to that without the explicit provision that they impliedly did the same thing.

[00:25:15] Speaker 02:
I guess I'm asking an even more basic question.

[00:25:18] Speaker 02:
Let's just suppose I disagree with you on that.

[00:25:19] Speaker 02:
Just assume I disagree with you on that.

[00:25:21] Speaker 02:
Then if I conclude that that amend or repeal authority that's designated in the Home Rule Act applies to the School Reform Act,

[00:25:30] Speaker 02:
then is there anything that prevents me from saying, well, even if the district didn't think it was amending or repealing the School Reform Act, it has the authority to amend or repeal the School Reform Act under the Home Rule Act.

[00:25:44] Speaker 02:
And that's an easier way to reach a resolution without having to decide whether the district, in fact, conflicted with the School Reform Act in promulgating the challenged methodologies.

[00:25:58] Speaker 03:
So just to restate your, just to make sure I'm answering the question correctly, if your position is that the Home Rule Act clearly gave, as enacted in 1973, clearly gives the district the authority to enact conflicting, repealing, amending legislation with respect to any subsequent congressional enactment, then

[00:26:24] Speaker 03:
Yes, I think that would resolve any need to decide whether there is a conflict between the schools.

[00:26:33] Speaker 03:
But just to make clear that I'm not being accused of abandoning anything, there would then be the question again as to whether the later Congress impliedly withdrew that authority.

[00:26:42] Speaker 03:
And again, that's our central position here is that you don't need to resolve the somewhat muddled question of what the Home Rule Act meant, what Congress

[00:26:51] Speaker 03:
when it enacted the Home Rule Act in the 70s, because it was twice clear.

[00:26:54] Speaker 02:
Right, and just to put a fine point on it, since I think the exchanges helped me, so it doesn't matter that the district, it wouldn't matter whether the district thought that it was amending or repealing.

[00:27:07] Speaker 02:
If you buy all the assumptions that you can't buy, but I'm asking you to buy, it wouldn't matter that the district

[00:27:13] Speaker 02:
promulgates provisions that are in effectuation, it believes are in effectuation of the school reform act and doesn't believe that it's amending or repealing the school reform act.

[00:27:24] Speaker 02:
But the fact that the district would have the authority to do that by hypothesis would be enough to allow resolving the case on that basis.

[00:27:34] Speaker 03:
I believe so, Your Honor.

[00:27:35] Speaker 03:
And I think, and of course I

[00:27:37] Speaker 03:
to fight the hypothetical a bit at just the first step.

[00:27:41] Speaker 03:
Again, it may not be relevant to your analysis, but I do think, and I think this bleeds back into the jurisdictional question as well, what's unique about this case is not only that it really does speak to the balance of power between Congress and the district, but this is a case where there is really a very express, avowed purpose of being able to amend

[00:27:59] Speaker 03:
repeal acts, the School Reform Act.

[00:28:03] Speaker 03:
The district really hasn't hidden the fact, if you just look at the DC code and how it has implemented the School Reform Act, the district in the district council's brief as amicus basically characterizes what it's done as amending

[00:28:17] Speaker 03:
and adopting different interpretations of the School Reform Act and what Congress may have intended and we think that's fine.

[00:28:23] Speaker 03:
And that's one of the reasons to again jump back to the jurisdictional point that we think this is really the type of dispute that sensibly belongs in a federal forum, which is understanding as between the congressionally enacted law and conflicting, purportedly amending district legislation, which is superior and who has authority is a federal question.

[00:28:43] Speaker 03:
But I do think that if you posit that the Home Rule Act grants an across-the-board blanket authority to repeal and amend, and if you posit that Congress didn't imply or explicitly withdraw that at a later point, then that would be sufficient to address the merits question.

[00:28:59] Speaker 01:
Can I just get some clarification from you on your position on the supplemental payments?

[00:29:03] Speaker 01:
Yes, Your Honor.

[00:29:04] Speaker 01:
Because I wasn't totally clear where you ended up landing on that, because it sounded like some supplemental payments you thought wouldn't have to be matched.

[00:29:12] Speaker 01:
But some would, for example, if the public school, PCPS school burned down, you could give them the funds to rebuild that year and wouldn't have to give the same funds to all the charter schools that didn't burn down?

[00:29:26] Speaker 01:
Yes, Your Honor.

[00:29:26] Speaker 01:
So what's your position on some of these?

[00:29:28] Speaker 01:
Which is in and which is out?

[00:29:29] Speaker 03:
Our position is that the school reform acts tax would permit a supplemental annual payment.

[00:29:35] Speaker 03:
That supplemental annual payment would need to be made through the uniform funding mechanism.

[00:29:39] Speaker 03:
that doesn't however lead to the sort of absurd windfall results that the district accuses are reading and producing, principally because in many of the circumstances, the emergency or exigency circumstances that the district identifies, those costs or expenses would not be an operating expense.

[00:29:57] Speaker 03:
They would be a capital level expense or they would be

[00:30:00] Speaker 03:
what I understand in accounting and budgeting terms is a non-operating expense, which is a non-routine, non-expected, truly emergency cost.

[00:30:08] Speaker 03:
And I think that question really speaks to a fundamental problem here, which is that the district hasn't really taken seriously its obligation to have to fund uniformly through the uniform funding mechanism.

[00:30:19] Speaker 01:
I just want to make sure I'm clear here on what this line is.

[00:30:22] Speaker 01:
Sure.

[00:30:22] Speaker 01:
So, all right, burned down school, that doesn't

[00:30:25] Speaker 01:
That doesn't result in all the charter schools having to get the same payment.

[00:30:29] Speaker 01:
What if there's just a sudden influx into the DCPS schools?

[00:30:34] Speaker 01:
Because I remember after Hurricane Katrina, a lot of students came up

[00:30:38] Speaker 01:
all over the country, including to the district, and suddenly needed to be schooled here because they couldn't be schooled in Louisiana.

[00:30:45] Speaker 01:
And so there's a sudden influx into the DC public schools that isn't anticipated when those annual payments are first made.

[00:30:54] Speaker 01:
Would the charter school, so a supplemental payment needs to be made for those students, for their education, would that have to be made to charter schools if they hadn't admitted any of those students?

[00:31:07] Speaker 03:
The answer is it's unclear for two reasons.

[00:31:11] Speaker 01:
The first is that the district would need to have come up with a definition of what an operating expense is, and there would be a question as to whether... Well, you moved to summary judgment in this case, so I'm trying to figure out your theory of getting summary judgment on these supplemental payments, so I don't know how it can be unclear.

[00:31:23] Speaker 01:
You must have a theory.

[00:31:25] Speaker 03:
Well, it's only unclear because there are essentially three categories of costs that are at issue here, and the uniform funding mechanism by its terms only applies to one of those categories of costs, that is operating expenses.

[00:31:38] Speaker 03:
There are definitions of operating expenses that exclude, even though it might be a sort of day-to-day thing necessary to keep a business or school running, there is a concept called a non-operating expense.

[00:31:52] Speaker 03:
which is something that is truly unexpected, truly one time.

[00:31:56] Speaker 03:
It's conceivable that a hurricane scenario that you're positing would fit into that.

[00:32:01] Speaker 01:
Well, hurricane didn't hit here.

[00:32:02] Speaker 01:
This is a sudden influx of students.

[00:32:04] Speaker 01:
Well, right, if the mobility of students is the result of something truly... Was that your position on what operating... I mean, I know you're telling me they'd have to give you a definition, but I had thought that you had a definition of operating expenses.

[00:32:15] Speaker 01:
So would your definition of operating expenses include or exclude payments per student from a surprise student influx, like after Hurricane Katrina?

[00:32:27] Speaker 03:
I think the answer is that that probably would be an operating expense, and that gets to my second answer, which is that given the structure Congress was establishing here, which is a mechanism that is per people, if in your hypothetical, and I think it is because it's Katrina, students are moving in from outside the district.

[00:32:42] Speaker 03:
That is, we're not talking about intra-district mobility.

[00:32:47] Speaker 03:
Given the nature of the per-student funding formula, which is that money should follow the student, and it should follow students on a per-student basis, if

[00:32:55] Speaker 03:
Mid-year, there's a sudden influx into either sector of system because of an unexpected event, and assuming those are operating expenses because the district doesn't decide, actually, this is just more like an emergency exigency fund.

[00:33:08] Speaker 01:
No, you've got a definition of operating expense.

[00:33:10] Speaker 01:
I assume you wouldn't let the district just define it.

[00:33:12] Speaker 01:
If you think it's an operating expense, I assume you're not going to let the district just say, we disagree and you lose.

[00:33:16] Speaker 03:
Right, right.

[00:33:17] Speaker 01:
Okay, so your definition of operating expenses would say that's in.

[00:33:20] Speaker 03:
I believe so, Your Honor, but in that circumstance, we would have no objection, and there's nothing in the School Reform Act that would preclude

[00:33:28] Speaker 03:
the district from making pro-rated per-student mid-year funds so long as they followed the formula, so long as that they followed the student formula.

[00:33:39] Speaker 03:
That is, so long as there was the aggregate equity that the formula was designed to accomplish.

[00:33:44] Speaker 01:
So what does that mean?

[00:33:44] Speaker 01:
Does that mean, let's just, because I'm not that good at math, so let's assume 1,000 students come in.

[00:33:51] Speaker 01:
And they come in in December, so you're going to need

[00:33:56] Speaker 01:
two-thirds of the year's payment to educate them.

[00:34:00] Speaker 01:
So they give two-thirds of the annual payment times $1,000 to the DCPS schools because they're the ones going to educate these kids for the balance of the school year.

[00:34:10] Speaker 01:
They have to get the same check to the charter schools or only if the kids go to the charter schools.

[00:34:15] Speaker 03:
Again, if the mobility is coming from outside the district, I don't think there's anything in either the text of the school format or our interpretation of it that would demand those same checks go to public charter schools even though they weren't experiencing a similar influx.

[00:34:27] Speaker 01:
So then it wouldn't be operating expenses subject to the formula?

[00:34:30] Speaker 01:
Or is your understanding that the formula wouldn't apply to operating expenses that are incurred in December?

[00:34:36] Speaker 03:
No, my understanding of the formula is that the hypothetical year positing would maintain the integrity of the per student equality uniformity requirement that is embodied in the school reform act.

[00:34:50] Speaker 01:
So the charter schools wouldn't get the money unless the students went to a charter school.

[00:34:53] Speaker 03:
That's correct.

[00:34:54] Speaker 03:
And this is an important point, Your Honor, because there are mechanisms that the district does follow to make mid-year adjustments based on mobility changes to public charter schools.

[00:35:04] Speaker 03:
that it doesn't currently make for district public school students but there's nothing again I think in our interpretation of the school reform act that would preclude the district from being able to make those mid-year mobility adjustments so long as they followed a pro-rated version of

[00:35:20] Speaker 03:
the per student formula that the school reform act requires.

[00:35:23] Speaker 03:
But I don't want to miss the point though to say, and I understand that we have an obligation to come up with a definition, but I think a big part of the problem of what's been going on here with respect to this funding is that the district has never really sat down and come up with a conceptual definition of what an operating expense is, what a capital expense is.

[00:35:42] Speaker 03:
adequacy study, which the district included in the summary judgment record below, which is at JA 580 and 581, makes this point emphatically.

[00:35:52] Speaker 03:
That was a study by independent consultants that was asked for by the deputy mayor of education in response to criticism that there had been inequitable funding.

[00:36:03] Speaker 03:
This was a 15-month study, and what the study found is that the district really has no coherent, conceptual reporting mechanism

[00:36:09] Speaker 03:
for figuring out what operating expenses are.

[00:36:12] Speaker 01:
I'm sorry.

[00:36:13] Speaker 01:
I'm not quite understanding why.

[00:36:15] Speaker 01:
So you moved for summary judgment in this case, correct?

[00:36:20] Speaker 01:
It was cross motions for summary judgment.

[00:36:21] Speaker 01:
Yes, correct, Your Honor.

[00:36:21] Speaker 01:
So you moved for summary judgment.

[00:36:23] Speaker 01:
And I thought you were making an argument under the meaning of the statute here that you haven't understanding what operating expenses are.

[00:36:32] Speaker 01:
And they include supplemental payments or some supplemental payments and not others.

[00:36:39] Speaker 01:
could render summary judgment for you on that that understanding correct or not I'm just confused as to why we need to know what do you think the district gets difference if it comes up with a definition

[00:36:52] Speaker 03:
Yes, absolutely, and it's certainly relevant.

[00:36:54] Speaker 03:
I think it's relevant with respect to supplemental appropriations, but it's more relevant with respect to teacher retirement payments and facilities-related payments.

[00:37:00] Speaker 03:
The district has taken a quite across-the-board categorical position that those costs aren't operating expenses, and then accused us of adopting such a wooden and flexible interpretation of the statute that they wouldn't be able to respond to exigencies or emergencies.

[00:37:15] Speaker 03:
All I'm suggesting is, Your Honor, is not to attempt to relieve ourselves of summary judgment burden, but rather that

[00:37:21] Speaker 03:
The term when something is an operating expense versus when something is an operating expense may well involve some tough judgment calls.

[00:37:29] Speaker 03:
Here those judgment calls aren't really necessary to resolution of this case because the district has taken an across the board position that teacher retirement payments don't count.

[00:37:41] Speaker 03:
and that facilities related costs don't count despite the fact that those fit with any commonly accepted definition of operating expenses.

[00:37:49] Speaker 03:
If the court would rule in our favor and say all operating expenses for public school students in the district need to be funded according to the uniform formula.

[00:38:00] Speaker 01:
How can we do that without knowing what operating expenses means?

[00:38:03] Speaker 03:
Well, there is a definition.

[00:38:05] Speaker 03:
We think there is an accepted definition of what an operating expense means.

[00:38:09] Speaker 03:
How that definition applies, as I'm sure you may be aware from sitting on too many FERC cases, how that definition applies in any particular case to any particular line item or expense may involve a matter of judgment.

[00:38:22] Speaker 03:
I'm saying that issue isn't presented here, Your Honor, because you have a circumstance where the district hasn't come up with those

[00:38:30] Speaker 03:
hasn't attempted to come up with a definition and has instead taken a rather across-the-board categorical position that things that fall within the core of the definition, that is essentially payments for current teacher salary packages, that is the pension piece, and payments for routine repair non-structural maintenance of schools

[00:38:52] Speaker 03:
are not operating expenses.

[00:38:53] Speaker 03:
When we think under any accepted definition of operating expenses, those count.

[00:38:57] Speaker 01:
The first problem that you were suing over was supplemental payments, and now you keep leaving that out because we've discussed how complicated that is.

[00:39:03] Speaker 01:
So is the answer here that nobody should get summary judgment?

[00:39:06] Speaker 01:
You need to have more proceedings to figure out?

[00:39:08] Speaker 01:
what supplemental payments include or don't, and what operating expenses mean or not, or are we supposed to give the definition of operating expenses?

[00:39:15] Speaker 01:
Are we supposed to wait for DC?

[00:39:16] Speaker 01:
I'm confused as to what you want now.

[00:39:18] Speaker 03:
Sure, if we're, if we're only, so with respect to, we would, we would like a declaration by this court that facilities related operating expenses and teacher retirement payments are operating expenses subject to the formula.

[00:39:30] Speaker 03:
And we, I think, laid out the reasons why that's the case.

[00:39:33] Speaker 01:
So you're dropping your

[00:39:34] Speaker 03:
I just wanted to bracket those to then move to that.

[00:39:37] Speaker 03:
If the only question is supplemental appropriations, the one supplemental specific example of a supplemental appropriation that's in the record is a fiscal year 2012 supplemental appropriation that the district made for $25 million that was made according to the district for a variety of expenses arising from budget shortfalls and funding shortfalls in the district schools.

[00:40:00] Speaker 03:
we have set as we set forth in our statement of undisputed facts and the district hasn't disputed those are routine day-to-day operating expenses and the district vigorously defends its right to be able to make those mid-year supplemental operating expense payments on a disparate basis and we think that's contrary to the text structure and purposes of the act so with respect to the relief we're asking for from this court with respect to that question it's simply that

[00:40:27] Speaker 03:
The uniformity requirement that Congress imposed wasn't meant to attach at only one point in the budget cycle.

[00:40:34] Speaker 03:
If something is an operating expense and the district wants to fund that mid-year, it needs to do that consistent with the terms of the uniform funding mandate.

[00:40:46] Speaker 03:
Thank you.

[00:40:48] Speaker 00:
Thank you.

[00:41:00] Speaker 04:
May it please the court, Jason Lettersign for the District of Columbia and the other individual district officials.

[00:41:07] Speaker 04:
This court does not have subject matter jurisdiction and neither did the district court.

[00:41:11] Speaker 04:
As we've indicated in our supplemental brief, that question is determined, and it's well settled that it's determined, by the well-pleaded complaint rule.

[00:41:20] Speaker 04:
The well-pleaded complaint rule looks to the idea of, although it didn't say these words particularly, basically the prima facie case that you have for a plaintiff who's seeking relief.

[00:41:30] Speaker 04:
What do you need to get your relief?

[00:41:32] Speaker 04:
And as a result, when you go into court, you look at first, if there is one existing, the cause of action.

[00:41:38] Speaker 04:
You look at the cause of action that they have.

[00:41:40] Speaker 04:
Is there a federal question that's involved?

[00:41:42] Speaker 04:
What the courts have said is, you don't go and look at anticipatory claims in a complaint with respect to what defenses might be by the other side to determine if you've reached a federal issue.

[00:41:52] Speaker 04:
You look at the well-pleaded complaint, and that's your answer.

[00:41:55] Speaker 04:
And here, what the charter schools are seeking is relief under the School Reform Act.

[00:42:00] Speaker 04:
And under the School Reform Act, that's a local law.

[00:42:02] Speaker 04:
It's a local law not just for jurisdictional purposes, but even for any substantive law.

[00:42:07] Speaker 04:
It's clear from the jurisdictional statute that Congress enacted back in 1970 that the School Reform Act is local law.

[00:42:13] Speaker 04:
It is one that was passed exclusively for the district.

[00:42:16] Speaker 04:
There's no dispute about that.

[00:42:17] Speaker 04:
And as a result, you can't come into federal court saying that there's been a violation of the School Reform Act because you're saying that there's a violation of local law.

[00:42:25] Speaker 04:
You have to go to the DC Superior Court.

[00:42:28] Speaker 02:
So they're not relying on the school reform act, right?

[00:42:30] Speaker 02:
They're just saying that the school reform act is supplemental jurisdiction.

[00:42:34] Speaker 02:
They're relying on the constitutional claims as the supremacy clause and the district clause as the basis for coming into federal court and then treating the school reform act claims as supplemental jurisdiction riders.

[00:42:45] Speaker 04:
Well, I mean, first off, you wouldn't look at just the counts that are denominated in the complaint.

[00:42:50] Speaker 04:
You would look at the gravamen of the relief that they're seeking.

[00:42:53] Speaker 04:
And so supplemental jurisdiction doesn't come into play with the School Reform Act, because the supplemental jurisdiction means you have to have original federal question jurisdiction first before you look at resolving the School Reform Act.

[00:43:03] Speaker 04:
And under their well-pleaded complaint, under the well-pleaded complaint rule, what they're seeking is relief under the School Reform Act.

[00:43:09] Speaker 04:
They're saying that the district has violated the School Reform Act.

[00:43:11] Speaker 01:
What is their cause of action?

[00:43:12] Speaker 01:
What is the source of their cause of action?

[00:43:15] Speaker 04:
the School Reform Act.

[00:43:16] Speaker 01:
So the School Reform Act creates a cause of action?

[00:43:19] Speaker 04:
Well, I mean, you know, whether it would create a private right of action for purposes of damages, we just don't think is the issue here.

[00:43:27] Speaker 01:
I'm just asking, what is the source of their cause?

[00:43:29] Speaker 01:
You said we have to start by looking at what their cause of action is, and so I'm trying to figure out what cause of action it is, in your view, that they suit under, because you haven't made any arguments

[00:43:39] Speaker 01:
about there not being a cause of action here.

[00:43:41] Speaker 01:
So I'm trying to figure out what you understood to be the cause of action so I can analyze this jurisdictional question.

[00:43:45] Speaker 01:
The School Reform Act.

[00:43:46] Speaker 01:
So your position is it creates the least inequitable cause of action?

[00:43:51] Speaker 04:
We are saying that if the School Reform Act is a law that instructs the District of Columbia to do something, that one would always be able to seek some sort of equitable belief that a government is not following the law.

[00:44:06] Speaker 01:
Under district law or under federal law?

[00:44:09] Speaker 04:
It wouldn't matter.

[00:44:10] Speaker 04:
I mean, if the district is violent.

[00:44:12] Speaker 01:
It doesn't matter to me.

[00:44:14] Speaker 01:
You can't enforce the Supremacy Clause under 42 U.S.C.

[00:44:17] Speaker 01:
1983, Springport said.

[00:44:20] Speaker 01:
So I'm struggling to figure out what the, and it's not an APA case, you're not a federal agency for those purposes.

[00:44:27] Speaker 01:
So I'm trying to figure out what the source, and maybe there's a district statute I don't know about that is the source of their cause of action to enforce the School Reform Act.

[00:44:38] Speaker 04:
Well, again, our belief is that one wouldn't need a private right of action for damages purposes.

[00:44:43] Speaker 04:
One could get equitable relief by claiming that a government is not following the law.

[00:44:47] Speaker 04:
And it could be a state law.

[00:44:48] Speaker 04:
It could be a local district law.

[00:44:49] Speaker 04:
It could be up on the federal level.

[00:44:51] Speaker 04:
You wouldn't need to get into an analysis about whether you have a private right of action.

[00:44:55] Speaker 04:
So we do believe that the school reform act could be, hypothetically, a basis for going into court and saying it's been violated.

[00:45:01] Speaker 04:
So as we read the complaint, what the charter schools are claiming is that there's a cause of action under the school reform act.

[00:45:07] Speaker 04:
It's been violated.

[00:45:09] Speaker 02:
Is that is that the way the law works in the district that there there's a kind of an ex parte young type of action for violation.

[00:45:19] Speaker 02:
It just springs from the law itself.

[00:45:21] Speaker 02:
It gives rise to a cause of action for compliance with district law.

[00:45:24] Speaker 04:
I'm sorry.

[00:45:24] Speaker 04:
The DC Court of Appeals has said that in Sierra Club, in which they indicated that you don't need to do an analysis under whether this particular law was implied private right of action for citizens.

[00:45:36] Speaker 04:
But rather, when you're talking about whether the government is following the law, you don't need that analysis.

[00:45:41] Speaker 04:
You have an ability to seek equitable relief to stop the government from acting unlawfully.

[00:45:44] Speaker 01:
And that applies to acts of Congress that apply only to the district as well as to district

[00:45:49] Speaker 04:
Well, acts of Congress that apply to the district are local laws, so yes, it would.

[00:45:53] Speaker 01:
I didn't know if that only applied to council enacted laws.

[00:45:56] Speaker 04:
I'm sorry, I can't.

[00:45:57] Speaker 04:
I didn't know if that only applied to council enacted laws, or if they've actually, the DC Court of Appeals has purported to say... Well, the Sierra Club... Sierra Club case was about a local district law that the DC council enacted, but we see no principal reason why it wouldn't apply to congressional acts or just for the district because the district treats them as local law.

[00:46:19] Speaker 04:
And so under the well-pleaded complaint rule, you look through the nomenclature that they might have put at the top of their town, and you see here that all they're seeking is relief under the School Reform Act.

[00:46:29] Speaker 02:
But Count 2 says violation of the Supremacy Clause.

[00:46:31] Speaker 02:
Right.

[00:46:32] Speaker 02:
So it's not styled as a claim that seeks

[00:46:35] Speaker 02:
relief for violation of the school reform act, it's dialed count two as violation of the supremacy clause.

[00:46:41] Speaker 04:
Right.

[00:46:42] Speaker 04:
Normally you would put counts in as alternative counts, right?

[00:46:45] Speaker 04:
In a complaint, you would put in three counts because you believe you violated each count in some form through the facts that you're arguing in the case.

[00:46:52] Speaker 04:
So what if they showed, what if the ultimate merits were that the district didn't violate the school reform act?

[00:46:58] Speaker 04:
Is there a supremacy clause issue?

[00:47:00] Speaker 04:
There's not.

[00:47:01] Speaker 04:
Is there an Article 1, Section 8 issue with the district clause?

[00:47:05] Speaker 04:
There's not.

[00:47:06] Speaker 04:
What they're seeking here is relief under the School Reform Act.

[00:47:08] Speaker 04:
They don't have any alternative grounds of relief under the Supremacy Clause.

[00:47:12] Speaker 04:
It's all premised on a violation of the School Reform Act, which is local law.

[00:47:16] Speaker 04:
What they're doing is exactly what the Supreme Court has said is something that federal question jurisdiction was designed, the test court was designed to avoid.

[00:47:25] Speaker 04:
When plaintiffs seek to get into federal court by anticipating what the defendant is going to raise and then therefore saying there's a federal issue involved with that.

[00:47:33] Speaker 04:
That doesn't mean the federal issue may not arise if there is a federal issue.

[00:47:37] Speaker 04:
It doesn't mean it can't exist in a case.

[00:47:39] Speaker 04:
It simply means that the federal courts aren't the ones to deal with it in the first instance.

[00:47:42] Speaker 02:
I'm sorry, the Supremacy Clause, a violation of the Well Pleaded Complaint Rule, because I get your point that they only make out a violation, a

[00:47:53] Speaker 02:
a claim, I guess they call it a violation of the Supremacy Clause, if there's a conflict with the School Reform Act.

[00:48:00] Speaker 02:
I think I understand that because the complaint is actually framed that way, that the reason there's a Supremacy Clause problem is because the district has acted inconsistently with the School Reform Act.

[00:48:11] Speaker 02:
So that part of it I understand.

[00:48:12] Speaker 02:
I guess I'm not completely understanding why that means that the Supremacy Clause only comes up by way of defense.

[00:48:19] Speaker 02:
It's on the face of the complaint.

[00:48:21] Speaker 02:
It's just that you have to go to the school reform act first.

[00:48:24] Speaker 02:
I get that, but that seems different from saying that therefore it's only coming up by way of the defense.

[00:48:29] Speaker 04:
Well, I apologize.

[00:48:30] Speaker 04:
It's not the defendant raising the federal issue, but what they're anticipating is that if you, if there's a violation of the school reform act, if that's what's found on the merits,

[00:48:38] Speaker 04:
The district will come back and say, oh, well, although we didn't intend to amend or repeal the School Reform Act, if you find for some reason inadvertently that we're violating it, we can do so under the Home Rule Act.

[00:48:49] Speaker 04:
And as a result, you can't get any relief.

[00:48:52] Speaker 04:
And so then the charter school is anticipating that that would be the defense.

[00:48:56] Speaker 04:
raising their complaint proactively to say, oh, well, if you do go against the School Reform Act pursuant to this belief that you have under the Home Rule Act, you violated federal law.

[00:49:07] Speaker 04:
Federal law is preemptive.

[00:49:09] Speaker 04:
Therefore, it's a supremacy clause case.

[00:49:11] Speaker 04:
That's we understand their complaint.

[00:49:13] Speaker 02:
So that seems like the way that Count 1 is framed, which is a violation of the District Clause and the Home Rule Act.

[00:49:19] Speaker 02:
That's right.

[00:49:20] Speaker 02:
It didn't seem like the way Count 2 is framed, which is a violation of the Supremacy Clause.

[00:49:24] Speaker 02:
Are you just saying it necessarily has to be the way to read that?

[00:49:27] Speaker 04:
Yes, because you have to look at what they're seeking.

[00:49:29] Speaker 04:
And what they're seeking fundamentally is relief because there's been violation of the school reform act.

[00:49:34] Speaker 04:
The only reason the supremacy clause of the Home Rule Act is even discussed is because the district is saying that if in fact we have violated it, we have the authority to do so.

[00:49:43] Speaker 04:
But in the well-pleaded complaint rule, you don't do that.

[00:49:46] Speaker 04:
You don't look and anticipate about what defenses might be raised.

[00:49:49] Speaker 04:
You look at the gravamen of the prime officiate case in the original clauses of action based on the facts that they're alleging.

[00:49:56] Speaker 04:
And we submit that it's well settled under the well-pleaded complaint rule that this would not suffice to get federal question jurisdiction.

[00:50:02] Speaker 04:
There's no federal issue arising in the case in chief.

[00:50:06] Speaker 02:
And so you didn't make a jurisdictional objection below?

[00:50:09] Speaker 02:
And that was just, it just didn't come up?

[00:50:11] Speaker 04:
It didn't come up.

[00:50:13] Speaker 02:
It's an oversight.

[00:50:14] Speaker 02:
OK.

[00:50:15] Speaker 02:
I just wanted to make sure there's no theory behind the theory shift.

[00:50:20] Speaker 04:
Right.

[00:50:20] Speaker 04:
Now, I mean, the well-plagued complaint rule does have a small, limited exception for when federal issues arise outside of a cause of action.

[00:50:28] Speaker 04:
However, again, it's the same analysis.

[00:50:30] Speaker 04:
Because here, for that to occur, you would have to have the federal issue be an essential element of the claim.

[00:50:36] Speaker 04:
And again, the essential element of the claim here is that the funding formula provides for funding equity for every spending that the District of Columbia does, and that the district has violated it through its funding practices, pursuant to laws that have enabled those funding practices, and therefore there's a violation of the School Reform Act.

[00:51:00] Speaker 01:
their second count, maybe in some sense, first count, arguing that the Constitution withholds this power from the district.

[00:51:16] Speaker 01:
You can't do it.

[00:51:18] Speaker 01:
When Congress has spoken, Congress has spoken.

[00:51:20] Speaker 01:
So it's another element of their argument.

[00:51:23] Speaker 01:
Congress has spoken in the School Reform Act, and when Congress speaks,

[00:51:28] Speaker 01:
the powers withheld from you to do differently.

[00:51:32] Speaker 01:
Is that a constitutional claim?

[00:51:35] Speaker 04:
Well, we don't think it would be under this pharmacy clause as far as an issue.

[00:51:39] Speaker 04:
Is that a constitutional claim?

[00:51:40] Speaker 04:
But no, it's a constitutional claim, but it's not one in their well-pleaded complaint.

[00:51:44] Speaker 04:
It's not one in the relief that they're seeking.

[00:51:46] Speaker 04:
The relief they're seeking is a violation of the school reform.

[00:51:48] Speaker 01:
Well, it's an element of getting to the relief that they seek that they not only show that you violated the school reform act and that you have no power

[00:51:57] Speaker 01:
do what you did, to alter it the way you did.

[00:52:00] Speaker 04:
The only way that comes up, though, the only way that comes up is when the district defends its action by saying that we're enabled to under the Home Rule Act.

[00:52:07] Speaker 04:
And so yes, maybe the issue of when Congress legislates for the district, is there a thumbprint on the legislation that doesn't exist on other local law?

[00:52:17] Speaker 04:
And does that therefore stop the district from deviating from the congressionally passed legislation?

[00:52:22] Speaker 04:
I'm not saying that that issue might not rise in the litigation.

[00:52:25] Speaker 04:
But under the federal question jurisdiction, that's not enough to get you in a federal court.

[00:52:28] Speaker 01:
Well, maybe their argument is more like dormant commerce laws, and that is you just can't go there.

[00:52:34] Speaker 01:
Congress has spoken and passed a statute, and that is exclusive.

[00:52:39] Speaker 01:
And that is, and so the district simply cannot work, cannot do otherwise.

[00:52:42] Speaker 01:
And if they have a dormant district clause there or something like that, which I would say they do, that's a rise over the Constitution.

[00:52:49] Speaker 04:
Because that's not what the charter schools have claimed.

[00:52:51] Speaker 04:
They disavowed any claim of field preemption in the litigation below.

[00:52:55] Speaker 04:
They were not claiming that the district had no authority to engage in any type of funding practices in public education that didn't conflict with the School Reform Act.

[00:53:03] Speaker 01:
They were not arguing.

[00:53:04] Speaker 01:
Does it have to be field preemption to a rise over the Constitution?

[00:53:06] Speaker 04:
I'm sorry?

[00:53:07] Speaker 01:
It doesn't have any field preemption to rise under the Constitution.

[00:53:09] Speaker 01:
Conflict preemption would do.

[00:53:10] Speaker 04:
I'm saying as far as what their complaint is, the basis for which they seek relief was not a field preemption case.

[00:53:16] Speaker 04:
Therefore, the issue was not raised.

[00:53:18] Speaker 01:
I would characterize it as analogous to a conflict preemption case.

[00:53:22] Speaker 01:
So where Congress spoke and was focusing its energies and its concerns, it was decided now is the time to use that power we retained.

[00:53:31] Speaker 01:
We are hereby exercising it.

[00:53:33] Speaker 01:
And when they do that, the Constitution means

[00:53:36] Speaker 01:
Congress has exercised its preliminary power.

[00:53:39] Speaker 01:
And so the district can't alter that.

[00:53:41] Speaker 04:
And so in order to get to that issue, you would have to find whether there's a violation of the School Reform Act.

[00:53:46] Speaker 04:
And once you've found there's a violation of the School Reform Act, whether it's an issue of preemption or supremacy.

[00:53:51] Speaker 01:
Well, I think you're putting that into the defense end of it.

[00:53:53] Speaker 01:
But what I'm saying is, if you assume the district has some power to amend legislation,

[00:54:01] Speaker 01:
even if we assume maybe it's a matter of statutory construction, in each case, whether Congress intended to leave that authority to them.

[00:54:07] Speaker 01:
If their argument is, whatever your power under other statutes, or maybe even as to some elements of this statute, adds to this equal funding provision, Congress has spoken and left the district no authority.

[00:54:22] Speaker 01:
And it has to have that in to have its claim survive some of the issues Judge Nirvazan was raising.

[00:54:27] Speaker 01:
So it has to make that affirm.

[00:54:30] Speaker 01:
not only a provision of the School Reform Act, but a provision of the School Reform Act that withholds power from the district to do otherwise.

[00:54:38] Speaker 01:
Would that not arise under the Constitution?

[00:54:41] Speaker 04:
Because in order to resolve that, you would have to interpret the School Reform Act, which is a local law.

[00:54:47] Speaker 04:
That's the one thing that we can't deviate from.

[00:54:49] Speaker 04:
Congress has spoken in 1970.

[00:54:51] Speaker 01:
And that just means that any time you have to interpret a local law, you can't arise under the Constitution.

[00:54:56] Speaker 01:
If we had to interpret

[00:54:57] Speaker 01:
the statute to see whether what the district was doing was violating the equal protection clause.

[00:55:02] Speaker 01:
It would still be a case that arises under the Constitution.

[00:55:05] Speaker 04:
So that would be arising under the Constitution because there's an equal protection provision?

[00:55:08] Speaker 01:
Well, we'd have to interpret the statute to see if there was.

[00:55:10] Speaker 01:
I mean, it's just because there's an interpretation doesn't mean it doesn't arise under the Constitution.

[00:55:14] Speaker 01:
We have that all the time in constitutional avoidance cases.

[00:55:17] Speaker 04:
We believe that in the context of this case, in order for the relief that they're seeking, injunctive relief, declaratory relief, you have to interpret the School Reform Act, which Congress has set as a local law.

[00:55:27] Speaker 04:
You don't need to get to the constitutional issue if there is one in order to find that relief.

[00:55:32] Speaker 02:
I'm sorry to keep going over this, but I think I'm still stuck in the same place, which is it seems like it's a different argument to say there's a well-pleaded complaint problem.

[00:55:43] Speaker 02:
on one hand, and to say, on the other hand, you have to resolve the School Reform Act claim in order to resolve the Constitutional claim.

[00:55:52] Speaker 02:
And as I understand your argument, you're treating them as one and the same.

[00:55:55] Speaker 02:
It sounds like you're saying because you need to show, because the plaintiff's theory requires showing a violation of the School Reform Act,

[00:56:02] Speaker 02:
Therefore, the Supremacy Clause claim can't be a well pleaded claim.

[00:56:08] Speaker 02:
And that I don't understand because I thought the well pleaded complaint rule was about what's on the face of the complaint and doesn't necessarily arise by way of defense.

[00:56:20] Speaker 02:
Not about whether you have to resolve a local law claim in order to find for the plaintiff on the federal law claim.

[00:56:27] Speaker 02:
I think different, but maybe I'm missing something, and it seems like you're saying that they're the same thing.

[00:56:32] Speaker 04:
Right, I think we're having a bit of a...

[00:56:35] Speaker 04:
at loggerheads is just that we believe the well-pleaded complaint will suggest or indicates that it's what you need to get to your relief.

[00:56:43] Speaker 04:
If you get to your relief by saying there's been a violation of local law, you don't need for your relief to get to any other issues about the district's authority.

[00:56:52] Speaker 04:
And to do so is only in anticipation of what the defendant raises about its authority.

[00:56:57] Speaker 04:
So under your case in chief, you don't need to get to those issues, and therefore you don't get into federal court, even if those federal issues may arise and the state court deals with it.

[00:57:06] Speaker 02:
So in our belief... So what if there's a federal cause of action that just says, if there's a violation of the School Reform Act, there's also a violation of federal law?

[00:57:16] Speaker 02:
That's the statute.

[00:57:17] Speaker 04:
Right.

[00:57:17] Speaker 02:
Wait, I'm sorry, the statute says that?

[00:57:19] Speaker 02:
Yeah.

[00:57:20] Speaker 02:
Then it just seems like you can bring a claim under the federal statute.

[00:57:24] Speaker 02:
Except we have a statute here in 1970 that said it's local law.

[00:57:28] Speaker 02:
I get that, but I'm just saying, as a hypothetical, you have a federal statute that just says, if there's a violation of the School Reform Act, it's also a violation of federal law.

[00:57:38] Speaker 02:
And then somebody brings a claim and says, I'm bringing a claim for violation of the federal law that makes the violation of the School Reform Act a violation of federal law.

[00:57:46] Speaker 02:
I don't think the answer would be, you can't do that because there's a well-pleaded complaint.

[00:57:50] Speaker 04:
And we wouldn't argue that, because now you have the Congress speaking and telling you what your jurisdictional ability is.

[00:57:57] Speaker 04:
Here we have Congress speaking in 1970 saying what your jurisdictional ability is, and it says that you can't treat a congressionally enacted law for the District of Columbia as federal law.

[00:58:06] Speaker 04:
But what I do want to get to a different piece of this, because I understand some of the dissonance, let's just assume for the moment that

[00:58:17] Speaker 04:
The School Reform Act is violated, but there's a belief that they need to go further to get their relief.

[00:58:23] Speaker 04:
They need to prove somehow that the district didn't have authority to do so.

[00:58:27] Speaker 04:
Where would you look for that?

[00:58:28] Speaker 04:
And this is where I'll address the Supremacy Clause and the District Clause.

[00:58:31] Speaker 04:
We don't think you look at the Supremacy Clause.

[00:58:33] Speaker 04:
I think on its face you don't.

[00:58:34] Speaker 04:
Because we already know, for both jurisdictional purposes and for substantive law, congressionally enacted law for the district is local law.

[00:58:42] Speaker 04:
And as a result, the supremacy clause, which doesn't provide you any rights anyway, doesn't even put a rule of decision, because we're not dealing with federal law versus local law.

[00:58:49] Speaker 04:
However, one would say, maybe, as the district court did, that the district clause may be implicated in some fashion, because obviously that's dealing with a specific situation of Congress enacting law for the district.

[00:59:02] Speaker 04:
So you have to put aside the supremacy clause even if they put it in their account.

[00:59:06] Speaker 04:
because it's not part of their claim, if what they have to prove is the authority of the district to do what it did.

[00:59:13] Speaker 04:
At best, you're in the district clause.

[00:59:14] Speaker 04:
Now, does that make it a constitutional claim?

[00:59:16] Speaker 04:
Is the whole federal question issue resolved?

[00:59:18] Speaker 04:
No, because the district clause is merely a broad plan to the Congress to act exclusively for the district.

[00:59:25] Speaker 04:
If the district had not enacted the Home Rule Act, then maybe we're on to something.

[00:59:29] Speaker 04:
Then maybe we're at the district clause.

[00:59:30] Speaker 04:
We have to look at whether another entity has violated that exclusivity.

[00:59:35] Speaker 04:
But Congress has acted pursuant to the district clause.

[00:59:38] Speaker 04:
It's implemented the district clause.

[00:59:40] Speaker 04:
That doesn't mean the district clause is dead, but it is sort of in a dormant fashion right now because Congress has acted through the Home Rule Act.

[00:59:46] Speaker 04:
And so where you would have to go, if we're going somewhere beyond the School Reform Act, would be the Home Rule Act.

[00:59:52] Speaker 04:
And the Home Rule Act, it's been found by this court, it's a hybrid federal state law, but it's mostly, but all of the provisions in the Home Rule Act that deal with what the district can and cannot do, as it was stated in demand, is state law.

[01:00:05] Speaker 04:
As a result, you're still not into federal court, even if you have to show that authority of the District of Columbia.

[01:00:11] Speaker 04:
What we're dealing with here is, as you can see where the pleadings went in the motion to dismiss stage, everything was surrounded by or surrounding the two provisions, 602A3 of the Home Rule Act and 717B.

[01:00:24] Speaker 04:
In other words, the district clearly can modify or amend or repeal Congressional law for the district, but can it do so for post-Home Rule Act legislation or only with pre-Home Rule Act legislation?

[01:00:36] Speaker 04:
That's what's teed up as the resolution that you have to do based on the arguments of the parties to determine whether there's any relief here.

[01:00:44] Speaker 04:
But those provisions we submit under DC Circuit precedent would be state law issues because they're dealing with what the district can and cannot do.

[01:00:53] Speaker 04:
As a result, we don't think you're in federal court even if you buy the argument from the charter schools that they need to get into the issue of the District of Columbia's authority.

[01:01:07] Speaker 04:
On the merits, if there are any questions on the merits.

[01:01:11] Speaker 00:
I don't think so.

[01:01:13] Speaker 00:
Judge Millett?

[01:01:15] Speaker 00:
All right.

[01:01:15] Speaker 04:
Thank you.

[01:01:17] Speaker 04:
We ask that you find that there's no jurisdiction in this case.

[01:01:20] Speaker 04:
Thank you.

[01:01:22] Speaker 00:
Why don't you take a couple minutes.

[01:01:29] Speaker 03:
Thank you, Your Honors.

[01:01:30] Speaker 03:
I'd like to make four quick points on the jurisdictional issues that remain.

[01:01:34] Speaker 03:
First, I just think it's a mischaracterization to say all of our claims arise under the School Reform Act.

[01:01:40] Speaker 03:
As several members of the Court noted, we have counts one and counts two of the complaint.

[01:01:46] Speaker 03:
clearly arise under the Constitution, and I think Armstrong, Your Honor, does make clear that we do have a cause of action and equity to be able to bring those claims under the Constitution.

[01:01:55] Speaker 03:
So if you start from the assumption that we do have claims that arise under the Constitution, unless you conclude that they are so frivolous,

[01:02:02] Speaker 03:
that they never opened the door to federal court, so to speak, then there is a basis for federal jurisdiction.

[01:02:08] Speaker 03:
And we would submit that both of those claims not only are not frivolous, but for reasons that Judge Millett articulated, either the district clause or the supremacy clause, and perhaps the most natural home is the district clause, has to rank congressional authority over the district as superior as a constitutional matter over conflicting district legislation.

[01:02:28] Speaker 03:
And that is a constitutional question

[01:02:29] Speaker 03:
that's directly implicated in the case here.

[01:02:32] Speaker 03:
Second, there's nothing anticipatory at all about Count 2.

[01:02:35] Speaker 03:
I think for reasons that some of the questions from the panel got to.

[01:02:40] Speaker 03:
We also think that that's true of Count 1, but there's nothing in Count 2 that predicts the district will come back and say, well, we have Home Rule Act repeal and amend authority.

[01:02:51] Speaker 03:
Instead, Count 2 invokes express preemption and obstacle preemption theories and says what the district has done here is contrary to

[01:02:59] Speaker 03:
and conflicts with the Supremacy Clause.

[01:03:01] Speaker 03:
So that theory of anticipation can't deal with count two.

[01:03:06] Speaker 03:
Third, and I don't think my friend from the district mentioned this provision, but again, 1366 on its terms does not apply to claims that arise under the Constitution.

[01:03:16] Speaker 03:
So if you accept step one of our argument that we do have claims that arise under the Constitution,

[01:03:21] Speaker 03:
There's nothing in 1366 that suggests Congress intended to shunt those claims to Superior Court, which, after all, lacked Article III protection.

[01:03:29] Speaker 03:
So it would be a pretty significant decision to decide that Congress had sent all constitutional claims involving Congress's own equities to Superior Court to be resolved, particularly on issues such as important as this.

[01:03:42] Speaker 03:
Finally, with respect to the Home Rule Act provisions, we do think that the provisions at issue here are authority allocating provisions.

[01:03:48] Speaker 03:
Section 601 and Section 717 define the relationship between Congress and the District, and under this Court's precedence, the HRA, of course, is a hybrid statute.

[01:03:58] Speaker 03:
And we think that it makes no sense that the purposes of those specific provisions, that is Congress's reservation of authority over the district to say that is purely a local law, instead that is an authority allocating provision that this court has held is sufficient to give rise to federal jurisdiction.

[01:04:14] Speaker 03:
So we think for all of those reasons jurisdiction is present here, and we think that

[01:04:18] Speaker 03:
On the merits, and for the reasons set forth in our brief, the district has for years now been engaging in consistent, unequal funding practices that are directly in defiance of congressional commands in the School Reform Act.

[01:04:32] Speaker 03:
We think federal courts are the proper forum to hear that case, and we think that on the merits, the district has violated the School Reform Act and that we're entitled to equitable and injunctive relief.

[01:04:43] Speaker 03:
making clear that the district is bound to and ought to be following the uniform funding mandate which Congress enacted.

[01:04:49] Speaker 01:
Tell me what your causes of action are.

[01:04:53] Speaker 01:
Take it you're claiming the equitable authority that you see in the Armstrong decision.

[01:05:01] Speaker 01:
Where else do you get?

[01:05:02] Speaker 01:
What are your causes of action?

[01:05:04] Speaker 01:
Yes, Your Honor.

[01:05:05] Speaker 03:
We think that Armstrong, for constitutional purposes, for the constitutional claim, Armstrong answers the lingering question of where the, quote-unquote, cause of action lies.

[01:05:13] Speaker 03:
And I won't repeat that discussion.

[01:05:16] Speaker 03:
The complaint also invoked the Home Rule Act, Section 601, as a source of authority to sue.

[01:05:21] Speaker 03:
That's set forth in the jurisdictional section of our complaint.

[01:05:24] Speaker 03:
This Court in Shook, when it was confronting the question of whether the balance of power between the Board of Education and the Control Board, cited Section 601 as a source of Congress's reserved authority.

[01:05:35] Speaker 03:
Again, the District has never... You said the same thing as a cause of action.

[01:05:39] Speaker 03:
Well, no, that's correct, John.

[01:05:41] Speaker 03:
My point was that in Shook, this Court recognized that Section 601 is a source of Congressional authority over the District.

[01:05:46] Speaker 03:
We invoke that in the complaint.

[01:05:48] Speaker 01:
My question is, what is your cause of action?

[01:05:51] Speaker 03:
We believe a cause of action also arises under the Home Rule Act under Section 601.

[01:05:55] Speaker 03:
Would the district have argued with this point on a motion to dismiss?

[01:06:01] Speaker 03:
We would have argued that there is an implied right of action under the Home Rule Act.

[01:06:06] Speaker 03:
As we note in our supplemental brief, the objection to the lack of cause of action isn't jurisdictional, certainly after Lexmark, and the district has never taken the position that there is no cause of action under the Home Rule Act.

[01:06:17] Speaker 03:
Cause of actions arise under the Constitution, causes of action arise under the Home Rule Act, and the district, again, has never raised an objection to the existence of any of those cause of actions, which are all sufficient.

[01:06:28] Speaker 03:
Each of the jurisdictional bases we set forth in our supplemental brief are sufficient to get in the door to federal court.

[01:06:35] Speaker 03:
And particularly with respect to supplemental jurisdiction, as we mentioned in our brief, there is a discretionary component to that, and we think that

[01:06:41] Speaker 03:
discretionary component has long since been waived, given that the district has chosen to not raise the question of an objection to a federal forum until more than four and a half years into the litigation on the eve of oral argument.

[01:06:53] Speaker 03:
We think that for that reason, this court could comfortably say that any objection to a district court's exercise of discretionary supplemental jurisdiction, again, once you think we had a non-frivolous federal claim to get us into federal court,

[01:07:05] Speaker 03:
has long since been forfeited by the district and for that reason section 1367 also provides jurisdiction over our claims.

[01:07:16] Speaker ?:
Thank you.