Petition for certiorari filed at, 03/06/2015
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ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FOURTH CIRCUIT, PARISH OF ORLEANS.
For Applicant (No. 2014-C-329): Michael H. Rubin, Jon Ann Harp Giblin, Michael Brent Hicks, Juston Michael O'Brien, Zelma Murray Frederick, MCGLINCHEY STAFFORD, PLLC.
For Respondent (No. 2014-C-329): Jeanne Katherine Demarest, Roderick Alvendia, Jeremy J. Pichon, Willie Matthew Zanders, ALVENDIA, KELLY & DEMAREST, LLC; Terrill Wayne Boykin, Kriste Louise Talton Utley, BOYKIN EHRET & UTLEY; Brent Bennett Barriere, Degan Skylar Rosenbloom, FISHMAN HAYGOOD PHELPS WALMSLEY WILLIS & SWANSON; Mark Philip Glago, GLAGO LAW FIRM, LLC; Anthony David Irpino, IRPINO LAW FIRM; Clarence Roby, Jr., LAW OFFICE OF CLARENCE ROBY, JR., APLC; Charles Mayer Samuel, III, RITTENBERG, SAMUEL & PHILLIIPS, LLC; Suzette Peychaud Bagneris, THE BAGNERIS FIRM, LLC,; Walter Ignatius Willard, THE WILLARD FIRM, PLC.
For Applicant (No. 2014-C-330): Terrill Wayne Boykin, Kriste Louise Talton Utley, BOYKIN EHRET & UTLEY; Brent Bennett Barriere, Degan Skylar Rosenbloom, FISHMAN, HAYGOOD, PHELPS, WALMSLEY, WILLIS & SWANSON.
For Respondent (No. 2014-C-330): Jeanne Katherine Demarest, Roderick Alvendia, Jeremy J. Pichon, Willie Matthew Zanders, ALVENDIA, KELLY & DEMAREST, LLC; Mark Philip Glago, GLAGO LAW FIRM, LLC; Anthony David Irpino, IRPINO LAW FIRM; Clarence Roby, Jr., LAW OFFICE OF CLARENCE ROBY, JR., APLC; Michael H. Rubin, Jon Ann Harp Giblin, Michael Brent Hicks, Juston Michael O'Brien, Zelma Murray Frederick, MCGLINCHEY STAFFORD, PLLC; Charles Mayer Samuel, III, RITTENBERG, SAMUEL & PHILLIIPS, LLC; Suzette Peychaud Bagneris, THE BAGNERIS FIRM, LLC,; Walter Ignatius Willard, THE WILLARD FIRM, PLC.
VICTORY, J. GUIDRY, Justice, additionally concurs and assigns reasons. JOHNSON, Chief Justice, dissents and assigns reasons.
[2014-0329 La. 1] VICTORY, J.
This class action arises out of the termination of approximately 7,600 former teachers and other permanent employees of the Orleans Parish School Board (the " OPSB" ) as a result of Hurricane Katrina
and the State of Louisiana's subsequent takeover of Orleans Parish schools. Although the district court denied defendants' exceptions of res judicata, a five judge panel of the court of appeal unanimously found that res judicata ordinarily would apply to the facts of this case, but that exceptional circumstances barred its application. We granted two writ applications to determine whether the doctrine of res judicata bars plaintiffs' claims against the OPSB and/or the State defendants, and, if not, whether the OPSB and/or the State [2014-0329 La. 2] defendants violated the plaintiffs' due process rights in relation to the plaintiffs' terminations. For the reasons that follow, we agree with the court of appeal that res judicata applies but find no exceptional circumstances that would preclude its application. Further, we find that, even if res judicata did not apply to certain parties' claims, neither the OPSB nor the State defendants violated plaintiffs' due process rights.
FACTS AND PROCEDURAL HISTORY
Because of severe financial problems within the OPSB, in 2004, the United States Department of Education (the " DOE" ) threatened to discontinue educational funding to the entire state. The DOE required that an external vendor be brought in to handle the OPSB's finances, and accordingly, in June 2005, the State and the OPSB entered into a Memorandum of Understanding (" MOU" ), the purpose of which was to " provide an immediate and long term resolution of the OPSB's financial and operational challenges." Under the MOU, the OPSB would continue its operation and control over its school system and the State would monitor the progress of the OPSB and its superintendent in establishing and implementing appropriate accounting, human resources, and financial policies and procedures. As required by the MOU, the State selected Alvarez & Marsal (" A& M" ) as the external vendor through a competitive bid process, and the OPSB entered into a " Professional Services Contract" (" PSC" ) with A& M.
On August 29, 2005, Hurricane Katrina struck the Gulf Coast. At that time, the [2014-0329 La. 3] 2005-2006 school year had already begun and approximately 59,000 students were attending schools operated by the OPSB. The storm displaced hundreds of thousands of New Orleans residents and caused many of the schools across the region to close, including all of the OPSB schools. During its first post-Katrina board meeting on September 15, 2005, the OPSB approved " a resolution to place employees on disaster leave as a result of Hurricane Katrina given the emergency closure of all schools and the subsequent lack of revenues." The " disaster leave" was without pay, retroactive to August 29, 2005, and allowed the employees to collect unemployment benefits while New Orleans and the OPSB tried to recover from the hurricane. A& M and the OPSB set up an employee hotline to communicate with displaced employees and to begin to determine which employees could return to work when the schools re-opened. The Call Center operated 24 hours a day and allowed non-active employees to inform the OPSB as to whether they intended to return to work. The Call Center was also used to determine which students might return to New Orleans.
In its First Extraordinary Session of 2005, the Louisiana Legislature passed Act 35, effective November 30, 2005, which resulted in the transfer of the vast majority
of Orleans Parish public schools to the State's Recovery School District (" RSD" ). The RSD was created in 2003 in conjunction with the adoption of an amendment to Article VIII, § 3(A) of the Louisiana Constitution authorizing the Louisiana State Board of Education (" BESE" ) to " supervise, manage, and operate . . . a public elementary or secondary school which has been determined to be failing." La. R.S. 17:10.5 [2014-0329 La. 4] was enacted and defined a " failed school" as one that is designated as " academically unacceptable under a uniform statewide program of school accountability established pursuant to rules adopted by [BESE]." In 2004, the Legislature enacted La. R.S. 17:10.6 to impose various restrictions on local school boards once they were determined to be " academically in crisis," which was defined as " any local system in which more than thirty schools are academically unacceptable or more than fifty percent of its students attend schools that are academically unacceptable."
Act 35 supplemented this existing constitutional and statutory framework by, among other things, creating La. R.S. 17:10.7, that added criteria by which a school could be designated as " failing" and immediately transferred to the RSD. La. R.S. 17:10.7(A)(1) provided that a school shall be designated as " failing" if it has a baseline school performance score below the state average, and is located in a district that both has been declared to be " academically in crisis" and has at least one school eligible to be transferred to the RSD. This new provision resulted in 102 of the 126 public schools in Orleans Parish being taken over by the State after Hurricane Katrina. Of the 24 remaining, seven were closed as uninhabitable, twelve became charter schools, and five remained under the jurisdiction of the OPSB. This caused a severe loss of funding to the OPSB, including $17 million per month in Minimum Foundation Funds from the State, which funds follow the student and would now go [2014-0329 La. 5] to the RSD. In addition, because the OPSB only retained five schools, it had a dramatically reduced need for employees. With regard to OPSB employees and the transfer of the schools to the RSD, La. R.S. 17:1990(D), which had been in effect since 2003, provided as follows:
(1) The [RSD] may employ such staff members as it deems necessary. At the time of the transfer of a school to the school district, any certified teacher with regular and direct responsibility for providing classroom instruction to students who is employed in the transferred school by the prior system shall be given priority consideration for employment in the same or a comparable position by the school district.
(2) Any person employed by the prior system in a transferred school may choose to remain in the employ of the prior system and, in that case, the prior system shall retain and reassign such person consistent with its contractual obligations or policies regarding the retention and reassignment of employees. (Emphasis added).
At this time, the OPSB had in force Personnel Policy 4118.4, which applied to all employees, and which provided:
The Orleans Parish School Board seeks to attract, retain and promote the highest caliber employee. It believes that job security should be primarily a function of quality performance by each and every employee. Such factors as enrollment decline, budget shortfalls, district reorganization and program ...