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Pedreira v. Sunrise Children's Services, Inc.

United States District Court, W.D. Kentucky, Louisville

May 29, 2018

ALICIA M. PEDREIRA, et al. PLAINTIFF
v.
SUNRISE CHILDREN'S SERVICES, INC., et al. DEFENDANTS

          MEMORANDUM OPINION

          CHARLES R. SIMPSON III, SENIOR JUDGE UNITED STATES DISTRICT COURT.

         This matter came before the court on motion of Sunrise Children's Services, Inc. f/k/a Kentucky Baptist Homes for Children, Inc. (“Sunrise”) and Vicki Yates Brown Glisson, Secretary of the Cabinet for Health and Family Services, and John Tilley, Secretary of the Justice and Public Safety Cabinet (collectively, the “Commonwealth Defendants”), for reconsideration of the court's December 22, 2016 Memorandum Opinion and Order. DN 573. The court addressed the issues raised in the motion, save one, in a Memorandum Opinion and Order entered March 17, 2017. DN 579. The court ordered that “the motions of the defendants, Sunrise Children's Services, Inc., et al., for reconsideration of the court's December 22, 2016 Memorandum Opinion and Order (DNs 573, 577) are GRANTED. The court DENIES IN ALL RESPECTS THE REQUEST TO VACATE THE DECEMBER 22, 2016 MEMORANDUM OPINION AND ORDER WITH THE EXCEPTION OF THE QUESTION AS TO THE LEGALITY OF THE IMPLEMENTATION OF THE SETTLEMENT AGREEMENT, AS AMENDED, WITHOUT MODIFICATION OF EXISTING REGULTIONS.THIS EXCEPTED ISSUE IS HELD IN ABEYANCE PENDING FURTHER BRIEFING AS FOLLOWS…” DN 579, pp. 11-12. The court then set a briefing schedule which has now concluded.

         For purposes of completeness, the court will restate some pertinent background.

         The action was remanded to this court by the United States Court of Appeals for the Sixth Circuit. The Court of Appeals returned the case for the explicit purpose of having this court decide whether the agreement reached between the plaintiffs and the Commonwealth Defendants to settle the case, an agreement which it found was a consent decree, was fair, reasonable and consistent with the public interest. The Court of Appeals added the further directive that the court consider its observation that “the consent decree denie[d] Sunrise a chance to clear its name, ” and “impose[d] the very reputational harm that Sunrise sought to avoid by means of 15 years of litigation.” Pedreira v. Sunrise Children's Services, Inc., 802 F.3d 865, 872 (6th Cir. 2015((“Pedreira II”).

         Within a week after the denial of the plaintiffs' motion for rehearing en banc by the Sixth Circuit, the parties entered into a First Amendment to Settlement Agreement (hereinafter “the Amendment”). The parties attempted to address the Court of Appeals' concern that the Settlement Agreement “single[d] out Sunrise by name for special monitoring by the ACLU and Americans United.” Id. Sunrise was the sole objector to the Settlement Agreement at that time.

         In the Amendment's “Recitals, ” the parties stated, in part, that:

C. In light of this potential concern, the Parties desire to amend the Settlement Agreement to eliminate any “singl[ing] out” of or potential reputational harm to Sunrise by uniformly applying the same monitoring triggers and rules to all Agencies, as set forth in this Amendment.
D. Further, in light of objections raised by Sunrise during briefing concerning the Settlement Agreement, the Parties desire to clarify that no new or modified administrative regulations need to be enacted to comply with the Settlement Agreement.

         In the Amendment's “Agreement” section, the parties agreed, in pertinent part, to:

Section 1. Modification of Section 3.
[Section 3 of the original agreement was deleted and replaced with new language which we do not recite here].
Section 2. Approval of Settlement Agreement, as Amended; Dismissal of Lawsuit.
[The parties agree to file a joint motion seeking the court's approval of the Amendment, dismissal of the action with prejudice, incorporation of the Amendment into the order of dismissal, retention by the court of jurisdiction to enforce the order, and to otherwise cooperate as necessary to obtain relief].
Section 3. No regulatory changes needed.
Notwithstanding any references in the Settlement Agreement to possible enactment of new or modified administrative regulations, the Parties agree that the Commonwealth Defendants do not need to enact or modify any administrative regulations to comply with the Settlement Agreement.
[Section 6(b) remains in the text of the Settlement Agreement, as amended, which requires the Commonwealth to initiate the process of modifying any administrative regulations necessary for the Commonwealth to comply with the terms of the Settlement Agreement].
Section 4. No Effect Upon Other Terms of Settlement Agreement.
Except as explicitly stated in this Amendment, all terms of the Settlement Agreement shall remain in full force and effect, and the Parties shall continue to comply with the Settlement Agreement, as amended herein, including during the pendency of any further proceedings in, or relating to dismissal of, the Lawsuit.
[Apparently, to date, the Commonwealth continues to comply with the terms of the original Settlement Agreement].

         A change in administration in Kentucky upon the election of Governor Matthew G. Bevin yielded a change in approach to the settlement of this action. The Commonwealth Defendants no longer support the agreement forged with the plaintiffs. Faced with the refusal of the Commonwealth Defendants to join in a motion seeking approval of the amended agreement, the plaintiffs moved unilaterally for voluntary dismissal of the action with prejudice and approval of the Settlement Agreement, as amended, as a consent decree. DN 552. This motion, in and of itself was, we noted, a bit of an oxymoron, as it sought entry of a consent decree to which only the plaintiffs consent. Sunrise and the Commonwealth Defendants each filed objections to the plaintiffs' motion. In any event, the plaintiffs sought to hold the Commonwealth Defendants to the terms of the Settlement Agreement, as amended, and urged the court to reject the defendants' many arguments in opposition to approval.

         In an opinion entered in December, the court determined that the Settlement Agreement, as amended, remains a viable proposed consent decree in the case. The court intended to address at a hearing, under the rubric of “fairness, reasonableness, and consistency with the public interest, ” a number of the defendants' arguments raised in opposition to the plaintiffs' motion for approval. However, concerned that the court had disregarded some of its arguments and dissatisfied with a number of the court's findings, Sunrise filed a motion to reconsider the December memorandum opinion and order. DN 573. Not unexpectedly, the plaintiffs opposed Sunrise's motion. DN 576.

         Additionally, the Commonwealth Defendants filed their own response to Sunrise's motion, joining in support and adopting in toto the arguments made by Sunrise in its motion for reconsideration. DN 577.

         Counsel for the Cabinets, Justin D. Clark, signed the pleading on behalf of the Commonwealth. He is counsel of record by virtue of his entry of appearance on behalf of both Cabinets. DN 562.[1] M. Steve Pitt and Chad Meredith, counsel from the Office of the Governor, are now also counsel of record for the Cabinets by virtue of the listing of their names as attorneys on this pleading, per Local Rule 83.5(d).[2]

         The court noted that the Cabinets are now amply represented and purport to fully align themselves with the positions taken by Sunrise in this case. This alignment with Sunrise is diametrically opposed to the Commonwealth Defendants' previous position throughout the life of the Settlement Agreement and the Amendment.

         The Court determined that Mona Womack had the authority to bind the Commonwealth Defendants to the Amendment and that the agreement in its original form is no longer operative, as it has been superseded by the Amendment. More specifically, by its terms, the Amendment preserves most of the original Settlement Agreement as written, altering and supplementing it in certain respects. Herein, we refer to the amalgamated document now in issue before the court as the “Settlement Agreement, as amended.” The court rejected the defendants' argument that the Settlement Agreement, as amended, is unenforceable for lack of consent. The court reasoned that the Commonwealth Defendants' entry into the Amendment after the Court of Appeals recited the reasons why the agreement was, in fact, a consent decree (even though the agreement itself declares otherwise) established that the Commonwealth Defendants thereby knowingly agreed to entry of a consent decree. Further support for this conclusion is the inclusion of Section 2 in the Amendment which listed the relief to be sought from the court. This list recited the factors which the Court of Appeals found were defining features of a consent decree - approval by the court, dismissal of the lawsuit with prejudice, incorporation of the settlement agreement into the order of dismissal, and retention by the court of jurisdiction to enforce the order.

         This court determined that the Court of Appeals did not vacate the original Settlement Agreement. Rather, the Court of Appeals required this court to afford that agreement more intensive scrutiny on remand.

         We concluded that consideration by this court of the Settlement Agreement, as amended, is not beyond the mandate of the Court ...


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