Case Document 6 Filed 11/23/09 Page 1 of 2 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR EDUCATION CORPORATION CIVIL ACTION No. 09-6607 Plaintiff, vs. SECTION 3 ORLEANS PARISH SCHOOL BOARD HONORALBLE JUDGE LEMMON Defendant. A MAGISTRATE JUDGE KNOWLES i: ADVOCATES FOR ARTS-BASED EDUCATION MOTION FOR SUMMARY JUDGMENT NOW INTO COURT, through undersigned counsel, comes Plaintiff Advocates for Arts- Based Education Corporation (?Advocates?), to hereby move, pursuant to Federal Rule of Civil Procedure 56 and 42 U.S.C. 1983 and 1988, for summary judgment in its favor awarding it declaratory judgment, permanent injunction, damages with legal interest until paid, costs and reasonable attorneys? fees to remedy action under color of state law impairing Advocates? vested contractual rights in violation of Article I, Section 10 of the United States Constitution. As set forth more fully in Advocates? Memorandum in Support of Motion for 79341o_1.ooc Case Document 6 Filed 11/23/09 Page 2 of 2 Summary Judgment and other supporting materials ?led herewith, there is no genuine issue of material fact and Advocates is entitled to summary judgment in its favor as a matter of law. WHEREFORE, Advocates prays that is motion forsummary judgment be granted in full. Respectfully submitted, /s/James A. Brown James A. Brown, T.A. (Bar #14101) Elisabeth Lorio Baer (Bar 31844) LISKOW LEWIS, PLC One Shell Square 701 Poydras Street, Suite 5000 New Orleans, LA 70139-5099 Telephone:(504) 581-7979 Facsimile: (504) 556-4108 Attorneys for Plaintiff, Advocates for Arts-Based Education Corporation CERTIFICATE OF SERVICE I hereby certify that on November 23, 2009, I electronically ?led the foregoing with the Clerk of corut by using the system which will send a notice of filing to all counsel of record. /s/James A. Brown Case Document 6-1 Filed 11/23/09 Page 1 of 15 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR EDUCATION CORPORATION CIVIL ACTION NO. 09-6607 Plaintiff, vs. SECTION 3 ORLEANS PARISH SCHOOL BOARD HONORALBLE JUDGE LEMMON Defendant. MAGISTRATE JUDGE KNOWLES :c-u-ax-a-x-x?x-x-a?x?a?a?s a. ADVOCATES FOR ARTS-BASED EDUCATION MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT MAY IT PLEASE THE COURT: I. INTRODUCTION Plaintiff Advocates for Arts-Based Education Corporation (?Advocates?) submits this Memorandum in Support of its Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56. As set forth below, defendant, Orleans Parish School Board acting under color of a state law passed years after it contracted with Advocates, has and is taking money from Advocates in direct violation of the express terms of their contract. Therefore, Advocates is entitled to judgment as a matter of law enjoining actions under color of Case Document 6-1 Filed 11/23/09 Page 2 of 15 state law that substantially impair Advocates? vested contractual rights, in violation of Article 1, Section 10 of the United States Constitution. Advocates is also entitled to declaratory judgment, damages with interest, and an award of its attorneys? fees and costs under 42 U.S.C. 1983 and 1988. II. MATERIAL FACTS A. Plaintiff Advocates is A Non-Profit Corporation Advocates is a non-profit corporation formed in August, 2005 pursuant to the Louisiana Nonpro?t Corporation Law. Affidavit of Advocates CEO Kathleen H. Riedlinger, Exhibit 1 hereto, 2?3. In accordance with its Articles and By?Laws, Advocates is self? governed by a Board of Directors of private individuals, who set policy for the corporation and oversee the activities of its Chief Executive Of?cer and other of?cers. Exh. l, 1] 3. Advocates owns substantial private assets and receives both private and public funds for its operations. Since September 2005, Advocates has received more than $8 million in private funds. Exh. l, 1] 4. A substantial portion of Advocates? net assets consists of privately raised funds and assets. Exh. l, 1] 4. B. Defendant OPSB is a Political Subdivision In its Answer filed on October 26, 2009, OPSB has admitted that it is a political subdivision of the State of Louisiana. Answer, ll V. Case Document 6-1 Filed 11/23/09 Page 3 of 15 C. Advocates? Contract with OPSB Expressly Forbids the Deduction of ?Administrative Fees? from the Contractual Amount Owed to Advocates The Louisiana Charter School Demonstration Programs Law, La. RS. 17:3971, et. seq. (the ?Chaiter Act?), authorizes parish school boards, such as OPSB, to contract with non-pro?t corporations, such as Advocates, to operate charter schools pursuant to the terms of the Charter Act. Exh. 1, 11 5. Acting pursuant to the Charter Act, effective January 1, 2006, OPSB entered into a Charter School Agreement (?the Agreement?) with Advocates to operate a ?Type 3? charter school, known as Lusher Charter School (?Lusher?), within the Parish of Orleans. Exh. 1, 11 6, and Agreement, Exh. A to Riedlinger Aff, Exh. 1. In the Agreement, Advocates is referred to interchangeably as ?Charter School? or ?Charter Operator.? Exh. 1, 11 6; Agreement, Exh. A to Aff., p. 1. The Agreement is effective from January 1, 2006 through December 31, 2011. Exh. 1, 11 6, Exh. Ato Aff, p. 1. Pursuant to the Agreement and the Charter Act, the Charter School must operate as a self? governing nonprofit cmporation and all contracts undertaken by the charter school are undertaken as a nonpro?t corporation. Exh. 1, 11 7; Exh. A to Aff, p. 2, La. RS. The Agreement further provides that Advocates is solely responsible for all debts incurred by it and that OPSB is not contractually bound to any such debts. Exh. 1, 117; Exh. A to Aff, p. 12, Advocates is responsible for purchasing and maintaining its own insm'ance covering all of its operations. Exh. 1, 11 7; Exh. A to Aff, p. 15, The Agreement further provides that Advocates is not an agent of and does not have the authority to bind OPSB. Exh. 1, 11 7; Exh. A to Aff., p. 19, Per the Agreement, Advocates agrees to defend and indemnify OPSB from any and all claims, suits, or actions arising from Advocates? operations. Exh. 1, 117; Exh. A to Aff, p. 16, OPSB is obligated to reimburse Case Document 6-1 Filed 11/23/09 Page 4 of 15 Advocates for all privately funded capital improvements to OPSB buildings or property upon termination of the Agreement. Exh. 1, ?ll 7; Exh. A to Aff., p. 4, Under the Agreement, OPSB owes to Advocates installments of public funds to partially fund Advocate?s operations under the Agreement. Exh. 1, 1i 8; Exh. A. to Aff., p. 12, As set forth above, Advocates also receives and owns substantial private funds from non-governmental sources. Exh. 1, 8. In Section p. 13 of the Agreement, Advocates and OPSB expressly and unmistakably contracted that: OPSB [Defendant] shall pay the estimated Annual Funding Amount to the Charter School [Plaintiff] as received from the State of Louisiana, Department of Education. Charter School will not pay administrative fees to OPSB other than those provided for in such cooperative endeavor agreements as may be entered into by OPSB and Charter School. Exh. 1, 9; Exh. A to Aff., p. 13, (bold added). As Advocates and OPSB have never entered into a cooperative endeavor agreement, the Agreement expressly forbids OPSB from deducting an administrative fee from the public funds it owes to Advocates under the Agreement. Exh. 1, 1m; OPSB Answer These contractual terms are fundamental considerations of Advocate?s Agreement with OPSB and vested contractual rights of Advocates protected from impairment under Article I, Section 10 of the United States Constitution. Exh. 1, 1i 9. D. OPSB, Acting Under Color of State Law, is Deducting Administrative Fees, In Direct Breach and Impairment of its Contract with Advocates In its 2009 Regular Session, the Louisiana legislature, by Act No. 292 (?Act No. 292?), amended La. R.S. 17:3 to authorize a parish school board to charge administrative fees to operators of charter schools in an amount not to exceed two percent of the amounts otherwise Case Document 6-1 Filed 11/23/09 Page 5 of 15 payable to the charter school operator. Exh. 1, 11 10. Acting pursuant to and under color of Act No. 292, OPSB, commencing on August 1, 2009, has deducted and is continuing to deduct a 2% ?administrative fee? from the installment of the public funds due and payable to Advocates under its Agreement with Defendant. Exh. 1, 11 11; OPSB Answer 11 XI. In so acting, OPSB has and is continuing to directly and substantially impair Plaintiff?s vested contractual rights under the Agreement, in violation of Article 1, Section 10 of the United States Constitution. OPSB has refused to accede to Advocates? repeated written and oral demands that it cease and desist from deducting amounts owed to Advocates, leaving Advocates no alternative but to bring the instant suit. Exh. 1, 11 12. From August 1, 2009 to date, OPSB has improperly deducted $3 7,830 dollars in administrative fees from the amounts it owes to Advocates imder the Agreement. Exh. 1, 1112. At present, OPSB is improperly deducting $8,903 per month in administrative fees. Exhpermitted to continue to impair Advocates? vested contractual rights, OPSB will improperly deduct over $360,000 during the remaining term of the Agreement. Exh. 1, 11 13. Thus, if acts are not enjoined, Advocates will be forced to curtail operations and programs and/or expend its private funds to replace the funds improperly deducted by OPSB. Exh. 1, 11 13. ARGUMENT AND AUTHORITIES A. Advocates is Entitled to Summary Judgment as a Matter of Law ?4 Summary judgment is appropriate when, as in this case, the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.m Whiting v. Univ. of So. Miss, 451 F.3d 339, 343 (5th Cir. 2006) (quoting Fed. R. Civ. P. Celotex Corp. v. Garrett, 477 us. 317, 322, 106 s. Ct. 2548, 2552 (1986). -5- Case Document 6-1 Filed 11/23/09 Page 6 of 15 To survive a summary judgment motion, the non-movant must come forward with suf?cient evidence to create a genuine issue of material fact. See Celotex, 477 US. at 322. A comt must ?view[] the evidence in a light most favorable to the non-movant.? Piazza ?5 Seafood World, LLC, v. Odom, 448 F.3d 744, 752 (5th Cir. 2006). However, ?[tjhe non-movant must go beyond the pleadings and come forward with speci?c facts indicating a genuine issue for trial to avoid summary judgment.? Id. ?To grant a motion for summary judgment, a court must be satisfied that no reasonable trier of fact could ?nd for the nonmoving party or ?that the evidence favoring the nonmoving party is insuf?cient to enable a reasonable jury to return a verdict in her favor.? Warren 1 Apollorz v. OCA, Inc, 592 F. Supp. 2d 906, 910-11 (E.D. La. 2008) (quoting Lavespere v. Niagara Mach. 00] Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990)). As shown below, there is no genuine issue of material fact. Advocates is entitled to judgment as a matter of law enjoining and remedying substantial impairment of its vested contractual rights under color of state law, in violation of Article I, Section 10 of the US. Constitution. B. As a Non-Profit Corporation, Advocates has Standing to Bring Suit against OPSB under 42 U.S.C. 1983 42 U.S.C. 1983 provides in peitinent part: Every person, who under color of any statute, ordinance, regulation, custom, or usage, of any ects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. A corporation such as Advocates is clearly a person within the meaning of section 1983 and constitutes a proper plaintiff under the statute. Discovery House, Case Document 6-1 Filed 11/23/09 Page 7 of 15 Inc. v. Consol. City of Indianapolis, 319 F.3d 277, 282 (7th Cir. 2003); RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1057, 11.7 (9th Cir. 2002); Advocates for the Arts v. Thomson, 532 F.2d 792, 794 (lst Cir. 1976). By contrast, a political subdivision of a state, which Advocates is not, may not have standing to seek constitutional redress against the state. See Bell. of Levee Comm ?rs of the Orleans Levee Bd. v. H1118, 852 F.2d 140, 142-43 (5th Cir. 1988) (citing City of Trenton v. State of New Jersey, 262 US. 182, 188, 43 S. Ct. 534, 537 (1923)); South Macomb Disposal Aath. v. Township of Wash, 790 F.2d 500, 506 (6th Cir. 1986); Delta Special Sch. Dist. N0. 5 v. State Ba?. 0fEduc.f0rArk., 745 F.2d 532, 533 (8th Cir. 1984). To determine Whether a particular entity is a political subdivision for these purposes, the federal courts look to state law. South Macomb, 790 .2d at 506; Delta Special Sch, 745 F.2d at 533. Under Louisiana statutory and case law, Advocates is not a political subdivision of the state or other governmental entity. Article 6, 44 of the Louisiana Constitution de?nes a ?political subdivision? as ?a parish, municipality, and any other unit of local govermnent, including a school board and a special district, authorized by law to perform governmental functions.? La. Const. art. 6, 44. Neither the Charter Act, nor any other Louisiana statute, de?nes a non?profit corporation that operates a charter school as a political subdivision or other government agency. Likewise, no Louisiana court has ever classified a corporate charter school operator as a political subdivision or government entity. To the contrary, the Louisiana Attorney General has expressly found that ?a charter school is not a political subdivision of the state.? La. Atty. Gen. Op. No. 04-0317, 2004 WL 2843115 (La. AG. 2004) (ital. added). Further con?rming that a corporate operator of a charter school is not a political subdivision, the Louisiana First Circuit has recognized the legal right of a Case Document 6?1 Filed 11/23/09 Page 8 of 15 charter school operator to sue a parish school board for breach of the charter contract. Charter Sch. of Pine Grove, Inc. v. St. Helena Parish Sch. Bal, 07-2238 (La. App. 1 Cir. 2/19/09), 9 So. 3d 209 (af?rming awards of speci?c performance, extension of contract term, and contempt of court). Other jurisdictions have also found that charter school operators have standing to bring suit against local school districts. See, e. g, Racine Charter One, Inc. v. Racine Unified Sch. Dist, 424 F.3d 677 (7th Cir. 2005)(claim under Section 1983). Most telling, however, is the Charter Act?s treatment of charter school operators and the implementation of the Charter Act?s provisions through contractual Agreement with Advocates. Both the Charter Act and the Agreement mandate, as a pre?condition of the charter, that Advocates be organized and Operate at all times as a self?governing nonpro?t corporation. Exh. 1, 11 7; Exh. A to Aff., p. 2, La. R.S. Advocates has at all times operated in just that fashion. Exh. l, 1] 7. The Agreement interposes the obligations of Advocates against those of OPSB in the manner of an arms length contract, further confirming that Advocates could not possibly be a mere governmental subdivision of OPSB. Per the Agreement, Advocates is responsible for indemnifying and defending OPSB against any claims of third parties arising from Advocates? operations. Exh. 1, 11 7; Exh. A to Aff., p. 16, One part of the govemrnent would not contract to indemnify and defend another part. The Agreement explicitly states that Advocates is not an agent of OPSB. Exh. 1, it 7; Exh. A to Aff, p. 19, Advocates must purchase and maintain its own insurance, is responsible for its own debts, and cannot bind OPSB to any debts. Exh. 1, 7; Exh. A to Aff, pp. 12, 15, Pursuant to the Charter Act, Advocates is permitted to, and does, receive and own substantial private, non-governmental assets and funds. Exh. 1, 4, 8. OPSB is obligated to Case Document 6-1 Filed 11/23/09 Page 9 of 15 reimburse Advocates for all privately funded capital improvements to OPSB buildings or property at the conclusion of the contract further con?rming Advocates? non-goverimiental status. Exh. 1, 117; Exh. A to Aff, p. 4, In sum, as a matter of law and common sense, Advocates is a non-governmental entity with standing to sue under 1983. As OPSB has admitted that it is a political subdivision of the State of Louisiana that has the capacity to be sued, this 1983 action has both a proper plaintiff and a pr0per defendant. OPSB Answer 11 V. C. Deduction of the 2% Administrative Fee Substantially Impairs Advocates? Vested Contractual Rights Article 1, Section 10 of the United States Constitution provides that ?No State shall. . .pass post fact Law, or Law impairing the Obligation of US. Const. Art. I, 10. Retroactive application of Act No. 292 to Advocates has directly and substantially impaired the terms and obligations of its Agreement with OPSB by permitting OPSB to charge Advocates administrative fees in direct breach of Section p. 13 of the Agreement. Hence, breaches of the Agreement under color of Act No. 292 violate Advocates? rights under Article I, Section 10 of the United States Constitution. The United States Supreme Court has articulated a ?dual standard of review? for impairment of contract cases. United States Trust Co. of New York v. New JerseyCt. 1505, 1519 (1977); Humane Ins. Co. v. LeBlanc, 524 F. Supp. 2d 764, 771 La. 2007). When, as in this case, a government entity acts to impair its own contract with a non- governmental entity, it faces ?more stringent examination under the Contract Clause than would laws regulating contractual relationships between private parties.? Humarza Ins. Co., 524 F. Supp. 2d at 771; Allied Structural Steel Co. v. Spammus, 438 US. 234, 244 n. 15, 98 S. Ct. Case Document 6-1 Filed 11/23/09 Page 10? of 15 2716, 2722 (1978) (citing United States rust Ca, 431 U.S. at 25); Energy Reserves Group, Inc. v. Kansas Power Light Co, 459 U.S. 400, 413 11.14, 103 S. Ct. 697, 705 (1983). The initial inquiry for both a private and a public contract is whether the state law has operated as a substantial impairment of a contractual relationship. United States Trust Co, 431 U.S. at 25. But When, as here, the contract is between the government and a non-govermnental party, the stricter Contracts Clause analysis requires the comt to strike down the impairment unless the government can meet a heavy burden of showing that the impairment is both ?reasonable and necessary to serve an important public purpose.? Id; Humana Ins. Co, 524 F. Supp. 2d at 771. 1. The 2% Administrative Fee Deduction is a Substantial Impairment of Advocates? Vested Contractual Rights In just four months, OPSB has already improperly taken $38,000 of Advocates? money, and it threatens to take some $322,000 more over the remaining life of the contract - a substantial impainnent by any measure. Exh. l, 12-13. There are three components to determining whether a state law has operated as a substantial impairment to a contractual relationship: 1) does a contractual relationship exist, 2) does the change in the law impair the contractual relationship; and 3) is the impairment substantial? Humana Ins. Co, 524 F. Supp. 2d at 771 (citing Gen. Motors Corp. v. Romein, 503 U.S. 181, 186-87, 112 S. Ct. 1105, 11091110 (1992)). As is the case here, the United States Supreme Comt has noted that the ?rst two components are unproblematic and the analysis typically only addresses the third component. Id. There is no disputing that OPSB and Advocates have a contractual relationship. OPSB Answer Further, it is clear that Act No. 292 has impaired that contract by nullifying its express -10- Case Document 6-1 Filed 11/23/09 Page 11 of 15 terms. OPSB is now taking money from Advocates in direct violation of its express contractual agreement not to do so. Exh. 1, 9; Exh. A to Aff., p. 13, And the impairment is substantial indeed costing Advocates tens of thousands of dollars to date and threatening to cost it hundreds of thousands more over the remaining term of the Agreement. Exh. l, 12~l3. For an impairment to be substantial, total destruction of contractual expectations is not necessary. Energy Reserves Group, Inc, 459 U.S. at 411 (citing United States Trust Co., 431 U.S. 26-27, 31). Considerations of the court include the expectations of the parties, what terms of the contract are affected and the duration of those effects. Lipscomb v. Columbus Mun. Separate Sch. Dist, 269 F.3d 494, 504 (5th Cir. 2001). See also Allied Structural Steel Co., 438 U.S. at 247 (legislation that imposed a ?pension funding charge? on a corporation was found to be a substantial contractual impairment because the statute ?nullifie[d] express terms of the company?s contractual obligations? and imposed ?completely tmexpected liability?). Here, express agreement not to deduct administrative fees from the amounts owed to Advocates was and is a fundamental consideration of the contract upon which Advocates has relied to its detriment from the inception of the Agreement. Exh. 1, 1] 9. Advocates had no expectation whatsoever that OPSB would act under color of a subsequently enacted law to take hundreds of thousands of dollars of Advocates? money in direct breach of its vested contractual rights. Exh. l, 1] 13. Retroactive application of Act No. 292, and actions under color of that statute, have and are violating Advocates? rights under Article 1, Section 10 of the U.S. Constitution. -11- Case Document 6-1 Filed 11/23/09 Page 12 of 15 2. The 2% Administrative Fee Deduction is Not ?Reasonable and Necessary to Serve an Important Public Purpose? OPSB has not and cannot meet its heavy burden of showing that its substantial impairment of the Agreement is ?reasonable and necessary to serve an important public purpose.? United States Trust Ca, 431 U.S. at 25. The court must ensure that government entities neither ?consider impairing the obligations of [their] own contracts on a par with other policy alternatives? or ?impose a drastic impairment when an evident and more moderate course would serve its purposes equally well? . . . . nor act unreasonably ?in light of the surrounding circumstances.? United States Trust Co., 431 U.S. at 30-31. When, as here, a govermnent entity is a party to the contract, ?complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State?s self? interest is at stake.? United States Trust Ca, 431 U.S. at 26 (ital. added). The government may impair its contractual obligations only when absolutely necessary to protect the general welfare of its citizens. It cannot do so in order to merely to reduce its ?nancial obligations. Id. at 25. As the Supreme Court reasoned in United States Trust Ca: A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its ?nancial obligations whenever it wanted to spend the money for what it regarded as an impmtant public purpose, the Contract Clause would provide no protection at all. Id. at 26. see also Energy Reserves Group, Inc, 459 U.S. at 413, 11.14 (?When a State itself enters into a contract, it cannot simply walk away from its ?nancial obligations?). Answer feebly asserts that the deduction of the 2% administrative fee is reasonable and necessary to carry out the legitimate government purpose of ?the oversight of a public charter school.? OPSB Answer, Third Af?rmative Defense. However, in actuality, the only purpose of the fee is to relieve OPSB from a financial obligation to which it expressly -12- Case Document 6-1 Filed 11/23/09 Page 13 of 15 bound itself in the Agreement. OPSB undertakes to do nothing other than what it originally contracted to do; it simply wishes to take money from Advocates to do it, in direct violation of its express contractual agreement not to do so. That is not ?reasonable and necessary to serve an important [governmental] purpose.? United States Trust Cosimply reneging on a contract. Energy Reserves Group, Inc. 459 US. at 413, n.14. OPSB could have ful?lled the same government purpose of ?properly overseeing public schools? through measures short of reneging on the express terms of its Agreement with Advocates. For example, under Act No. 292, OPSB can charge administrative fees to charter school operators that do not have an express prohibition against such fees in their contracts, or it can incorporate such fees into new contracts with such operators following expiration of existing agreements. It may not, however, under color of Act No. 292, substantially impair the terms and obligations of its solenm contract with Advocates, in violation of Article 1, Section 10 of the United States Constitution. D. Advocates is Entitled to Declaratory Judgment, Permanent Injunction, Damages, Costs and Attorneys? Fees Under 42 U.S.C. 1983 and 1988 42 U.S.C. 1983 and 1988 afford parties who are aggrieved by action under color of state law in violation of their constitutional rights the full panoply of civil remedies to redress the wrong, including declaratory judgment, permanent injunction, damages, costs and reasonable attorneys? fees. See e. g, Lipscomb v. Columbus Mun. Separate Sch. Dist, 269 F.3d 494, 514 I (5th Cir. 2001); Humane Ins. Co. v. LeBZanc, 524 F. Supp. 2d 764 (MD. La. 2007); Entertainment Software Ass. v. Foti, 451 F. Supp. 2d 823 (MD. La. 2006). On the undisputed factual record, Advocates is entitled to declaratory judgment declaring that retroactive application of Act No. 292 to the Agreement, and deduction of -13- 798041H1.DOC Case Document 6-1 Filed 11/23/09 Page 14 of 15 administrative fees from amounts owed to Advocates under color of Act No. 292, violate Advocates? rights under Article 1, Section 10 of the US. Constitution. See, e. g, Lipscomb, 269 F. 3d at 514. Advocates further is entitled to judgment permanently enjoining OPSB from continuing to violate Advocates? constitutional rights. Unless OPSB is stopped, it will take hundreds of thousands of dollars of Advocates? money, forcing it to sacri?ce programs to the detriment of students and teachers and/or expend private funds and assets. Fuither, Advocates will be forced to repeatedly return to this Court for protection of its constitutional rights. Continuing violations of constitutional rights, such as the substantial impairment present here, constitute irreparable injury as a matter of law. Springtree Apartments, ALPIC v. Livingston Parish Council, 207 F. Supp. 2d 507, 515 (MD. La. 2001); Entertainment Software, 451 F. Supp. 2d at 837. Issuance of a permanent injunction will not impair any state interest as it is clearly in the public interest to uphold the Constitution. A permanent injunction should be ordered. See, e. Entertainment Software, 451 F. Supp. 2d at 837; Causeway Med. Suite v. Ieyoub, 905 F. Supp. 360, 366 (EDLA 1995). Advocates likewise is entitled to damages in the amount of $37,830, the amount improperly taken by OPSB from August 1, 2009 through November 1, 2009, and an additional sum of $8,903 per month for each month of improper deductions after November lst, with legal interest on all sums until paid. Under 42 U.S.C. 1988, Advocates is entitled to an award of its reasonable attorneys? fees and costs, to be established by separate motion following the Court?s entry of summary judgment in favor of Advocates, in accordance with Federal Rule of Civil Procedure 54(d)(2) and Local Rule 54. See, Dearmore v. City of Garland, 519 F.3d 517 (5th Cir. 2008) -14, 793041_1.ooc Case Document 6-1 Filed 11/23/09 Page 15 of 15 (prevailing party in an action brought under 42 U.S.C. 1983 is entitled to the award of attorneys fees under 42 U.S.C. 1988); Globe Glass Mirror Co. v. Brown, 1996 WL 325602 (ED. La. 1996) (same). IV. CONCLUSION For the foregoing reasons, this Court should grant summary judgment in Advocates? favor awarding declaratory judgment, permanent injunction, damages with legal interest until paid, costs and reasonable attorneys? fees to remedy actions under color of state law impairing Advocates? vested contractual rights in violation of Article 1, Section 10 of the United States Constitution. ReSpectfully submitted, /s/James A. Brown James A. Brown, T.A. (Bar #14101) Elisabeth Lorio Baer (Bar 31844) LISKOW LEWIS, PLC One Shell Square 701 Poydras Street, Suite 5000 New Orleans, LA 70139?5099 Telephone:(5 04) 581-7979 Facsimile: (504) 556-4108 Attorneys for Plaintiff, Advocates for Arts-Based Education Corporation CERTIFICATE OF SERVICE I hereby certify that on November 23, 2009, I electronically ?led the foregoing with the Clerk of court by using the system which will send a notice of ?ling to all counsel of record. /s/James A. Brown -15- Case Document 6-2 Filed 11/23/09 Page 1 of 44 EXHIBIT #1 Case Document 6-2 Filed 11/23/09 Page 2 of 44 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR ARTS-BASED EDUCATION CORPORATION CIVIL ACTION NO. 09-6607 Plaintiff, 9: vs. 7% SECTION 3 ORLEANS PARISH SCHOOL BOARD A HONORABLE JUDGE LEMMON Defendant. MAGISTRATE JUDGE KNOWLES i: AFFIDAVIT OF KATHLEEN H. RIEDLINGER STATE OF LOUISIANA PARISH OF ORLEANS BEFORE ME, the undersigned Notary Public, personally came and appeared: KATHLEEN H. RIEDLINGER Who, upon ?rst being duly sworn, did depose and state the following: 1. I am over the age of majority, am competent to testify to the facts and matters set forth in this af?davit, and have personal knowledge of those facts and matters. 2. Since the inception of the corporation on August 24, 2005, I have served and continue to serve as the Chief Executive Of?cer of Advocates for EXHIBIT I Case Document 6-2 Filed 11/23/09 Page 3 of 44 Corporation (?Advocates?). In that capacity, I have the day to day responsibility for managing and overseeing Advocates? operations, personnel and programs. 3. Advocates is a non-profit corporation formed in 2005 pursuant to the Louisiana Nonpro?t Corporation Law. A true and correct copy of Advocates? Articles of Incorporation is attached hereto as Exhibit B. In accordance with its Articles and By?Laws, Advocates is self-governed by a Board of Directors of private individuals, who set policy for the corporation and oversee the activities of its Chief Executive Of?cer and other officers. 4. Advocates owns substantial private assets and receives both private and public funds for its operations. Since September, 2005, Advocates has received more than $8 million in private funds. A substantial portion of Advocates? net assets consists of privately raised funds and assets. 5. The Louisiana Charter School Demonstration Programs Law, La. R.S. 17:3971, et. seq. (the ?Charter Act?), authorizes parish school boards, such as Orleans Parish School Board to contract with non-profit corporations, such as Advocates, to operate charter schools pursuant to the terms of the Charter Act. 6. Acting pursuant to the Charter Act, effective January I, 2006, OPSB entered into a Charter School Agreement (?the Agreement?) with Advocates to operate a ?Type 3? charter school, known as Lusher Charter School (?Lusher?), Within the Parish of Orleans. A true and correct copy of the Agreement is attached hereto as Exh. A. In the Agreement, Advocates is referred to interchangeably as ?Charter School? or ?Charter Operator.? Exh. A, p. 1. The Agreement is effective from January I, 2006 through December 31, 2011. Exh. A, p. 1. 7. Pursuant to the Agreement and the Charter Act, Advocates must operate as a self- governing nonpro?t corporation and all contracts undertaken by Advocates are undertaken as a Case Document 6-2 Filed 11/23/09 Page 4 of 44 nonpro?t corporation. Exh. A, p. 2, La. RS. The Agreement further provides that Advocates is solely responsible for all debts incurred by it and that OPSB is not contractually bound to any such debts. Exh. A, p.12, Advocates is responsible for purchasing and maintaining its own insurance covering all of its operations. Exh. A, p. 15, The Agreement further provides that Advocates is not an agent of and does not have the authority to bind OPSB. Exh. A, p. 19, Per the Agreement, Advocates agrees to defend and indemnify OPSB from any and all claims, suits, or actions arising from Advocates? operations. Exh. A, p. 16, OPSB is obligated to reimburse Advocates for all privately funded capital improvements to OP SB buildings or property upon termination of the Agreement. Exh. A, p. 4, 8. Under the Agreement, OPSB owes to Advocates installments of public funds to partially fund Advocates? operations under the Agreement. Exh. A, p. 12, As set forth above, Advocates also receives substantial private funds from 9. In Section p. 13 of the Agreement, Exh. A hereto, Advocates and OPSB expressly and umnistakably contracted that: OPSB [Defendant] shall pay the estimated Annual Funding Amount to the Charter School [Plaintiff] as received from the State of Louisiana, Department of Education. Charter School will not pay administrative fees to OPSB other than those provided for in such cooperative endeavor agreements as may be entered into by OPSB and Charter School. As Advocates and OPSB have never entered into a cooperative endeavor agreement, the Agreement expressly forbids OPSB from deducting an administrative fee from the public funds it owes to Advocates under the Agreement. See OPSB Answer Will. These contractual terms 7935931900 Case Document 6-2 Filed 11/23/09 Page 5 of 44 are fundamental considerations of Advocates? Agreement with OPSB upon which Advocates has relied to its detriment since the inception of the Agreement. 10. In its 2009 Regular Session, the Louisiana legislature, by Act No. 292 (?Act No. 292?), amended La. R.S. to authorize a parish school board to charge administrative fees to operators of charter schools in an amount not to exceed two percent of the amounts otherwise payable to the charter school operator. 11. Acting pursuant to and under color of Act No. 292, OPSB, commencing on August 1, 2009, has deducted and is continuing to deduct a 2% administrative fee from the installment of the public funds due and payable to Advocates under its Agreement with Defendant. See OPSB Answer 12. OPSB has refused to accede to Advocates? repeated written and oral demands that it cease and desist from deducting amounts owed to Advocates, leaving Advocates no alternative but to bring the instant suit. From August 1, 2009 to date, OPSB has improperly deducted $37,830 in administrative fees from the amounts it owes to Advocates under the Agreement. At present, OPSB is improperly deducting $8,903 per month in administrative fees. 13. If it is permitted to continue to impair Advocates? vested contractual rights, OPSB will improperly deduct over $360,000 during the remaining term of the Agreement. Thus, if acts are not enjoined, Advocates will be forced to curtail its operations and programs, out teacher pay, and/or expend its private funds to replace the funds improperly deducted by OPSB. Case Document 6-2 Filed 11/23/09 Page 6 of 44 FURTHER AFFIANT SAYETH NOT. SWORN TO AND SUBSCRIBED 7mm JAMES A. BROWN Notary Public 'State of Louisiana Lemmana State Bar #14101 11* ?1 ?mission is Issued for Life 798593_1 /Kathleen H. Riedlinger 45? Case Document 6-2 Filed 11/23/09 Page 7 of 44 EXHIBIT Case Document 6-2 Filed 11/23/09 Page 8 of 44 LUSHER CHARTER SCHOOL AGREEMENT THIS AGREEMENT by and between the Orleans Parish School Board (hereinafter through its Acting Superintendent, Dr. Ora Watson, who is duly authorized to act herein pursuant to Louisiana Revised Statute 17: 10.6 and Advocates for Arts Based Education Corporation, operating a charter school known as Lusher Charter School, (hereinaiter ?Charter School? or ?Charter Operator?) shall be effective the lIn day of January, 2006. RECITALS WHEREAS, the ?Charter School Demonstration Programs Law,? LA-R S. 17:3971 et seq. authorizes experimentation in the creation of innovative kinds of independent public schools for Pupils; WHEREAS, the Louisiana legislature has expressed its intention to provide a ?'amework for such experimentation by the creation of such schools, a means for persons with valid ideas and motivation to participate in the experiment, and a mechanism by which experiment results can be analyzed; repeated or replicated; 'rf?appropriate; 'and' the?negative resuitsidenn?ed' and eliminated; . WHEREAS, the Louisiana legislature has, ?rrther stated its intentionthat the best interests of at?risk pupils shall be the overriding consideration in implementing the provisions of the ?Charter School Demonstration Programs Law;" WHEREAS, the purposes of the ?Charter School Demonstration Programs Law? are to provide opportunities for educators and others interested in educating pupils to form, operate or be employed within a charter school designed to accomplish the following objectives, namely: (1) to improve pupil learning and, in general, the public school system; (2) to increase learning opportunities and access to quality education for pupils; (3) to encourage the use of di??erent and innovative teaching methods and a variety of governance, management, and administrative structures; (4) to require appropriate assessment and measurement of academic learning results; (5) to account better and more thoroughly for educational results; and (6) to create new professional opportunities for teachers and other school employees, including the opportunity to be responsible for learning program at the school site; WHEREAS, the Orleans Parish School Board is authorized, pursuant to LA-RS. 17:3 971 et seq., to execute Charter Contracts authorizing the operation of charter schools; WHEREAS, the Orleans Parish School Board has approved the granting of a charter to Advocates for Arts Based Education Corporation e??ective January 1, 2006 with its ?fth year in operation concluding on December 31, 2011, to operate a Type 3 Charter School, as de?ned in LA- RS. EIT Page 1 of 26 Case Document 6-2 Filed 11/23/09 Page 9 of 44 NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein and for other good and law?rl consideration, the receipt and su?ciency of which are hereby acknowledged, the parties hereby to be legally bound by the terms and conditions set forth herein, and enter the following Agreement accordingly: 1. Parties A This Charter Contract is entered into between Advocates for Arts Based Education Corporation and its Board of Directors (?Charter Operator?) and the Orleans Parish School Board, and its successor (collectively referred to herein as the ?Orleans Parish School Board? or for the purpose of operating a charter school known as Lusher Charter School to provide instruction. B. The person authorized to sign on behalf of the Orleans Parish School Board is the Acting Superintendent or Superintendent or his or her designee, pursuant to Louisiana Revised Statute 17 :10.6.or the President of the OPSB, in the event that Louisiana Revised Statute 17:10.6, is amended, modi?ed or repealed. C. The person authorized to sign on behalf of the Charter Operator is Blaine LeCesne (?Charter Representative?), who is the President of the Board of Directors of Advocates for Arts Based Education, Inc. D. The Charter Representative a?rms as a condition of this Charter Contract, that he/ she is the above-described representative of the Charter Operator and has authority to sign this Charter Contract on behalf of the Charter Operator. Attached hereto as Attachment A and incorporated herein by reference, is a copy of a resolution of the Board of Directors of Advocates for Arts Based Education Corporation authorizing the individual listed above to sign documents, including this Charter Contract, on behalf of the Charter Operator. E. Charter Operator al?rms, as a condition of this Charter Contract, that the nonpro?t corporation is duly authorized according to the laws of the State of Louisiana. Attached as Attachment and incorporated herein by reference is proof of the Charter Operator?s legal formation. The Charter Operator certi?es that all contracts obligating the charter school. have been and will be undertaken by the Charter Operator as a nonpro?t corporation and failure to act strictly as a nonpro?t corporation shall be grounds for rescission of its charter. F. Charter Operator a?inns, as a condition of this Charter Contract, that the nonpro?t corporation has a governing or management board, whose members receive no compensation other than reimbursement of actual expenses incurred while ful?lling duties as a member of such a board. G. Incorporated herein by reference is a true and correct copy of the Application/Proposal of the Charter Operator that was relied upon by the Orleans Parish School Board in granting this Charter Contract and is an Page 2 of 26 Case Document 6-2 Filed 11/23/09 Page 10 of 44 integral part of this contract. 2. Purpose- The Charter Operator shall provide educational services according to the educational standards established by law, the Charter Contract and the Charter Application/Proposal; measure pupil progress toward stated goals; and participate in pupil assessments required by law, regulation and Board of Elementary and Secondary Education policy. The Charter Operator shall manage the charter school in a ?nancially prudent manner. 3. Nonsectarian Status The charter school shall be nonsectarian in its programs, admission policies, employment practices and all other operations. 4. onassignability A No right or interest in this Charter Contract shall be assigned by anyone on behalf of the Charter Operator without prior written approval of Orleans Parish School Board and delegation of any contractual duty of the Charter Operator shall not be made without prior written approval of Orleans Parish School Board. A violation of this provision shall be grounds for immediate termination of this Charter Contract and revocation of Charter. B. Should the Charter Operator propose to enter into a contract with another entity to manage the charter school, the Charter Operator agrees to submit all information requested by Orleans Parish School Board regarding the management arrangement, including a copy of the proposed contract and a description of the managing company, with identi?cation of its principals and their backgrounds. The Charter Operator shall not enter a management contract without Orleans Parish School Board approval. 5. Compliance with Law The Charter Operator shall comply with all federal and state laws and regulations applicable to charter schools and all requirements imposed by BESE policy and regulation. The Charter Operator shall conform, in all respects, with the educational standards contained in its Application/Proposal and Charter Contract. 6. Board of Directors of Nonpro?t Corporation A The Board of Directors of Advocates for Arts Based Education Corporation is responsible for complying with and carrying out the provisions of this Charter Contract, including compliance with applicable law and regulation and all reporting requirements. B. The Board of Directors of Advocates for Arts Based Education Corporation is responsible for the sound ?scal management of the charter school. C. The Board of Directors of Advocates for Arts Based Education Corporation Page 3 of 26 Case Document 6-2 Filed 11/23/09 Page 11 of 44 7. Sites shall be the ?nal authority in matters affecting the charter school, including but not limited to sta?ng, job titles, employee salary and ?inge bene?ts, ?nancial accountability and curriculum. Notwithstanding the foregoing, the Chatter School shall utilize a policymaking board, which shall be subject to the provisions of the Open Meetings Laws and Public Records Laws as de?ned by Louisiana Statutory Laws. The Charter School shall provide K-12 educational services, including the delivery of instruction, at the following location(s) (together, "?the School Buildings? which shall include the current contents of the locations listed): 1. 7315 Willow Street/719 S. Carrollton Avenue 2. 5624 Freret Street 3 Such other locations as may be approved by the Board of Directors of Advocates for Arts Based Education, Inc. and Orleans Parish School Board - 4. Such other locations as may be necessary to operate due to Hurricane Katrina?s impact on the above listed facilities. The unavailability of any of the School Buildings due to the School Building not being put in suitable condition by OPSB for the occupancy of the Charter School and as a result, the Charter School not being able to obtain any necessary permits to operate, shall not constitute relinquishrnerrt of the School Building by the Charter School during the term of this Agreement. After approvals for the initial occupancy of the School Buildings have been obtained and the Charter School occupies the School Buildings, the Charter School shall thereafter endeavor to ensure that the facilities comply with all . state and local health and safety standards and other applicable laws, . regulations and rules and that compliance will be maintained at all times. No lease will be required for 7315 Willow Street, 719 S. Carrollton Avenue, or 5624 Freret Street or any other School Building. OPSB agrees that it is obligated to restore 5624 Freret St. and the other School Buildings suf?ciently to pre?Hurricane Katrina levels. If the Charter Operator makes capital improvements to any of the sites at which it operates with non-public ?rnds, and this Charter Contract is revoked or terminated pursuant to paragraph 14 of this Charter Contract, the Charter Operator will be reimbursed for the fair market value of such capital improvements at the time the Charter Agreement is terminated. On an annual basis, the Charter School must prepare a school safety plan and submit it to the local of?ce of the O?ice of Emergency Preparedness for review and if applicable, approval for each school calendar year. Evidence of this plan shall be submitted to the OPSB Superintendent or his or her designee, prior to providing educational services at the School Buildings and Page 4 of 26 Case Document 6-2 Filed 11/23/09 Page 12 of 44 10. on August 15th of each subsequent year of this Charter Agreement, and is considered a requirement as part of the safety approvals for the school building. Charter Contract Interpretation A. Merger: The Charter Operator and Orleans Parish School Board intend this Charter Contract, including all of the attachments, to represent a ?nal and complete expression of their agreement, which shall be considered the school?s Charter; except that the parties recognize that amendments to this Charter Contract may be approved from time to time hereafter. No course of prior dealings between the parties shall supplement or explain any terms used in this document. B. In the event of inconsistency between the terms of this Agreement and any other provision of the Attachments, the terms of this Agreement shall prevail. Noti?cation Requirements A. The Charter Operator shall immediately notin Orleans Parish School Board of any conditions that may cause the school to vary materially from the terms of its approved charter or from state law. B. The Charter Operator shall immediately notify Orleans Parish School Board of any circumstance requiring the closure of the charter school, including, but not limited to, a natural disaster, such as a hurricane, tornado, storm, ?ood or other weather related event, other extraordinary emergency, or destruction of or damage to the school facility. C. The Charter Operator shall immediately notify Orleans Parish School Board of the arrest of any members of its Board of Directors, employees, contractors, subcontractors or any person directly or indirectly employed by the Charter Operator for a crime listed in or any crime related to the misappropriation .of ?mds or theft. D. The Charter Operator shall immediately notify Orleans Parish School Board of a default on any obligation which shall include debts for which payments are past due by sixty (60) days or more. E. The Charter Operator shall immediately notify Orleans School Board of any change in its standing with the Louisiana Secretary of State?s o?ice. F. The Charter Operator shall immediately notify Orleans Parish School Board if its enrollment decreases by ten percent or more compared to most recent pupil count submitted to the Orleans Parish School Board, Department of Education and/or BESE. Amendments Requiring Orleans Parish School Board Approval: Any amendment to this Charter Contract will be effective only if approved by the Charter Operator?s Board of Directors at a public meeting. The proposed amendment Page 5 of 26 Case Document 6-2 Filed 11/23/09 Page 13 of 44 ll. 12. 13. must be submitted to Orleans Paris School Board in writing and accompanied by a resolution of the Board of Directors within ?ve (5) days of adoption. An amendment shall not become effective and the Charter Operator shall not take action or implement the changes requested in the amendment until the amendment is approved by Orleans Parish School Board. Changes in operation that require the Charter Operator to obtain an amendment to this Charter Contract include, but are not limited to, the following: Changes in legal status or ownership of the Charter Operator. Changes in the school?s mission. Changes in maximum allowable student enrollment. Changes in school location (change of site and/or adding or deleting sites). Changes in the school calendar involving the number of days of instruction. Changes in admission procedures. Changes in Special Education procedures. Changes in the method(s) used to measure pupil progress. Signing authority for the charter school. Amendments Requiring Noti?cation of Changes: A Changes to this Charter Contract listed below do not require an amendment be made pursuant to Paragraph Eleven (11) and shall be accomplished through written noti?cation. The written noti?cation shall include a copy of the resolution of the Charter Operator authorizing the changes. B. Changes requiring noti?cation include: Mailing address, phone and fax number of the Charter School. . Change in Chief Operating O?cer of the Charter School. Contact person located at the charter school site. Change of the Charter Operatofs Certi?ed Public Acc'ountant. Change of the Charter Operator?s Quali?ed Business Professional. girhmge in the membership of the Charter Operator's board of ectors. Term of Charter Contract A. Five Year Term ?7 This Agreement shall commence on the effective date provided above, and shall expire at midnight, December 31, 2011, unless terminated or extended pursuant to the terms hereof. B. Upon completion of the Charter School?s ?fth year of operation pursuant to this Charter Contract, this Charter Contract may be renewed at the discretion of Orleans Parish School Board, pursuant to the applicable provisions of Title 17, Chapter 42 of the Louisiana Revised Statutes. Revocation/Termination Page 6 of 26 Case Document 6-2 Filed 11/23/09 Page 14 of 44 A. As provided by law, this Charter Contract may at any time be terminated and the Charter revoked upon a determination and af?rmative vote by a majority of Orleans Parish School Board that the Charter Operator, its board members, o?icers or employees did any of the following: 1. Committed a material violation of any of the conditions, standards, or procedures provided for in the approved charter; 2. Failed to meet or pursue within the agreed timelines any of the academic or other educational results speci?ed in the approved charter; 3. Failed to meet generally accepted accounting standards of ?scal management; or 4. Violated any applicable federal, state or local law applicable to a charter school. B. This Charter Contract may be terminated immediately and the Charter revoked if Orleans Parish School Board determines that the health, safety or welfare of the students is threatened. Orleans Parish School Board must provide written notice of termination, which shall include its ?ndings and basis for termination. The termination and revocation shall?be effective upon receipt of the notice of termination by the Charter Operator. C. This Charter Contract may be terminated immediately by Orleans Parish School Board and the Charter revoked under the following conditions: 1. Mismanagement of public ?mds Failure to retain facilities Insuf?cient enrollment to meet ?nancial obligations Failure to provide records on reasonable demand Failure to comply with requests made by auditors, law enforcement of?cials or any other regulatory agencies Orleans Parish School Board must provide written notice of termination The termination and revocation shall be effective upon receipt of the notice of termination by the Charter Operator. D. In the event that the OPSB terminates the Charter, OPSB shall not be further obligated to pay any additional local ?uids to the Charter School from the date of the termination. E. In the event that the Charter School ceases operation for any reason, the Charter School and its governing body will be responsible for winding up the business and affairs of the Charter School and will cooperate with OPSB to the extent necessary to provide an orderly return of the students to their local school. Any public surplus remaining at the time the Charter School ceases operations shall be remitted to the OPSB within thirty (30) days of the day students no longer attend the Charter School. Any ?rmiture and equipment Page 7 of 26 Case Document 6-2 Filed 11/23/09 Page 15 of 44 purchased with OPSB funds shall be delivered to OPSB within thirty (30) days of the day students no longer attend the Charter School. F. The OPSB shall not be liable for the Charter School?s unpaid debts if the Charter School does not have su?cient ?rnds to pay all of its debts at the time it ceases operations. - G. In the event that the Chatter School does not commence operation of this Charter by the enrollment of students and the provision of educational services as contemplated herein within one 1) calendar year from the date of this Charter Agreement, then such failure to commence operation shall be deemed to be grounds for termination of the Charter. The unavailability of any of the School Buildings due to the School Building not being put in suitable condition by OPSB for the occupancy of the Charter School shall not constitute a failure by the Charter School to commence operation under this paragraph The parties acknowledge that the Charter Operator will be establishing a grades 9-12 program, and that grades 10, 11, and 12 may be phased in and commenced in di?'erent years over the duration of this Charter Agreement and the parties agree that such phase in will not constitute a failure to commence operations under this paragraph. Nothing herein shall prevent the Charter School from re-petitioning for another charter at a later appropriate and timely date. 14. Ceasiug of Operations of the Charter School In the event the Charter School closes and ceases operations for any reason, including termination of this Charter Contract, surrender or revocation of the Charter or dissolution of the nonpro?t corporation, it is agreed that Orleans Parish School Board shall supervise and have the authority to conduct the winding up of the business and a?'airs of the charter school. 15. Site Visits The Charter School shall grant reasonable access to, and cooperate with, the OPSB, its of?cers, employees or other agents, including allowing announced site visits for the purpose of allowing the OPSB to ?Jlly evaluate the operations and performance of the Charter School and its compliance with the Charter School Agreement. 16. Production of Documents Representatives of the Charter Operator or the administrator of the charter school shall produce all documentation requested by BESE, the Department of Education, Orleans Parish School Board, the Louisiana Legislative Auditor, law enforcement of?cials, contracted evaluators or any other federal, state or local regulatory agency within a reasonable period of time after prior notice. 17. Assets Page 8 of 26 Case Document 6-2 Filed "11/23/09 Page 16 of 44 18. A. Any assets acquired by the Charter Operator are the property of the charter school for the duration of this Charter Contract. Ifthis Charter Contract is terminated, the charter is revoked or surrendered, or the school otherwise ceases to operate, all assets purchased with any public funds or obtained ?om public sources shall automatically revert to full ownership by Orleans Parish School Board. Assets purchased with nonpublic funds or obtained from nonpublic sources will be retained by the Charter Operator. B. If the charter school fails to open and serve pupils or closes for any reason, the Charter Operator shall re?rnd all equipment and cash on hand attributable to state ?mding to the state. C. Ifthe charter school fails to open and serve pupils or closes for any reason, the Charter Operator shall refund all equipment and cash on hand attributable to federal ?nding to the appropriate division within the Department of Education, Orleans Parish School Board or other federal ?mding source. D. The Charter Operator must maintain records of any assets acquired with any private ?nds that remain the property of the Charter Operator. If the school?s accounting records fail to clearly establish whether a particular asset was purchased with public ?mds or private ?rnds, ownership of the asset will revert to Orleans Parish School Board. E. The Charter Operator shall maintain a complete and current inventory of all school property. The Charter Operator shall update the school property inventory quarterly. F. The Charter Operator shall be responsible for adequately safeguarding all assets purchased with any public funds and shall produce evidence of such upon request by Orleans Parish School Board. Student and Financial Records Accountability A. Student Records and Use of Technology in Maintaining Records: 1. For all students enrolled in the Charter School who were previously enrolled in OPSB schools, the Charter School shall provide the ?ll] names, birth dates, student identi?cation numbers, name of last OPSB school attended, grade last enrolled and date from last OPSB school to the OPSB Student Data Information Manager. If known, students with Individualized Education Plans (IEP) shall be identi?ed. Parent signatures and authorizations to release records must be included. The OPSB shall provide the students? educational records within twenty (20) business days of receipt of the past student enrollment information and IEP within ten (10) days. Page 9 of 26 Case Document 6-2 Filed 11/23/09 Page 17 of 44 2. The Charter Operator shall maintain all student records in accordance with applicable federal and state laws, regulations, rules and policies, unless otherwise speci?cally exempted herein. The Charter School shall maintain all student records on behalf of OPSB during each student?s enrollmtent in the Charter School. Upon a student?s withdrawal or other matriculation ?om the Charter School, the student?s educational records shall be returned within ten (10) business days to the 0P Student Data Information Manager for retention. The Charter School shall maintain and ensure the privacy and con?dentiality of each student?s educational record in accordance with the Family Educational and Privacy Rights Act (PERPA), 20 U.S.C.A 1232g, and shall not disclose to any unauthorized third party any personally identi?able information concerning any student enrolled in the Charter School without ?rst obtaining prior written parental permission. 3. Each Charter School will use the same student information system as used by OPSB, if available. If the OPSB student information system is used by the Charter School, in order to provide OPSB with necessary data for state reporting and enrollment monitoring the Charter School agrees to use the OPSB student information system in accordance with school system speci?cations. OPSB will provide the Charter School, at the Charter School?s expense, the minimum necessary hardware and software, including upgrades and successor software, if applicable, to utilize the district student information system. - 4. The Charter School must maintain all data elements for federal and state mandated reporting. These data include, but are not limited to, Student Classes, Course (OPSB Course File), Sections, Grade Reporting and Attendance. Process tirnelines must be met in compliance with OPSB instructions. Course History and Discipline information must be maintained according to OPSB guidelines. Electronic student record transfer to and from the Charter School will be made through the district enrollment process. 5. If is available, the Charter School will complete all tasks necessary to process data in for federal, state, and district requirements in accordance with applicable State or federal timelines. There are no exceptions to the reporting requirements due to the size of the Charter School. Requirements may change at any time due to modi?cations of federal, state or district requirements. Tasks will be communicated to the Charter School in a manner consistent with other OPSB schools. 6. The Charter School may choose to make use of other data elements in the basic installation of for their data maintenance without support ?om OPSB. No changes to the OP SB code structure may be made. Additional modules are available through the software vendor. Page 10 of26 Case Document 6-2 Filed 11/23/09 Page 18 of 44 OPSB will provide the Charter School with The Charter School will be responsible for the SASI annual maintenance fee and expenses associated with respective modules. On an annual basis, OPSB will charge the Charter School a reasonable maintenance fee. Notwithstanding the aforementioned and foregoing, if applicable, all terms and conditions concerning use of will be fully outlined in a separate cooperative endeavor agreement between the Charter School and OPSB. The Charter School is solely responsible for the school network connection to OPSB, if any is necessary, which includes connectivity, expense, and domain controller. If this Charter Agreement is terminated, the charter is revoked or surrendered, or the school otherwise ceases to operate, all student records shall be immediately transferred to Orleans Parish School Board or its designee. B. Financial and Operational Records: At all times, the Charter School shall maintain appropriate governance and management procedures and ?nancial controls as herein provided: 1. The Charter School shall demonstrate to the OPSB that the following controls are in place prior to the transfer of any funds pursuant to this Agreement: (1) generally accepted accounting procedures; (2) a checking account held in a ?nancial institution with of?ces in Louisiana; (3) adequate payroll procedures; (4) procedures for the creation and review of and quarterly ?nancial statements, which procedures shall speci?cally identify the individual who will be responsible for preparing such ?nancial statements in the following ?scal year, and (5) evidence that the Charter School has made every effort to ensure that the person responsible for the ?nancial management of the Charter School has been bonded by a surety company in a satisfactory amount (the amount to be determined by then prevailing conditions) The bond will name the Orleans Parish School Board as a coinsured. The Charter School shall provide the Superintendent of OPSB with a document evidencing compliance with this provision (hereinafter called the ?Initial Statement?). In the event the Initial Statement reveals that any of the above controls is not in place, the Charter School shall remedy such de?ciency within thirty (30) days of receipt of a notice of de?ciency. All documentation should be submitted to the OPSB Superintendent, or his or her designee. The Charter School shall cause a Financial Statement Audit and Financial and Administrative Procedures Controls Review (collectively, the ?Financial Audits?) to be performed annually at its expense by a Certi?ed Public Accounting ?rm retained by the Charter School and the ?rm shall be on the Louisiana Legislative Auditor?s Page 11 of 26 Case Document 6-2 Filed 11/23/09 Page 19 of 44 approved list. The Charter School shall provide to the OPSB any reportable conditions and other advisory comments as de?ned by the American Institute of Certi?ed Public Accountants, or additional information as required by the Louisiana State Board of Elementary and Secondary Education. The Financial Audits and other ?nancial reports shall be provided to the OPSB no later than September 30th of each year or sooner if required by BESE. The required number of copies of the Financial Audit shall be submitted to the OPSB Superintendent or his or her designee. The Charter School will also provide OPSB with a schedule of all assets, as de?ned by OPSB, purchased with OPSB ?inds during the ?scal year as part of the year- end reporting. 3. Any de?cit occurring during or at the end of a ?scal year will be eliminated by an infusion of funds ?'om the Charter School Board or, if the Charter School has not eliminated the de?cit by the end of the ?scal year, the Charter School must provide a plan for eliminating the de?cit within the next ?scal year. No OPSB ?inds will be allocated to the Charter School for the next ?scal year until such plan has received OPSB approval. 4. The Charter School is solely responsible for all debts it incurs and OPSB shall not be contractually bound on the charter school?s account to any third party. 5. The Charter School shall operate and maintain its budget in accordance with the Louisiana Local Government Budget Act. 6, The Charter School shall be considered an approved public school of the Orleans Parish School Board and shall receive a per pupil amount each year ?om the Orleans Board based on the October ?rst membership count of the charter school or as otherwise may be provided by Louisiana law or BESE action. The per pupil amount provided to all charter schools shall be computed annually and shall be equal to no less than the per pupil amount received by the school district in which the charter school is located ?'om the following sources based on the district's October ?rst membership count as set forth in LA RS. 1723995 which is incorporated herein by reference. 7. The Charter School shall be eligible for any other federal, restricted state, and unrestricted state funding for which the school or its pupils qualify as provided for by LA R.S. 173995. 8. OPSB shall pay the estimated Annual Funding Amount to the Charter School as received from the State of Louisiana, Department of Page 12 of 26 Case Document 6-2 Filed 11/23/09 Page 20 of 44 Education. Charter School will not pay administrative fees to OPSB other than those provided for in such weperative endeavor agreements as may be entered into by OPSB and Charter School. 9. After OPSB has put the School Buildings have been put in condition for occupancy by the Charter School and the provision of educational services by the Charter School, OPSB will begin payments to the Charter School. Thereafter, at the beginning of the each contract year, OPSB will begin or continue to disburse payments to the Charter School only if the Charter School has submitted to OPSB evidence of and had approved: such permits as necessary to operate the School Buildings and evidence of the insurance as required herein, including a surety bond. 10. All records of the charter school are subject to inspection and production as set forth in this Charter Agreement. If this Charter Contract is terminated, the charter is revoked or surrendered, or the' school otherwise ceases to operate, the possession of all records of the school shall be immediately transferred to Orleans Parish School Board. 19. Testing The Charter Operator shall perform all student testing required by state law and BESE policy and regulations. - 20. Reporting A. The Charter Operator shall timely supply all reports, test results and other information that are required under this Charter Contract, state law and BESE policy and regulations. The Charter Operator shall provide a report at least at the end of each semester to parents of pupils enrolled in the school, the community and Orleans Parish School Board indicating progress toward meeting the performance objectives as stated the Charter Application/Proposal. 21. Attendance A. The Charter Operator?s governing or management board and employees shall attend all training sessions required by BESE, Orleans Parish School Board or the State or Federal Department of Education. The Charter Operator shall attend all meetings, in which Orleans Parish School Board requests its presence, a?er reasonable notice of the requested meeting. These meetings shall include, but are not limited to, meetings with sta??, committee and hill board meetings. Page 13 of 26 Case Document 6-2 Filed 11/23/09 Page 21 of 44 22. 23. 24. Financial Accounting and Reporting A. The Charter Operator is subject to appropriate ?nancial audits in accordance with LA-RS. 24:513 et. seq. as stated in The Charter Operator shall comply with the provisions of LA-R S. 39:1301 through 1315 (Local Government Budget Act) and shall annually submit a budget directly to the Orleans Parish School Board. LA-R.S. which shall submit the charter school?s budget to the state superintendent of education in accordance with the provisions of RS. 1 7:88. The Charter Operator shall maintain records in a manner to re?ect compliance with this Charter Contract and Generally Accepted Accounting Principles. Certified Public Accountant/Quali?ed and Competent Business Professional A. The Charter Operator shall retain a Certi?ed Public Accountant to validate all pupil count reports submitted to the Department of Education and BESE by the Charter Operator. The Certi?ed Public Accountant shall a?ix his or her signature to each pupil count report submitted, thereby Mg that the information contained therein is true and accurate. Attached hereto as Attachment and incorporated herein by reference, is a copy of a resolution of the Board of Directors of Advocates for Arts Based Education, Inc. indicating that the Certi?ed Public Accountant listed therein has been retained by the Charter Operator. The Charter Operator shall retain a Quali?ed and Competent Business Professional to produce all ?nancial and accounting information and reporting required by this Charter Contract, state law and BESE policy and regulation, except the required annual audit, which must be performed by an independent auditor. Attached hereto as Attachment D, and incorporated herein by reference, is a copy of a resolution of the Board of Directors of Advocates for Arts Based Education, Inc. indicating that the Quali?ed and Competent Business Professional listed therein has been retained by the Charter Operator. The Charter Operator?s Quali?ed and Competent Business Professional shall be reSponsible for validating all inventory reports submitted to BESE by the Charter Operator. The Quali?ed and Competent Business Professional shall af?x his or her signature to every document be or she prepares, thereby validating its authenticity as his or her work product. All documents and reports submitted pursuant to this Paragraph shall contain the signature of the Charter Operator?s Quali?ed and Competent Business Professional, thereby af?rming that the information contained therein is true and accurate. Notices Page 14 of 26 Case Document 6-2 Filed 11/23/09 Page 22 of 44 Any notice, demand, or request ?'om one party to any other party or parties hereunder shall be deemed to have been Suf?ciently given or served for all purposes it; and as of the date, it is delivered by hand, overnight courier or within three (3) business days of being sent by registered or certi?ed mail, postage prepaid, to the parties at the following addresses: If to the Charter School: If to the OPSB: With copy to: And: 25. A. Blaine LeCesne Board President Advocates for Arts Based Education, Inc. 7315 Willow Street New Orleans, LA 70118 Board President Orleans Parish School Board 3510 General DeGaulle Drive New Orleans, LA 70114 Superintendent New Orleans Public Schools 3510 General DeGaulle Drive New Orleans, LA 70114 General Counsel Orleans Parish School Board 3510 General DeGaulle Drive New Orleans, LA 70114 Insurance The Charter Operator shall, at its own expense, purchase and maintain insurance covering all of its operations. Said insurance shall include, but not be limited to workers? compensation the limits of which shall be in compliance with state law, employer?s liability insurance to cover bodily injury by accident in the amount of $500,000 per each accident, Errors and Omissions Liability Insurance to cover the Charter Operator for those sources of liability arising out of the rendering or failure to render professional services in the performance of this agreement, including all provisions regarding ?nancial management and indemni?cation, bodily injury by disease in the amount of $500,000 for each employee, comprehensive general liability insurance in the following forms: (1) comprehensive form; (2) contractual insurance; (3) personal injury; (4) bread form property damage; (5) premise-operations and (6) completed operations. This coverage shall be in the amount not less than $1,000,000, combined single limit, and shall also cover the use of all equipment, hoists and vehicles on the premises not covered by automobile liability. The policy coverage must be on an occurrence basis. Automobile liability and Physical Damage insurance is required in the following amount: (I) comprehensive insurance in an amount not less than $1,000,000 for each, for bodily injury and property damage combined single limit; and (2) speci?c extensions of comprehensive form coverage and coverage for all owned, hired, leased and non-owned vehicles used in the operation of the Charter Page 15 of 26 Case Document 6-2 Filed 11/23/09 Page 23 of 44 26. School. Each and every agent shall warrant when signing the Certi?cate of Insurance that he or she is acting as an authorized representative on behalf of the companies a?'ording insurance coverage under this Agreement and that he or she is licensed by the State of Louisiana is currently in good standing with the Commissioner of Insurance for the State of Louisiana. Any and all companies providing insurance required by this Agreement must meet the minimum ?nancial security requirements as set forth herein The rating for each company must be indicated on the Certi?cate of Insurance. Companies providing insurance under this Agreement must have a current Best?s Rating not less than and Best?s Financial Size Category not less than Class VII. Proof of all insurance shall be submitted to OPSB prior to the operation of the Charter School and shall be maintained during the entire length of this Agreement. The OPSB shall be covered as an additional insured under any and all insurance required by this Agreement. Con?rmation of this shall appear on all Certi?cates of Insurance and any and all applicable policies. The OPSB shall be given no less than thirty (3 0) days written notice of cancellation and of any material change of coverage in any insurance required pursuant to this Agreement. The OPSB shall also be given written notice of renewal of coverage not less than thirty (30) days prior to the expiration of any policy. All insurance required under this agreement shall be in effect at the beginning of each contract year and continue through each ?scal/academic year of July 1 through June 30. - As evidence of compliance with the insurance required by this Charter Contract, the'Charter Operator shall annually provide Orleans Parish School Board with current certi?cates of insurance signed by an authorized representative of the insurer(s). The certi?cates shall evidence that policies providing the required coverage, conditions and limits are in full force and e?'ect. Indemni?cation and Acknowledgments A. The Charter Operator shall defend, indemnify, and hold harmless the OPSB, its o?icers, directors, agents, emplOyees, partners, and subcontractors (collectively referred to as Indemriities?) ?'om any and all claims, demands, suits, actiOns, proceedings, losses, costs, judgments, damages or other forms of liability to third parties, of every kind and description, actual or claimed, including but not limited to attorneys? fees and/or litigation expenses, including, but not limited to injury to property or persons (including, but not limited to civil rights violations), occurring or allegedly occurring, in connection with the operation of the Charter School ?om conducted committed or alleged to have been committed on the premises of the Charter School or by the Charter School, or by its employees, of?cers, directors, Page 16.0f26 Case Document 6-2 Filed 11/23/09 Page 24 of 44 subcontractors, or agents, during the term of this charter or any renewal thereof which may be brought or made against or incurred by the Orleans Parish School Board on account of any action of the Charter Operator, its employees, agents or assigns. The provisions or limits of insurance required under this contract shall not limit the liability of the Charter Operator. The Charter School shall defend the OPSB in any such action or proceedings brought thereon. B. Any management contract entered into by the Charter School shall include an indemni?cation provision as follows: The management company shall indemnify and save and hold the OPSB Indemni?es harmless against any and all claims, demands, suits, actions, proceedings, losses, costs, judgments, damages or other forms of liability to third parties, of every kind and description, actual or claimed, including but not limited to attorneys? fees and/or litigation expenses, including, but not limited to injury to property or persons (including, but not limited to civil rights violations), occurring or allegedly occurring, in connection with the operation of the Charter School from conducted committed or alleged to have been committed on the premises of the Charter School or by the Charter School from conduct committed by the management, or by its employees, o?icers, directors, subcontractors, or agents, during the term of this charter or any renewal thereof. The management company shall defend the OP SB Indemni?es in any such action or proceedings brought thereon. C. Each party shall give prompt written notice to the other of the assertion of any claim or the commencement of any litigation for which indemni?cation is sought and shall cooperate with the indemnifying party in the defense of the claim or litigation. D. The Charter School shall not settle or compromise any claim against OPSB Without the express written permission of the OPSB. E. This Charter Contract is not an employment contract. No o?icer, employee, agent or subcontractor of the Charter Operator or the School is an o?icer, employee, or agent of Orleans Parish School Board. F. The parties acknowledge that, pursuant to LA-RS. 17:3993, Orleans Parish School Board and its members individually are immune from civil liability for any damages arising with resPect to all activities related to the operation of any type of charter school they may authorize as a chartering authority. G. This indemni?cation shall not apply to the extent that any claim, lien, demand, suit or liability ?om the sole negligence of wrongful act or omission of any OPSB Indemnity or ?'om any act or omission of the Charter School required by law or this Agreement. H. Nothing herein shall waive the right of OPSB Indemni?es to assert any statutory or legal defense of sovereign immunity or o?cial immunity. 1. This indemni?cation, defense and hold harmless obligation shall survive the Page 17 of 26 Case Document 6-2 Filed 11/23/09 Page 25 of 44 27. 28. 29. termination of this Agreement. Any indemni?ed party shall have the right, at its own expense, to participate in the defense of any lawsuit, without relieving the indemni?zing party of its obligations hereunder. Non-Discrimination Clause A. The Charter Operator agrees to abide by the requirements of the following as applicable: Title VI and VH of the Civil Rights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972; Federal Executive Order 11246; the Federal Rehabilitation Act of 1973, as amended; the Vietnam Era Veteran?s Readjustment Assistance Act of 1974; Title IX of the Education Amendments of 1972; the Age Act of 1975; and the Americans with Disabilities Act of 1990. The Charter Operator agrees to not discriminate against students on the basis of disability, race, creed, color, gender, national origin, religion, ancestry, and familial status or for special educational needs. The Charter Operator agrees not to discriminate in its employment practices, and will render services under this contract without regard to race, color, religion, sex, national origin, veteran status, political a?iliation, marital status, or disabilities. Any act of discrimination committed by the Charter Operator or its agents, or failure to comply with these statutory obligations when applicable shall be grounds for termination of this contract. Compliance with Laws and Regulations The Charter School shall comply with all applicable federal, state and local rules, regulations, and statutes and shall operate in accordance with Louisiana R.S. 17:3971. Criminal History Review All personnel employed by the Charter School shall be ?ngerprinted and shall pass a criminal record check prior to employment. No person who has been convicted of or has pleaded nolo contendere to a crime listed in LA-R S. 15:587. shall be hired by a public charter school or public school system for a position of supervisory or disciplinary authority over school children unless approved in writing by a district judge of the parish and the district attorney. No person employed or otherwise associated with the charter school, including any contact person listed on the charter school application or any member of the management board, who has been convicted of or has pleaded nolo contendere to a crime related to misappropriation of ?rnds or theft shall be engaged in direct processing of charter school ?mds. The Charter Operator shall adhere to all policies/procedures adorned by BESE Page 18 of 26 Case Document 6-2 Filed 11/23/09 Page 26 of 44 30. concerning criminal history review for public school employees, as Well as other persons associated with the charter school who are engaged in direct processing of charter school ?mds. A criminal history review through the Louisiana Department of Public Safety and Corrections, Oi?ce of State Police, Bureau of Criminal Identi?cation, shall be administered. The criminal history review shall include a ?ngerprint check and simultaneous FBI check. All costs associated with the criminal history review shall be the responsibility of the entity granted the charter, although the Charter Operator may assign the responsibility to those persons undergoing the criminal history review. General Terms and Conditions In addition to the Charter Application which is incorporated in ?ill by reference herein, the Charter Operator shall also comply with the following general terms and conditions: A. Recitals Incorporated by Reference: The recitals to this Agreement are incorporated herein by reference and made a part hereof. Charter roval: The Charter School is hereby granted a public school charter in accordance with Louisiana Revised Statute 17:3971 et. seq., and the terms and conditions of this Agreement, to operate a charter school as described herein. Disclaimer of Liability: The parties expressly acknowledge that the Charter School is not acting as the agent of OPSB except as required by law or this Agreement and OPSB assumes no liability for any loss or injury resulting from (I) the acts and omissions of the Charter School, its directors, of?cers, agents or employees; (2) the use and occupancy of the School Buildings, or any matter in connection with the condition of the School Buildings; or (3) any debt or contractual obligation incurred by the Charter School. The Charter School acknowledges that it is without authority to, and will not, extend the faith and credit of the OPSB to any third party. Authority: The Charter School is not an agent of and does not have the authority to bind OPSB except as speci?cally authorized inthe Charter School Agreement. Delegation: The parties agree and acknowledge that the ?inctions and powers of OPSB with respect to this Agreement may be exercised by the Superintendent or Acting Superintendent of the New Orleans Public Schools, provided that any ultimate decision regarding renewal, non-renewal or revocation of this Agreement or substantial modi?cation of this Agreement may be made only by the OPSB. Public School: The Charter School shall be a public, nonsectarian, Page 19 of 26 Case Document 6-2 Filed 11/23/09 Page 27 of 44 nonreligious, nonpro?t school, which is not home based and is organized and operated under the laws of the State of Louisiana, and which shall be located in the facility or facilities listed herein. G. Mum The faculty, instructional staff and all other personnel necessary for the operation of the Charter School shall be employees of the Charter School. The Charter School is responsible for providing any and all salary and/or wages, including any bene?ts for any personnel employed by the Charter School. It is the responsibility of the Charter School to comply with all local, state and federal laws relating to the hiring of all staff personnel. (2) Students of the Charter School shall be instructed by teachers certi?ed by the Louisiana Department of Education in all core academic areas as de?ned in Section 1119 of the No Child Left Behind Act. Paraprofessionals with instructional support duties must meet guidelines of Section 1119 of the No Child Left Behind Act and the Elementary and Secondary Education Act. . H. Transportation: The Charter School, if it chooses to provide transportation to students, is responsible for providing or not providing any transportation. ?'om home to school and school to home. Any Charter chool contract(s) for transportatibn needs to be with a company that maintains compliance with all applicable US. Department of Transportation rules and regulations and state laws, rules and "regulations governing vehicle safety equipment, inspections and licenses. Notwithstanding the aforementioned, OPSB shall provide transportation at no cost to the Charter School to any student who attends the Charter School because that student transferred to the school under the No Child Left Behind Act. For local ?eld trips, the Charter School is eligible for bus services ?om OPSB at the same rate as any OPSB school is charged and is required to follow reservation procedures. For any special needs students enrolled in the charter school with an requiring special transportation to and ?om school, the Charter School can contract with OPSB for a fee for transporting any such student. Notwithstanding the aforementioned, if applicable, all transportation terms and conditions will be ?rlly outlined in a separate cooperative endeavor agreement between the Charter School and OPSB. I. School Nutrition Program: The OPSB may, at the Charter, School?s option, provide nutrition services to the Charter School for the student breakfast and lunch programs for the remaining of the 05-06 academic year, excluding any summer program. under terms and conditions that will be ?illy outlined in a separate cooperative endeavor agreement between the Charter School and OPSB. The Charter School shall be responsible for providing, maintaining, and replacing all kitchen equipment and ensuring the kitchen facility meets all Page 20 of 26 Case Document 6-2 Filed 11/23/09 Page 28 of 44 applicable code requirements for a school kitchen, including obtaining annual food service permits. The Charter School shall be responsible for maintaining and/or replacing any OPSB computer equipment at the Charter School meal lane Point of Sale (POS) and/or Cafeteria Manager workstation. OPSB will provide POS software licenses for all workstations. It is the responsibility of the Charter School to provide necessary connectivity for rapid, reliable, electronic, data transmission to OPSB in accordance with speci?cations to provided by OPSB. As part of the OPSB School Nutrition Program, each school year OPSB will provide Federal Eligibility Application forms for the Charter School for each student to determine free or reduced meal eligibility. These forms must be completed by each household and returned by the Charter School to OPSB following all procedures and timelines. The data ?'om these forms is also used to determine the Charter School?s eligibility for Title I ?mds. In the event that OPSB discontinues food services, the Charter School will be re5ponsible for providing household survey forms, dissemination, collection and submitting eligibility data to OPSB for the purposes of determining the Charter School?s eligibility for Title I ?mds. Notwithstanding the aforementioned, if applicable, all child nutrition terms and conditions will be ?illy outlined and the parties will be bound by a separate cooperative endeavor agreement between the Charter School and OPSB. J. Grants: To the extent required by law or regulation, OPSB will serve as the local education agency for the purposes of the Charter School applying for and receiving Federal and State grants. The Charter School will follow all applicable OPSB requirements for the processing of ?mds derived ?'om such grants. The Charter School may obtain any and all other grants as it sees OPSB will not serve as the ?scal agent for any other grants unless mutually agreed prior to the Charter School applying for and being awarded funds. The receipt of rants by the Charter School shall not change the Annual Funding Amount. K. Tuition and Fees: The Charter School shall not charge tuition to any student. The Charter School may not charge mandatory fees for textbooks or instructional materials. Reasonable fees may be charged for before and after- school programs and other extra-curricular activities. Tuition cannot be charged for remedial summer school. L. Other Funding: The Charter School may accept charitable donations or any other type of donations or funding on behalf of the Charter School. Such charitable donations shall not change the Annual Funding Amount. M. Educational Program: As required by the State Board of Elementary and Secondary Education, as well as state and federal statute, the Charter School shall do the following: (1) Students to be Served. including Students with special needs and Page 21 of 26 Case Document 6-2 Filed 11/23/09 Page 29 of 44 disabilities: a. The Charter School shall have an effective educational model for the delivery of special education services. The Charter School shall have non-discriminatory admission policies consistent with its mission and with state and federal law. The Charter School shall comply with all applicable special education requirements including, but not limited to, those imposed by the Individuals with Disabilities Education Act GDEA), Section 504 of the Rehabilitation Act of 1973,-and Title II of the Americans with Disabilities Act, along with any applicable provisions of the Louisiana charter school law concerning the provision of special education and related services. Notwithstanding the foregoing, nothing provided for herein shall relieve OPSB of any obligation it might have to comply with state and federal law and with any obligations contained within the charter agreement and/or any other agreement(s) between OPSB and the school relating to the provision of special education and related services. The Charter School shall have a special education department with a quali?ed coordinator who will be responsible for monitoring individual case management of all special education students and for arranging the provision of services required by their IEP. A ?le demonstrating the school?s compliance with providing special education will be maintained. Where possible, Chatter School will seeks to o?'er Special education services in an inclusion setting. The Special Education Coordinator will: I Ensure that all aspects of the IEP are followed; I Arrange for the teacher of the child being served at the Charter School to attend IEP team meetings; I Communicate with parents about progress made toward attaining the goals stated on the child?s IEP, and inform them of due process procedures and rights; I Consult quarterly with the Principal and Academy Directors to ensure that the objectives and goals, of . students with EPS are being met; I Complete the requisite paperwork, update and ?le necessary information for initial referrals, oversee triennial evaluations, monitor student progress, and provide any/all test modi?cations as stipulated in the IEP for students being served at the Charter School; I Maintain a central ?le with all special education evaluation material and USPS in accordance with FERPA and IDEA guidelines; and I Provide a report of student progress on the same schedule as students in general education. Page 22 of 26 Case Document 6-2 Filed 11/23/09 Page 30 of 44 e. As required by IDEA, the school will collect and maintain the following information on students with disabilities: 3 The count of all school-aged students with disabilities being provided special education services by age, grade, category of disability and the number of students with disabilities who are Limited English Pro?cient; The number of students provided with test modi?cations; The settings in which students with disabilities receive their services, speci?cally the portion of the school day they receive services with non?disabled peers including time away ?'orn the regular classroom; 3 The number of students with disabilities suspended school? and ?out of school,? organized by disability and length of suspensions; and The basis of exit of students with disabilities from- the Charter School attainment of diploma and type, declassi?ed, moved, etc). For students with English as a second language, the Charter School will (utilizing local and State resources as need and where available) determine the most appropriate course of action for that (those) student(s). The Charter School will contract with a quali?ed provider to provide any such services. The Charter School will ensure that the contracted provider meets the current Louisiana curriculum standards for an ESOL program. Immersion in the regular classroom will be the preferred mode] for mastering the English language. g. Under the No Child Left Behind Act, all students must meet - or exceed state standards by 2014. The Charter School should believe that this mandate is merely a minimum requirement and must strive to achieve higher academic standards for all of its students. The Charter School will participate in all state- required testing. The Charter School will participate in any additional assessments that the State of Louisiana might develop and administer in the ?iture. h. Federal Impact Aid: The Charter School shall participate in collecting Federal Impact Aid Questionnaires or any other documents required to secure or retain federal ?mds and shall submit completed data by the stated OPSB deadline of each year to the OPSB Chief Information Of?cer, or his or her designee. i. Of?ce of Civil Rights Report: If the Charter School is subject to reporting to the O?ce of Civil Rights,, such information will be timely submitted by the Charter School. j. Student Withdrawal: A student may withdraw without penalty from the Charter School at any time and enroll in the Page 23 of 26 Case Document 6-2 Filed 11/23/09 Page 31 of 44 appropriate OPSB school based upon the student? 5 residence address and grade level. A student who is suspended or expelled ?'om the Charter School as a result of a disciplinary action taken by the Charter School shall be entitled to enroll in the student?s regular attendance zone school only if such student would not have been subject to suspension or expulsion by OPSB for the conduct which gave rise to the suspension or expulsion. The Charter School shall notify the Deputy Superintendent, or his or her designee, when it plans to suspend a student for more than ten (10) days or expel a student. Due to space limitations in the OPSB alternative school program, there is currently no alternative school placement for the Charter School. 14. Evaluation Procedures: The Charter School shall evaluate the e?'ectiveness of its plan for improvement on an annual basis. The Charter School shall submit an Annual Evaluation Report to the OPSB on or before August 1'It of each year. The Annual Evaluation Report shall set forth the academic program and the progress made by the Charter School in the previous year in implementing its improvement plan, including without limitation, the results of all state-mandated assessment scores and documentation that students met minimum state standards, and documentation that students met or exceeded the academic or vocational education goals and objectives for that school year. The Annual Evaluation Report will include all state?mandated accountability indicators. Each year, the Annual Evaluation be in a form speci?ed by the OPSB or as required by the Louisiana Department of Education, with the number of required c0pies submitted to the OPSB Superintendent, or his or her designee. The same Annual Evaluation Report shall also be made available to the parents or guardians of students enrolled in the Charter School, the community, and the State Board of Education. N. - Maintenance of Corporate Status and Good Standing (1) (2) (3) The Charter School shall at all times maintain itselfas a Louisiana not- for-pro?t corporation capable of exercising ?mctions of the Charter School under the laws of the State of Louisiana; shall remain in good standing under the Laws of the State of Louisiana; and shall timer make all required ?lings with the Louisiana Secretary of State. The Charter School?s Articles of Incorporation, a Certi?cate of Incorporation evidencingits incorporation as a nonpro?t, its Bylaws and amendments or modi?cations thereto shall be made a part of this Agreement. In the event the Charter School becomes or seeks to become recognized as an organization exempt from Federal Income Taxation under 501(c)(3) of the Internal Revenue Code, the Charter School shall ?irther provide the OPSB with copies of all applications and ?lings related to its seeking or maintaining 501(c)(3) status. A list of Page 24 of 26 Case Document 6-2 Filed 11/23/09 Page 32 of 44 current board members of the nonpro?t corporation and the name of the charter board chair shall be made a part of this Agreement. 0. Amendments: This Agreement may be amended upon the approval of OPS and a majority of the governing body of the Charter School. - Any and all amendments, modi?cations or other changes to the terms of this Agreement shall be made e?'ective in writing, properly authorized by the governing boards of the Charter School and OPSB, and shall be conformed to by the appropriate representative of the parties prior to taking any e?'ect. P. Severability: In the event that any provision of this Agreement or the application hereof to any person or in any circumstances shall be determined to be invalid, unlaw?il, or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is determined to be invalid, unlaw?il or unenforceable, shall not be affected thereby, and each remaining provision of this Agreement shall continue to be valid and may be enforced to the fullest extent permitted by law. Q. Governing Law and Venue: This Agreement is to be construed and enforced under, in accordance with, and governed by, the laws of the State of Louisiana. Each of the parties to this Agreement irrevocably consents to any suit, action, or proceeding with respect to this Agreement being brought in the Civil District Court for the Parish of Orleans, State of Louisiana. Headings: The section headings of this Agreement are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties. Page 25 of 26 Case Document 6-2 Filed 11/23/09 Page 33 of 44 Considering the foregoing and that the Charter Operator?s proposal has been approved by the Orleans Parish School Board, a charter, as set forth in the Charter Operator?s proposal, as conditioned by state law, BESE regulations and this Charter Agreement, is hereby granted. All of the aforementioned terms and conditions have been agreed to and accepted by the following: Orieans Parish School Board: By: L, AA 4 we tson Date cting eiintendent Advocates for Arts Based Education Corporation: Blaine Le Cesne D?ate Board Chairman Page 26 of 26 Case Document 6-2 Filed 11/23/09 Page 34 of 44 EXHIBIT omici th MBE corporat prov1s1 g??wdai?k da?hungyawanwgf August 24, ngp?andQnuiauwai?? ?52; ion 1 6005912N 2005 322 gagiubn?gugwan 35$ ons of R.S. led at NEW ORLEANS, jAa/ue Aexeunfo Ae? lq?qy me I Title 12, LOUI IANA, EIBIT State, subject to the restrictions imposed by law, Chapter 2. Was filed and recorded in this Office on August 24, And all fees having been paid as required by law, the ADVOCATES FOR EDUCATION CORPORATION authorized to transact business in this 2005, including .a copy 0 Ef?SZ?ag gets g/g? the Articles of Incorporat oaw?hnq, ion of ?11 Egg-5x?? 1' . .. . . thanInchadd ink" 1 Case Document 6-2 Filed 11/23/09 Page 36 of 44 5? ARTICLES INCORPORATION - . ?5 . OF A . \v Advocates For Arts-Based Education Corporation I . The undersigned, for the purpose of forming a corporation under the Nonpro?t Corporation Law of the State of Louisiana, does hereby make, Sign and aclmowledge these Articles of Incorporation, stating as follows: ARTICLE I NAME The name of this corporation is: Advocates s-f?ml?stga?equggucation Of?ce ofthe Secretarv :rsm . In :3 . la . Corporation. 22pm ARTICLE II a WK DURATION Ra 9M9 ursmm This corporation shall have perpetual- existence. DBWAHM: ?3 ARTICLE - DOMICILE a The domicile of this corporation is Orleans Parish, Louisiana, and the location and municipal address of its registered of?ce is: 546 Carondelet Street New Orleans, Louisiana 70130 ARTICLE IV POWERS AND PURPOSES (1) This corporation shall possess generally all of the powers, rights, privileges, capacities and immunities of a nonpro?t corporation organized under the laws of the State of Louisiana, subject to any limitations imposed by the provisions of the Internal Revenue Code of 1986, as amended (the "Codei') on this corporation as an organization described in Section 501(c)(3) that quali?es as exempt from federal income taxation under Section 501(a) of the Code. . . 784406v.l Case Document 6-2- Fil'ed 11/23/09 Page 37 of 44 (2) This corporation is organized and shall be operated exclusively for charitable and/or educational purposes. By way of illustration but not limitation, this. corporation is organized to organize, govem, operate and raise funds for one or more charter schools; to undertake any activities that support and/or. advance the organization, governance and operation of such schools; to improve student learning; to increase learning opportunities for all students; to encourage: use of innovative teaching methods. and a variety of governance, management and administrative structures; toibe more thoroughly aCcountable for educational results; and to create new professional Opportunities for teachers and other school employees. ARTICLE TAX EXEMPTION (1) No part of the net earnings or other assets of this corporation shall inure to the bene?t of or be distributable to the incorporators, members, directors, of?cers, or other private persons, except that the corporation is authorized to pay reasonable compensation for services rendered and to make payments and distributions furtherance of the corporation's exempt purposes. (2) No substantial part of the activities of this corporation shall be the carrying on of propaganda or otherwise attempting to influence legislation, and this corporation shall not participate or intervene in (including. the publishing or distributing of any statements) any political campaign on behalf of or in opposition to any candidate for public of?ce. (3) This corporation shall distribute its income for each taxable year at times and in a manner so as not to subject it to the tax on failure to distribute income under Section 4942 of the Code or the corresponding provision of any successor federal'tax laws. (4) This corporation shall not engage in any act of self-dealing, as de?ned in Section 4941(d) of the Code or the corresponding provision of any successor federal tax laws. -2- Case Document 6-2 Filed'11/23/09 Page 38 of 44 (5) This corporation shall not retain any excess business holdings that would it to tax under Section 4943 of the Code or the corresponding provision of any successor federal tax laws. (6) . corporation shall not make any investments that Would subject it to tax under Section 4944 of the Code or the corresponding provision of any successor federal tax laws. (7) This'corporation shall not make any taxable exp'?nditures, as de?ned in Section 4945 of the Code or the correspondingprovision of any successor federal tax laws. . This corporation shall not carry on any activities not permitted to be carried on by an organization that is exempt from federal income taxation under Section 501(a) and described in Section 501(c)(3) of the Code or the corresponding provisions-Of any successor federal'tax laws. ARTICLE I STRUCTURE OF THE CORPORATION This corporation is organized on a non-stock basis. (2) This corporation shall not be a membership corporation. ARTICLE VII DIRECTORS (1) The corporate pOWers and management of this corporation shall be vested in and exercised by a board of directors consisting of not fewer than three (3) or more than ?fteen (15) directors. The number of directors may be increased only by the af?miative vote of a majority of the total voting power of the Board of Directors. The Corporation may also have One or more advisory directors. The advisory directors shall not have or exercise voting powers, but instead shall serve in an advisory capacity only. (2) All directors of the corporation shall be elected by plurality vote of the board. 784406v.l Case Document 6-2 Filed 11/23/09 Page 39 of 44 VII. SCHOOL GOVERNANCE LUSHER CHARTER SCHOOL ARTICLE VII DIRECTORS The corporate powers and management of this corporation shall be vested in and exercised by a board of directors consisting of not fewer than three (3) or more than ?fteen (15) directors. The number of directors may be increased only by the af?rmative vote of a rnaj ority of the total voting power of the Board of Directors. The Corporation may also have one or more advisory directors. The advisory directors shall not have or exercise voting powers, but instead shall serve in an advisory capacity only. All directors of the corporation shall be elected by plurality vote of the board. The names and addresses of the initial directors are: Ike Spears 1631 Elysian Fields Avenue New Orleans, Louisiana 70117 Wiley Ates 2133 Pine Street New Orleans, Louisiana 70118 Pat Dover 428 Nashville Avenue New Orleans, Louisiana 70115 Andrew B. Wisdom 400 Poydras Street New Orleans, Louisiana 70130 Paul Barron 6329 Freret Street New Orleans, Louisiana 70118 Blaine LeCesne 1619 New York Street New Orleans, Louisiana 70112 Jessie Creech 1612 Charlton St. New Orleans, 70122 EXHIBIT D-4 a - Case Document 6-2 Filed 11/23/09' Page 40 of 44 I The original directors shall hold of?ce until the ?rst annual meeting and until their successors are chosen and have quali?ed. Thereafter, directors shall hold of?ce for a' term of one year and until their successors are chosen and have quali?ed: (6) The board of directors is vested with theibroadest permissible authority and discretion in connection with the administration of funds or other'assets of this corporation, prof vided that?the directors shall exercise their authority in a mariner consistent with the exempt purposes of this corporation. For example, the board of directors may authorize the corporation to borrow money, purchase immovable property, or sell, lease, encumber or otherwise alienate any of its immovable property. (7) The board of directors, by the af?nnative vote of a majority of the full board, may I make, alter and annul by?laws, rules and regulations for the government of the affairs of this corporation. (8) No director or of?cer shall be personally liable to this corporation or its members for monetary damages for breach of ?duciary duty as a director or of?cer, provided that this Article does not eliminate or limit the liability of a director or of?cller (1) for any breach of the director's or of?cer's duty of loyalty to this corporation or its members, for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (3) for liability under Louisiana Revised Statutes Sections or (4) for any transaction from which the director or of?cer derived an improper personal bene?t. ARTICLE OFFICERS The of?cers of this corporation shall consist of a chief executive of?cer, a secretary, and any other of?cers that the chief executive of?cer from time to time may appoint. 784406VJ Case Do?cument 6-2- Filed 11/23/09 Page 41 of 44 . ARTICLE XII - . INDEMNIFICATION Subject to the provisions of Article of these Articles of Incorporation, this corporation shall indemnify any person who was or is a party or is threatened to be made aparty to any action, suit, or proceedLg, whe?ier civil, criminal, administrative, or investigative (including, but not limited l-to, any action by or in the right of the corporation) by reason of the fact that director or officer of the corporation, or is or was serving at the request of the corporation as a director, of?cer, employee,I or agent of another business, foreign, 0r nonpro?t corporation, partnership, joint venture, or other entity, to the fullest extent permitted by Section 227 of the Louisiana Nonpro?t Corporation Law, as amended, or any other applicable provision of law; provided, however, that this obligation to provide indemni?cation shall not apply to any action brought by or in the right of the corporation if the of?cer or director is found liable to the corporation in such action. I x111 DISSOLUTION Upon the dissolution of this corporation, its assets shall be distributed for one or more exempt purposes within the meaning -of Section 501(c)(3) of the Code, or the corresponding provision of any successor federal tax laws, or shall be distributed to the federal, state or local government exclusively for public purposes. Any such assets not so disposed of shall be disposed of by a court of competent jurisdiction of the parish in which the principal of?ce of the corporation is then located, exclusively for such purposes. 784406v.l Case Document 6-2 Filed'11/23/09 Page 42 of 44 ARTICLE XIV . - AMENDMENTS The Secretary of the Corporation, upon the writtenlconcurrence of legal counsel for the Corporation, is empowered to attend these Articles of Incorporation solely for purpose of II I having them Conform to the requirements of the Internal Revenue Service governing tax exempt corporations and contributions which are tax deductible: In all other instances, where not I . I: proscribed by law and provided that such amendments would not deprive the Corporation of its nonpro?t status, these Articles of Incorporation may be amended by, the af?rmative vote of not less than two?thirds of the total voting power of the board. ARTICLE XV I SEVERABILITY - Each provision of these Articles of Incorporation shall be severable from all other provisions. If a provision of this instrument shall be detennined to be invalid or ineffective for any reason, that determination shall not invalidate the remaining provisions, each of which shall continue in full force and effect. TN WITNESS WHEREOF, the orporator has sigriied and acknowledged these I Articles of Incorporation on this day of SE Print Name: WILLIAM (up-4L4?? #1 I1 Amt/10V salty/L 734406v.l Case Do'Cument 6-2. Filed _11/23/09 Page 43 of 44 a . ACKNOWLEDGMENT STATE OF LOUISIANA . PARISH OF ORLEANS On thing day of August, 2005, before me, the undersigned authority, a notary public duly commissioned and quali?ed within and for the Parish and State aforesaid, and in the presence of the undersigned competent witnesses, personally came and appeared: .Judith Kaufman known to me to be the incorporator described in and who executed the foregoing instrument, and who, being by me ?rst duly sworn, stated that she has read the above and foregoing Articles of Incorporation and acknowledged that she executed same as her free act and deed. WITNESSE Print Name: Wit?Li v?k?M LU Elf? Au Print Name: 1% .otary Public My commission is issued for life. 2 5' 0 FL . Rachel Wendt Wisdom State of Louisiana - Bar No. 21167 My is issued for life 784406v.l . Case Document 6-2 Filedi11/23/O9- Page 44-of44 AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT BY DESIGNATEDREGISTERED . STATE OF LOUISIANA PARISH OF ORLEANS in On ay of August, 2005, before me, a Notary Public in and for the State and Parish aforesaid, personally came and appeared: Rachel W. Wisdom . who is to me known to be the person, and who, being duly sworn, acknowledged to me that he does hereby accept the appointment as Registered Agent Of Advocates For Arts?Based Education Corporation, which is a Nonpro?t Corporation authorized to transact business in the State of Louisiana pursuant to the provisions of the Title 12, Chapter 2. Subscribed and sworn to before me on the day, month, and year ?rst above set forth. Milt/WE Notary Public at 784406v.l Case Document 6-3 Filed 11/23/09 Page 1 of 5 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR ARTS-BASED EDUCATION CORPORATION A CIVIL ACTION NO. 09?6607 Plaintiff, A vs. A SECTION 3 ORLEANS PARISH SCHOOL BOARD A HONORALBLE JUDGE LEMMON Defendant. A MAGISTRATE JUDGE KNOWLES at: i: STATEMENT OF MATERIAL FACTS AS TO WHICH THERE IS NO GENUINE ISSUE TO BE TRIED IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Pursuant to Local Rule 56.1, Plaintiff Advocates for Arts?Based Education Corporation (?Advocates?) submits this Statement of Material Facts as to Which There is No Genuine Issue to Be Tried, in support of its Motion for Summary Judgment. l. Advocates is a non-pro?t corporation formed in August, 2005 pursuant to the Louisiana Nonpro?t Corporation Law. In accordance with its Articles and By-Laws, Advocates is self~governed by a Board Of Directors of private individuals, who set policy for the corporation and oversee the activities Of its Chief Executive Of?cer and other of?cers. Case Document 6-3 Filed 11/23/09 Page 2 of 5 2. Advocates owns substantial private assets and receives both private and public funds for its operations. Since September, 2005, Advocates has received more than $8 million in private funds. A substantial portion of Advocates? net assets consists of privately raised funds and assets. 3. The Louisiana Charter School Demonstration Programs Law, La. R.S. 1723971, et. seq. (the ?Charter Act?), authorizes parish school boards, such as OPSB, to contract With non- pro?t corporations, such as Advocates, to operate charter schools pursuant to the terms of the Charter Act. 4. Acting pursuant to the Charter Act, effective January 1, 2006, OPSB entered into a Charter School Agreement (?the Agreemen With Advocates to operate a ?Type 3? charter school, known as Lusher Charter School (?Lusher?), within the Parish of Orleans. In the Agreement, Advocates is referred to interchangeably as ?Charter School? or ?Charter Operator.? Exhibit A to Riedlinger Affidavit, p. l. The Agreement is effective from January 1, 2006 through December 31, 2011. Exh. A, p. 1. 5. Pursuant to the Agreement and the Charter Act, Advocates must operate as a self- governing nonprofit corporation and all contracts undertaken by Advocates are undertaken as a nonpro?t corporation. Exh. A, p. 2, La. R.S. The Agreement further provides that Advocates is solely responsible for all debts incurred by it and that OPSB is not contractually bound to any such debts. Exh. A, p.12, Advocates is responsible for purchasing and maintaining its own insru'ance covering all of its operations. Exh. A, p. 15, The Agreement further provides that Advocates is not an agent of and does not have the authority to bind OPSB. Exh. A, p. 19, Per the Agreement, Advocates agrees to defend and indemnify OPSB from any and all claims, suits, or actions arising from Advocates? Case Document 6-3 Filed 11/23/09 Page 3 of 5 Operations. Exh. A, p. 16, OPSB is obligated to reimburse Advocates for all privately funded capital improvements to OP SB buildings or property upon termination of the Agreement. Exh. A, p. 4, 6. Under the Agreement, OPSB owes to Advocates installments of public funds to partially fund Advocate?s operations under the Agreement. Exh. A, p. 12, As set forth above, Advocates also receives substantial private funds from non?governmental . 7. In Section p. 13 of the Agreement, Exh. A to Riedlinger Af?davit, Advocates and OPSB expressly and unmistakably contracted that: OPSB [Defendant] shall pay the estimated Annual Funding Amount to the Charter School [Plaintiff] as received from the State of Louisiana, Department of Education. Charter School will not pay administrative fees to OPSB other than those provided for in such cooperative endeavor agreements as may be entered into by OPSB and Charter School. As Advocates and OPSB have never entered into a cooperative endeavor agreement, the Agreement expressly forbids OPSB from deducting an administrative fee from the funds it owes to Advocates under the Agreement. See OPSB Answer These contractual terms are fundamental considerations of Advocate?s Agreement with OPSB upon which Advocates has relied to its detriment since the inception of the Agreement. 7935583 .000 Case Document 6-3 Filed 11/23/09 Page 4 of 5 8. In its 2009 Regular Session, the Louisiana legislature, by Act No. 292 (?Act No. 292?), amended La. R.S. 17:3995 (A) to authorize a parish school board to charge administrative fees to operators of charter schools in an amount not to exceed two percent of the public funds otherwise payable to the charter school operator. 9. Acting pursuant to and under color of Act No. 292, OPSB, commencing on August 1, 2009, has deducted and is continuing to deduct a 2% administrative fee from the installment of the funds due and payable to Advocates under its Agreement with Defendant. See OPSB Answer 10. OPSB has refused to accede to Advocates? repeated written and oral demands that it cease and desist from deducting amounts owed to Advocates, leaving Advocates no alternative but to bring the instant suit. From August 1, 2009 to date, OPSB has imprOperly deducted $37,830 dollars in administrative fees from the amounts it owes to Advocates under the Agreement. At present, OPSB is improperly deducting $8,903 per month in administrative fees. 11. If it is permitted to continue to impair Advocates? vested contractual rights, OPSB will improperly deduct over $360,000 during the remaining term of the Agreement. Thus, if acts are not enjoined, Advocates will be forced to curtail its operations and programs, out teacher pay, and/or expend its private funds to replace the funds improperly deducted by OPSB. Case Document 6-3 Filed 11/23/09 Page 5 of 5 Respectfully submitted, /s/Ja.mes A. Brown James A. Brown, T.A. (Bar #14101) Elisabeth Lorio Baer (Bar 31844) LISKOW LEWIS, PLC One Shell Square 701 Poydras Street, Suite 5000 New Orleans, LA 70139-5099 Telephone: (5 04) 5 81-7979 Facsimile: (5 04) 556?4108 Attorneys for Plaintiff, Advocates for Arts-Based Education Corporation CERTIFICATE OF SERVICE I hereby certify that on November 23, 2009, I electronically ?led the foregoing with the Clerk of court by using the system which will send a notice of ?ling to all counsel of record. /s/James A. Brown Case Document 6-4 Filed 11/23/09 Page 1 of 2 IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR EDUCATION CORPORATION CIVIL ACTION NO. 09-6607 Plaintiff, vs. 7% SECTION 3 ORLEANS PARISH SCHOOL BOARD HONORALBLE JUDGE LEMMON Defendant. A MAGISTRATE JUDGE KNOWLES 2k 1: i: NOTICE OF HEARING Please take notice that plaintiff, Advocates for Arts?Based Education Corporation, will bring its motion for summary judgment on for hearing before the Honorable Mary Ann Vial Lemmon, United States District Judge, 500 Poydras Street, New Orleans, Louisiana, on December 16, 2009, at 10:00 am. Case Document 6-4 Filed 11/23/09 Page 2 of 2 Respectfully submitted, /s/James A. Brown James A. Brown, T.A. (Bar #14101) Elisabeth Lorio Baer (Bar 31844) LISKOW LEWIS, PLC One Shell Square 701 Poydras Street, Suite 5000 New Orleans, LA 70139-5099 Telephone:(5 04) 5 81-7979 Facsimile: (504) 556-4108 Attorneys for Plaintiff, Advocates for Arts-Based Education Corporation CERTIFICATE OF SERVICE I hereby certify that on November 23, 2009, I electronically ?led the foregoing with the Clerk of court by using the system which will send a notice of ?ling to all counsel of record. /s/Ja1nes A. Brown Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 1 of 9 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR ARTS-BASED EDUCATION CORPORATION CIVIL ACTION VERSUS NO: 09-6607 ORLEANS PARISH SCHOOL BOARD SECTION: "S" (3) ORDER AND REASONS IT IS HEREBY ORDERED that Advocates for Arts-Based Education Corporation’s Motion for Summary Judgment (Doc. #6) is GRANTED. BACKGROUND Plaintiff, Advocates for Arts-Based Education Corporation (“Advocates”) is a Louisiana nonprofit corporation. The Louisiana Charter School Demonstration Programs Law, LA. REV. STAT. §17:3971, et seq. (the “Charter Act”), permits parish school boards, such as defendant, the Orleans Parish School Board (“OPSB”), to contract with nonprofit corporations to operate charter schools. Advocates and OPSB entered into a Charter School Agreement (the “Agreement”), effective January 1, 2006 through December 31, 2011, under which Advocates operates the Lusher Charter School in Orleans Parish, Louisiana. Pursuant to the Agreement, OPSB pays Advocates, in monthly installments, the estimated Annual Funding Amount OPSB receives from the State of Louisiana, Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 2 of 9 Department of Education, for each child attending the school. The Agreement also provides that Advocates “will not pay administrative fees to OPSB other than those provided for in such cooperative endeavor agreements as may be entered into by OPSB and [Advocates].” In 2009, the Louisiana legislature, by Act No. 292, amended Louisiana Revised Statutes §17:3995(A)(4)(a) to authorize a parish school board annually to charge administrative fees to charter school operators in an amount equal to two percent of the total state-funded per pupil amount. Pursuant to Act No. 292, since August 1, 2009, OPSB has deducted a two percent administrative fee from the monthly installments of state per pupil funds that it pays to Advocates. The monthly amount deducted is $8,903. If OPSB continues to apply the deduction, OPSB will withhold more than $360,000 over the life of the Agreement. Advocates filed this action pursuant to 42 U.S.C. §1983, alleging that OPSB’s application of Act No. 292 to the Agreement substantially impairs Advocates’ rights under the Agreement in violation of the Contract Clause, Article I, Section 10 of the United States Constitution. Advocates seeks: (1) a declaratory judgment that Act No. 292 cannot be retroactively applied to the Agreement; (2) an injunction preventing OPSB from applying Act. No. 292 to the Agreement; (3) damages in the form of the withheld administrative fees, plus interest thereon; (4) attorneys’ fees; and, (5) costs. Advocates moved for summary judgment arguing that there are no material issues of fact regarding its entitlement to such relief. Advocates contends that it is not a political subdivision of the state, and has standing to bring an action under 42 U.S.C. §1983. Advocates also argues that because OPSB’s continued deduction of the two percent administrative fee will amount to over $360,000 in funds Advocates will not receive such deduction substantially impairs Advocates’ 2 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 3 of 9 contractual rights under the Agreement in violation of the Contract Clause. Finally, Advocates argues that OPSB is deducting the administrative fees for its own financial benefit, which is not reasonable and necessary to serve an important public purpose. OPSB opposes the motion, arguing that as a charter school operator, Advocates is a political subdivision of the state or a state actor that does not have standing to bring a §1983 claim. Essentially, OPSB argues that charter school operators are political subdivisions or state actors because charter schools are created by the state and perform the governmental function of public education. OPSB also argues that there is no substantial impairment because even with the two percent deduction, Advocates continues to receive $445,150 per month, and will receive $16,100,000 over the life of the Agreement. Finally, OPSB argues that even if Act No. 292 creates a substantial impairment of the Agreement, the deduction serves the legitimate public purpose of facilitating OPSB in performing its administrative responsibilities over the charter school. ANALYSIS 1. Standing Contract Clause rights fall within the protection of §1983. Dennis v. Higgins, 111 S.Ct. 865, 872 (1991); McGuire v. Sadler, 337 F.2d 902 (5th Cir. 1964). Section 1983 provides in pertinent part that: Every person, who under color of any statute, ordinance, regulation, custom, or usage, of any State . . . subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the depravation of any rights privileges, or immunities secured by the constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress. 3 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 4 of 9 A corporation has standing to bring an action under §1983 for its own damages. Discovery House v. Consolidated City of Indianapolis, 319 F.3d 277, 282 (7th Cir. 2002) (citing Adams v. Park Ridge, 293 F.2d 585 (7th Cir. 1961); RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1057, n.7 (9th Cir. 2002); Advocates for the Arts v. Thomson, 532 F.2d 792, 794 (1st Cir. 1976). However, a political subdivisions of a state, such as a school district, does not have standing to bring a §1983 action. See Board of Levee Comm’rs of the Orleans Levee Board v. Huls, 852 F.2d 140, 142-43 (5th Cir. 1988); see also City of Trenton v. State of New Jersey, 43 S.Ct. 534, 538 (1923); see also Delta Special School Dist. No. 5 v. State Board of Educ. for the State of Arkansas, 745 F.2d 532, 533 (8th Cir. 1984). State law determines whether an entity is a political subdivision of the state. Delta Special School Dist. No. 5 v. State Bd. of Educ. for the State of Arkansas, 745 F.2d 532 (8th Cir. 1984). Under Louisiana law, Advocates is not a political subdivision of the state. Article 6, Section 44 of the Louisiana constitution defines a “political subdivision” as “a parish, municipality, and any other unit of local government, including a school board and special district, authorized by law to perform governmental functions.” Advocates is a nonprofit corporation, which does not fit the definition of a political subdivision. The Louisiana Attorney General has opined that a charter school is not a political subdivision. The referenced Attorney General Opinion stated in pertinent part that a “charter school is an independent public school that is operated pursuant to a charter between a nonprofit corporation and the Board of Elementary and Secondary Education . . . [a] charter school is not a 4 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 5 of 9 political subdivision of the state. . .” LA. ATTY. GEN. OP. NO. 04-0317, 2004 WL 2843115 (La. A.G. 2004). Moreover, the Charter Act provides that charter schools must be organized and operate as self-governing nonprofit corporations. LA. REV. STAT. ANN. §17:3991(A)(1)(a). A charter school’s distinction from other public schools is further evidenced by the Charter Act’s exemption of charter schools from all public laws and regulations except as otherwise provided. LA. REV. STAT. ANN. §17:3996. The fact that the charter school performs a governmental function does not make it a political subdivision of the state. The Supreme Court has stated that “a private entity perform[ing] a function which serves the public does not make its acts state action.” Rendell-Baker v. Kohn, 102 S.Ct. 2764, 2772 (1982). Thus, under Louisiana law, Advocates is not a political subdivision of the state, and has standing to pursue its claim under §1983. 2. The Contract Clause Advocates contends that the retroactive application of Act No. 292 to the Agreement violates, Article I, Section 10 of the United States Constitution, which states in pertinent party that: “[n]o State shall . . . pass any . . . ex post facto Law, or Law impairing the Obligation of Contracts . . .” If a law impairs a state’s own contracts such impairment “face[s] more stringent examination under the Contract Clause than would laws regulating contractual relationships between private parties.” Allied Structural Steel Co. v. Spannaus, 98 S.Ct. 2716, 2722, n. 15 (1978) (citing United States Trust Co. of New York v. New Jersey, 97 S.Ct. 1505, 1518 (1977)). When evaluating an 5 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 6 of 9 alleged Contract Clause violation, the court inquires whether the state law has in fact operated as a substantial impairment of a contractual relationship. Gen. Motors Corp. v. Romein, 112 S.Ct. 1105, 1109 (1992) (citing Allied Structural Steel Co., 98 S.Ct. at 2722; Energy Reserves Group, Inc. v. Kansas Power & Light Co., 103 S.Ct. 697, 704 (1983)). The three components to determining whether a state law has operated as a substantial impairment to a contractual relationship are: (1) whether a contractual relationship exists; (2) whether the change in the law impairs the contractual relationship; and (3) whether the impairment is substantial. Id., 112 S.Ct. at 1109-10. It is undisputed that Advocates and OPSB had a contractual relationship. It is also undisputed that Act No. 292 impairs the contractual relationship between Advocates and OPSB by imposing an administrative fee where one did not previously exist. Thus, the pertinent inquiry is whether the impairment is substantial. A. Substantial Impairment Complete destruction of contractual expectations is not required for finding substantial impairment. Energy Reserves Group, Inc., 103 S.Ct. at 704 (citing United States Trust Co. of New York, 97 S.Ct. at 1519-20). A “regulation that restricts a party to gains it reasonably expected from the contract does not necessarily constitute a substantial impairment.” Id. (citing United States Trust Co. of New York, 97 S.Ct. at 1522). Further, the court should also consider which terms of the contract are affected by the law, and the duration of the effects. Lipscomb v. Columbus Mun. Separate School Dist., 269 F.3d 494, 504 (5th Cir. 2001) (citing Allied Structural Steel Co., 98 S.Ct. at 2723-24). The extent of the impairment is determined in light of “whether the industry the complaining party has entered has been regulated in the past.” Energy Reserves Group, Inc., 103 6 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 7 of 9 S.Ct. at 704 (citing Allied Structural Steel Co., 98 S.Ct. at 2721). “One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them.” Id. (citing Hudson Water Co v. McCarter, 28 S.Ct. 529, 531 (1908)). The impairment to the Agreement is substantial. The Agreement specifically provides that Advocates “will not pay administrative fees to OPSB other than those provided for in such cooperative endeavor agreements as may be entered into by OPSB and [Advocates].” Since August 1, 2009, OPSB has charged Advocates a two percent administrative fee from the per pupil amount that OPSB owes to Advocates, amounting to $8,903 per month, and will total more than $360,000 over the life of the Agreement. Further, the Agreement’s prohibition of OPSB’s charging an administrative fee was bargained for in the execution of the Agreement and is not an attempt to contract around state restriction. Prior to the passage of Act No. 292, Louisiana Revised Statutes §17:3995(A)(4)(a) permitted school boards to charge such an administrative fee during a charter school’s application period and first year of operation. The amendment permits a school board to charge an administrative fee annually. It does not mandate charging such a fee, but rather permits it. Thus, OPSB’s withholding of $360,000 is a substantial impairment to the Agreement. B. Legitimate Public Purpose OPSB contends that the administrative fee is reasonable and necessary to serve the legitimate governmental purpose of overseeing the public schools. The state may justify the imposition of an administrative fee if there is a “significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem,” even where there is a substantial impairment to a contractual relationship. 7 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 8 of 9 Energy Reserves Group, Inc., 103 S.Ct. at 704-5 (citing United States Trust Co. of New York, 97 S.Ct. at 1517; Allied Structural Steel Co., 98 S.Ct. at 2723-2725). Requiring a legitimate public purpose ensures that the state is exercising its police power, instead of providing a benefit to special interests. Id. at 705. The level of impairment dictates the amount of scrutiny applied to the state law. Lipscomb, 269 F.3d at 505. Once a legitimate public purpose is identified, the court asks whether the change in “the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying [the legislation’s] adoption.” Id. (quoting United States Trust Co. of New York, 97 S.Ct. at 1518). When the state is a party to the contract, it cannot simply abandon its financial obligations, and “complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.” Id. (quoting United States Trust Co. of New York, 97 S.Ct. at 1519). The court should first determine whether the contract implicates “an essential attribute of [the State’s] sovereignty.” Lipscomb, 269 F.3d at 505 (citing United States Trust Co. of New York, 97 S.Ct. at 1518). If it does, then the Contract Clause does not prevent the state from impairing such an obligation. Id. (citing United States Trust Co. of New York, 97 S.Ct. at 1518). However, purely financial obligations do not impact a state’s sovereignty, and are subject to the Contract Clause. Id. If the substantial impairment is subject to the Contract Clause, the court determines “whether the impairment is ‘reasonable and necessary,’ without giving ‘complete deference’ to the legislature’s judgment.” Id. (citing United States Trust Co. of New York, 97 S.Ct. at 1518). 8 Case 2:09-cv-06607-MVL-DEK Document 23 Filed 01/26/10 Page 9 of 9 OPSB’s charging an administrative fee to Advocates is not reasonable or necessary for the overseeing of public schools. By entering into the Agreement, OPSB assumed the responsibility of overseeing Advocates’ actions in running the Lusher Charter School. The Agreement specifically prohibits OPSB from charging Advocates an administrative fee. When it entered the agreement OPSB had the responsibility to oversee the charter school, and contracted away its right to charge an administrative fee. OPSB’s imposition of an administrative fee ex post facto to do nothing other than what it originally contracted to do, is simply an attempt to reduce its financial obligations to Advocates. Thus, the administrative fee is not reasonable or necessary for a legitimate governmental purpose. CONCLUSION IT IS HEREBY ORDERED that Advocates for Arts-Based Education Corporation’s Motion for Summary Judgment (Doc. #6) is GRANTED. 26th day of January, 2010. New Orleans, Louisiana, this _____ ____________________________________ MARY ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE 9 Case 2:09-cv-06607-MVL-DEK Document 26 Filed 02/22/10 Page 1 of 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ADVOCATES FOR ARTS-BASED EDUCATION CORPORATION CIVIL ACTION VERSUS NO: 09-6607 ORLEANS PARISH SCHOOL BOARD SECTION: "S" (3) JUDGMENT Considering the foregoing Motion for Entry of Final Judgment (Doc. # 24) and Unopposed Motion to Correct Proposed Final Judgment (Doc. #25) filed by plaintiff, Advocates for Arts-Based Education Corporation (“Advocates”), IT IS HEREBY ORDERED that Advocates’ Motion for Entry of Final Judgment is GRANTED. IT IS FURTHER ORDERED Advocates’ Unopposed Motion to Correct Proposed Final Judgment is GRANTED. IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the retroactive application of Act No. 292 of the 2009 Regular Session of the Louisiana Legislature insofar as it authorizes the charging of administrative fees to Advocates’ Charter School Agreement (the Case 2:09-cv-06607-MVL-DEK Document 26 Filed 02/22/10 Page 2 of 2 “Agreement”) with defendant, Orleans Parish School Board (“OPSB”) is UNCONSTITUTIONAL, in that it impairs Advocates’ vested contractual rights in violation of Article I, Section 10 of the United States Constitution. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that OPSB is PERMANENTLY ENJOINED from charging administrative fees to Advocates in violation and impairment of Advocates’ vested contractual rights during the remaining term of the Agreement. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that pursuant to 42 U.S.C. § 1983, Advocates is AWARDED $85,905.00 in damages caused by OPSB’s violation of its rights under Article I, Section 10 of the United States Constitution, plus interest thereon until paid. The court further recognizes that Advocates has reserved its right to move for its attorneys’ fees and costs pursuant to 42 U.S.C. § 1988 and it shall proceed in accordance with Rule 54(d)(2) of the Federal Rules of Civil Procedure and Local Rule 54. New Orleans, Louisiana, this _____ day of February, 2010. ____________________________________ MARY ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE 2