Fifth Circuit Reverses Contempt Fines in Texas Foster Care Case and Orders Reassignment to Another District Judge

The decision

On October 11, 2024, the U.S. Court of Appeals for the Fifth Circuit reversed a district court order that held a Texas Health and Human Services Commission official in contempt and imposed fines totaling $100,000 per day in a class action over the Texas foster care system. The court held that the sanction was a criminal contempt imposed without criminal procedural protections, that the fines violated state sovereign immunity, and that the state had substantially complied with the two remedial orders at issue.

The court also granted the state defendants’ request to remove the district judge and directed that the case be reassigned on remand.

Background

According to the opinion, the plaintiffs “are a class of minor children who challenged the constitutionality of the Texas foster care system under the Due Process Clause of the Fourteenth Amendment.” They filed suit in 2011. After a bench trial, the district court ruled for the plaintiffs in 2015 and awarded injunctive relief. The defendants are Governor Greg Abbott, Health and Human Services Commission (HHSC) Executive Commissioner Cecile Erwin Young and Department of Family and Protective Services (DFPS) Commissioner Stephanie Muth, in their official capacities.

The opinion describes this as the state defendants’ fourth appeal. In 2018, the Fifth Circuit invalidated or modified numerous parts of the district court’s remedy. In 2019 and 2020, it reversed later changes to the injunction, in whole or in part, and instructed the district court to implement the modified injunction “without further changes.”

This appeal concerned a 427-page order issued on April 15, 2024, that found Commissioner Young in contempt of Remedial Orders 3 and 10. The opinion states that together those orders essentially require timely investigation of abuse and neglect allegations involving children in the Permanent Managing Conservatorship (PMC) class, in a manner that accounts for the child’s safety. The orders name only DFPS, but the parties agree they also apply to HHSC, which took over certain DFPS functions in 2020.

The district court based the contempt finding on the handling of thirty-eight abuse and neglect allegations, involving 13 children, by Provider Investigations, a unit within HHSC. It imposed a $50,000 daily fine for each of the two orders until HHSC leadership certified substantial compliance. The Fifth Circuit stayed the contempt order on May 20, 2024.

The court’s reasoning

Judge Edith H. Jones wrote the opinion for a panel that also included Judges Clement and Wilson. The court reviewed for abuse of discretion and stated that “[t]he issues here are purely legal.”

Type of contempt

When it granted the stay, the court had concluded that the state was likely to succeed in arguing that the order was a criminal contempt. After studying the briefs, the court wrote, “we are convinced of that conclusion.”

Relying on the Supreme Court’s decision in International Union, United Mine Workers of America v. Bagwell, the court explained that a non-compensatory fine is civil if it is remedial and allows the contemnor to purge the contempt, but criminal if it is punitive and imposed for a completed act of disobedience. The court found that much of the April 15 order focused on past conduct, including investigations closed months earlier, and that the daily fines began immediately. It concluded that this “leaves the Defendants no realistic opportunity to purge the contempt.” In a footnote, it said the fine appeared serious enough to entitle the defendants to a jury trial.

The court rejected the plaintiffs’ argument that the order was civil because the fines could be suspended once the state showed substantial compliance. It stated that suspension of fines is not the same as cancellation. It also declined the plaintiffs’ alternative request to affirm the findings and remand for a civil remedy, stating that “this court’s practice has been to reverse invalid contempt orders.”

State sovereign immunity

The court held that the fines also violated state sovereign immunity. Citing Supreme Court precedent, it stated that a federal court may govern a state official’s future conduct but may not award retroactive monetary relief. The opinion states that “[c]riminal contempt sanctions like those at issue here punish the state’s past malfeasance in violation of the Eleventh Amendment.”

The court also noted that the district court had directed that fines paid be preserved “for the benefit and use of PMC foster care children,” and that the plaintiffs’ pro bono attorneys had given control of their fees to the district court. The court said these questions were not presented for review, but that the arrangements heightened its federalism concerns.

Substantial compliance

In a footnote, the court stated that it need not parse the state’s additional arguments that the contempt findings were unsupported by clear and convincing evidence and that Remedial Orders 3 and 10 were too vague, because it held that the district court imposed a criminal contempt sanction without the requisite criminal procedural protections and in violation of state sovereign immunity.

The court held that the district court erred in not finding that the defendants substantially complied with Remedial Orders 3 and 10. It stated that “[t]he state endeavored in good faith to comply with the court’s orders,” citing spending of over a hundred million dollars, overhauled internal policies and requests to the Legislature for additional assistance. It noted that the contempt order never found bad faith.

The plaintiffs argued that compliance should be measured by HHSC’s Provider Investigations alone. The court instead compared compliance across both agencies, reasoning that the orders name only DFPS and that these investigations moved to HHSC in 2020. The court noted that the monitors disagreed with the disposition of 38 of the 69 investigations on which the district court’s order focused, and described those investigations as “a drop in the bucket” of systemwide investigations. It cited monitor reviews finding 73 percent and 84 percent compliance with Order 10 in periods from 2021 through 2023, up from 21 percent in 2019.

Reassignment

The court stated that reassignment “is an extraordinary power and should rarely be invoked.” It considered whether the judge would have substantial difficulty setting aside previously expressed views, whether reassignment would preserve the appearance of justice, and whether it would cause waste out of proportion to any gain.

On the first factor, the court pointed to its 2019 and 2020 reversals. It noted that it had earlier described the district judge as well-intentioned and acting in good faith, but stated that “good faith is no safe harbor.” It cited the judge’s remark at a hearing that she knew the Fifth Circuit had barred her from discussing a new computer system but was “going to talk about it anyway,” and later orders on matters outside the remedial decree.

On the second factor, the court reviewed a three-day contempt hearing in December 2023 and several status conferences, quoting at length from the judge’s remarks to defense counsel, witnesses and the two commissioners. These included a warning that defense counsel was close to being held in contempt and a question to Commissioners Muth and Young whether they had “ever seen the inside of a jail cell.” The court also stated that the district court had encouraged the plaintiffs to file the contempt motion. It found “a sustained pattern, over the course of months and numerous hearings, of disrespect for the Defendants and their counsel, but no such attitude toward the Plaintiffs’ counsel.”

On the third factor, the court acknowledged the judge’s familiarity with the case and stated that it did “not lightly transfer oversight” of the decree. But it found that the judge had become too personally involved, and that the April 15 order indicated a strong possibility of further contempt orders or a receivership. The court stated that it took “no position on issues that have not yet matured into appealable orders,” and that federal judges “are not allowed to become permanent de facto superintendents of major state agencies.” It concluded: “The district judge must be removed.”

Separate opinions

None.

Status

The court reversed the contempt order and directed the Chief Judge of the Southern District of Texas to reassign the case to another judge on remand. The opinion’s introduction says the court vacates the contempt order, and its conclusion says the court reverses it.

After the decision, HHSC and DFPS said they were pleased the court recognized their efforts, according to the Texas Tribune. The plaintiffs’ lawyer said they would ask the full Fifth Circuit to review the ruling, according to Texas Public Radio and the Austin American-Statesman.

According to the court’s docket, the plaintiffs filed a petition for rehearing en banc on October 25, 2024. The petition asks the full court to review the contempt, substantial-compliance and reassignment rulings. On November 2, 2024, three organizations filed a motion for leave to file an amicus brief supporting the plaintiffs’ request for rehearing en banc.