Political Lawyering: An Examination of ’s Lawsuits Against Community Schools

Zach Mason Role of the State Attorney General April , 2012

Some of Ohio’s charter schools—known there as “community schools”—have struggled severely. One exemplary statistic comes from the Cincinnati-based Harmony School, where in the 1998-99 school year, only 10% of the school’s sixth grade students passed the Ohio state proficiency test for reading in a year for which the state average was a 53.2% pass rate and the state standard for the test was 75%.1 More broadly, in 2007, over half of the 328 community schools in Ohio received a grade of D or F on the state’s school report card.2 The failure of many of Ohio’s community schools comes in the context of a larger debate over the role of charter schools in American education that has been raging for over 20 years.

Interestingly, the debate involves many of the issues important to state attorneys general and yet it has drawn little attention from the generals themselves.3 For one thing, the debate is highly political, due in large part to teachers unions, which generally oppose charter schools and also generally provide serious financial and other support to Democratic candidates for office.

As a group of public officials most of whom have been elected, one might think state attorneys general would be more interested in charter schools. In addition, the charter school debate presents fundamental questions about the appropriate role of the various branches and levels of

American government. As executive branch officials who do most of their work through the

1 Complaint at ¶ 31, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 2 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 3 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all.

1 judicial branch, attorneys general might be likely to appear more in charter school issues. The charter school debate also raises questions of the public good and welfare, questions with which attorneys general are usually highly concerned. Yet it took until 2007 for a state attorney general to engage the issue head-on.4

In 2007, then-Attorney General of Ohio Marc Dann initiated lawsuits against three Ohio community schools. These lawsuits were remarkable for three reasons. Not only would the lawsuits test the schools themselves, but they would also test the boundaries of attorney general involvement in legislative questions. It would further demonstrate the extent to which the political nature prosecutorial discretion can affect litigation. In essence, Dann’s suits alleged that the schools’ underperformance required the courts to shut down the schools.5 The lawsuits were not only unusual because no attorney general had directly sued to shut down charter schools before, but they were also unusual because of Dann’s legal theory: He argued that the schools qualified as charitable trusts under state law and therefore they fell under the Attorney General’s oversight of public charities.6 In the end, the lawsuits would fail, but not before three different attorneys general handled them. This variety of principals provides an interesting insight into the role of prosecutorial decision and demonstrates the extent to which these particular lawsuits were politically motivated.

This paper examines Dann’s lawsuits in several parts. First, it discusses the constitutional, legislative, and judicial background of Ohio’s community schools and assesses the failures of community schools. Then, it examines Dann’s legal challenges to community

4 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 5 Complaint at Introduction, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 6 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *4 (Ohio Ct. App.).

2 schools and considers the political motivations of those suits. Next, it discusses the outcomes of the lawsuits and assesses the roles of the three Attorneys General who helmed the cases. Finally, it concludes with a description of the political and legal mastery of Attorney General Richard

Cordray’s challenge to community schools on different grounds.

I. THE HISTORY OF OHIO’S COMMUNITY SCHOOLS A. The Constitutional and Legislative Framework of Community Schools

The Ohio Constitution’s Thorough and Efficient Clause requires the state’s Legislature to create a school system. Article VI, Section 2 reads: “The General Assembly shall make such provisions, by taxation or otherwise, as, with the income arising from the school trust fund, will secure a through and efficient system of common schools throughout the state.”7 The General

Assembly duly complied and has ever since had a public school system which resembles most public education in America through the latter half of the nineteenth and most of the twentieth centuries. This system was not immune to challenge and change, of course. Private schools always provided an alternative for those who could afford them and Ohio did not escape the dramatic changes in the gender and race dynamics of K-12 enrollment and curriculum, but for the most part, the structure of the system went undisturbed.

In 1997, however, the Ohio General Assembly authorized the use of charter schools by enacting R.C. Chapter 3314.8 Called “community schools,” these schools are able to operate without having to comply with many of the rules applicable to traditional public schools.9

Ohio’s authorization of community schools came in the context of a national debate and a growing acceptance of them. While Democrats had generally opposed charter schools, by 1997,

7 OHIO CONST. art. VI, §2. 8 Am.Sub.H.B. No. 215., 147 Ohio Laws, Part I, 909, 1187. 9 A list of the laws inapplicable to community schools is laid out in OHIO REV. CODE ANN. §3314.04.

3 they were becoming more widely viewed as an intriguing option for school reform, with even

President endorsing charters.10 Importantly, Chapter 3314 was passed during a decade of Republic rule in Ohio, in which experimentation with market-based solutions was sweeping the state.11 The fact that the community school system was politicized from the beginning ended up playing an important role in the political nature of the lawsuits Dann would eventually file. At any rate, the popularity of community schools exploded in Ohio over the decade after they were first authorized. By 2006, over 66,000 students attended Ohio’s 297 community schools, which received $444 million in state aid.12

In creating these schools, the General Assembly declared it intended the law’s effects would include “providing parents a choice of academic environments for their children and providing the education community with the opportunity to establish limited experimental education programs in a deregulated setting.”13 The deregulation was not unlimited, however, as community schools are still required to meet many of the academic standards applicable to traditional public schools.14

Under Chapter 3314, creation of a community school begins with a school contracting with a sponsor, which must be approved by the Ohio Department of Education (“ODE”).15

10 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 11 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 12 Catherine Candisky, Charters Face Supreme Test: Sides Will Debate the Constitutionality of Schools in Front of State’s Top Court, COLUMBUS DISPATCH, Nov. 26, 2005, available at http://oh.aft.org/index.cfm?action=article&articleID=58cb63f4-795a-465b-b932-3827bc9516e9 13 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 569 (2006) (citing Am.Sub.H.B. No. 215, Section 50.52, Subsection 2(B), 147 Ohio Laws, Part I, 2043). 14 OHIO REV. CODE ANN. §3314.03(A)(11). Community schools are also responsible for facility maintenance, health and safety codes, and regulations of that sort. Id. 15 OHIO REV. CODE ANN. §3314.015(A).

4 Sponsors are then responsible to the ODE for compliance with state academic standards.16

Those standards include the same graduation test that students in traditional public schools are required to pass and proficiency and achievement tests.17 Community schools are independent of the school district in which they are geographically located, but are still a part of the state program of education.18 One interesting aspect of Ohio’s community schools is that, unlike in most states, commercial companies rather than non-profits run a large number of the schools.19

Community schools are prohibited from charging tuition by the General Assembly, and instead they receive their funding from the state, largely based on the number of students in a given school.20 Each student comes with a subsidy taken out of the aid Ohio would have given to the school in which the student would otherwise be enrolled.21 Community schools receive no money directly from localities.22

B. The Failures of Community Schools

Still in his first year as Governor of Ohio, pulled no punches in his assessment of the community school system, saying in 2007, “Perhaps somewhere, charter schools have been implemented in a defensible manner, where they have provided quality, but the way they’ve been implemented in Ohio has been shameful. I think charter schools have been

16 OHIO REV. CODE ANN. §3314.03(A)(4). 17 OHIO REV. CODE ANN. §3314.03(A)(11)(f), 3314.03(A)(11)(d). 18 OHIO REV. CODE ANN. §3314.01(B). 19 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 20 OHIO REV. CODE ANN. §3314.08(D). 21 OHIO REV. CODE ANN. §3314.08. 22 OHIO REV. CODE ANN. §3314.08. In State ex rel. Ohio Congress of Parents & Teachers v. State Board of Education, discussed infra, a group of plaintiffs challenged the funding scheme, arguing that while schools do not receive money directly from localities, the diversion of state funds that would otherwise go to local school districts made the provision merely a technicality, but their argument was rejected by the . 111 OhioSt.3d. 568 (2006).

5 harmful, very harmful, to Ohio students.”23 Strickland was not alone among senior Ohio officeholders in criticizing community schools. Ohio Supreme Court Justice Paul Pfeifer noted that while the General Assembly may have intended community schools to help fix the ailing public school system, “the cure has been worse than the disease.”24

Many statistics backed up Strickland and Pfeifer’s argument and showed just how dramatically community schools were damaging Ohio’s education system and failing their students. In 2007, 57 percent of community schools were in academic watch or emergency at a time when even in Ohio’s major cities, only 43 percent of traditional public schools received those ratings.25 In Franklin County, home to Columbus (Ohio’s capital and its largest city), half of community schools received the emergency rating.26 Notably, the failure rate of Ohio’s community schools was much higher than that of charter schools in other states.27 Making the failure even more outrageous was the fact that the schools received so much taxpayer money.

Two of the schools sued by Dann had received over $17 million over six years.28

Community schools’ troubles were not limited to academic performance. Many were also a financial and managerial mess. For example, Harmony Community School, one of the schools Dann would later sue, received more than $2.6 million in overpayments over the years

23 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 24 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 592 (2006) (Pfeifer, J. dissenting). 25 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 26 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 592 (2006).(Pfeifer, J. dissenting). 27 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 28 Reginald Fields, Sues to Close 2 Dayton-Area Charter Schools, PLAIN DEALER, Sept. 13, 2007, available at http://oh.aft.org/index.cfm?action=article&articleID=259d1254-3b3a-48ae-bad6-6dca7616c1cb.

6 2005, 2006, and 2007, despite being at times unauditable.29 The reason community schools were such dramatic failures in Ohio was partly based on a systemic flaw in Chapter 3314. 70 different government and private agencies had the ability to authorize a new community school, leading to a lack of meaningful oversight.30

Although it would be overstatement to say that Ohio community schools were all failures, it is clear that many of them were failing their students and the state. The system needed reform, but it is not clear that judicial challenges were the ideal solution. Given that so many of the problems with the schools resulted from academic failures and mismanagement, it should probably have been left to the Legislature to solve the problem.

Indeed, nobody could say the Legislature was ignoring the problem. The General

Assembly, noting the failure of community schools, passed a law in 2007 aimed to dismantle problematic schools. If the schools that were then rated as being in academic emergency did not make improvements, those schools would be shut down after the 2008-09 school year.31

The General Assembly made further attempts to tackle the financial mess that community schools had created. It passed another law in 2007, which would cost a community school all of its state aid if its books were deemed unauditable by the State Auditor.32 This would be especially damaging considering that community schools were almost entirely dependant on state aid, as discussed above. Not only was the remedy harsh, but the scope of the law was also

29 Press Release, ’s Office, Cincinnati Charter School Owes State $2.6 Million (Aug. 5, 2008) (available at http://www.auditor.state.oh.us/newscenter/press/release/590/). 30 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 31 Catherine Candisky, Charter Schools Fire Back at Dann, COLUMBUS DISPATCH, Sept. 15, 2007, http://www.dispatch.com/content/stories/local/2007/09/14/charter14.ART_ART_09-14- 07_B1_F07T7QA.html. 32 Catherine Candisky, Charter Schools Fire Back at Dann, COLUMBUS DISPATCH, Sept. 15, 2007, http://www.dispatch.com/content/stories/local/2007/09/14/charter14.ART_ART_09-14- 07_B1_F07T7QA.html.

7 broad. State Auditor Mary Taylor had labeled 19 schools unauditable for the 2005-06 school year.33

C. Prior Legal Challenges to Community Schools

Even though it eventually became clear that community schools were falling short, they faced challenges immediately upon the beginnings of their operation. As early as 2001, a coalition of community school opponents34 challenged Chapter 3314 under the Ohio State

Constitution.35 Their claims were varied, but in essence, boiled down to five sections of the state

Constitution regarding the establishment of public schools and how the state and its localities are allowed to raise and spend money.

The establishment question arose under the Thorough and Efficient Clause discussed above. The challengers argued that by creating community schools as a series of independent schools outside the broader system of schools whose regulations apply to everyone, the General

Assembly had abandoned its duty to create one system of “common” schools.36 Their financing argument came in several different flavors but were all offshoots of the same argument which

33 Catherine Candisky, Charter Schools Fire Back at Dann, COLUMBUS DISPATCH, Sept. 15, 2007, http://www.dispatch.com/content/stories/local/2007/09/14/charter14.ART_ART_09-14- 07_B1_F07T7QA.html. 34 The coalition consisted of the Ohio Federation of Teachers (part of the American Federation of Teachers, the largest teachers’ union in the nation), the Ohio Congress of Parents and Teachers, the Ohio School Boards Association, “other education associations and teachers’ unions, certain parents, taxpayers, school district boards of education, and residents of various school districts.” State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 568 (2006). 35 State ex rel. Ohio Congress of Parents and Teachers v. State Board of Education 111 Ohio.St.3d 568, 571 (2006). 36 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 574 (2006).

8 was that by diverting state resources from local school districts, the Legislature had violated the requirement that spending be limited to the stated purposes of tax which raised the funds.37

In a four to three decision, the Ohio Supreme Court rejected all of the Plaintiffs’ arguments.38 Writing for the majority, Justice Lanzinger argued that certain community schools might end up providing problems, but that the courts were an inappropriate place to challenge their existence altogether. She summarized her decision thusly, “The General Assembly always has the prerogative to determine that Ohio’s community schools are not meeting the purpose for which they were established and, consequently, has the ongoing opportunity to modify or dismantle them.”39 Lanzinger’s deferment to the legislative branch was appropriate, especially as the General Assembly proved later on that they would respond to the problems community schools presented.

Ohio Congress, however, inspired three separate dissents. Although Justice O’Donnell argued that the appeal was improvidently granted, Justice Pfeifer and the lone Democrat on the

Court, Justice Resnick, both blasted community schools and forcefully argued for their unconstitutionality.40 Pfeifer spent much of his opnion arguing that community schools had failed, noting, for example, that most of the community schools in Franklin County had met only

12.4 percent of the academic standards Ohio required.41 For her part, Resnick argued that community schools undermined education by separating themselves from other public schools

37 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 581-82 (2006). 38 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 568 (2006). 39 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 586 (2006). 40 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 593 (2006) (O’Donnell, J. dissenting) 41 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 592 (2006) (Pfeifer, J. dissenting)

9 and that because of that, the General Assembly violated the Constitution’s command to set up a system of common schools.42

While the defeat surely hurt community school opponents, one has to assume that the diversity of opinion on the state’s highest court emboldened them as well. If it had not been for the split decision, Dann might have hesitated significantly before going after community schools.

Indeed, the decision must have hamstrung Dann in the variety of arguments available to him, but he must have felt more comfortable knowing that he had at least some allies in the judiciary.

His allies went beyond the judiciary, of course, including the challengers in Ohio

Congress, but they did not always make his life easy as Attorney General. Indeed, they put him in an impossible position for a moment, pitting his official duties in conflict with his personal opinion on community schools. Before Dann took office, the Ohio Education Association

(“OEA”), a large teachers’ union, had filed a lawsuit against the state for failing to properly monitor community schools.43 As the head lawyer for the state, including the ODE, Dann was put in the awkward position of defending against the lawsuit. Part of the motivation for his own suit, then, was likely to get the OEA to allow him out of this position. Indeed, after Dann decided to pursue schools on his own, the case against the ODE was dropped.44 Union President

Patricia Frost-Brooks said of the move, “In light of your aggressive approach toward enforcing the accountability of community schools as outlined in your letter [announcing the lawsuits], we

42 State, ex rel., Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio.St.3d 568, 598 (2006) (Resnick, J. dissenting) 43 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html. 44 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html.

10 are willing to cooperate with your office and urge the plaintiffs to defer pursuing the litigation at this time.”45

This was a remarkable demonstration of the powers of the Attorney General’s office. On the turn of a dime, the state of Ohio switched from the legal position defending community schools to the legal position of attacking them. Even more remarkable, this all happened because of one individual at the top, Marc Dann. Ordinary litigants are extremely unlikely to make a 180 degree turn in their positions, especially so quickly. However, because one person controls the litigation strategy of an entire state, it is possible in situations with an Attorney General. The contrast between ordinary litigants and the state is striking because the state is such a bigger actor and one might think that would make it more inflexible, but such is the power of the

Attorney General. Moreover, the political nature of these lawsuits would only become more evident over the course of the cases as different Attorneys General handled them.

II. DANN’S LAWSUITS A. The Political Context of the Lawsuits

As a general rule, the free market nature and unregulated environment in which charter schools operate make Republicans likely to support them and the strong opposition from teachers’ unions (because most charter schools do not have unions) make Democrats more likely to oppose them.46 The political situation in Ohio was not markedly different. To wit, then- governor Strickland strongly opposed community schools and hoped to carry out a crackdown on

45 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html. 46 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all.

11 them independent of Dann’s lawsuits and the state’s largest sponsor of community schools,

David Brennan, was a major donor to Ohio’s Republican party.47

For his part, Marc Dann had developed a reputation for activism, attacking mortgage giants and pursuing shady Internet services.48 In initiating the lawsuits, he highlighted the students at the center of the debate and tried to take the lawsuit out of its political context. His spokesman said, “We don’t want to see kids in failing schools any longer than they have to be.

When a kid is in a school where they are not being educated, that’s one day too long.”49 Each side of the lawsuit had ties to political institutions, though.

Pro-charter groups immediately signed up to pay the attorneys fees for the targeted schools.50 A leading advocate of charters, the Thomas B. Fordham Foundation, issued a series of blog posts attacking Dann and his suits. One such post argued, “Dann has been so precipitous and his legal reasoning so odd that we wonder whether he is truly focused on the best interest of students.”51 They went on, “Politics is very nearly the only rationale the attorney general could have in launching his [lawsuit].”52 In fact, a wide variety of charter school proponents would

47 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 48 Reginald Fields, Ohio Attorney General Sues to Close 2 Dayton-Area Charter Schools, CLEVELAND PLAIN DEALER, Sept. 13, 2007, available at http://oh.aft.org/index.cfm?action=article&articleID=259d1254-3b3a-48ae-bad6-6dca7616c1cb. 49 Catherine Candisky, Charter Schools Fire Back at Dann, COLUMBUS DISPATCH, Sept. 15, 2007, http://www.dispatch.com/content/stories/local/2007/09/14/charter14.ART_ART_09-14- 07_B1_F07T7QA.html. 50 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 51 Matt Lafferty and Terry Ryan, Dann: Right Struggle, Wrong Tactics, 1 OHIO EDN. GADFLY 40, 40 (Sept. 14, 2007) (available at http://www.edexcellence.net/ohio- policy/gadfly/2007/september-14/dann-right-struggle-wrong.html). 52 Matt Lafferty and Terry Ryan, Dann: Right Struggle, Wrong Tactics, 1 OHIO EDN. GADFLY 40, 40 (Sept. 14, 2007) (available at http://www.edexcellence.net/ohio- policy/gadfly/2007/september-14/dann-right-struggle-wrong.html).

12 attack Dann and argue that his motivation was primarily political.53 Even Republicans in the

General Assembly piled on.54

These attacks did not come without evidence. On top of the circumstantial evidence that the OEA dropped their lawsuit against the state immediately after Dann announced his lawsuits, an investigation by uncovered emails showing the close ties Dann’s office had with teachers’ unions in conceiving of the suit and its legal strategy. In the months leading up to filing the complaints, an OEA attorney emailed an Assistant Attorney General, suggesting, “I know this is a long shot, but by any chance, are community schools registered as charitable trusts? If not, are they exempt from registration by regulation?”55 The AAG responded the same day, “Not that I’m aware of, to either.”56 Dann’s spokesman tried to fight back against the attacks by announcing, “It may have been news [to the AAG], but Marc Dann was talking about it to people last year.”57

This all raises legitimate questions about the appropriateness of politics entering legal decisions by attorneys general. If a statewide official, especially the one who leads the legal strategy of the state, takes orders from political interest groups, it may undermine the credibility

53 See Catherine Candisky, Charter Schools Fire Back at Dann, COLUMBUS DISPATCH, Sept. 15, 2007, http://www.dispatch.com/content/stories/local/2007/09/14/charter14.ART_ART_09-14- 07_B1_F07T7QA.html. 54 See Catherine Candisky, Dann Sues 2 Charter Schools, COLUMBUS DISPATCH, Sept. 13, 2007, http://www.dispatch.com/content/stories/local/2007/09/13/chsuit.ART_ART_09-13- 07_A1_KF7SSIS.html. 55 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html. 56 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html. 57 Catherine Candisky, Teachers Behind Dann’s Strategy?, COLUMBUS DISPATCH, Oct. 2, 2007, http://www.dispatch.com/content/stories/local/2007/10/02/dann02.ART_ART_10-02- 07_B2_5882UTI.html.

13 of the individual case. More damaging, it may undermine the credibility of the broader agenda of that attorney general. The most damaging potential consequence, though, is that it may undermine the credibility of the office of attorney general. These are high prices to pay.

I would argue however, that it is not as damaging as the opponents might hope it to be.

After all, it is no secret that Democrats have friendly relations with labor. The Attorney General is an elected office and the office gains a great deal of its legitimacy from this fact. One could easily say that popular election is the most legitimating qualification. Any damage to the credibility of the office done by politics then should surprise only the oblivious and disturb only the unreflective. After all, it is one thing to worry that the appearance of impropriety may damage a case, a man, or an office, but it is another to think that the appearance of politics in attorney general decision makes the office not credible.

In this particular situation, Dann tried to play it both ways, at time hiding his political motivation and at other times, showcasing it. As mentioned above, his spokesman highlighted the students when announcing the suit. However, the optics of the case were highly suggestive of political motivation. One of the targets, New Choices Community School, was in the state house district of the Republican Speaker of the State House of Representatives, Jon Husted.

Husted was a leading community school supporter.58 Even though the political nature of the

Dann suits should not trouble observers too much, it does represent an intriguing aspect of the case and so it will be revisited later in this paper.

B. The Complaints

58 Catherine Candisky, Dann Sues 2 Charter Schools, COLUMBUS DISPATCH, Sept. 13, 2007, http://www.dispatch.com/content/stories/local/2007/09/13/chsuit.ART_ART_09-13- 07_A1_KF7SSIS.html.

14 In late 2007, Dann filed his complaints against three community schools: Harmony

Community School (“Harmony”), Colin Powell Leadership Academy (“Powell Academy”), and

New Choices Community School (“New Choices”). The Complaint against Harmony provides a good example of how Dann’s argument progressed in three parts. First, he argued that the school was a charitable trust. Second, he argued that the school had failed to meet its charitable purpose: educating its students. Third, he argued that these failures constituted breaches of the school’s fiduciary duties and that therefore, the trust must be terminated and under the doctrine of cy pres, the school’s funds should be redirected to its students’ new schools.

1. A Community School is a Charitable Trust

R.C. 109.23(A) defines a charitable trust as any fiduciary relationship arising out of legal funding as a result of an intention to create a trust and which subjects the holder of the funds to fiduciary duties to use the funds for a charitable purpose.59 This definition is backed up by the common law of Ohio.60 Dann argued that a community school constitutes a charitable trust because the public money that it receives for a specific purpose subjects the institution to fiduciary duties.61 Furthermore, “the general structure and specific provisions of [its] organization manifest an intent to create fiduciary relationships; and it has represented that the funds it receives will be used for educational purposes.”62 R.C. 109.23(A) adds to the argument by specifying that education counts as a charitable purpose.63 That a community school’s financing comes from public money, the argument goes, makes the school a public trust.64

59 OHIO REV. CODE ANN. §109.23(A) 60 See Complaint at ¶ 80, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 61 Complaint at Introduction, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 62 Complaint at Introduction , State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 63 OHIO REV. CODE ANN. §109.23(A) 64 Complaint at Introduction, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008)

15 Under the charitable trust theory, the public funding apparently constituted the corpus of the trust.

Dann pursued this line of attack on the schools because R.C. 109.24 gives the Attorney

General authority over public trusts and investigative powers with respect to all trusts operating in Ohio, although he cannot terminate them himself without a court order.65 The strategy went beyond the mere fact that Dann had the authority, however. Ohio Congress had limited his ability to challenge all the community schools at once. Furthermore, the OEA apparently believed that this suit would be fruitful. This is evidenced by the fact that they at least attempted to suggest the charitable trust theory to the Dann’s office and the fact that they dropped their own lawsuit.66 Moreover, only the Attorney General could make such a claim because his authority under R.C. 109.24 is exclusive.67 Given these factors, even though the legal theory was a novel one, it was worth testing out. Just as there was no precedent to say he could make such a claim, there was also no precedent prohibiting him from making the claim.

2. These Schools Failed to Meet Their Charitable Purpose: Educating Their Students

The most extensive part of the Complaints is the details of the schools’ failings. Just outlining Harmony’s failures to meet academic and other standards takes 25 pages.68 The basic argument is given in the Complaint’s introduction: “In spite of receiving $31,931,414 in public funding it has met only 5 of the 53 applicable indicators for school performance. […] It has

65 OHIO REV. CODE ANN. §109.24 66 The OEA would also go on to submit a brief in favor of Dann during the appeal of the New Choices decision. In it, the OEA would argue, “The egregious failures and shortcomings of some community schools, including New Choices community school, necessitates swift and decisive action in order to promote and protect the interests of taxpayer [sic] and the academic welfare of Ohio students.” State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at n.2 (Ohio Ct. App.).. 67 OHIO REV. CODE ANN. §109.24 68 See Complaint, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008)

16 failed to meet Adequate Yearly Progress standards for the last four school years. […] It has lagged even further behind statewide averages: its test scores have averaged 32 points behind statewide averages.”69 The Complaint then goes through year-by-year outlining failure after failure, staring with Harmony’s first year of operation. In the 1999-2000 school year,

Harmony’s first, none of its students passed the State proficiency test for sixth grade science, a test for which the state standard is 75%, to take just one statistic as an example.70 In the year in which that occurred, Harmony received $2,480,209 in Ohio money in order to achieve an educational purpose.71

One might excuse the early statistics because the school had just started and had played a limited role in the overall academic performance of its students, but it is hard to deny that there was a problem later on. In the 2006-07 school year, only 14.7% of Harmony students passed the state achievement test for eighth grade math, a test for which the state standard was 75% and the state average was 71.5%.72 In that year, it received $3,944,969 in state funding.73 For its part,

Powell Academy had met only one applicable state standard out of 61 in the six years before the lawsuit.74 New Choices had met only one of 29 standards, over six years in which it received

$6,686,503 in public funds.75

It was obvious that the schools were failing to meet the academic standards required of them and to provide an adequate education to their students. Dann also did a great job at picking

69 Complaint at Introduction, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 70 Complaint at ¶ 31, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 71 Complaint at ¶ 32, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 72 Complaint at ¶ 74, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 73 Complaint at ¶ 77, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 74 Catherine Candisky, Dann Sues 2 Charter Schools, COLUMBUS DISPATCH, Sept. 13, 2007, http://www.dispatch.com/content/stories/local/2007/09/13/chsuit.ART_ART_09-13- 07_A1_KF7SSIS.html. 75 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *1 (Ohio Ct. App.).

17 targets for the individual lawsuits, picking those with extremely troubling statistics. The optics of his choices were also excellent. Powell Academy, for instance, was one of four community schools founded by a former college football star with no experience in education, William

Peterson.76

3. The Schools’ Failures Constituted Breaches of Their Fiduciary Duties

After reading all the failures of the schools, by the time the Complaints got to the causes of action, the reader is primed to agree. Dann argued two alternative arguments. First, Dann asked the Courts to dismantle the trusts, or in other words, close the schools. If that was not possible, Dann argued in the alternative to remove the members of the schools’ Governing

Authorities.77 Dann first asked the Court to terminate the trust because the schools were incapable of achieving their stated purpose.78 This, he argued, demanded the Court to use the doctrine of cy pres and redirect the schools’ funding to follow the students to the schools they would attend upon termination of the schools.79 This was because the original intent of the trust was to advance the education of the students. In the alternative, under a breach of fiduciary duty theory, Dann asked the Court to fulfill the best interest of the trust and remove the officers of the schools as trustees.80

C. Lower Court Decisions

76 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 77 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *2 (Ohio Ct. App.). 78 Complaint at ¶ 102, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 79 Complaint at ¶ 110, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008) 80 Complaint at ¶ 97, State, ex rel., Dann v. Harmony School (Ohio Misc. 2008)

18 The swiftest reaction to the Dann suits came from Powell Academy. Instead of contesting the lawsuit, Peterson resigned and his successors closed the school.81 Harmony and

New Choices both went to trial. The New Choices decision came down first. There, the

Montgomery County Court of Common Pleas granted the school’s 12(c) motion, holding that as a matter of law, the school was a political subdivision of the state and therefore could not be a charitable trust subject to the Attorney General’s oversight and legal claims.82 In a decision arguably superfluous to the outcome of the case, the Court of Common Pleas Judge went further, noting that the Attorney General would not have oversight authority even if a community school was a charitable trust because Chapter 3314 gave more specific oversight provisions for community schools. Those provisions would override the Attorney General’s authority over charitable trusts.83 To its credit, the court did not go even further and reach yet another unnecessary issue raised by the school. In its 12(c) motion, New Choices argued that Dann’s attempt to regulate public education ran afoul of the separation of powers principles in the Ohio

Constitution, but the trial court ignored that argument and kept its decision narrow.84

The Harmony decision was decided on largely the same grounds, but with slightly different reasoning. Decided two months after New Choices, Judge Luebbers of the Hamilton

County Court of Common Pleas did not focus as much on the alternative regulatory structure in

Chapter 3314, but rather the absence of specific authorization of the Attorney General. She wrote, “It is the decision of this court that if the General Assembly desired the attorney general to

81 Sam Dillon, Ohio Goes After Charter Schools That Are Failing, N.Y. TIMES, Nov. 8, 2007, http://www.nytimes.com/2007/11/08/us/08charter.html?pagewanted=all. 82 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *1 (Ohio Ct. App.). 83 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *1 (Ohio Ct. App.). 84 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *2 (Ohio Ct. App.).

19 have this authority, they would have specifically granted it.”85 Furthermore, she wrote, “critical to the court's analysis is the complete lack of any intent by the State to designate community schools as charitable/public trusts.”86 Despite its success in the courtroom, Harmony’s academic failures lingered. It closed on December 31, 2008.87

D. The Rogers’ Appeal 1. From Dann to Rogers to Cordray

Compounding matters for Dann, in the midst of the lawsuits, scandal broke out in his office. Early in Dann’s term, two female employees of the Attorney General’s Office began making accusations of unwanted sexual advances from their supervisor.88 When they felt their accusations were not being properly addressed, they went to the Inspector General, who would end up discovering a host of disrespect in the office and would eventually find serious financial ethics violations.89 In a report issued in December 2008, the Inspector General wrote, “The rude, vulgar and abusive conduct of senior management, including the attorney general himself, created a hostile work environment that is an embarrassment to state government.”90 As the scandal grew more and more public, Dann initially stayed steadfast in his office, but when the

85 Catherine Candisky, Judge Spikes State’s Bid to Close Charter School, COLUMBUS DISPATCH, Nov. 24, 2008, http://www.dispatch.com/content/stories/local/2008/11/24/chartrule.html 86 Blogpost, Hamilton County Court Rules Community Schools Are Not Charitable Trusts, OHIO ALLIANCE FOR PUBLIC CHARTER SCHOOLS, Dec. 1, 2008, http://www.oapcs.org/news/44 87 Denise Smith Amos, Troubled School Won’t Reopen, CINCINNATI ENQUIRER, Dec. 17, 2008, http://news.cincinnati.com/article/20081217/NEWS0102/812170346/Troubled-school-won-t- reopen. 88 Reginald Fields Inspector General Blasts Marc Dann for Misspent Money, CLEVELAND PLAIN DEALER, Dec. 22, 2008, http://blog.cleveland.com/openers/2008/12/inspector_general_blasts_dann.html 89 Reginald Fields Inspector General Blasts Marc Dann for Misspent Money, CLEVELAND PLAIN DEALER, Dec. 22, 2008, http://blog.cleveland.com/openers/2008/12/inspector_general_blasts_dann.html 90 THOMAS P. CHARLES, REPORT OF INVESTIGATION iv, (2008) available at http://www.watchdog.ohio.gov/investigations/2008125.pdf.

20 Inspector General’s office raided his office and Dann’s allies in the began rumbling about impeachment, Dann resigned on May 14, 2008.9192

In response, Governor Strickland selected Nancy Rogers, Dean of the Ohio State

University Law School, to replace Dann as Attorney General until a special election could be held.93 Rogers had to take over an office already moving at full pace on many cases, including the community school suits. The most difficult decision she had to make regarding the community school suits was whether to appeal them. The Harmony decision came down on

November 24th, 2008, but that school planned to close just a month later. The New Choices case provided a bigger challenge for Rogers. The lower court decided that case in September 2008, so Rogers would have to decide whether to appeal it before the November election of her successor. Interestingly, Rogers chose to appeal the decision.

There is no public information regarding why she chose to appeal, but it is intriguing because of the political nature of the lawsuits. Rogers had immediately decided not to run in the special election to serve out the remainder of Dann’s term.94 This made her significantly less beholden to the teachers unions that had helped to elect Dann, yet she supported the union-

91 Reginald Fields Inspector General Blasts Marc Dann for Misspent Money, CLEVELAND PLAIN DEALER, Dec. 22, 2008, http://blog.cleveland.com/openers/2008/12/inspector_general_blasts_dann.html 92 It was revealed in 2008 that during Dann’s transition to Attorney General after his 2006 election, he formed an unregulated transition account. See Fields, supra note 88. A report from Ohio State Inspector General Tom Charles later showed the extent of the damage: $195,000 in undocumented receipts with no record of who made the donations. See Charles, supra note 90. Much of that money would go to Dann’s wife and his close friends who he hired as top aides, leaving less than $9,000 left in the account. Id. 93 Governor’s Statement on Attorney General Appointment, Ted Strickland (May 28, 2008) available at http://www.tedstrickland.com/5-28-08-governors-statement-on-attorney-general- appointment/. 94 Christine Jindra, Dean of Ohio State Law School Nancy Rogers to Head Ohio Attorney General’s Office, CLEVELAND PLAIN DEALER, May 28, 2008, http://blog.cleveland.com/openers/2008/05/_susan_tave_zelman_will.html.

21 backed suit. Complicating matters for her was some case law that came down just a month before Dann’s resignation. In Greater Heights Academy v. Zelman, on a lawsuit over a different issue than Dann’s lawsuits, the 6th Circuit held that community schools were, as a matter of law, political subdivisions of the state.95 Whatever the reason, she did decide to appeal.

Rogers’ decision to appeal put her successor in an awkward position. assumed office on January 8, 2009. At that point, the appeal had already commenced, and

Cordray, a Democrat would have faced significant political pressure from the unions that support the party if he had decided to abandon the appeal. As a result, he was all but forced to continue apace with the lawsuit.

2. The Appellate Decision in New Choices

The Court of Appeals of Ohio decided the case on September 4, 2009, affirming the

Montgomery Court of Common Pleas. In its decision, it affirmed the reasoning of the lower court, but also focused on the lack of any indicia of intent to create a trust, one of the legal requirements for the existence of a trust.96 Writing for a unanimous three-judge panel, Judge

Froelich wrote:

Had New Choices, upon incorporation, chosen to operate as a private school, its Articles of Incorporation may have been able to be interpreted as manifesting an intent to operate as a charitable trust. However, upon entering into a contract with a sponsor pursuant to R.C. Chapter 3314, New Choices expressed its intent to become a political subdivision and a legislatively-created public school falling within the state's system of public education and the oversight of the Department of Education.97

95 Greater Heights Acad. v. Zelman, 522 F.3d 678 (6th Cir. 2008). 96 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *9 (Ohio Ct. App.). 97 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *9 (Ohio Ct. App.).

22 Further, according to the Court, the mere fact that the school received public funding did not turn it into a trust.98 Froelich also finally addressed the separation of powers argument brought up by the schools in the lower courts, writing:

In essence, the Attorney General is seeking to replace Department of Education oversight with judicial review. We find this position untenable when the General Assembly, which has the constitutional obligation to make educational policy choices for Ohio's children, has delegated these responsibilities to sponsors, the Department of Education, and the Auditor of State.99

After the appellate decision, Cordray finally had some control over how to proceed. It was up to him whether to appeal to the State Supreme Court.

III. EPILOGUE: CORDRAY v. INTERNATL. PREPARATORY SCHOOL

Cordray had some good reasons to try his hand at the high court. Most importantly, the political pressure from his union base was still present. Additionally, there was reason to think he might succeed at the State Supreme Court. Although Justice Resnick, the Court’s lone

Democrat and the vocal opponent of community schools in Ohio Congress, had left the Court in

2007, the other two Ohio Congress dissenters were still on the Court. Moreover, because this case had such limited scope, attacking a single school, there is reason to think some Justices might have switched sides from Ohio Congress. On the other hand, there were now two lower court decisions, an appellate court decision, and the 6th Circuit decision all saying that community schools were not charitable trusts. In the face of that, Cordray may well have decided that spending any more resources on the case would have been wasteful.

Perhaps the best reason that Cordray chose not to pursue the case any higher was that he decided to use the bad case law in his favor. Cordray would use the holding against the

98 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *9 (Ohio Ct. App.). 99 State, ex rel., Rogers v. New Choices Community School, 2009 WL 2857360 at *12 (Ohio Ct. App.).

23 community schools by successfully arguing that, so long as community schools were political subdivisions of the state, a treasurer of a community school was a public official and therefore liable for overpayments to the school. His case, Cordray v. Internatl. Preparatory School, went all the way to the State Supreme Court. The Court’s decision sums up the argument:

“Community schools fall within the definition of public office because they are entities

‘established by the laws of this state for the exercise of [a] function of government.”100

Making this argument showed remarkable flexibility on Cordray’s part. Embracing the political pressure to oppose community schools, he continued to attack them, as Dann had, but he was also able to take the feet out from under community school supporters. Using its own legal arguments against them, he made it impossible for a Republican court system to find against him. Furthermore, this was a huge political win for the new Attorney General. He was able to show Republicans that he was tough on accountability for public funds while also showing

Democrats he was tough on community schools. In the world of political lawsuits, what Dann merely attempted, Cordray mastered.

100 Cordray v. Internatl. Preparatory School, 128 Ohio St.3d 50, 54 (2010).

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