Sitting by designation in San Juan, District Judge William G. Young of Boston wrote touchingly about the prejudice being inflicted on some residents of Puerto Rico by operation of Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA.
In his July 13 opinion, Judge Young also identified a potential denial of constitutional equal protection that may arise from PROMESA as applied, while the island commonwealth works out its financial problems under court supervision akin to chapter 9 of the Bankruptcy Code.
Judge Young confronted a case where the plaintiff had prevailed under the Individuals with Disabilities Education Improvement Act, 20 U.S.C. § 1400 et seq., or IDEA. The statute allows successful plaintiffs to recover their costs and reasonable attorneys’ fees.
Judge Young “reluctantly” held that proceedings to recover costs and attorneys’ fees under IDEA are automatically stayed by PROMESA, which incorporates much of Sections 362(a) and 922(a) of the Bankruptcy Code.
Although he held that remedial orders under IDEA are not automatically stayed, a claim for attorneys’ fees “is a different matter,” he said, because “claim” is interpreted so broadly. Citing a decision from the municipal debt adjustment of San Bernardino, Calif., Judge Young said that an attempt to collect attorneys’ fees is an effort to obtain property of the debtor and is thus automatically stayed.
Judge Young said that IDEA was crafted to provide “some support and leverage” to “parents of our most vulnerable children.” Talking “plainly,” he described his decision as illustrating “the difficulties of applying bankruptcy principles to government entities,” which, he said, “are not capitalist for-profit entities.”
Looking to the effect of his decision, Judge Young said that “no well-run law firm can long endure in this line of work if all they can expect is a bankruptcy claim.” When “competent legal representation dries up,” parents in Puerto Rico “will find themselves bereft of the advantages enjoyed by their follow citizens throughout the states of the United States.”
Saying that a constitutional issue “looms imminent,” Judge Young said that the parents of disabled children in Puerto Rico “will no longer share equally in the protection of laws.”
Judge Young ended his opinion by saying, “Do those of us who enjoy voting representation in Congress truly appreciate what we have done?”