                 REVISED JULY 11, 2008
       IN THE UNITED STATES COURT OF APPEALS
                FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                Fifth Circuit

                                                                 FILED
                                                               June 24, 2008

                                No. 06-41347               Charles R. Fulbruge III
                                                                   Clerk

SAMNORWOOD INDEPENDENT SCHOOL DISTRICT; HARROLD
INDEPENDENT SCHOOL DISTRICT

                                          Movants-Appellants
v.

TEXAS EDUCATION AGENCY; STATE OF TEXAS

                                          Defendants-Appellees

G.I. FORUM; LEAGUE OF UNITED LATIN AMERICAN CITIZENS

                                          Intervenor Plaintiffs-Appellees


                Appeal from the United States District Court
                      for the Eastern District of Texas


Before GARWOOD, GARZA, and BENAVIDES, Circuit Judges.
GARWOOD, Circuit Judge:
      This case involves two independent school districts located in the Texas
panhandle challenging whether a some thirty-six-year -old federal court
desegregation order can properly be applied to them when they were not a party
to the suit when the order was entered and have never been found to have
discriminated against students since they voluntarily and completely
desegregated in the 1960s.
                                       No. 06-41347

       Because we believe that the application of the modified order to these two
districts is unwarranted under current school desegregation law, we reverse and
render.
                      FACTS AND PROCEEDINGS BELOW
       In March 1970, the United States brought suit in the United States
District Court for the Eastern District of Texas against numerous specified
Texas school districts, their governing boards, their officials, the State of Texas,
and the Texas Education Association (“TEA”) in order to achieve meaningful
school desegregation. United States v. State of Texas, 321 F. Supp. 1043 (E.D.
Tex., Nov. 24, 1970); United States v. State of Texas, 330 F. Supp. 325 (E.D. Tex.,
May 11, 1971), affirmed in part, modified in part, 447 F.2d 441 (5th Cir. 1971)
(affirming order of Nov. 24, 1970, modifying order of April 20, 1971). The district
court found that the named school districts were responsible for maintaining a
dual school system and TEA aided this effort by funding the segregated school
districts. To redress this discrimination, the district court entered an order on
November 24, 1970, modified August 9, 1973, that has governed various aspects
of public education in the state of Texas since then.1 The Modified Order
provides, among other things, that:
       “[TEA] shall not permit, make arrangement for or give support of
       any kind to student transfers, between school districts, when the
       cumulative effect, in either the sending or receiving school or school
       district, will be to reduce or impede desegregation, or to reinforce,
       renew, or encourage the continuation of acts and practices resulting
       in discriminatory treatment of students on the grounds of race,
       color, or national origin.”




       1
         Hereinafter, the federal court order entered in this case, including its modifications,
will be referred to as the “Modified Order.”

                                               2
                                        No. 06-41347

       This case, like much of the recent litigation under the Modified Order,2
involves small rural independent school districts competing over students to
keep their local schools financially viable.                 Samnorwood and Harrold
Independent School Districts (together the “School Districts”) are located in the
Texas panhandle and each have a single campus that serves the district’s entire
study body, grades K-12. Samnorwood is in Collingsworth County, southeast of
Amarillo, and Harrold is in Wilbarger County, east of the city of Vernon. Black
students from Samnorwood attended a segregated school in an adjoining district
until July 8, 1963, and Black students from Harrold attended a segregated
school in an adjoining district until October, 4, 1965.3 After those dates, all
children attended school in each district without regard to race, color, or national
origin. Both School Districts desegregated by a vote of their respective school
boards well before the commencement of United States v. Texas, and neither was
ever a party to a desegregation order or have ever been shown to have acted with
segregative intent in accepting transfer students (or otherwise). During the
2002-2003 school year, Harrold’s enrollment was 112 students, of whom 1% were
Black, 31% were Hispanic, and 63% were non-Hispanic white. Samnorwood’s
enrollment for the same school year was 101 students, of whom 3% were Black,
20% were Hispanic, and 75% were non-Hispanic white.
       Both School Districts depend heavily on transfer students for their
economic viability. Each accepts transfer students regardless of the race or
ethnicity of the student, and neither charges tuition to any transfer student.




       2
         See United States v. Texas (Hearne), 457 F.3d 472 (5th Cir. 2006) (Hearne ISD
brought suit against Mumford ISD claiming that by accepting transfers from its school,
Mumford ISD was impermissibly impeding desegregation ); United States v. Texas (Goodrich),
158 F.3d 299 (5th Cir. 1998) (involving a neighborhood’s attempt to be annexed to a different
school district).
       3
           Hispanic residents in these two School Districts never attended segregated schools.

                                               3
                                         No. 06-41347

During the 2002-2003 school year, seventy-four percent of Samnorwood’s
students and “virtually all” of Harrold’s students were transfers.
       Under Texas law, any child eligible for enrollment may transfer from his
home district to any other district if the receiving district and a custodial parent
(or guardian) jointly approve and timely agree in writing. Tex. Educ. Code §
25.036. TEA annually distributes funds to Texas school districts based on the
average daily attendance of enrolled students, whether the students reside in
the district or have transferred from another district. Tex. Educ. Code §§
7.055(b)(35), 42.005, 42.101. Other than allocating funding based on student
enrollment, Texas law does not otherwise empower TEA to oversee student
transfers. Nevertheless, the Modified Order requires TEA to monitor all student
transfers and to refuse to fund transfers in certain circumstances.4
       In order to comply with its obligations under the Modified Order, TEA
requires each school district to inform TEA whenever it receives a transfer
student. Prior to 2002, schools recorded transfer data on paper and submitted
it to TEA, but in the spring of 2002, TEA implemented a new automated Student
Transfer System (“STS”) to track transfers. Under the new system, schools are
still required to report transfers, but now they submit that information
electronically using STS.5 Once a student transfer is submitted using STS, TEA


       4
         The Modified Order provides that: “[TEA] shall not approve transfers where the effect
of such transfers will change the majority or minority percentage of the school population,
based on average daily attendance in such districts by more than one percent (1%), in either
the home or the receiving district or the home or receiving school.” But, as the district court
noted in its opinion below, “[f]or very small school districts (fewer than 300 students), including
Harrold and Samnorwood, the tolerable percentage change in the diversity of the home and
receiving districts due to transfers is now three percent (3%).” Mem. Op., July 24, 2006, at 2.
In calculating the one or three percent threshold, all minority students are added together and
that percentage (the “minority percentage”) is compared to the percentage of non-Hispanic
white students.
       5
        TEA switched to the automated system in response to complaints from school
superintendents regarding the length of time it took TEA to determine whether a transfer
student was eligible for funding under the old paper system.

                                                4
                                       No. 06-41347

calculates whether the transfer has a “segregative effect.”6 Any transfer that
exceeds the applicable one- or three-percent rule is deemed ineligible. STS
operates in “real time,” meaning that it maintains a current calculation of every
school district’s racial and ethnic demographics, so when a transfer student is
entered into the system it calculates what effect that transfer has on the current
minority percentage at the sending and receiving schools.7 STS does not make
a permanent record of whether transfers are deemed eligible when they are
entered or of a school’s minority percentage on any particular day so there is no
way for TEA to use STS to verify whether a transfer was deemed eligible when
it was entered.8
       In order to monitor the cumulative enrollment, TEA also requires school
districts to report student data to its Public Education Information Management
System (“PEIMS”) after each school year. See Tex. Educ. Code § 42.006. The
PEIMS data allows TEA to compute the average daily attendance of each school
district. At the end of the year, TEA reconciles the data from PEIMS with the
data from STS to determine whether student transfers have caused a school’s
minority percentage to change by more than one or three percent in violation of
section A(3)(b) of the Modified Order. If a school has accepted an ineligible
transfer in a particular year, the school loses funding for the next year for each


       6
         A transfer is determined to have segregative effect if it changes the sending or
receiving school’s minority percentage by more than one percent, three percent for small
schools, and the transfer moves either school closer to being racially identifiable than it was
before.
       7
          A consequence of this real time calculation is that a student could be listed as an
eligible transfer on the date he is entered into the system, but could later be listed as an
ineligible transfer depending on later demographic shifts in the sending or receiving schools.
TEA has attempted to remedy this issue by not penalizing a school for a transfer if it can prove
that the transfer student was eligible for funding on the date he was entered into STS.
       8
        The only way a school district could prove whether a student was eligible on the date
he was entered into STS was to print the computer screen after entering the student into the
system.

                                               5
                                       No. 06-41347

day that the ineligible student attended the school. If a school district fails to
enter a transfer into STS, TEA treats that student as an ineligible transfer and
the school loses funding for that student as well.
       If a school district remains in violation after being notified by TEA that it
has accepted an ineligible transfer, the Modified Order instructs TEA to escalate
sanctions against the district. Section A(6) requires TEA to refuse to fund
transfers that violate the order. Section A(7) requires TEA to suspend a school
district’s accreditation if it fails to correct the violation after a ten-day warning.
       In this case, STS reported that Samnorwood exceeded the three-percent
limitation by accepting one ineligible transfer student, “Vincent R.,” and TEA
also determined that Samnorwood had failed to enter three transfers into STS.
TEA informed Samnorwood by letter on March 24, 2004, that $10,746 in funds
would be withheld from its funding for the following year due to the three
unreported students and Vincent R.’s transfer. In another letter dated March
24, 2004, TEA informed Harrold that it would have $100,069 withheld from its
funding for the following year because it had failed to enter seventeen transfers
into STS. The School Districts both requested an informal review of TEA’s
funding decision as provided by TEA policy. During that review, both School
Districts admitted that they had not entered the transfers into STS, but they
were able to show that some of the transfers were nevertheless eligible for
funding because they were approved exemptions as defined by the Modified
Order.9 TEA waived the nonreporting fine for theses students.                     TEA also
restored funding for Vincent R. because Samnorwood was able to prove that, on
the day his transfer was entered, STS declared him an eligible transfer. TEA,
however, left the fines intact for the three unreported transfers from



       9
         The Modified Order provides exceptions to the transfer rules for students whose older
siblings attend the school to which they wish to transfer and for students whose parents are
teachers at the school to which they wish to transfer.

                                              6
                                      No. 06-41347

Samnorwood and the twelve unreported and nonexempt transfers from Harrold,
so after the informal review, Samnorwood was penalized $6,111, and Harrold
was penalized $68,525.10           In late 2004 the School Districts intervened into
this case (United States v. Texas) in order to challenge the sanctions imposed by
TEA and the validity of the Modified Order on its face and as applied to them.
       In its order, the district court held that it did not exceed its remedial
power by entering the Modified Order because it did not seek to reverse
segregative effects on public schools based on private residential decisions, and
that its mandate was not more broad than necessary to cure a constitutional
injury. It also noted that the Modified Order properly applied statewide because
it was meant to eliminate the vestige of discrimination that remained from the
fact that Texas operated a “state-wide dual school system prior to desegregation
in the 1960s.” Mem. Op., July 24, 2006.
       On the issue of the sanctions, the district court held that since Texas
provides a “sparsity adjustment” to small schools that guarantees school districts
with Samnorwood and Harrold’s enrollment levels to be funded as if they had
130 student, the School Districts did not receive any additional funds due to
these transfers.11 The district court then reasoned that sanctions by TEA were
not mandated by the Modified Order for transfers that decreased diversity by
more than three percent in schools that received the sparsity adjustment
because section A(6) of the Modified Order only instructs TEA to refuse to
transfer funds associated with the ineligible transfer student, and since the
School Districts were already being funded at a level of 130 students because of
the sparsity adjustment, they did not actually receive any extra funds due to the

       10
          TEA maintained that these financial sanctions were appropriate because the failure
to enter transfers into STS effectively prevents TEA from determining which transfers comply
with the Modified Order.
       11
        The “sparsity adjustment” states that any school operating with less than 130 but
more than ninety students will be funded as if it had 130 students. Tex. Educ. Code § 42.105.

                                             7
                                        No. 06-41347

transfer of a new student.            The district court also admonished TEA for
sanctioning school districts for failing to report transfers when STS did not
maintain a record of whether transfers were approved or not, thereby
impermissibly placing the burden on schools to keep a record of their STS
transactions themselves.
        The district court ultimately held that the School Districts were not to be
sanctioned, even for the students that they failed to enter into STS. However,
it made it clear that TEA was free to sanction school districts who failed to enter
student transfers into STS in the future. Order Den. Mot. to Am. J., Aug. 10,
2006, at 1-2 (“TEA’s policy of sanctioning districts for their failure to enter
students into the STS system is reasonable, and nothing in the Court’s
Memorandum Opinion casts doubt on TEA’s continuing ability to impose such
sanctions . . . .”).


                                       DISCUSSION
I.     Justicibility
       TEA, the League of United Latin American Citizens (“LULAC”), and G.I.
Forum12 argue that this court lacks jurisdiction under Article III to hear this
appeal. Therefore, we will first consider whether or not the appellant has “made
out a ‘case or controversy’ between himself and the [appellees] within the
meaning of Art. III.” Warth v. Seldin, 95 S.Ct. 2197, 2205 (1975); see U.S. Const.
art. III, § 2. In order for there to be a justiciable case or controversy under



       12
         LULAC and G.I. Forum had previously intervened in this civil action. United States
v. Texas (LULAC), 680 F.2d 356, 372-73 (5th Cir. 1982). Because of this prior intervention
they were still parties to the proceeding when the School Districts petitioned to intervene.
They did not participate in the bench trial, but they did participate pretrial (e.g. they filed a
motion challenging the intervention of parties other than the School Districts and a response
supporting TEA’s motion to dismiss). They also filed a joint brief in this court challenging the
School Districts’ standing on appeal. Since the parties jointly filed their brief, for simplicity
we will refer to arguments in the brief as being from LULAC only.

                                               8
                                       No. 06-41347

Article III, a litigant must show that he has standing.                   See Valley Forge
Christian Coll. v. Ams. United for Separation of Church & State, Inc., 102 S.Ct.
752, 758 (1982). Such a case or controversy must exist throughout the litigation;
in other words, the case cannot be moot. Honig v. Doe, 108 S.Ct. 592, 601 (1988).
This court is “obligated to address issues of jurisdiction, including mootness,
prior to addressing the merits of an appeal.” Goldin v. Bartholow, 166 F.3d 710,
714 (5th Cir. 1999).
       LULAC argues this case is moot because the School Districts received the
relief they requested in the district court, namely, the sanctions were vacated.13
LULAC’s contention is incorrect, however, because in their complaint the School
Districts sought, in addition to having the fines vacated, a declaratory judgment
holding that the student transfer provisions of the Modified Order exceeded the
district court’s desegregation jurisdiction on its face and as applied by TEA, a
decree vacating the student transfer provisions of the Modified Order, and a
permanent injunction restraining TEA from regulating student transfers under
the Modified Order. The district court did not grant the School Districts any of
these forms of relief, so the School Districts’ claims for equitable relief are not
moot. However, we must still decide whether the School Districts have standing
to seek these alternative forms of relief.
       In order for a plaintiff to have sufficient standing under Article III, that
plaintiff must show that: he has suffered or will suffer an injury, his injury is

       13
         LULAC also argues that if we were to decide this case it would be an advisory opinion
because there are not sufficiently adverse parties. We do not agree with this contention. TEA
has a sufficiently adverse interest to the School Districts in this case because it continues to
maintain that the School Districts are not entitled to be exempted from the Modified Order,
the very thing the School District seeks. LULAC itself also had the opportunity to challenge
the School Districts’ request for relief in its brief and at oral argument. Finally, the United
States participated in all aspects of this case up until the appellate phase and it too was
challenging the School Districts’ claims that they should no longer have to abide by the
Modified Order. We therefore believe that there were parties with sufficiently adverse
interests involved in this case to ensure a proper case and controversy. See Goldin v.
Bartholow, 166 F.3d 710, 717-20 (5th Cir. 1999).

                                               9
                                        No. 06-41347

traceable to the defendant’s conduct, and a favorable federal court decision will
likely redress the injury.14 Bennett v. Spear, 117 S.Ct. 1154, 1163 (1997). Here
the School Districts’ injury is being subjected to an injunctive remedy, the
Modified Order, which potentially imposes monetary fines, places them at risk
of losing their accreditation, and limits their ability to accept student transfers
that they would otherwise be permitted to accept under Texas law.15 What
makes this case unique is that the School Districts were not a party to the
original suit. If the School Districts had been a party directly bound by the
Modified Order there would be no question that they had standing to challenge
the Modified Order. Here the School Districts were not a party to the Modified
Order, but their actions are collaterally constrained by the Modified Order
because it prohibits TEA from funding student transfers to their school that
exceed the one- or three-percent threshold, and without funding they cannot
afford to accept such transfers.
       While we have found no cases directly on point, this situation is analogous
to cases where this circuit has held that a third party had standing to appeal an
injunction which adversely affects its interest, even when it was not a party to


       14
          Neither TEA nor LULAC argue that the School Districts’ alleged injury is not
redressable or traceable. TEA has admitted that its only authority to impose sanctions on
school districts because of student transfers flows from its obligation to implement the Modified
Order, so the potential sanctions are traceable to the Modified Order. Additionally, if this court
were to provide the School Districts with their requested relief, a declaration that the Modified
Order should not be applied to them, their alleged injury would be redressed. Therefore, the
School Districts satisfy these two prongs of Article III standing.
       15
          While the district court’s order held that TEA can no longer deny the School Districts
funding for unapproved transfers as long they continue to fall within the sparsity adjustment
(applicable to districts with 90 to less than 130 students, see note 11 supra), there is no
guarantee that their enrollment will not exceed the sparsity adjustment in the future. In fact,
Harrold enrolled 129 students for the 2003-2004 school year and Samnorwood enrolled 134
students during the 2004-2005 school year. Additionally, the Modified Order instructs TEA
to revoke the accreditation of school districts that continue to enroll a transfer student that
exceeds the three-percent rule after ten days of being informed that the transfer student is
ineligible. This mandate of the Modified Order would apply whether or not the school falls
within the sparsity adjustment.

                                               10
                                        No. 06-41347

the litigation. See United States v. Holy Land Found. for Relief & Dev., 445 F.3d
771, 780-81 (5th Cir. 2006) (judgment creditors had standing to challenge a
restraining order that affected their ability to execute on assets, even though
they were not a party to the case where the restraining order was entered),
approved in this respect en banc, 493 F.3d 469, 472 (5th Cir. 2007) (en banc);
Castillo v. Cameron County, Tex., 238 F.3d 339, 349 n.16 (5th Cir. 2001) (holding
that the state of Texas had Article III standing to appeal an injunction even
though it was a nonparty because the injunction adversely affected its interests);
Charga v. San Antonio Light Div. of Hearst Corp., 701 F.2d 354, 358-60 (5th Cir.
1983) (holding that newspapers and reporters had standing to appeal a court
order closing a pretrial bail reduction hearing at the request of a criminal
defendant).16
       In each of these cases, this court held that the challenging party had
standing because the equitable relief granted by the district courts placed a
burden on the challenging party which gave them a personal stake in the
litigation. The case before us is no different.17 The Modified Order, and TEA’s

       16
          Other circuits have held that there was standing in similar circumstances. See
United States v. Kirschenbaum, 156 F.3d 784, 794 (7th Cir. 1998) (“[N]on-parties who are
bound by a court’s equitable decrees have a right to move to have the order dissolved, . . . and
other circuits have held that where a non-party is purportedly bound by an injunction, the
non-party may bring an appeal rather than face the possibility of a contempt proceeding.”); In
re Estate of Ferdinand Marcos Human Rights Litig., 94 F.3d 539, 544 (9th Cir. 1996) (finding
standing for nonparty where injunction confronted nonparty “with the choice of either
conforming its conduct to the dictates of the injunction or ignoring the injunction and risking
contempt proceedings”); In re Piper Funds, Inc., Institutional Gov’t Income Portfolio Litig., 71
F.3d 298, 301 (8th Cir. 1995) (“A nonparty normally has standing to appeal when it is
adversely affected by an injunction.”).
       17
          That the School Districts intervened in this longstanding case to challenge the
Modified Order and its application rather than attempting to enter litigation at the appellate
phase, as in the cited cases, is of no significance to the question of standing. A party must have
standing at all points of the litigation. Honig v. Doe, 108 S.Ct. 592, 601 (1988). So if the
adverse affects of the equitable relief were sufficient to provide standing to the parties to
appeal in the cited cases, similar adverse affects from the Modified Order are sufficient to give
the School Districts standing when they intervened in the district court and now to appeal the
decision of that court.

                                               11
                                       No. 06-41347

regulations to enforce it, impose severe penalties if the School Districts fail to
adhere to TEA’s reporting requirement or accept a transfer that trips the one-
or three-percent rule.18 The School Districts also expend time and resources
complying with the Modified Order every time they seek to accept a transfer
student. Finally, the Modified Order effectively prohibits the School Districts
from doing something that they contend they are permitted to do under Texas
law and the United States Constitution: accept as many transfer students, of
any race or ethnicity, as they wish if they do so in a nondiscriminatory manner.
In two school districts that rely on transfer students for their financial viability,
this is not a consequence to be ignored. For these reasons, the Modified Order
presents a real adverse impact on theses schools, and therefore, they have
standing to challenge its application to them.19
       At its core standing is about ensuring that a party with a sufficiently
strong interest is the one who brings a cause of action. See Baker v. Carr, 82
S.Ct. 691, 703 (1962) (The question of standing is whether the party seeking
relief has “alleged such a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the presentation of issues upon
which the court so largely depends for illumination of difficult constitutional
questions?”); see also Flast v. Cohen, 88 S.Ct. 1942, 1952 (1968) (“[W]hen
standing is placed in issue in a case, the question is whether the person whose
standing is challenged is a proper party to request an adjudication of a



       18
          Although the monetary fines have been lifted in this case, TEA is free to impose the
fines for not reporting in the future and if either school falls outside the sparsity adjustment
they are again subject to fines for violating the three-percent rule.
       19
          If we were to hold that the School Districts did not have standing in this case, their
only available recourse would be to violate the Modified Order and wait to be sanctioned. We
have not required this of parties under a district court’s equitable power in the past. See
Castillo v. Cameron County, Tex., 238 F.3d 339, 350 (5th Cir. 2001) (holding that the fact that
a party could be found in contempt for violating the court order in the future was a sufficient
injury to provide standing for a pre-enforcement challenge to the decree).

                                              12
                                   No. 06-41347

particular issue and not whether the issue itself is justiciable.”) Here the school
districts are challenging whether the Modified Order can properly be applied to
them. We can think of no better party to raise such a claim than the School
Districts themselves.
II.   Merits
      The School Districts argue that the Modified Order’s student transfer
provisions are unlawful because they exceed the equitable power of the district
court to fashion a desegregation remedy.         Their argument flows from the
principle that in “any equity case, the nature of the violation determines the
scope of the remedy.” Swann v. Charlotte-Mecklenburg Bd. of Educ., 91 S.Ct.
1267, 1276 (1971). The import of this principle is that in school desegregation
cases, “federal-court decrees exceed appropriate limits if they are aimed at
eliminating a condition that does not violate the Constitution or does not flow
from such a violation . . . .” Milliken v. Bradley (Milliken II), 97 S.Ct. 2749, 2758
(1977). In applying this standard, the factual findings of the district court are
reviewed under the clearly erroneous standard.            United States v. Texas
(Goodrich), 158 F.3d 299, 306 n.8 (5th Cir. 1998). Whether a constitutional right
has been violated is a question of law that this court reviews de novo. Gates v.
Cook, 376 F.3d 323, 333 (5th Cir. 2004). If a constitutional violation is found, we
employ an abuse of discretion standard in reviewing the equitable remedy itself.
Swann, 91 S.Ct. at 1280.
      Here the School Districts contend that the Modified Order exceeds the
district court’s equitable power because it applies to them even though they have
never been under a desegregation order (and were never a party to this case
until their 2004 intervention) and it was not shown that any of the transfers
involved in this case were the approved due to an intent to discriminate. In
support of their position, the School Districts cite a trio of cases involving the
Modified Order. In the first, this court held that a remedial order mandating

                                         13
                                        No. 06-41347

that school districts provide bilingual language education to Mexican-American
students could not be imposed on school districts without first determining
whether they actually participated in segregation. United States v. Texas
(LULAC), 680 F.2d 356, 372 (5th Cir. 1982) (“If remedial orders are to be
imposed in Texas school districts on grounds of past segregation of students
within the given district, that district must first be heard.”) In the second, the
district court’s use of the Modified Order to invalidate a detachment and
annexation of territory was reversed because there was no “showing that the
school authorities ‘[had] in some manner caused unconstitutional segregation
. . . .’” Goodrich, 158 F.3d at 309 (citing Pasadena City Bd. of Educ. v. Spangler,
96 S.Ct. 2697, 2704 (1976)). In the third, this court overturned an injunction
entered pursuant to the Modified Order, which barred TEA from disbursing
state funding for any white transfer students at Mumford ISD and Mumford ISD
from receiving any more white transfer students.                    United States v. Texas
(Hearne), 457 F.3d 472, 484 (5th Cir. 2006) (“[T]he question is not whether
Mumford complied with TEA directives; Mumford must have acted with
discriminatory intent in accepting the transfers.”).
       Each of those opinions begin with the Supreme Court’s instruction in
Swann: “the nature of the violation determines the scope of the remedy.” 91
S.Ct. at 1276. In each of the above cited decisions of this court, we struck down
the remedy because there had been no showing of a constitutional violation. We
are presented with a similar situation. In this case, these two School Districts
were denied funding because they failed to enter students in the STS system
that TEA uses to monitor compliance with the order. TEA acknowledges (and
neither LULAC nor the district court here ever disputed) that there is no basis
under Texas state law for it to impose such sanctions on the school districts.20

       20
         This opinion does not affect Texas’s ability to regulate or collect information regarding
student transfers, if it should so choose. The issue presented in this case is whether the

                                               14
                                      No. 06-41347

The sole basis of TEA’s power to impose these sanctions stems from its duty to
comply with the Modified Order. Thus the modified order and TEA’s actions
pursuant to it constitute a remedy that must flow from a constitutional violation.
Milliken II, 97 S.Ct. 2758. However, as in Goodrich and Hearne, neither Harrold
nor Samnorwood have ever been found to have discriminated against students
of the basis of their race or ethnicity. In fact, TEA does not (and did not)
investigate or conduct a hearing to determine whether a particular transfer was
accepted or denied due to a segregative intent on the part of a sending or
receiving school district before imposing sanctions on a school district. The
failure to report or the triggering of the one- or three-percent threshold is all
that is required. This use of an arbitrary percentage as a proxy for intentional
discrimination has been criticized previously by this court,21 and such a
quantitative review cannot substitute for actual evidence of intentional
discrimination on the part of these two School Districts. There has been no such
evidence presented in this case. Therefore, allowing these two School Districts
to remain under the Modified Order would improperly impose a desegregation
remedy where there has been no showing or finding of a constitutional violation.
       In the district court’s memorandum opinion, it held that it was proper for
TEA to enforce the student transfer provisions of the Modified Order against the
School Districts because they were part of a state-wide dual school system. This
inference, however, has been specifically rejected by this circuit. See Hearne,
457 F.3d at 483 (“Because Mumford was not a party defendant to the original
litigation that resulted in Order 5281, it cannot be condemned for violating the


Modified Order can obligate TEA to enforce its student transfer provisions against these two
School Districts.
       21
          The prophylactic percentage rule of the Modified Order is potentially an
“unenforceable vestige of conditions long since substantially remedied . . . [that] lives on,
however, as a cause of voluminous continuous recordkeeping and monitoring by TEA and all
Texas school districts.” Hearne, 457 F.3d at 478 n.8.

                                             15
                                  No. 06-41347

Order without a finding that it intentionally engaged in segregative conduct.”).
Moreover, the only evidence shows that neither of these two Districts has been
any part of a dual or segregated school system ever since a time more than three
years prior to the initial filing this suit in March 1970, and there has been no
judicial determination to the contrary.
      The district court also held that because TEA was a defendant in the
initial suit and had been found to be promoting a dual-school systems in the
state of Texas, the Modified Order can permissibly mandate TEA to enforce
provisions of the Modified Order against any schools it funds. The district court
believed that this was consistent with Swann’s mandate that a remedy may only
extend as far as the constitutional violation. We cannot agree.
      While it is undisputed that TEA funded some segregated schools at the
time the Modified Order was entered, that does not empower the district court
to force TEA to impose a remedy on these two School Districts (neither of which
had been segregated for years prior to filing of the suit in which that order was
entered). See Lee v. Lee County Bd. of Educ., 639 F.2d 1243, 1256 (5th Cir. 1981)
(“a federal court cannot impose liability on individual defendant school districts
on the basis of a general inverse respondeat superior theory holding them
presumptively responsible for actions of the state or another governmental
entity” and “one cannot presume that racial imbalances between separate school
districts result from unconstitutional discriminatory acts on the part of those
school districts”) (citing and discussing Milliken v. Bradley, 94 S.Ct. 3112
(1974)). Had the School Districts been a party to the original 1970 litigation, the
district court would not have been able to impose a remedy policing their student
transfers because they were not (and had not been for more than three years
before the suit was filed) segregating students. Additionally, since the dates on
which both of the School Districts desegregated, there has not been a
determination, or indeed any evidence, that either has attempted to resegregate


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                                   No. 06-41347

or to accept student transfers with discriminatory intent.          Absent such a
showing, the district court cannot invoke TEA’s long past wrongdoing as a
justification to require TEA to monitor nondiscriminatory student transfers
involving Samnorwood and Harrold ISDs.
      Of course, our opinion today does not give the School Districts a license to
discriminate. If evidence arises that either of these school districts is acting with
discriminatory intent when accepting or rejecting transfer students, then they
would be subject to suit and a remedy would then be in order to correct the
constitutional violation. Our decision today only holds that the prophylactic
provisions created by the Modified Order to remedy the segregative conduct on
the part of TEA and all-black schools in East Texas should not be imposed on
these two panhandle school districts that had long previously already
desegregated and have never since been found to have acted with segregative
intent.
                                 CONCLUSION
      We render judgment that Samnorwood ISD and Harrold ISD shall no
longer be subject to the Modified Order’s student transfer provisions or TEA’s
regulations promulgated to enforce those provisions. To the extent that the
district court declined to so rule its judgment is reversed.
                         REVERSEDand RENDERED.




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