                   United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 13-1816
                         ___________________________

                                  A. D. Smith, et al.

                       lllllllllllllllllllll Plaintiffs - Appellants

                                            v.

        Board of Education of the Palestine-Wheatley School District, et al.

                       lllllllllllllllllllll Defendants - Appellees
                                        ____________

                     Appeal from United States District Court
                 for the Eastern District of Arkansas - Little Rock
                                  ____________

                            Submitted: January 16, 2014
                              Filed: October 2, 2014
                                  ____________

Before LOKEN, MURPHY, and COLLOTON, Circuit Judges.
                           ____________

LOKEN, Circuit Judge.

      In 1987, the majority white Palestine school district and the majority African-
American Wheatley school district, both located in St. Francis County, Arkansas,
voluntarily consolidated into the Palestine-Wheatley School District (the “District”),
while continuing to operate elementary and secondary schools in both communities.
In 1989, Wheatley schoolchildren, their parents, and other interested parties (the
“Wheatley plaintiffs”) sued the District, alleging on-going violations of the Voting
Rights Act and the Fourteenth Amendment. In May 1990, the district court confirmed
a settlement between the parties and approved a consent decree to enforce the
settlement “in accordance with its terms.” A central provision required that the
District operate a single middle school located in the town of Wheatley.

       In 2012, the District filed a motion to modify or terminate the decree, seeking
an order permitting the District to relocate the middle school grades from the
Wheatley campus to the Palestine campus. Primarily applying the standards for
modifying a consent decree when changed circumstances have caused it to be unjust,
see Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 384-85 (1992), the
district court1 granted the motion. The Wheatley plaintiffs appeal, arguing the district
court erred when it failed to apply the more rigorous test for termination of a
desegregation decree set forth in Freeman v. Pitts, 503 U.S. 467, 490-91 (1992).
Reviewing what is the appropriate legal standard de novo, and the district court’s
modification of the decree for abuse of discretion, we affirm. See Parton v. White,
203 F.3d 552, 555-56 (8th Cir.), cert. denied sub nom. Cooper v. White, 531 U.S. 963
(2000).

                                           I.

       In their 1989 Complaint, the Wheatley plaintiffs alleged that the consolidated
districts “have a history of unremediated racial discrimination” and “have not fully
desegregated their staffs and student activities”; that defendants planned to close the
secondary school in Wheatley and transport its majority African-American students
to the Palestine school so that “the predominantly white population from Palestine
[would not] be burdened in the desegregation-consolidation process”; and that the at-
large election of the District’s directors “dilutes the votes of black plaintiffs” in


      1
       The Honorable Susan Webber Wright, United States District Judge for the
Eastern District of Arkansas.

                                          -2-
violation of the Voting Rights Act. Plaintiffs sought an order requiring election of
school board members from eight single-member districts, enjoining “implementation
of any desegregated or consolidated plan which disparately burdens . . . students who
live in Wheatley,” and “forbidding the closing of the Wheatley High School . . . unless
justified by objective, nonracial considerations.” Defendants denied the allegations
of discrimination but admitted they planned to close the Wheatley High School and
transport grades 7-12 to the Palestine campus. In November 1989, the court ordered
the parties to mediate the dispute with assistance from the United States Department
of Justice Community Relations Service. The result was a settlement that the court
approved as a consent decree in May 1990.2 The decree provided:

              1. That the School District move the entire grades of 5, 6, 7 and
      8 to the Wheatley campus.
              2. That monthly School Board meetings be alternated between the
      two school campuses in Palestine and Wheatley.
              3. That the School District establish an organized sports program
      for grades 6 and 7.
              4. That all stationery and all printed material, including printing
      on school vehicles, have the name “Palestine-Wheatley.”
              5. That neither faculty at the Palestine campus or the Wheatley
      campus shall be considered subordinate to the other.
              6. That the District shall provide, for students in both Palestine
      and Wheatley, two free telephones for the purpose of contacting parents.
              7. That the District will make efforts to create an educational
      spirit in both communities, including the establishment of a Palestine-
      Wheatley Parent Teachers Association.
              8. That the election of the new board will be pursuant to single
      member voting districts and will meet all standards of the Voting Rights



      2
        The court’s order directed counsel to prepare a consent decree incorporating
the settlement. This was never done, but for over twenty years the parties and the
court have treated a February 1990 letter proposal by the District’s attorney, orally
accepted by plaintiffs’ attorney, as reflecting the consent decree’s terms.

                                         -3-
      Act and have final approval of the Voting Rights section of the United
      States Department of Justice (if necessary).
             9. That the terms of office shall be three for (3) years, two for (2)
      years, and two for (1) year. Thereafter, each member shall run for three
      year terms.
             10. That the mascot of the District shall be the “Patriots” and
      school colors shall be red, white, and blue.
             11. That the Superintendent will not participate in any School
      Board election.

       In 1994 and again in 2005, the District petitioned to modify the decree to alter
the grades attending the Wheatley campus. The Wheatley plaintiffs did not object,
and the court granted those modifications. The District petitioned for permission to
relocate all grades from the Wheatley campus to the Palestine campus in 2006,
alleging that most students attending the middle school did not reside in Wheatley and
transporting students to Wheatley was “an unnecessary and inefficient expense.” The
Wheatley plaintiffs opposed this modification, which the district court denied after a
hearing, concluding the District had “failed in its proof.”

      In June 2012, the District filed the “Motion to Modify or Terminate Consent
Decree” here at issue. The Motion again sought permission to relocate the middle
school grades to the Palestine campus, effectively ending the District’s educational
presence in the town of Wheatley. In support, the District submitted evidence of
changed demographic and financial circumstances tending to show that relocating the
middle school to Palestine was justified. Applying the standard for modification of
a consent decree first announced in Rufo, the district court agreed with the District:

      The Court finds that the evidence establishes that since 1990, when the
      parties agreed to keep an educational presence in Wheatley, the
      population of the District has shifted so that the majority of the
      population lives closer to Palestine. Further, the greater majority of the
      students, including minority students, live closer to Palestine. The Court
      further finds the evidence reflects the District’s financial situation is

                                          -4-
      under closer scrutiny due to changes in [state] law. . . . The evidence
      shows the District has a declining fund balance and is projected to lose
      students in the coming years. Further, the District’s middle school has
      been cited by the Arkansas Department of Education for academic
      shortcomings.

                                 *   *    *    *   *

      The Court finds the Board has established that there have been
      significant changes in circumstances to warrant modification of the
      consent decree. The Court further finds the evidence establishes that
      defendants have complied in good faith with the remainder of the
      requirements set forth in the consent decree and “that ‘the vestiges of
      past discrimination ha[ve] been eliminated to the extent practicable.’”
      Little Rock Sch. Dist. v. Arkansas, 664 F.3d 738, 744 (8th Cir. 2011)
      (citation omitted).

The court ordered “that defendants’ motion to modify or terminate the consent decree
is granted.” This appeal followed.

                                         II.

       In Rufo, the Supreme Court confirmed that Rule 60(b) of the Federal Rules of
Civil Procedure authorizes modification of consent decrees. The Court reversed the
denial of a motion to modify a consent decree entered to correct unconstitutional
conditions at a county jail, concluding that the lower courts had applied a too-
restrictive standard of review. The Court explained, 502 U.S. at 380-81, 383:

             The upsurge in institutional reform litigation since Brown v. Board
      of Education, 347 U.S. 483 (1954), has made the ability of a district
      court to modify a decree in response to changed circumstances all the
      more important. Because such decrees often remain in place for
      extended periods of time, the likelihood of significant changes occurring



                                         -5-
      during the life of the decree is increased. . . . [T]he public interest is a
      particularly significant reason for applying a flexible modification
      standard in institutional reform litigation because such decrees ‘reach
      beyond the parties involved directly in the suit and impact on the
      public’s right to the sound and efficient operation of its institutions.’

                                  *    *   *     *   *

              Although we hold that a district court should exercise flexibility
      in considering requests for modification of an institutional reform
      consent decree, it does not follow that a modification will be warranted
      in all circumstances. Rule 60(b)(5) provides that a party may obtain
      relief from a court order when ‘it is no longer equitable that the judgment
      should have prospective application,’ not when it is no longer convenient
      to live with the terms of a consent decree. Accordingly, a party seeking
      modification [must establish] that a significant change in circumstances
      warrants revision of the decree. If the moving party meets this standard,
      the court should consider whether the proposed modification is suitably
      tailored to the changed circumstances.

       Less than three months later, the Court decided Freeman, reviewing the denial
of a motion for final dismissal of a consent order that imposed “a comprehensive and
final plan of desegregation” for the suburban Atlanta school system. The school
system sought an order that it “had satisfied its duty to eliminate the dual education
system, that is to say a declaration that the school system had achieved unitary status.”
503 U.S. at 472-73. Without even citing Rufo, the Court held that:

      in the course of supervising desegregation plans, federal courts have the
      authority to relinquish supervision and control of school districts in
      incremental stages, before full compliance has been achieved in every
      area of school operations. . . . Among the factors which must inform the
      sound discretion of the court in ordering partial withdrawal are the
      following: whether there has been full and satisfactory compliance with
      the decree in those aspects of the system where supervision is to be



                                           -6-
      withdrawn; whether retention of judicial control is necessary or practical
      to achieve compliance with the decree in other facets of the school
      system; and whether the school district has demonstrated, to the public
      and to the parents and students of the once disfavored race, its good-faith
      commitment to the whole of the court’s decree and to those provisions
      of the law and the Constitution that were the predicate for judicial
      intervention in the first instance.

Id. at 490-91. In considering the school district’s good faith, the court should address
“whether the vestiges of past discrimination had been eliminated to the extent
practicable.” Id. at 492, quoting Board of Educ. v. Dowell, 498 U.S. 237, 250 (1991).

                                          III.

       The Wheatley plaintiffs’ argue on appeal that the district court erred by relying
on Rufo’s standard for modification of a consent decree, when it should have applied
the test for termination of a desegregation decree articulated in Freeman. As plaintiffs
point out, the primary difference between these standards is that the Rufo test lacks
Freeman’s explicit focus on the moving party’s good faith as to both past and future
compliance with the consent decree. Applying the Freeman standard, the Wheatley
plaintiffs contend, the District’s motion to modify or terminate the consent decree
should have been denied because the District failed to prove (i) compliance with the
decree’s requirement that the District not eliminate “an educational presence in
Wheatley,” (ii) that the demographic changes allegedly justifying modification were
not the result of the District’s past segregation, and (iii) that the District had
“eliminated the vestiges of its segregated past to the extent practicable.”

      The Wheatley plaintiffs’ contention that Rufo does not apply to school
desegregation decrees is without merit. The above-quoted citation to Brown v. Board
of Education in the Rufo opinion makes this obvious. Thus, it is no surprise that,
nearly twenty years ago, we applied the flexible Rufo standard in affirming a


                                          -7-
modification to a long-standing Little Rock school desegregation consent decree that
permitted the closing of an incentive school. Little Rock Sch. Dist. v. Pulaski Cnty.
Special Sch. Dist. #1, 56 F.3d 904, 914 (8th Cir. 1995); accord Lorain NAACP v.
Lorain Bd. of Educ., 979 F.2d 1141, 1149 (6th Cir. 1992), cert. denied, 509 U.S. 905
(1993).

         The Wheatley plaintiffs’ proposed legal standard ignores the significant
differences between a petition to modify a consent decree on account of changed
circumstances, and a petition to terminate all or part of a consent decree because the
party subject to the decree has fully complied with its obligations. A court of equity
always retains discretion to modify an injunction, including a consent decree, “when
changed factual conditions make compliance with the decree substantially more
onerous . . . when a decree proves to be unworkable because of unforeseen obstacles
. . . or when enforcement would be detrimental to the public interest.” Rufo, 502 U.S.
at 384. As we said in Gavin v. Branstad, 122 F.3d 1081, 1088 (8th Cir. 1997), “the
nature of the remedy to be applied in the future[] is not established in perpetuity upon
the approval of the consent decree.”

        Rufo and its progeny grant federal courts of equity substantial flexibility to
adapt their decrees to changes in the facts or law, particularly in institutional reform
litigation, where the public interest is paramount. See Horne v. Flores, 557 U.S. 433,
447-48 (2009). Of course, a requested modification “must not create or perpetuate a
constitutional violation.” Little Rock Sch. Dist., 56 F.3d at 914, quoting Rufo, 502
U.S. at 391. Thus, when modification of a decree is sought because of changed
circumstances, the moving party’s past compliance with its constitutionally-mandated
terms is “obviously relevant.” Dowell, 498 U.S. at 249. But proof of full compliance
is not a pre-condition to obtaining relief from a consent decree’s contractual mandates
on account of changed circumstances, as it is when a moving party seeks termination
of an injunctive decree because it has fully complied, as in Cody v. Hillard, 139 F.3d



                                          -8-
1197, 1199 (8th Cir. 1998). Here, the district court expressly found “that ‘the vestiges
of past discrimination ha[ve] been eliminated to the extent practicable,” the core of the
termination standard in Freeman, which authorizes courts to relinquish continuing
jurisdiction to ensure compliance with a desegregation consent decree when the
moving party has demonstrated full compliance.

       The Wheatley plaintiffs understood when the consent decree was entered that
the relief ordered was not perpetual; their 1989 Complaint sought an injunction
forbidding the closing of the Wheatley High School “unless justified by objective,
nonracial considerations.” Their 1989 lawsuit presumed that the Wheatley and
Palestine school districts had consolidated, with support from the Arkansas
Department of Education, at least in part to remedy racial imbalances that may have
been the result of unconstitutional de jure segregation. Such imbalances could have
been remedied by reassigning some students, faculty, and administrators to the
existing facilities, or by closing the schools in Wheatley, so that all students and
teachers would attend one racially integrated campus The lawsuit was settled by the
parties agreeing to the former remedy, approved by the court in a consent decree. The
remedy ordered was a constitutional option, but it was not a constitutional imperative.
Therefore, the District’s obligation to maintain certain grades at the Wheatley campus,
like the aspects of the Little Rock desegregation plan at issue in Little Rock School
District v. North Little Rock School District, “ar[o]se as a matter of contract, not
constitutional law.” 451 F.3d 528, 531 (8th Cir. 2006). Modifying the decree to close
the schools in Wheatley based on changed circumstances does not “resegregate” the
District’s facilities. This change, by itself, is constitutionally neutral.

                                          IV.

      The question, then, is whether the district court abused its discretion in applying
the Rufo standard when it granted the District’s motion to modify or terminate the



                                          -9-
consent decree. The Rufo standard has two essential elements, whether “a significant
change in circumstances warrants revision of the decree,” and if so, “whether the
proposed modification is suitably tailored to the changed circumstances.” 502 U.S.
at 383.

        A. On appeal, the Wheatley plaintiffs do not argue that the district court erred
in concluding the District met its burden to establish the first element, changed
circumstances warranting modification of the decree. Rather, they argue that Rufo is
not the governing standard and focus on the District’s alleged lack of compliance.
Thus, we need give this element little consideration, although we reemphasize the
Supreme Court’s warning that a moving party must establish “a significant change in
circumstances,” not merely that “it is no longer convenient to live with the terms of
a consent decree.” Here, the factors noted by the district court -- dramatic
demographic changes, significant cost savings, a projected decrease in enrollment, a
risk of fiscal distress noted by the Arkansas Department of Education’s Fiscal Distress
Accountability and Reporting Unit, “academic shortcomings” cited by the
Department, and evidence that placing all grade levels on the same campus would
likely improve the academic performance of middle school students -- together with
the court’s finding “that defendants have complied in good faith with the remainder
of the requirements set forth in the consent decree,” were a sufficient basis for the
court to conclude that the District had demonstrated the requisite “significant change
of circumstances.” The flexible Rufo standard “allows a court to recognize that the
longer an injunction or consent decree stays in place, the greater the risk that it will
improperly interfere with a State’s democratic processes.” Horne, 557 U.S. at 453.

       B. The second Rufo element -- whether the modification is suitably tailored to
the changed circumstances -- gives us greater pause. The district court simply granted
the District’s motion to modify or terminate, without clarifying which it was granting.
On appeal, the Wheatley plaintiffs argue the decree was terminated, without proof of



                                         -10-
the good faith compliance Freeman required, “because it authorized the ending of any
educational presence in Wheatley, and without there being a school in Wheatley, all
other aspects of the decree are nugatory.” Under Rufo, a court of equity’s flexible
authority to modify a consent decree on account of changed circumstances includes
the authority to relieve the moving party of a consensual commitment that was
essential to the original decree. Thus, a court has the power to order a changed-
circumstances modification that effectively terminates the decree. Cf. United States
v. Swift & Co., 286 U.S. 106, 114 (1932) (discussing the power “to revoke or modify”
a consent decree).

        However, the Supreme Court has cautioned, if a consent decree is to be
terminated or dissolved, the parties are entitled to “a rather precise statement” to that
effect. Dowell, 498 U.S. at 246. Here, the district court’s Order is not precise on the
question of modification or termination. The record is clear that the District sought
permission to transfer the middle school grades from the Wheatley campus to the
Palestine campus. The district court did not abuse its discretion in approving that
modification, which was directly related to the evidence of changed circumstances the
District presented. It is also apparent from the face of the consent decree that many
of its eleven contractual commitments were premised on continued use of two school
campuses; therefore, these provisions, too, were effectively terminated.

       Other provisions in the decree do not require functioning schools in both
communities. For example, the provisions relating to school board membership
districts, school board terms, and the superintendent’s lack of voting authority --
provisions that resolved the Wheatley plaintiffs’ distinct Voting Rights Act claims --
do not require an “educational presence” in Wheatley and were not addressed in the
District’s proof of changed circumstances. On this record, the District’s motion to
terminate these provisions was supported by nothing more than the notion they are
“no longer convenient to live with,” which does not warrant Rule 60(b)(5) relief under



                                          -11-
Rufo. In these circumstances, we are confident the district court did not intend that
its Order terminate the entire consent decree, and we so construe its Order.

        For the foregoing reasons, the Order of the district court dated March 12, 2013,
is affirmed.
                         ______________________________




                                         -12-
