I skimmed through the judge's opinion, and it makes sense all over. The parents wanted an amendment so favorable to them that congress screwed them over with their wording. Because it's a de novo appeal, the judge can't consider trial court evidence. The twist for the parents is that all their allegations of the trial court judge being impartial can't be proven without looking at the trial court's evidence. So they basically their lawyers messed up with the complaint.
Hopefully she'll pass on soon so the parents will give up on this waste of time. But who knows, perhaps congress will pass legislation that makes it unlawful to rule in favor of a defendant, just in this case...