Jennica Carmona v. New Jersey Department of Education, 22-2874

Background

In March 2020 New Jersey closed schools by executive order and moved to distance learning during the COVID-19 pandemic; USDOE issued guidance that IDEA obligations could be met via remote instruction.
In October 2021 parents of children with disabilities filed a putative class action in federal court challenging the suspension of in-person services, alleging unilateral changes to IEPs and denial of a FAPE (Counts 1–8) and a civil RICO scheme to obtain IDEA Part B funds (Count 9).
At filing the parents had initiated but not completed individual IDEA administrative due process hearings.
The District Court dismissed Counts 1–8 for failure to exhaust administrative remedies and dismissed Count 9 (RICO) for lack of standing and other deficiencies.
The Third Circuit affirmed: (1) exhaustion required and no exception applied for Counts 1–8; (2) the parents lacked RICO standing because any fraud was directed at the federal government and plaintiffs’ alleged harms were too remote.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether IDEA exhaustion was required before filing federal claims seeking IDEA relief	Parents argued they had satisfied exhaustion because they had initiated administrative proceedings and sought only IDEA-available relief	Educators argued plaintiffs must complete the IDEA administrative process and have a due-process decision before suing	Court held exhaustion required; initiating proceedings was insufficient and dismissal affirmed
Whether the systemic-exception to exhaustion applies to this putative class action	Parents argued systemic violations and class volume made administrative remedies inadequate	Educators argued alleged violations did not impair access to the administrative forum	Court held systemic exception inapplicable; administrative forum remained available
Whether the IDEA "stay-put" or a unilateral change-in-placement exception excuses exhaustion because schools moved to remote learning	Parents argued the shift to distance learning unilaterally changed placements, invoking stay-put	Educators argued the school closures were system-wide and applied to all students, not a disability-targeted placement change	Court held no change in placement; stay-put did not apply because closures were general administrative measures
Whether Plaintiffs have RICO standing and proximate causation for alleged fraud in obtaining Part B funds	Parents alleged defendants made false assurances to USDOE, diverting IDEA funds and causing students' regressions	Educators argued any fraud was committed against the federal government, making plaintiffs indirect/remote victims without proximate causation	Court held plaintiffs lacked RICO standing because alleged injury was too remote and the government was the direct victim; RICO claim dismissed

Key Cases Cited

Endrew F. v. Douglas Cnty. Sch. Dist. RE-1, 580 U.S. 386 (2017) (FAPE standard under IDEA)
Luna Perez v. Sturgis Pub. Sch., 143 S. Ct. 859 (2023) (exhaustion not required for relief IDEA does not provide)
Batchelor v. Rose Tree Media Sch. Dist., 759 F.3d 266 (3d Cir. 2014) (IDEA exhaustion requirement for judicial claims)
T.R. v. Sch. Dist. of Phila., 4 F.4th 179 (3d Cir. 2021) (limits of systemic-exception to exhaustion)
J.S. v. Attica Cent. Sch., 386 F.3d 107 (2d Cir. 2004) (systemic-exception factors for class claims)
Honig v. Doe, 484 U.S. 305 (1988) (limitations on excluding disabled students and relevance to stay-put)
Genty v. Resol. Tr. Corp., 937 F.2d 899 (3d Cir. 1991) (civil RICO standing and elements)
St. Luke's Health Network, Inc. v. Lancaster Gen. Hosp., 967 F.3d 295 (3d Cir. 2020) (proximate causation limits in civil RICO)
Lum v. Bank of Am., 361 F.3d 217 (3d Cir. 2004) (requirement to plead mail/wire fraud predicates with specificity)