JENNICA CARMONA, Individually, and as Parent and Natural Guardian of B.A.; KERRY GALLAGHER, Individually, and as Parent and Natural Guardian of K.G.; ANGELLE KURSAR, Individually, and as Parent and Natural Guardian of D.K.; JAMES NAZZARO, Individually, and as Parent and Natural Guardian of J.N.; LISA MATTESSICH**, Individually, and as Parent and Natural Guardian of M.M.; NICOLE TIERNEY, Individually, and as Parent and Natural Guardian of K.D.; DORENE CAMP*, Individually, and as Parent and Natural Guardian of S.C., C.C. and T.C.; LISA DRISCOLL, Individually, and as Parent and Natural Guardian of M.D.; DIANA LOGRASSO, Individually, and as Parent and Natural Guardian of K.I.; KELLY OSTERMAN, Individually, and as Parent and Natural Guardian of J.L.; TINA DELORENZO, Individually, and as Parent and Natural Guardian of N.D.; MUNIRA EDMONDS, Individually, and as Parent and Natural Guardian of A.K. and all other similarly situated; GABRIELLE KINDER, Individually, and as Parent and Natural Guardian of A.M., Appellants v. NEW JERSEY DEPARTMENT OF EDUCATION; AUDUBON PUBLIC SCHOOL DISTRICT; CAMDEN CITY SCHOOL DISTRICT; CAMDEN COUNTY SCHOOL DISTRICT; CAPE MAY COUNTY PUBLIC SCHOOL DISTRICT; ESSEX COUNTY PUBLIC SCHOOL DISTRICT; GLOUCESTER COUNTY PUBLIC SCHOOL DISTRICT; LOWER CAPE MAY REGIONAL SCHOOL DISTRICT; MANASQUAN PUBLIC SCHOOL DISTRICT; MATAWAN ABERDEEN REGIONAL SCHOOL DISTRICT; MIDDLE TOWNSHIP PUBLIC SCHOOL DISTRICT; MIDDLETOWN TOWNSHIP PUBLIC SCHOOL DISTRICT; MONMOUTH COUNTY PUBLIC SCHOOL DISTRICT; MORRIS COUNTY PUBLIC SCHOOL DISTRICT; OCEAN COUNTY PUBLIC SCHOOL DISTRICT; ROXBURY TOWNSHIP PUBLIC SCHOOL DISTRICT; RUMSON-FAIR HAVEN REGIONAL HIGH SCHOOLS; TOMS RIVER REGIONAL SCHOOL DISTRICT; WASHINGTON TOWNSHIP SCHOOL DISTRICT; WEST ORANGE PUBLIC SCHOOLS; COMMISSIONER ANGELICA ALLEN-MCMILLAN, In her official capacity; AVE ALTERSITZ, In her official capacity; DR. J. SCOTT CASCONE, In his official capacity; JOSEPH CASTELLUCCI, In his official capacity; ANDREW DAVIS, In his official capacity; DR. JUDITH DESTEFANO-ANEN, In her official capacity; THOMAS GIALANELLA, In his official capacity; DEBRA GULICK, In her official capacity; ROGER JINKS, in his official capacity; DR. FRANK KASYAN, in his official capacity; JOSEPH MAJKA, In his official capacity; KATRINA MCCOMBS, In her official capacity; JEFFREY MOHRE, In his official capacity; CHARLES MULLER, in his official capacity; DR. LOVELL PUGH-BASSETT, in her official capacity; LORETTA RADULIC, in her official capacity; DR. LESTER RICHENS, in his official capacity; DAVID SALVO, in his official capacity; MARY ELLEN WALKER, in her official capacity; JOSEPH S. ZARRA, in his official capacity
No. 22-2874
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
September 8, 2023
NOT PRECEDENTIAL
(*Dismissed pursuant to Court Order dated 12/20/2022)
(**Dismissed pursuant to Court Order dated 9/6/2023)
On Appeal from the United States District Court for the District of New Jersey (D.C. No.
Submitted under Third Circuit L.A.R. 34.1(a) July 13, 2023
Before: SHWARTZ, RESTREPO, and CHUNG, Circuit Judges.
(Filed: September 8, 2023)
OPINION*
CHUNG, Circuit Judge.
I. BACKGROUND1
In March 2020, all New Jersey schools were closed by gubernatorial executive order due to the COVID-19 pandemic. A973-74. Schools continued to educate students “through appropriate home instruction,” id., and remained closed for the rest of the 2019-20 school year. They gradually reopened over the 2020-21 school year, starting with a hybrid of distance and in-person learning and transitioning to full-time in-person instruction. Exec. Order No. 175 (Aug. 13, 2020); A1023, Exec. Order No. 214 (Jan. 11, 2021); A979. During this time, the United States Department of Education (“USDOE“) provided guidance on how schools might fulfill their obligations to students with
In October 2021, the Plaintiff-Appellants (hereinafter, the “Parents“) challenged the switch to distance learning in the 2019-20 and 2020-21 school years for their children with disabilities by filing suit against the Educators in the District Court.2 The Parents filed suit for themselves and on behalf of a putative class of “all other similarly situated school-aged children with disabilities covered by IDEA in New Jersey and their parents.” A257.3
The Parents amended their complaint and articulated eight causes of action based in federal and state law all related to alleged deprivations of adequate education in violation of the IDEA. In support of these claims, the Parents generally alleged that their children‘s Individualized Education Plans (“IEP“) had been unilaterally altered by the shift to distance learning and deprived them of the right to a free and appropriate public
Count Nine of the Amended Complaint, civil RICO, alleged that individual Educator defendants had engaged in a scheme wherein they falsely represented their IDEA compliance during the pandemic to continue to obtain federal IDEA funding. A275, 277-306. The false statements allegedly caused the federal government to wrongfully remit IDEA Part B funds to the NJDOE and defendant school districts.4 This, in turn, allegedly deprived Plaintiffs of the benefit of Part B funds apparently because said funds were diverted from benefiting students with disabilities and used for other purposes such as the purchase of personal protective equipment. A304.
The Educators moved to dismiss the Amended Complaint and the District Court granted their motion. The District Court concluded that, in Counts One through Eight, the Parents were required to exhaust administrative remedies because they sought “relief available under the IDEA.” A13. The District Court further concluded that the Parents had not exhausted their remedies, nor shown an exception applied. These counts were thus dismissed for want of subject matter jurisdiction. The District Court also dismissed the Parents’ RICO count because, among other infirmities, the Parents “allege[d] only indirect harm flowing from the allegedly fraudulent scheme” and therefore lacked
II. DISCUSSION6
Our review of the District Court‘s dismissal for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) is de novo, as is our review of dismissal for failure to state a claim pursuant to Rule 12(b)(6). In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 632 (3d Cir. 2017); Phillips v. Cnty. of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008). The District Court determined, and the parties do not dispute, that the Educators’ subject matter jurisdiction challenge to the first eight counts was a facial attack. A5. A facial attack “challenges subject matter jurisdiction without disputing the facts alleged in the complaint, and it requires the Court to ‘consider the allegations of the complaint as true.‘” Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016) (quoting Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006)). In reviewing the dismissal of the RICO count for failure to state a claim, we likewise “accept [the Parents‘] well-pleaded factual allegations as true and draw all reasonable inferences from those allegations in [their] favor.” In re Horizon, 846 F.3d at 633.
A. IDEA and IDEA-Related Claims (Counts One - Eight)
Under the IDEA, every State that receives federal funds for “educating children with disabilities” must “provide a ... FAPE ... to all eligible children.” Endrew F. ex rel. Joseph F. v. Douglas Cnty. Sch. Dist. RE-1, 580 U.S. 386, 390 (2017) (citations omitted); Batchelor v. Rose Tree Media Sch. Dist., 759 F.3d 266, 271 (3d Cir. 2014). Parents who believe their child has been denied a FAPE may request a due process hearing to remedy the alleged denial. Mary T. v. Sch. Dist. of Phila., 575 F.3d 235, 240 (3d Cir. 2009);
The District Court determined the Parents were required to exhaust the claims in Counts One through Eight because they sought to redress the Educators’ alleged failure to provide a FAPE with remedies available under the IDEA. The Parents had not completed due process hearings challenging changes to their children‘s IEPs, however, so the District Court dismissed Counts One through Eight for failure to exhaust. The Parents vigorously argue they did exhaust or, alternatively, that an exhaustion exception applied.
1. The District Court Correctly Concluded that the Parents Failed to Exhaust Administrative Remedies
The Parents contend that they satisfied the exhaustion requirement because, as set forth in the Amended Complaint, they “were in the process of exhausting their administrative remedies.”8 Parents’ Opening Br. at 17.
We reject the Parents’ contention that initiating the required due process hearing
2. The District Court Correctly Concluded That No Exceptions Excuse the Parents’ Failure to Exhaust
The Parents have alternatively argued the systemic exception to exhaustion applies to their claim and that IDEA‘s “stay put” provision also excuses their failure to exhaust.
a. The Systemic Exception Does Not Apply
Before the District Court, the Parents asserted that, because their suit is a putative class action and they have sought relief from alleged systemic violations of the IDEA, the “systemic exception” should have applied. A9-11.9 The systemic exception applies
The District Court was correct not to apply the systemic exception here where the Parents alleged IDEA violations that did not “undermine access to the administrative hearing process itself.” T.R., 4 F.4th at 193 (systemic exception did not apply where parent plaintiffs “dispute[d] the adequacy of the quantity, quality, and consistency” of interpretation/translation services but did not allege that “access to the administrative hearing process” had been compromised by such failures). These alleged violations included, among others: unilateral IEP changes from in-person learning to distance learning; failure to maintain in-person services for disabled students; and failure to involve the Parents in decisions about placement. A262-65. While a high volume of complaints could arise from these alleged violations, they did not involve a deprivation of
b. The “Stay Put” Provision Does Not Excuse the Failure to Exhaust
When an IEP changes a student‘s educational placement, such as when an IEP calls for a student to move from one school to another, parents often bring IDEA administrative actions. The purpose of the “stay put” provision,
In their Amended Complaint (as opposed to their motion for a preliminary injunction, which was denied), the Parents did not raise a stay-put claim; nonetheless, they have sought to rely on the stay-put exception and have argued that, in complying with New Jersey‘s restriction against in-person schooling, the Educators changed their
In deciding what constitutes a change of placement, courts often draw a line between changes that specifically affect children with disabilities and changes motivated by budgetary or administrative concerns that affect a general student population; the former will often be found to effect a change in placement, but not the latter. D.M. v. New Jersey Dep‘t of Educ., 801 F.3d 205, 217 (3d Cir. 2015); N.D. ex rel. Parents Acting as Guardians Ad Litem v. Hawaii Dep‘t of Educ., 600 F.3d 1104, 1108 (9th Cir. 2010) (system-wide, financially motivated closure of schools on Fridays was “not [a] change[] in educational placement“); id. at 1116-17 (noting that holding otherwise would give “parents of disabled children veto power” over states’ management of schools).10
Here, there was no change in placement where New Jersey‘s school closure was “a system-wide administrative decision of general applicability - an order shutting schools to all students (abled and disabled) ... during an unprecedented and life-threatening
Citing Honig v. Doe and NYS Association for Retarded Child., Inc. v. Carey, the Parents counter by arguing that the IDEA is meant to prevent schools from excluding disabled students even where a school invokes what might otherwise be a compelling reason, e.g., safety concerns. Parents’ Opening Br. at 31, 34. Analogizing to such cases, the Parents argue that the IDEA did not permit schools to halt in-person instruction for disabled children despite the risks posed by COVID-19. Parents’ Opening Br. at 34.
We are unpersuaded. Honig and Carey involved children with disabilities who faced the targeted exclusion that the IDEA does not tolerate. Honig v. Doe, 484 U.S. 305, 308 (1988) (“stay-put provision” did not permit exceptions for dangerousness where individual children were suspended for behaviors related to their disabilities); NYS Association for Retarded Child., Inc. v. Carey, 466 F. Supp. 479, 481 (E.D.N.Y. 1978) (finding an IDEA (formerly, the Education for All Handicapped Children Act) violation where disabled pupils afflicted with hepatitis B, but not similarly-situated non-disabled pupils, were excluded from schools). In this case, the transition to distance learning applied to all students regardless of disability. Thus, even if a unilateral change in placement could excuse a failure to exhaust, the Parents have not shown there was a change in placement here.
For the reasons set forth above, we will affirm the District Court‘s dismissal of the first eight counts of the Parents’ Amended Complaint.11
B. The RICO Count
The Parents also challenge the District Court‘s dismissal of Count Nine, which alleged that the individual Educators violated RICO (
RICO prohibits a person, who is part of an enterprise that affects interstate commerce, from participating in the enterprise‘s affairs through a pattern of racketeering activity. Genty v. Resol. Tr. Corp., 937 F.2d 899, 906 (3d Cir. 1991) (citing
The Parents failed to plausibly allege injuries proximately caused by the purported RICO violations. In their Amended Complaint, the Parents alleged the individual Educators falsely assured the USDOE and NJDOE that the entity defendants (NJDOE and school districts) had IDEA-compliant policies and procedures in place from January to July 2019 and January to July 2020. The Parents alleged that these misrepresentations caused Part B funds to be unlawfully remitted in violation of the mail and wire fraud statutes. The Parents further alleged that they—as the intended beneficiaries of Part B funds—were resultantly defrauded of hundreds of millions of dollars in funding and suffered other harm “including significant regressions in skills and loss of competencies.” A275, 306-07.
We agree with the District Court that these injuries are too remote to establish the Parents’ standing. To the extent the purported misrepresentations caused the fraudulent remittance of Part B funds, the direct victim of said fraud would be the United States
III. CONCLUSION
For the foregoing reasons, we will affirm the District Court‘s order entered
