Asah v. N.J. Dep't of Educ.

330 F.Supp.3d 975

ASAH ; Spectrum360, Verona; Spectrum360, Livingston; Michele Homa; Hollydell School, Hurffville; and Maureen Grossi, Plaintiffs,

v.NEW JERSEY DEPARTMENT OF EDUCATION ; Kimberly Harrington; Kevin Dehmer; and Elise Sadler-Williams, Defendants.

Civil Action No. 16-3935 (FLW) (DEA)

United States District Court, D. New Jersey.

Signed July 27, 2018

Vito A. Gagliardi, Jr., Porzio, Bromberg & Newman, PC, Morristown, NJ, for Plaintiffs.

Caroline Genett Jones, State of New Jersey Office of the Attorney General, Trenton, NJ, for Defendants.

WOLFSON, United States District Judge:

Plaintiffs ASAH, Spectrum360, Verona, Spectrum360, Livingston, Michele Homa, the HollyDELL School, Hurffville ("HollyDELL"), and Maureen Grossi (collectively, "Plaintiffs") bring this case against Defendants the New Jersey Department of Education (the "Department" or "DOE"), Kimberly Harrington, in her official capacity as the Department's Commissioner of Education, Kevin Dahmer, in his official capacity as the Department's Chief Financial Officer and Assistant Commissioner in the Division of Finance, and Elise Sadler-Williams, in her official capacity as the Department's Planning Associate (collectively, "Defendants"), asserting various state and federal constitutional claims challenging the Department's regulations governing tuition reimbursement for approved private schools for students with disabilities. Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' Amended Complaint, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted. For the reasons that follow, Defendants' Motion to Dismiss is granted in part and denied in part, as follows: (i) Defendants' Motion is granted, insofar as Defendants seek to dismiss Plaintiffs' federal claims, asserted in Counts One, Two, Three, and Five of the Amended Complaint; and (ii) because this Court declines to exercise supplemental jurisdiction over Plaintiffs' remaining state law claims, Defendants' Motion is denied without prejudice as to those claims.

I. FACTUAL BACKGROUND ¹

Before recounting the relevant factual background and procedural history of this case, I will briefly review the relevant statutory and regulatory context in which Plaintiffs' claims arise.

A. Statutory and Regulatory Framework

Under the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1400, et seq. , each state that receives federal education funding must "ensure that disabled children receive a ‘free appropriate public education’ (FAPE)." Munir v. Pottsville Area Sch. Dist. , 723 F.3d 423, 425-26 (3d Cir. 2013) (quoting 20 U.S.C. § 1412(a)(1) ); see H.E. v. Walter D. Palmer Leadership Learning Partners Charter Sch. , 873 F.3d 406, 408 (3d Cir. 2017). The IDEA "protects the rights of disabled children by mandating that public educational institutions identify and effectively educate those children, or pay for their education elsewhere if they require specialized services that the public institution cannot provide." D.K. v. Abington Sch. Dist. , 696 F.3d 233, 244 (3d Cir. 2012) (citation omitted). To comply with the IDEA, "school districts must identify and evaluate all children who they have reason to believe are disabled under the statute." Munir , 723 F.3d at 426. To provide a FAPE, the school district must develop and administer an Individualized Education Program ("IEP") for each student that is classified as eligible for special education. S.H. v. State–Operated Sch. Dist. of Newark , 336 F.3d 260, 264 (3d Cir. 2003) ; see C.H. v. Cape Henlopen Sch. Dist. , 606 F.3d 59, 65 (3d Cir. 2010) ("The FAPE required by the Act is tailored to the unique needs of the child by means of an [IEP]."). "An appropriate IEP must contain statements concerning a disabled child's level of functioning, set forth measurable annual achievement goals, describe the services to be provided, and establish objective criteria for evaluating the child's progress." Cape Henlopen , 606 F.3d at 65. While the school district is "not required to ‘maximize the potential’ " of each child, T.R. v. Kingwood Twp. Bd. of Educ. , 205 F.3d 572, 577 (3d Cir. 2000) (quoting Bd. of Educ. of Hendrick Hudson Cent. Sch. Dist. v. Rowley , 458 U.S. 176, 197 n. 21, 102 S.Ct. 3034, 73 L.Ed.2d 690 (1982) ), it "must offer an IEP that is ‘reasonably calculated to enable the child to receive meaningful educational benefits in light of the student's intellectual potential.’ " Munir , 723 F.3d at 426 (quoting P.P. ex rel. Michael P. v. W. Chester Area Sch. Dist. , 585 F.3d 727, 730 (3d Cir. 2009) ).

New Jersey has adopted a host of regulations that are designed to fulfill the state's responsibilities under the IDEA. P.N. v. Greco , 282 F.Supp.2d 221, 234 (D.N.J. 2003). In relevant part, each school district in New Jersey is obligated "to provide suitable facilities and programs of education for all the children who are classified as children with disabilities." N.J.S.A. § 18A:46-13. "A school district that is unable to deliver those required services, in full or in part, may satisfy its obligation by sending the special-needs student to a facility or program approved by the Department," such as Spectrum360, Verona, Spectrum360, Livingston (collectively, "Spectrum360"), or HollyDELL. Youth Consultation Serv., Inc. v. New Jersey State Dep't of Educ. , No. A-4336-06T1, 2008 WL 794573, at *1 (N.J. Super. Ct. App. Div. Mar. 27, 2008) ; see N.J.S.A. § 18A:46-14(g). As the Court explains, infra , these approved private schools for students with disabilities ("APSSDs")² are "authorized to charge the sending districts for the cost of tuition for each child sent to their schools; however, the calculation of the tuition rates is strictly regulated." Windsor Learning Ctr., Inc. v. New Jersey State Dep't of Educ., Office of Compliance , No. A-2197-06T1, 2008 WL 113992, at *3 (N.J. Super. Ct. App. Div. Jan. 3, 2008).

Private schools that seek to contract with public schools to accept students with disabilities on a tuition basis must first be approved by the Department. See N.J.S.A. § 18A:46-15 ; N.J.A.C. § 6A:14-7.2. As part of the approval process, APSSDs must submit an affidavit attesting that they will comply with, inter alia , the IDEA and all applicable New Jersey statutes and regulations, including those governing tuition reimbursement. See N.J.A.C. § 6A:14-7.2(a)(3). To receive students with disabilities from a sending district, APSSDs are required to enter into a mandated form tuition contract (the "Tuition Contract") with the sending district. N.J.A.C. § 6A:14-7.8(b) ("The district board of education shall establish a written contract for each student with a disability it places in a program approved under this subchapter.... For students placed in an [APSSD], the district board of education shall use the mandated tuition contract according to N.J.A.C. 6A:23A–16 through 22."); N.J.S.A. § 6A:23A-18.5(a)(13). Here, the Tuition Contract provides, in relevant part, as follows:

3. ... The SENDING DISTRICT and APPROVED PRIVATE SCHOOL agree to comply with all the requirements promulgated by the Commissioner of Education and the State Board of Education, as applicable.

4. Tuition charges, as part of this AGREEMENT, as well as the payment of the same shall be made in accordance with the applicable New Jersey Statutes and the rules and regulations of the State Board of Education.

Amended Verified Complaint ("Am. Compl."), Ex. A at ¶¶ 3-4.³

As noted, APSSD tuition reimbursement is governed by New Jersey law and the Department's regulations. Specifically, New Jersey law provides that the tuition rates charged by APSSDs cannot "exceed the actual cost per pupil as determined under rules prescribed by the commissioner and approved by the State Board of Education." N.J.S.A. § 18A:46-21 ; see N.J.A.C. § 6A:23A-18.3(a) ("The board of directors of an APSSD ... shall determine the final tuition rate charged to be an amount less than or equal to the certified actual cost per student as determined by an independent school auditor."). To ensure compliance with this statutory requirement, the Department has promulgated a set of administrative regulations that "establish requirements for accounting, financial reporting, and tuition rate setting by [APSSDs]." N.J.A.C. § 6A:23A-18.1, et seq.⁴ In the case at bar, Plaintiffs challenge the Department's enforcement of these regulations governing APSSD tuition reimbursement.

As an initial matter, the Department's rules define "actual costs per student," in relevant part, as "the actual allowable cost for the entire school year," N.J.A.C. § 6A:23A-18.2, and state that APSSDs "may charge one tuition rate per school location for the school year." N.J.A.C. § 6A:23A-18.3(b). When determining the actual allowable costs for the program, APSSDs must ensure that the costs are:

i. Based on all costs required for student instruction from July 1 through June 30;

ii. Consistent with the students' [IEPs];

iii. Inclusive of all costs required to implement all students' IEPs and all related services,⁵ except as set forth in [ N.J.A.C. § 6A:23A-18.3(a)(5) ];

iv. Reasonable, that is, ordinary and necessary and not in excess of the cost that would be incurred by an ordinarily prudent person in the administration of public funds; and v. Based on goods actually received and placed in service and/or services rendered in the fiscal year expensed.

N.J.A.C. § 6A:23A-18.3(a)(1). The regulations further provide that, with the exception of extraordinary services,⁶ APSSDs "shall provide required related services in the scope of services rendered pursuant to the tuition contract and may not bill the sending district board of education separately for related services that are required by a student's initial or any subsequent IEP with limited exception." N.J.A.C. § 6A:23A-18.3(a)(5) (emphasis added). In short, with the exception of extraordinary...