State of New Jersey

OFFICE OF ADMINISTRATIVE LAW

ORDER ON EMERGENT RELIEF

OAL DKT. NO. EDU 13422-15
AGENCY REF. NO. 235-8/15

BOARD OF EDUCATION OF THE

TOWNSHIP OF LAKEWOOD, OCEAN
COUNTY,
Petitioner,
v.
MICHAEL AZZARO, STATE MONITOR,
Respondent.

Marc H. Zitomer, Esq., and Joseph L. Roselle, Esq., appearing on behalf of

petitioner, Lakewood Township Board of Education (Schenck Price Smith
and King, attorneys)

David Rubin, Esq., appearing for respondent, Michael Azzara

Angelo Genova, Esq., Jennifer Mazawey, Esq., and Jennifer Borek, Esq.,
appearing on behalf of intervenor Catapult Learning, Inc. (Genova Burns,
attorneys)

Michael Inzelbuch, Esq., appearing on behalf of intervenor Mekor Hachinuch

School

BEFORE SUSAN M. SCAROLA, ALJ:

New Jersey is an Equal Opportunity Employer

OAL DKT. NO. EDU 13422-15

STATEMENT OF THE CASE

The petitioner, Board of Education of the Township of Lakewood (Board), alleges

that respondent, State Monitor Michael Azzara (Monitor or Azzara), improperly
overturned the Boards decision to award a contract for in-class resource programming
(ICRP) services to Catapult Learning, LLC (Catapult).

PROCEDURAL HISTORY

On August 28, 2015, the petitioner filed a petition for emergent relief with the
Bureau of Controversies and Disputes, Department of Education (DOE).

The

respondent filed a reply on September 7, 2015.

On August 31, 2015, Catapult filed a motion to intervene. On September 9,

2015, Mekor Hachinuch School, a nonpublic school, filed a motion to intervene.1

The matter was transmitted to the Office of Administrative Law, where it was filed
on September 1, 2015, to be heard as a contested case. N.J.S.A. 52:14B-1 to -15;
N.J.S.A. 52:14F-1 to -13. Oral argument was heard on the emergent application on
September 9, 2015.
FINDINGS OF FACT2

In June 2015 the Board sought requests for proposals (RFP) pursuant to the
competitive contracting process authorized by N.J.S.A. 18A:18A-4.1 et seq. from
interested vendors for the provision of ICRP services to be provided to eligible
nonpublic school students in accordance with the Individuals with Disabilities Education
Act (IDEA). The Board indicated that contracts could be awarded to multiple vendors.

Counsel for the proposed intervenors were permitted to argue at the hearing on emergent relief.
These facts were taken from the parties briefs, as no testimony was taken on the date of the hearing on
emergent relief.
2

OAL DKT. NO. EDU 13422-15

Three vendors submitted proposals for services: Tree of Knowledge Learning Center,
Inc. (TOK); Tender Touch Educational Services (TT);3 and Catapult.
The school district convened a selection committee4 to review the proposals and
ensure they were consistent with the specifications set forth in the RFP.

After

evaluation, the committee scored the proposals. While deficiencies were noted in all of
the proposals, all proposals scored within five to six points of one another.

The

committee issued an evaluation report reflecting the scores, and recommended that two
of the vendors (TT and TOK) receive contracts. Catapult, a previous service provider,
was advised that due to a number of identified material deficiencies in its proposal, it
would not be awarded a contract.

Catapult responded with a full explanation of the RFP and indicated that many of
the identified deficiencies were inaccurate. The Boards attorney advised the Monitor
that the remaining issues in Catapults response were not material and were subject to
cure through the provisions of a contract.

The Board meeting was scheduled for August 5, 2015. The contract awards to
TOK and TT as vendors for the ICRP were placed on the agenda, but the meeting was
canceled due to a lack of a quorum. The Monitor exercised his authority to approve
items on that evenings agenda, including the ICRP contract awards to TT and TOK.

In the interim before the next Board meeting, the Board became concerned that
TT and TOK would not be able to perform because Catapult advised that many of the
specialized instructors in its employ had signed non-compete agreements and would
therefore not be available to TT or TOK to provide the services those companies said
they could provide for the upcoming school year.5

The Monitor discounted this

conclusion and indicated that the two approved vendors had stated that they could

Neither TT nor TOK appeared at the hearing, although counsel advised that they had received notice of
these proceedings.
4
The Committee included the supervisor of related services, the supervisor of special education, and the
supervisor of Lakewood Early Childhood Center.
5
The Lakewood nonpublic schools started on August 31, 2015.

OAL DKT. NO. EDU 13422-15

perform.

In addition, the Monitor felt that the non-compete agreements were not

enforceable.

The Board met again on August 26, 2015, at which time a motion was made from
the floor to award a contract to Catapult in addition to the contracts awarded to TT and
TOK.6

The motion carried by a majority of the Board.

The Monitor overrode the

motion.

LEGAL ANALYSIS AND CONCLUSION

Special Monitor

The School District Fiscal Accountability Act, N.J.S.A. 18A:7A-54 to -60, was
passed to address the problem of some school districts failure to correct serious
deficiencies identified in their annual audits. The Act authorizes the Commissioner to
appoint a monitor to provide direct oversight of a board of educations business
operations and personnel matters.

N.J.S.A. 18A:7A-55(a).

Once appointed, the

Monitor shall
(1)
oversee the fiscal management and expenditures of
school district funds, including, but not limited to, budget
reallocations and reductions, approvals of purchase orders,
budget transfers, and payment of bills and claims;
....
(5)
have authority to override a chief school
administrators action and a vote by the board of education
on any of the matters set forth in this subsection, except that
all actions of the State monitor shall be subject to the
education, labor, and employment laws and regulations . . . .
[N.J.S.A. 18A:7A-55(b).]
6

As of September 9, 2015, neither TT nor TOK had executed contracts for the ICRP services. Counsel
indicated that TOK had received a contract, and that TT had signed a letter of intent to perform until the
contract was executed.
7
The Monitor expressed concern whether a contract awarded to Catapult would have violated the Public
Schools Contracts Law, and also expressed concern over possible litigation from TT and TOK if an
additional vendor were approved that had not met selection criteria. The Board expressed its concern
over possible litigation threatened by Catapult if it were not awarded a contract.

OAL DKT. NO. EDU 13422-15

The Monitor is subject to the supervision of the Commissioner and provides oversight
until such time as the Commissioner determines that the necessary local capacity and
fiscal controls have been restored to school district operations. N.J.S.A. 18A:7A-55(e).

In Board of Education of Pleasantville v. Riehman, EDU 11454-10, Initial

Decision

(May

31,

2011),

rejected,

Commr

(July

13,

2011),

<http://njlaw.rutgers.edu/collections/oal/>, affd, No. A-5928-10 (App. Div. February 11,

2013), <http://njlaw.rutgers.edu/collections/courts/>, the school board had rejected the
advice of its counsel to settle a pending whistleblower lawsuit. The Monitor overturned
the Boards decision and the Board appealed.

The administrative law judge (ALJ)

agreed with the Board that the Monitor had exceeded his statutory authority because
the enabling legislation, N.J.S.A. 18A:7A-55, did not expressly authorize him to settle
lawsuits.

The Commissioner rejected the ALJs analysis and upheld the Monitors

authority to override a school boards refusal to settle a lawsuit that, in the Monitors
reasonable estimation, could have significant financial exposure for the Board. The
Appellate Division affirmed the Commissioners decision, finding that a history of fiscal
instability by a board warrants the limits of exercise of those powers through oversight
by the Monitor.

In Rankins v. Board of Education of Pleasantville, EDU 6819-09, Initial Decision

(August

3,

2010),

rejected,

Commr

(October

26,

2010),

<http://njlaw.rutgers.edu/collections/oal/>, affd, No. A-1662-10 (App. Div. October 22,

2012),

<http://njlaw.rutgers.edu/collections/courts/>,

the

Monitor

terminated

an

employee over the objection of the Board of Education. The ALJ vacated the Monitors
action, which was rejected by the Commissioner, who took an expansive view of the
Monitors powers. While a Monitor does not have unfettered power to make decisions
for the district, he must have fiscal or financial concerns or motivations in order to
appropriately overturn a Boards decision.

In affirming, the Appellate Division also

noted the Broad powers of the State Monitor conferred by statute and rejected the
argument that the Monitor has no authority to override a boards exercise of its own
power because no statute permits that action.

OAL DKT. NO. EDU 13422-15

The conclusion to be drawn is that the Monitor exercises broad powers of

oversight of a Boards actions wherever fiscal considerations are a concern.

The

standard to be used in determining whether a Monitors decisions are ultra vires, as the
Board suggests, is whether the Monitor acted arbitrarily and capriciously. Arbitrary
and capricious means acting without rational basis, a willful and unreasoning action
without consideration of and in disregard of circumstances. J.P. and M.P. ex rel M.P.
and J.P. v. Bd. of Educ. of South Brunswick, EDU 4969-01, Initial Decision (December
17,

2002),

adopted,

Commr

(February

3,

2003),

<http://njlaw.rutgers.edu/collections/oal/>.

Intervention

Catapult has filed a motion to intervene in this matter, and, indeed, the Board
and the Monitor have expressed no objection to Catapults intervention. N.J.A.C. 1:116.1(a) provides that any person or entity not initially a party, who has a statutory right
to intervene or who will be substantially, specifically and directly affected by the
outcome of a contested case, may on motion, seek leave to intervene.

Catapult claims that it has a legitimate interest to protect in this matter which is
not the same as the interest of the Board. It contends that the action of the Monitor
resulted in its being deprived of economic benefit, as well as the students being
deprived of continuity of services. Catapult contends that the Monitor acted ultra vires
in depriving it of the opportunity to correct any deficiencies in its bid, if indeed there
were in fact any significant deficiencies from the other bids that were accepted. To that
extent, Catapult has a different position from the Board: the Board does not contend
that there were errors in the bidding process; rather, it contends that any deficiencies in
the bidding process could be corrected by the contracts offered to all three successful
bidders. Catapult, on the other hand, argues that it is in a superior position to provide
the services required by the Board, having adequate personnel to meet the demands of
the student population.

Accordingly, I will permit Catapult to intervene.

OAL DKT. NO. EDU 13422-15

Mekor Hachinuch School, a nonpublic school, has also filed a motion to

intervene. It contends that it will be substantially, specifically and directly affected by
the outcome of this case, in that its students will be deprived of the specialized
instructors, aides and teachers previously assigned to the school. It contends that the
school year has started and that no services are being provided to the students of the
school. At this time, the school has presented no sufficient reasons that would permit it
to intervene. The Board is actively protecting the interest of students within the district,
including students of this school, by seeking to expand the number of vendors who
provide services to the students.

Nothing has been presented to indicate that the

schools interest is so disparate from the Boards or so unique as to require intervention

at this time.

Accordingly, the school will not be permitted to intervene at this time.

Emergent Relief

N.J.A.C. 6A:3-1.6 provides for emergent relief or stay as follows:

(a)
Where the subject matter of the controversy is a
particular course of action by a district board of education or
any other party subject to the jurisdiction of the
Commissioner, the petitioner may include with the petition of
appeal, a separate motion for emergent relief or a stay of
that action pending the Commissioners final decision in the
contested case.
(b)
A motion for a stay or emergent relief shall be
accompanied by a letter memorandum or brief which shall
address the following standards to be met for granting such
relief pursuant to Crowe v. DeGioia, 90 N.J. 126 (1982):
1.
The petitioner will suffer irreparable harm if the
requested relief is not granted;
2.
The legal right underlying petitioners claim is
settled;
3.
The petitioner has a likelihood of prevailing on
the merits of the underlying claim; and

OAL DKT. NO. EDU 13422-15

4.
When the equities and interests of the parties
are balanced, the petitioner will suffer greater harm
than the respondent will suffer if the requested relief is
not granted.
[See also N.J.A.C. 1:1-12.6.]

For emergent relief to be granted, the petitioner must satisfy all four prongs of the
Crowe test by clear and convincing evidence, a particularly heavy burden. Rinaldo v.
RLR Inv., LLC, 387 N.J. Super. 387, 396 (App. Div. 2006) (quoting Punnett v. Carter,
621 F.2d 578, 582 (3d Cir. 1980)); see also Guaman v. Velez, 421 N.J. Super. 239,
24748 (App. Div. 2011).

The Board seeks injunctive relief in the form of a determination that the Monitor
acted arbitrarily and capriciously when he overruled the Boards decision to offer a
contract to Catapult. The effect would be a return to the status quo of the three
vendors being given contracts for the provision of ICRP services.

As to the first requirement, that the petitioner will suffer irreparable harm if the
requested relief is not granted, the Board contends that students educational programs
will be harmed if the Monitors decision is permitted to stand, because it has received
information that Catapult had entered into non-compete agreements with its individual
service providers, thus making them unavailable to be hired by TT or TOK.8 After
receiving this information, the Board endeavored to award a third contract to Catapult,
contending that any deficiencies noted in the bid could be corrected in the contract, only
to be denied by the Monitor.

The Monitor contends that he followed the recommendation of the selection

committee in awarding the contracts to TT and TOK, and finding deficiencies in
Catapults proposal. No evidence has been presented that TT and TOK will be unable
to perform. Indeed, at this point it is conjecture, based upon allegations that Catapult
will attempt to enforce non-compete agreements.

This position essentially assumed that TT and TOK would default on their contract requirements
because of the unavailability of personnel held to their non-compete clauses with Catapult.

OAL DKT. NO. EDU 13422-15

The Board also contends that the actions of the Monitor in overruling the Board
are harmful to it because the Board will be forced to abide by an illegal and capricious
action. The Monitor contends that his action in overruling the Board is not harmful in
and of itself. The Boards positon assumes that what the Monitor did was arbitrary and
capricious, but this can only be determined after a full hearing.
Catapult contends that it will be irreparably harmed if the Monitors decision is not
vacated, as it will be denied economic profits as the result of its not being able to enter
into a contract with the Board to provide services. However, loss of anticipated profits is
not a basis for emergent relief. Contracts are not a guarantee; any business must
recognize the risk that it will not be awarded every contract for which it applies. See
Pritchard Industries, Inc., v. State-Operated School District of Paterson, EDU 9297-09,
Order (September 25, 2009), <http://njlaw.rutgers.edu/collections/oal/>.

As to the second requirement, that the legal right underlying petitioners claim is
settled, both parties correctly note the dearth of cases regarding the power of the
Monitor to overrule school-board decisions. The Monitor has authority in fiscal affairs,
but, as noted above, it is not unfettered. While the Board is correct that the New
Jersey Constitution provides that students within this state are entitled to a thorough
and efficient education, and that the IDEA provides that students with special needs
have a right to services designed to meet those needs, that is not the legal standard to
be used in determining whether the Monitor misused his authority when he overruled
the Board. Indeed, given past rulings of the Commissioner as affirmed by the Appellate
Division, the Monitors authority is broad and wide-ranging when a matter has fiscal
involvement, such as prevention of costly litigation.
As to the third requirement, the petitioners likelihood of prevailing on the merits
of the underlying claim, it has not been established. The law in this area is sparse, but it
does provide the Monitor with a broad range of authority in fiscal matters. The Board
and Catapult must demonstrate that the Monitor acted ultra vires when he followed the
recommendations of the Selection Committee and overruled the Board by declining to
alter the bidding process to permit a third vendor access to the same contracts. Such
proof of arbitrary and capricious action can only come after a hearing in this matter.
9

OAL DKT. NO. EDU 13422-15

Based on the information provided by the petitioner and Catapult, it cannot presently be
concluded that the petitioner and Catapult have a likelihood of prevailing on the merits
of the underlying claim.

As to the balancing of the equities of the situation and the interests of the parties,
the Board and the Monitor have an interest in seeing that the children of Lakewood
receive the education and special services they are entitled to by law. They both have
an interest in ensuring that these educational services are timely provided in a
financially sound manner in accordance with the bidding and selection process. There
is no indication that either the Board or the Monitor did not attempt to act in the best
interests of the students and the district in reaching their separate conclusions about the
acceptance or the rejection of the bids.

Catapult has a financial interest in obtaining a contract from the Board so that it
may continue to provide services and obtain the economic benefit of the contract.

Balancing the equities at this juncture, there is no indication that the two vendors
approved by the selection committee and the Board cannot perform in accordance with
the proposed contracts. If they cannot meet the demands of the contracts, then indeed,
the matter may yet become emergent and the petitioner may then re-apply for emergent
relief.

In conclusion, neither the Board nor Catapult has demonstrated that it is entitled
to emergent relief. The application soughtto overrule the decision of the Monitor on
the basis that he was without authority to so actis denied.

ORDER

Having concluded that the Board has not satisfied the four requirements for
emergent relief, the petitioners request for emergent relief is DENIED.

The matter shall be scheduled for hearing forthwith.

10

OAL DKT. NO. EDU 13422-15

This order on application for emergency relief may be adopted, modified or

rejected by the COMMISSIONER OF THE DEPARTMENT OF EDUCATION, who by
law is authorized to make a final decision in this matter. The final decision shall be
issued without undue delay, but no later than forty-five days following the entry of this
order. If the COMMISSIONER OF THE DEPARTMENT OF EDUCATION does not
adopt, modify or reject this order within forty-five days, this recommended order shall
become a final decision on the issue of emergent relief in accordance with N.J.S.A.
52:14B-10.

September 10, 2015

DATE

SUSAN M. SCAROLA, ALJ

SMS/cb

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OAL DKT. NO. EDU 13422-15

DOCUMENTS CONSIDERED
Petitioners Motion for Emergent Relief, with attachments
Respondents Brief in Opposition, with attachments
Catapults Motion to Intervene and Supporting Brief
Mekor Hachinuchs Motion to Intervene, with attachments
(Mekor Hachinuchs Letter and Certification filed on September 10, 2015, after record
closed, not considered)

12