Partners in Nutrition v. Minnesota Department of Education

Background

Partners in Nutrition, doing business as Partners in Quality Care, is a nonprofit organization that sponsors sites participating in the federal Child and Adult Care Food Program (CACFP). The program allows sponsors to help participating child-care and adult-daycare sites administer the program. The Minnesota Department of Education (MDE) administers CACFP in Minnesota.

Partners alleged that MDE violated Section 17 of the National School Lunch Act, federal CACFP regulations, and the Due Process Clause when MDE terminated Partners from CACFP on May 27, 2022, and withheld funds for past and future claims. Partners had challenged MDE’s actions through the MDE administrative appeal process, including an appeal concerning the May 27 termination letter. Partners then sued and sought a temporary restraining order (TRO), an emergency order temporarily preventing MDE from enforcing that letter.

The May 27 letter followed a federal investigation into an alleged fraud scheme involving CACFP-related food-service businesses and individuals. MDE said its action was based on new information and its determination that Partners’ role in the alleged fraud could not be corrected by imposing additional conditions. Before the May 27 letter, MDE had also suspended payments, proposed termination and disqualification, and denied 258 reimbursement claims. The opinion states that some of those matters were being pursued through administrative or state-court appeals.

Issue and standard

The court applied the four factors used for temporary and preliminary injunctive relief: the likelihood that the moving party will succeed on the merits, the likelihood of irreparable harm without relief, the balance between the parties’ harms, and the public interest. The court explained that injunctive relief is an extraordinary remedy and that the party seeking it bears the burden of showing that an injunction is proper.

Abstention

MDE argued that the court should abstain from considering the TRO because Partners’ administrative appeal was pending and the CACFP regulatory scheme provided the appropriate remedy. The court was not persuaded that the cited Supreme Court decision required abstention in this case. It concluded that the CACFP regulations supplied specific procedures that a court could apply and that the court had authority to enjoin state action even while an administrative appeal was pending. The court therefore considered Partners’ request.

Likelihood of success

The court found that Partners had not shown a likelihood of success on the merits at that stage. Although 7 C.F.R. § 226.6 establishes procedures for termination, the court concluded that the regulation does not eliminate MDE’s discretion to monitor compliance or prevent MDE from considering other USDA regulations. The court also noted MDE’s position that the termination related to earlier deficiencies involving financial responsibility and that the federal investigation provided information suggesting that Partners lacked adequate controls to distinguish legitimate from fraudulent claims.

The court held that the record did not show that MDE’s actions clearly violated the federal regulations. It therefore found that Partners had not demonstrated a likelihood of success on the merits for purposes of the TRO.

Irreparable harm

The court also found that Partners had not adequately shown irreparable harm. It reasoned that monetary losses from denied reimbursements could be addressed through damages if the denials were later found unlawful. The court further noted that Partners was using the administrative review process regarding its termination and had not fully exhausted its administrative remedies.

The court rejected Partners’ showing of reputational harm because Partners offered no evidence that its sites ended their relationships with Partners because of MDE’s actions. The court stated that any reputational harm could instead have resulted from the federal fraud investigation and related publicity. It also concluded that the possible loss of the business was not shown to be irreparable where money damages might be available, and that prior participation in CACFP did not create an entitlement to participate again because organizations must reapply annually and remain subject to MDE’s oversight.

Balance of harms and public interest

The court found that the balance of harms favored MDE. It reasoned that Partners’ claimed financial injuries could potentially be remedied through reimbursement or damages, while an injunction could restrict MDE’s ability to monitor compliance under the federal regulations. The court also stated that MDE might not be able to recover funds if Partners were ultimately found to have participated in the alleged fraud.

The court concluded that the public interest would not be served by granting the TRO because, if the allegations were true, continuing to provide program funds to an organization that knowingly or blindly served as a pass-through for fraud would not be in the public interest.

Disposition

The court denied Plaintiff’s Motion for a Temporary Restraining Order. The opinion did not finally resolve Partners’ claims concerning the legality of MDE’s termination or payment decisions.