In New Jersey, slashed funding and years of official neglect resulted in a child welfare system so deficient that a Blue Ribbon Panel, created by the Governor in 1997, compiled a list of almost 400 recommendations for reform. The State responded with a defective strategic plan, which barely scratched the surface of problems, and a funding increase that failed to reinstate former funding levels. Moreover, the State flatly refused Children's Rights' offer to work with the Division of Youth and Family Services (DYFS) to better the system.

This lawsuit was filed in August 1999 after it was clear much-needed reform would not occur without the pressure of a lawsuit. In June 2003, after the death of Faheem Williams, a child well-known to DYFS who was found beaten to death in a Newark basement along with two starving siblings, and after plaintiffs compiled massive evidence of the state's egregious failures, the parties reached a landmark, legally enforceable settlement agreement. The agreement stipulates both areas of immediate and long-term action. For example, the State must begin by allocating $23.85 million in funding for new DYFS employees, space, equipment, and foster homes. DYFS will also conduct an immediate safety assessment on children presently in DYFS custody and move children from unsafe homes and facilities. The State will immediately allocate $1.5 million just to recruit new foster homes for these children. The agreement requires DYFS to work closely with a Panel of independent experts to create a reform plan. The Panel will specifically set the legally enforceable outcomes that DYFS must achieve. The Panel may disapprove DYFS's plan, in which instance, the case returns to court with liability stipulated by the state and the only issue for trial being what remedy should be imposed. After an 18-month period of oversight, the Panel will dissolve and an independent monitor will take its place. The district court approved the Settlement Agreement at a hearing on September 2, 2003, and entered it as a court order stating: "it is clear that this settlement, indeed, is fair, appropriate and probably, if anything, long overdue. I think it represents the best that can be presented in the U.S. legal system and represents the highest ideals and achievements of attorneys who, when the time is right, can put aside the adversarial process of our legal system and achieve the result which, in fact, will better society and, in particular in this case, achieve hopefully long overdue reforms in our child welfare system." Children's Rights will remain actively involved to ensure DYFS's compliance with the settlement agreement.