On certification to the Superior Court, Appellate Division.
For affirmance -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber and Handler. For reversal -- None. The opinion of the Court was delivered by Schreiber, J.
At issue in this case is whether state employees who formerly functioned as hearing officers in the Division of Motor Vehicles are entitled to appointment as administrative law judges under the act creating the Office of Administrative Law, N.J.S.A. 52:14F-1 et seq. Appellants are certain individuals, who before the implementation of N.J.S.A. 52:14F-1 et seq. were hearing officers in the Division of Motor Vehicles, and the New Jersey Civil Service Association and the New Jersey State Employees Association who brought this action on behalf of their respective members.
Prior to 1978 many contested cases before state agencies were initially heard by a hearing officer or an examiner who was an employee of the agency responsible for rendering a decision. Some hearing officers were part-time employees who were paid on a per diem basis; others were full-time state employees who performed other duties for their agencies in addition to holding hearings.*fn1 The use of agency employees to adjudicate claims
against an agency encouraged an institutional bias that undermined the fairness and impartiality desired in administrative adjudication. Mazza v. Cavicchia, 15 N.J. 498, 536 (1954) (Jacobs, J., dissenting).
To rectify this condition the Legislature amended the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq., in 1978 to create an independent Office of Administrative Law, staffed by a corps of independent examiners known as administrative law judges. N.J.S.A. 52:14F-3, 4, 5. The major purpose of this legislation was "to bring impartiality and objectivity to agency hearings and ultimately to achieve higher levels of fairness in administrative adjudications." Unemployed-Employed Council of New Jersey, Inc. v. Horn, 85 N.J. 646, 650 (1981). Except for the State Board of Parole, the Public Employment Relations Commission, the Division of Workers' Compensation, and the Department of Defense,*fn2 state agencies can no longer use their own employees to preside over contested cases. N.J.S.A. 52:14F-8. Instead, that function is performed by administrative law judges, who are directly responsible to the Director of the Office of Administrative Law. N.J.S.A. 52:14F-5.
It is the duty of the Director to "[a]ssign an administrative law judge to any agency empowered to conduct contested cases to preside over . . . proceedings in contested cases . . . ." N.J.S.A. 52:14F-5 n. The Director may also assign an administrative law judge to any agency to conduct or assist in rule-making and investigative hearings, if requested to do so by the head of an agency. N.J.S.A. 52:14F-5 o. Administrative law judges are appointed by the Governor with the consent of the Senate for five-year terms. They must be either attorneys-at-law of New Jersey or, in the judgment of the Governor or the Director, "qualified in the field of administrative law, administrative hearings and proceedings in subject matter relating to the
hearing functions of a particular state agency." N.J.S.A. 52:14F-4, 5 l.
The Act provides that it is subject to the provisions of the State Agency Transfer Act. See N.J.S.A. 52:14F-9, referring to N.J.S.A. 52:14D-1 et seq. Under the terms of the State Agency Transfer Act, whenever the functions, powers and duties of one agency of the state government are transferred to another, the employees of the agency are transferred as well. N.J.S.A. 52:14D-5. In view of the explicit reference to the State Agency Transfer Act, the Director of the Office of Administrative Law inquired of the Attorney General whether the then-employed hearing officers were entitled to appointment as administrative law judges. In an opinion of March 1, 1979, the Attorney General expressed the view that "the functions and responsibilities of Hearing Officers-Examiners in the respective state agencies, insofar as they pertain to presiding over contested cases as are required by the Administrative Procedure Act, have now been abolished and placed exclusively by the Legislature in the Office of Administrative Law." Attorney General's Formal Opinion No. 4 (1979). He found that the State Agency Transfer Act did not apply to hearing officers in the several state agencies. The Attorney General further advised that the Chief Examiner and Secretary of the Civil Service Commission should conduct an investigation in accordance with civil service laws and regulations to determine the tenure, seniority and other employment rights of those serving as hearing officers.
Although the Director of the Office of Administrative Law did not announce that he had followed the Attorney General's advice, or adopted his opinion, hearing officers were not automatically transferred to the Office of Administrative Law. Rather, they were invited to apply for appointment as administrative law judges. Of the forty-five individuals now acting as administrative law judges, approximately half were formerly hearing officers. None of the individual appellants has been ...