On certification to the Superior Court, Appellate Division, whose opinion is reported at 274 N.J. Super. 228 (1994).
The opinion of the Court was delivered by Coleman, J. Chief Justice Wilentz and Justices Handler, Pollock, O'Hern, Garibaldi, and Stein join in this opinion.
The opinion of the court was delivered by: Coleman
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
LAURA MAISONET V. NEW JERSEY DEPARTMENT OF HUMAN SERVICES, DIVISION OF FAMILY DEVELOPMENT (A-86-94)
Argued January 30, 1995 -- Decided May 23, 1995
COLEMAN, J., writing for a unanimous Court.
The issue before the Court is whether the Appellate Division was compelled by the Supremacy Clause of the United States Constitution to exercise original jurisdiction over Laura Maisonet's claim for attorney's fees under the Civil Rights Attorney's Fees Awards Act of 1976, 42 U.S.C.A. § 1988 (section 1988), for an alleged violation of 42 U.S.C.A.§ 1983 (section 1983) based on the State's administration of a federally funded food-stamp program.
On August 15, 1990, Maisonet applied for participation in the Food Stamp Program, which is authorized by Congress, regulated by the U.S. Department of Agriculture (USDA), and run by State welfare agencies pursuant to State regulations based on federal laws. Maisonet stated in her application that the rent for her apartment was $400 per month. She did not mention that from August 1990 through July 1991, her cash payment for rent was $150 per month. The $250 reduction in rent was in exchange for her performance of janitorial services for her landlord. Maisonet failed to report that compensation as income. After finding out that Maisonet had not reported the rent savings as income, Passaic County Board of Social Services (PCBSS) instituted an administrative disqualification hearing before the Office of Administrative Law (OAL) pursuant to regulation. PCBSS charged Maisonet with an intentional program violation, resulting in an overpayment of food stamps in the amount of $732.
The Administrative Law Judge (ALJ), relying exclusively on New Jersey regulations, found that Maisonet was required to report the rental income to PCBSS and that her failure to do so was intentional. Based on those findings, the ALJ disqualified Maisonet, pursuant to regulation, from the Food Stamp Program for six months. The Director of the Division of Family Development rejected the ALJ's finding of an intentional program violation, but accepted the ALJ's Conclusion that the $250 monthly rental allowance should be treated as income.
Maisonet appealed the Director's final decision to the Appellate Division. Her claim of a section 1983 violation, made solely to collect attorney's fees under section 1988, was asserted for the first time in her notice of appeal. The Appellate Division held that certain federal statutes and regulations should be interpreted to exclude employer reductions in rent and that New Jersey regulations require the same result. The court, however, refused to exercise original jurisdiction over Maisonet's claim for attorney's fees pursuant to section 1988 for an alleged violation of section 1983.
The Supreme Court granted certification to review the propriety of the Appellate Division declining to exercise original jurisdiction.
HELD: The failure of the Appellate Division to exercise original jurisdiction and hear Maisonet's federal fee claim does not violate the Supremacy Clause. The only state court required by the Supremacy Clause to hear a federal fee claim is the Law Division.
1. Whenever an action is brought in state court to enforce federal rights or claims, the Supremacy Clause requires that federal substantive law and policy be applied by the state court. State rules of procedure and practice ordinarily control how such claims are processed. However, there are no rules of procedure in New Jersey controlling the handling of a claim for section 1988 attorney's fees arising out of proceedings before a state administrative agency. Therefore, the Court establishes such a procedure in this opinion. (pp. 7-8)
2. When a state court refuses jurisdiction because of a neutral state rule regarding the administration of the courts, the Supremacy Clause does not compel a state court to exercise its jurisdiction over federal claims. The Appellate Division articulated valid, neutral reasons for declining to exercise original jurisdiction over the federal claims. This case does not fall within either of the two categories in which original jurisdiction has previously been exercised: 1) to complete the determination of issues raised but not decided in trial court; and 2) to provide emergent relief in a matter implicating public interest. (pp. 8-11)
3. When civil-rights claims are alleged for the first time in the notice of appeal, if the Appellate Division decided to resolve the claim, that court would be transformed into a trial court because the attorney's fee request raises legal issues collateral to the main cause of action. (pp. 11-13)
4. As a matter of policy, a review of a final administrative decision of a State agency by the Appellate Division ordinarily should be limited to review of the decision of the agency. Thus, if an aggrieved party in an administrative matter elects not to file a complaint in State court alleging violation of sections 1988 and 1983, but instead raises federal claims in a notice of appeal or cross-appeal, unless the Appellate Division decides to exercise original jurisdiction, the following procedure should be followed: 1) the notice of appeal or cross-appeal shall be deemed a complaint and shall toll the running of any statute of limitations; 2) venue shall be in the county in which the cause of action arose; 3) the Appellate Division shall transfer the federal claims to the Law Division in the county in which the cause of action arose; 4) Rule 4:9-1 shall control amendments to the special complaint carved out of the notice of appeal or cross-appeal after the transfer; and 5) the Law Division, by virtue of the transfer, shall have the power to award section 1988 attorney's fees for services rendered in the Appellate Division if found to be appropriate. (pp. 14-17)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, and STEIN join in ...