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In re Mack

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 20, 2008

IN THE MATTER OF TONY MACK, CITY OF TRENTON

On appeal from a final administrative action of the Merit System Board, DOP No. 2005-2317, OAL No. CSV 562-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 26, 2008

Before Judges Winkelstein, Yannotti and LeWinn.

Appellant, Tony Mack, who was defeated in his run for mayor by Trenton Mayor Douglas Palmer, lost his position as the coordinator of Trenton's Bureau of Recycling when the Bureau's functions were eliminated. He asserts that he was removed for political reasons. An Administrative Law Judge (ALJ) agreed with him, but the Merit System Board disagreed, and in a December 20, 2006 decision, found that Trenton's termination of Mack's employment was justified. On Mack's appeal from the Board's decision, we affirm.

I.

We summarize the facts from the transcript of Mack's hearing before the ALJ in February, March and April, 2006.

On February 11, 1991, Mack was provisionally appointed as Trenton's Recycling Coordinator in the Department of Public Works, and was permanently appointed to that post on October 13, 1992. As of the May 2002 mayoral election, he and Palmer had a political and social relationship. Mack had been "an intricate part" of Palmer's mayoral campaigns for the preceding twelve years, and Palmer had been instrumental in Mack becoming a freeholder.

According to Mack, in April 2002, Palmer privately told him that he was not going to seek re-election in 2006. When Palmer heard rumors that Mack was contemplating running for mayor in 2002, Palmer "called [him] over to assure [him] that this was [Palmer's] last time," and after that Mack could "go for it."

Mack testified that Palmer publicly made his decision known at an election eve rally on the Monday before the May 2002 election. Nonetheless, approximately a month and one-half after Palmer's 2002 victory, he told Mack that he had changed his mind about the 2006 election, and he attempted to dissuade Mack from running. Although Palmer did not subsequently tell Mack not to run, Mack asserted that Bill Watson, Palmer's political advisor, told him that they needed to "sit down and talk to discuss this." Palmer announced his 2006 candidacy for mayor in 2003. He denied ever asking Mack not to oppose him and claimed he first learned that Mack intended to run for mayor from a June 2003 newspaper article.

Rodney Washington, a voter registration coordinator and field worker, had been involved in Trenton politics for twenty-five years. He was friendly with Mack and had been friendly with Palmer. Describing himself as not the "best" employee, Washington was terminated from his municipal position in October 2002. According to Washington, the City alleged that he "had dumped some tires and what you call double dipping, got paid for it." Although he was acquitted on criminal charges, his termination was upheld after an administrative hearing. He acknowledges that he had between ten and fourteen prior disciplinary infractions because he "took advantage of the situation because of [his] political pull. [He] had the mayor."

Washington claimed that immediately after Palmer's May 2002 victory, Palmer announced to a group of political people that it would be his last term and "one of the guys is going to have to replace" him. Thus, beginning in June 2002, Washington began "boosting" Mack for mayor. In October 2002, Palmer angrily told Washington to stop promoting Mack and that he was "cutting him off." When disciplinary charges were lodged against Washington two weeks later, Washington called Palmer as he did on prior occasions when he had been in trouble. Although Palmer had made telephone calls on Washington's behalf in the past, this time Palmer told him to "[c]all your boy Tony up."

Palmer defeated Mack in the 2006 mayoral election.

II.

When Jane Feigenbaum became Trenton's Acting Business Administrator in 2002, the City was providing residential and commercial recycling services. Residential recycling was performed by Waste Management, Inc., a private contractor, and commercial recycling was performed "in-house" by the City's Recycling Bureau. A portion of the commercial recycling was done by the City under contract with the State. Eleven persons were employed in the Recycling Bureau; three were dedicated to the State contract.

The Recycling Bureau was funded, in part, by two trust funds. The Regular Recycling Trust Fund, which was the repository of generated revenues from the sale of recyclables, was anticipated to "fund, if not all, a good portion of the program." Another trust fund, the State Recycling Trust Fund, paid portions of employees' salaries, including Mack's.

Eric Jackson, the Director of Public Works, testified that in mid-2001, Mack recommended the purchase of a new sorting machine for recyclables. Mack claimed that the sale of unsorted recyclables would generate $40 a ton, while the sale of sorted recyclables could bring $200-250 per ton. He asserted that the new system "would have reduced [Trenton's] solid waste landfill budget by another million or $2 million. This was the overall objective of the conveyor system, to reduce the amount of money we pay for landfill costs." The sorting machine, which Trenton purchased for over $200,000, was never put into operation and remained with the manufacturer for resale.

Donald Arrington, Trenton's Sanitation Superintendent and a former employee of the Recycling Bureau, disputed Mack's testimony. He claimed that it was illegal for recyclables to be deposited in a landfill and that Mack's testimony about "landfill savings" was inaccurate.

During 2001 and 2002, Feigenbaum began examining the efficiency of various City operations to determine if "it made sense to continue performing certain operations in house." A review of fire department operations resulted in the consolidation of firehouses and an increase in the number of personnel on trucks. Other scrutinized operations included sanitation, recycling and forestry because similar operations had been privatized in other municipalities. Feigenbaum explained that the City's financial resources were limited because much of its property, which is state-, county-, and federally-owned, was tax-exempt, and funds that the City had been receiving for state-owned properties had been frozen since 1995. For all but two municipalities, recycling in Mercer County had been done through the Mercer County Improvement Authority (Improvement Authority) under contract with a private company.

Denying that Palmer said anything to her about eliminating the recycling program, Feigenbaum identified a December 19, 2002, e-mail from Budget Officer Elana Chan to Eric Jackson, in which Chan expressed alarm about the funding for recycling. In response to an inquiry from Jackson as to whether $22,000 could be taken from the Regular Trust Fund to purchase a truck, Chan wrote:

In the last five months, the Recycling division has charged 3 big items against this old Trust:

(1) Recycler Box Truck $59,900

(2) 10% deposit with Mayfran Sorting System $21,810

(3) 40% deposit with Mayfran Sorting System $87,239

Items (2) and (3) represent[] a 50% payment[] towards a $218,098 system, meaning you still owe the company another $149,049.

Let me ask you, how do you plan to pay for it? Upon full payment of this system, there won't be much money left in FY 2004 to absorb part of the salary cost towards city positions (estimated to be $80,000 annually), then what do you plan with the staff situation in Recycling?

At Feigenbaum's request, Chan performed an analysis of the Recycling Trust Funds, dated December 24, 2002. It showed that the State Recycling Fund contributed $94,000 to the City's staff costs, and the Regular Recycling Fund contributed $80,000 to those costs. The State Recycling Fund's $77,888 beginning balance on July 1, 2002, was projected to drop to $4061 by June 30, 2003. The Regular Recycling Fund showed a beginning balance of $367,206 on July 1, 2002, and a projected balance of $106,947 on June 30, 2003. The deduction of $173,867 in contributions from both funds toward employee salaries of $304,581 left a cost to Trenton of $130,714. Chan noted that when the "[R]egular Trust has [a] diminishing balance and can no longer support portions of City staff costs, then the City budget will have to be increased in subsequent years to maintain the same level of staffing."

Feigenbaum wanted an audit to better understand "how the division was operating fiscally." Thus, the City commissioned an outside fiscal audit of the Recycling Bureau in late 2002 or early 2003. The auditors were not asked to make a recommendation with respect to the privatization of recycling. At the time Feigenbaum hired the auditing firm, she was not aware of Mack's intention to run for mayor.

In late 2003, Jackson became aware that Trenton had an opportunity to become part of the Improvement Authority's recycling program. Consequently, Trenton was added to the Improvement Authority's bid for both residential and commercial recycling. Feigenbaum explained:

We got a bid back which was less than what we were currently paying for residential pickup, like close to $100,000, . . . when you factored in the fact that our contract with [the Improvement Authority] included our collection of the revenue from the collection of commercial recyclables, that was also a reduction in costs from the operation of the program of close to $100,000.

A January 16, 2004 analysis of the Recycling Trust Funds showed an estimated deficit of $34,528 as of June 30, 2004, for the State Recycling Trust Fund, and an estimated balance of $55,666 for the Regular Recycling Trust. A June 8, 2004, analysis showed that for fiscal year 2005, the State Fund would have an estimated deficit of $38,000, and the Regular Trust would have an estimated balance of $35,000.

Upon Feigenbaum's recommendation, Trenton entered into a three-year Interlocal Services Agreement with the Improvement Authority for residential and commercial recycling commencing on August 1, 2004. Feigenbaum testified that Palmer neither directed nor suggested to her that recycling be privatized.

Trenton ceased paper recycling between August and December 2004, and that function was returned to the State. As of January 1, 2005, Trenton was out of the recycling business. Feigenbaum estimated that as a result of its contract with the Improvement Authority, for the year 2005, Trenton saved $94,877 in residential recycling costs and $97,043 in commercial recycling costs. In addition, the land upon which Trenton maintained its recycling facility was slated for redevelopment.

III.

Consistent with the termination of its in-house recycling program, Trenton submitted a September 2, 2004, layoff plan to the New Jersey Department of Personnel (DOP). The plan called for: 1) the abolishment of Mack's position of Municipal Recycling Coordinator; 2) the transfer of seven employees (laborers and truck drivers) "to the Division of Property Maintenance in their current titles to perform like and similar duties under [their] present titles" (including the cleaning of "'gate-ways' into the City") and 3) the transfer of Peter Pinto "back to his former division, the Division of Solid Waste Removal in his current title" where "he will supervise and work with a group of employees engaged in refuse collection and disposal." The plan further stated that "[t]here would be no continued need to direct, plan, develop, implement or coordinate the Recycling Program at the local level" because "[t]he [Improvement Authority] will be responsible for the duties primarily performed by the Municipal Recycling Coordinator."

The transfer of Pinto to his prior division enabled Trenton to attain supervision over each of three sanitation districts. Jackson's request for a third supervisor had been denied in the past. The laborers and truck drivers were to be involved in cleaning the "gateways," or access routes, to Trenton. The positions to which the eight employees were transferred were not existing vacancies and had not been posted. Feigenbaum testified that the City saved $450,000 as a result of the personnel transfers.

Jackson denied that Palmer suggested or directed that he not create a position for Mack, nor did Palmer ever express a desire to Jackson "to rid the City of . . . Mack." Palmer similarly denied directing anyone to "get rid of" Mack.

Jackson testified that he made a good faith effort to find a position for Mack. He said:

[He] looked at Mr. Mack's . . . history as a City employee, to see what positions he held prior that would classify as for this plan under the New Jersey Department of Personnel and found that he did not have any other classification prior or other than the one that he held as the Recycling Coordinator; then looked [at] what could possibly [be] done using that title in the organization. And there were no positions or no places that would maximize and use his abilities to supplement units that we already had in place.

He asserted, for example, that Mack was not qualified for two vacancies in the Public Works Department at the Trenton Water Works in the positions of Assistant General Superintendent and Chief Engineer because he did not hold the required licenses. Jackson considered and rejected entry level or technical positions.

The DOP approved the layoff plan, conditioned upon modification of the layoff date. On November 24, 2004, the DOP advised Mack that while his "name will be placed on the special reemployment list(s) for the . . . [Municipal Recycling Coordinator] title and for other titles that may be deemed to be appropriate," he did not have any lateral displacement rights or demotional rights at that time. Mack did not appeal from that determination. The City terminated him from his position effective December 8, 2004.

Mack testified that Trenton made no effort to find him a job. He claimed:

[T]here were jobs created after I left. So, if there was sincerity or objectivity in finding work for me, I could have easily been called to come back to work. . . . There were two positions that I know of that were created within . . . the year time frame that I left, and that was the one for Greg Adams and the new assistant to the director. Two that I could have easily handled . . . . Although I was not in some of the other departments, we . . . all worked together on a monthly basis, so I knew what sewer, water, streets and sanitation [were] doing on a daily basis, because we all worked together.

IV.

Following the hearings, the ALJ found in favor of Mack. She wrote:

[T]he City failed to financially analyze the in-house and outsourcing costs of the recycling operation in order to make a proper determination that outsourcing the recycling would result in economy and efficiency . . . [and] that the City failed to perform a thorough analysis of the in-house current operating costs and revenues and the projected revenues and savings of the Recycling Bureau before deciding to outsource the recycling to the [Improvement Authority] and to abolish the Recycling Bureau.

Finding Mack credible, the ALJ questioned the credibility of Feigenbaum and Jackson. She also found: "Mayor Palmer's denial of ill motive to be not credible[;] . . . that [he] either directly or by inference ordered the abolishment of the Recycling Bureau and the termination of Mr. Mack in retaliation for Mr. Mack's running against the Mayor in the 2006 election." The ALJ concluded that:

Mr. Mack showed by a preponderance of the credible evidence that his running against the Mayor was the basis of the Mayor's ill motive to abolish the Recycling Bureau and to terminate Mr. Mack's job in retaliation. Mr. Mack also showed that because of the purchase of almost $300,000 worth of equipment and the projected cost benefits, it was illogical and unreasonable to abruptly abolish the Recycling Bureau and privatize the City['s] recycling operation.

The facts evidence that no cost-benefit analysis was done by the City to determine the economy and efficiency that would result from the abolishment of the Recycling Bureau and the layoff of Mr. Mack. Eight employees of the Recycling Bureau were repositioned to non-vacant, non-posted positions in the City. The only employee who lost his job was Mr. Mack. The City failed to show a logical or reasonable connection between the need for economy and efficiency and the layoff of Mr. Mack.

The abolishment of the Recycling Bureau for reasons of economy and efficiency is a pretext for the bad-faith layoff of Mr. Mack.

The Board disagreed with the ALJ and found that the City's witnesses were credible. It further found that the ALJ's recommendation to reverse Mack's layoff was not supported by the evidence.

The Board found that e-mails from Chan demonstrated "that the City was concerned about its abilities to meet its obligations to its citizens in a fiscally responsible manner." The Board stated that no basis existed to support Mack's "verbal assertion that the sorting equipment would generate much revenue to offset the decline in the price of recyclables and help make the recycling program self-sufficient." The Board observed that the City was presented with "an unexpected opportunity" to find another way to accomplish recycling as a result of the Improvement Authority's having to reopen its recycling contract coupled with the expiration of the City's residential recycling contract with Waste Management.

As to the failure of the City to find a job for Mack, the Board wrote that:

Trenton was not required to "find" a job, provisional or otherwise for the appellant.

In a layoff, an appointing authority is only required to consider an individual's lateral and/or demotional layoff rights. See N.J.A.C. 4A:8-2.1, et seq. The appellant, as determined by the DOP, had neither. Moreover, Trenton was not required to "find" a job for the appellant for which he was not qualified. Trenton's only obligation is to rehire the appellant from a special reemployment list. See N.J.A.C. 4A:8-2.3.

The Board distinguished between the City's reemployment of the other employees of the Recycling Bureau and the failure to reemploy Mack:

[T]he positions of Laborers and Drivers were positions that the City continued to use and need. Moreover, the testimony indicates that these employees were moved to an area where Trenton had anticipated hiring in the future. The testimony also established that the Supervisor was reassigned to the Division [of] Public Works where he had originally come from in the same title. The Board finds that, with these actions, Trenton complied with Merit System law and rules in its attempt at mitigating the effects of a layoff on its employees. See N.J.A.C. 4A:8-1.2.

Commenting on Mack's charge of the City's bad faith with regard to his layoff, the Board wrote:

[E]ven in the face of ill will and improper motive, a layoff may still be sustained if there is a good faith reason for the layoff, notwithstanding the ill will. In this regard, the basis of the appellant's case with the layoff appears to center more on the assumption that, if it wanted to, the City could have found a position for him, and the fact that it did not demonstrates the City's bad faith.

The Board concluded that "there is not one scintilla of testimony or evidence from anyone indicating that Mayor Palmer directly or indirectly charged his staff with eliminating the appellant's position."

V.

We examine the Board's decision in light of the principles applicable to appellate review of an administrative agency's determination. The scope of that review is limited. "[W]e do not ordinarily overturn such a decision in the absence of a showing that it was arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence[.]" In re Carter, 191 N.J. 474, 482 (2007) (quotation omitted). As long as the decision is based on substantial evidence, we may not substitute our judgment for that of the agency even if we "might have reached a different result[.]" Id. at 483 (quotation omitted).

Ordinarily, it is not for a reviewing court or an agency head to disturb an ALJ's credibility determination. H.K. v. N.J. Dep't of Human Servs., 184 N.J. 367, 384 (2005). Nevertheless, an ALJ's credibility determination is not immune from reversal or modification. N.J.S.A. 52:14B-10(c) provides, in part:

In reviewing the decision of an administrative law judge, the agency head may reject or modify findings of fact, conclusions of law or interpretations of agency policy in the decision, but shall state clearly the reasons for doing so. The agency head may not reject or modify any findings of fact as to issues of credibility of lay witness testimony unless it is first determined from a review of the record that the findings are arbitrary, capricious or unreasonable or are not supported by sufficient, competent, and credible evidence in the record.

In S.D. v. Div. of Med. Assistance & Health Servs., 349 N.J. Super. 480, 485 (App. Div. 2002), we observed: "An agency head reviewing an ALJ's credibility findings relating to a lay witness may not reject or modify these findings unless the agency head explains why the ALJ's findings are arbitrary or not supported by the record."

Against these standards, the record supports the Board's conclusion that the City terminated Mack from his employment for valid reasons. "A permanent employee may be laid off for economy, efficiency or other related reason." N.J.S.A. 11A:8-1a. "[T]he employer may take layoff action and demotions in connection with a budgeting decision where the interest of economy and efficiency require it." DiMattia v. N.J. Merit Sys. Bd., 325 N.J. Super. 368, 374 (App. Div. 1999). "[T]here is a presumption that an agency's actions are reasonable and the burden is placed on the challenging party to show otherwise." Id. at 375. As we iterated in Greco v. Smith, 40 N.J. Super. 182, 189 (App. Div. 1956) (citations omitted):

The power of a municipality to abolish a position in the classified civil service, or to dispense with the services of one holding such position, cannot be questioned where such action is motivated by a bona fide desire to effect economies and increase municipal efficiency. . . . In such case it is incumbent on petitioner to show that the action taken was not for the purpose of economy. The presumption of good faith attends the municipal action, and the burden is on petitioner to show bad faith. . . . . . . Where an office or position is unnecessary or useless, and can be abolished without impairing departmental efficiency, the motive for abolishing the office or position, or of discharging the incumbent, is immaterial; that there are considerations other than economy motivating the municipal action is of no consequence in such case.

In other words, it is not necessarily inimical to a finding of good faith in the abolishment of a municipal position if other motives besides economy and efficiency are present. Pellet v. Dep't of Civil Serv., 10 N.J. Super. 52, 54, 57 (App. Div. 1950), certif. denied, 6 N.J. 314 (1951). "Evidence that other motives in addition to governmental economy and efficiency were present is not particularly significant if, in fact, the position is useless and its abolition is in the public interest." Ibid.; see also City of Newark v. Civil Serv. Comm'n, 112 N.J.L. 571, 575 (Sup. Ct. 1934), aff'd o.b., 114 N.J.L. 185 (E. & A. 1935) (local governments may remove employees in order to "discontinue old methods, create new offices and otherwise make changes in the public interest, provided such changes are not mere pretexts for removal from office").

Recognizing these principles, the Board approved the City's decision to abandon its recycling bureau, which resulted in the elimination of Mack's position. The Board gave appropriate reasons for its disagreement with the ALJ's factual findings and legal conclusions. It stated:

[T]he City believed it would see significant cost savings by transferring its residential and commercial recycling operations to the [Improvement Authority]. It was also able to perform other operations it believed were necessary without hiring additional employees by reassigning the employees from the Recycling Bureau. These results appear to support the presumption that the layoff was effected for reasons of economy and efficiency. However, it is noted that even in the face of ill will and improper motive, a layoff may still be sustained if there is a good faith reason for the layoff, notwithstanding the ill will. . . .

The record supports the Board's conclusion. Even assuming, as Mack argues, that Mayor Palmer had ill will toward him, and the ill will was a factor in the City's decision, the record nevertheless fully supports the Board's conclusion that the City was primarily motivated by a desire to remove itself from the recycling business for reasons of economy and efficiency.

As early as 2001, Feigenbaum began looking at ways to save the City money. The fire department was first targeted, followed by other operations, including recycling. Trenton's attempt to improve its own recycling operation by purchasing trucks and the sorter proved to be an expensive drain upon the recycling funds. The trust funds suffered from constant bleeding and were projected to continue to deteriorate, requiring more taxpayer dollars to sustain recycling efforts.

An opportunity presented itself to improve the City's fiscal standing when Trenton was able to join the Improvement Authority's recycling program, which up to that point had serviced all municipalities in Mercer County with the exception of Trenton and one other. As part of that program, Trenton could divest itself from all aspects of the recycling business, with cost savings inuring to the City. Trenton received an indirect benefit by the elimination of the need to hire additional employees to clean gateways and to supervise a sanitation district, and by the potential development of land formerly used for the recycling operation.

In sum, despite evidence of Palmer's animus for Mack, the record supports the Board's conclusion that the subcontracting of all recycling and the closure of the municipal Recycling Bureau cannot be viewed as a bad-faith pretext for the removal of Mack from his position. A fiscally sound basis existed for Trenton's decision. The record simply does not support Mack's contention that Trenton decided to subcontract all of its recycling and "rid itself" of its State recycling contract just to do away with his job.

Mack's argument that the City's failure to find a job for him is evidence of bad faith is similarly without merit. As noted, the City was not required to find him another job, and the City did comply with its obligation to submit a layoff plan to the DOP. The DOP advised Mack that while his name would be placed "on the special reemployment list(s) for the . . . [Municipal Recycling Coordinator] title and for other titles that may be deemed to be appropriate," he did not have any lateral displacement rights or demotional rights. Mack did not appeal from that determination. His arguments that the City should have made additional efforts to place him are without sufficient merit to warrant additional discussion in a written opinion. R. 2:11-3(e)(1)(D).

We affirm substantially for the reasons expressed by the Merit System Board in its comprehensive decision of December 20, 2006.

20080320

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