August 12, 2008
IN THE MATTER OF KHADIHHA BLACKSON, JOHN GERMINO, PETER WICKMAN, JEFFREY MERKEL, AND ALBERT COSTON.
On appeal from a Final Decision of the New Jersey Merit System Board, Docket Nos. 1999-1305 and 1999-2602.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted July 28, 2008
Before Judges Graves and Yannotti.
John Germino, Peter Wickman, Jeffrey Merkel, and Albert Coston appeal from a final determination of the Merit System Board (Board), dated September 7, 2006, which upheld their layoffs from positions with the Housing Authority of the City of Camden (HACC).*fn1 For the reasons that follow, we affirm.
The HACC was created pursuant to the "Local Redevelopment and Housing Law," N.J.S.A. 40A:12A-1 to -50. The HACC receives funds and is regulated by the United States Department of Housing and Urban Development (HUD), pursuant to federal law. In the 1990s, HUD identified a number of serious deficiencies in the operations of the HACC, including political interference with day-to-day operations of the agency, appointments that did not reflect the population of the community, inadequate management, staff and administration, and deficit budgeting.
In July or August 1997, HUD assumed control of the HACC and seized its assets. As part of the HUD plan to make the agency more efficient, the HACC restructured its Department of Modernization (DOM) by hiring a private entity to assume its responsibilities, laid off certain employees within the DOM, and eliminated thirteen additional permanent positions.
Appellants and other employees affected by the layoffs filed petitions with the Department of Personnel (DOP), alleging that the layoffs were in bad faith and were for reasons other than efficiency and economy. The DOP referred the matter to the Office of Administrative Law (OAL) for a hearing before an administrative law judge (ALJ), who rendered an initial decision on August 31, 2005, in which he concluded that the layoffs were in bad faith. The ALJ recommended that the layoffs be reversed and the employees receive full back pay from the time of their layoffs, less any monies they may have earned during that period.
By order dated September 21, 2005, the Director of the OAL granted the Board's application for an extension of the time for issuing its decision to November 29, 2005. At its meeting of November 22, 2005, the Board rejected the ALJ's initial decision and remanded the matter to the OAL for further proceedings.
In a decision dated December 9, 2005, which memorialized its action on November 22, 2005, the Board stated that the ALJ's initial decision was inadequate because the ALJ had not presented the Board "with a coherent and comprehensive description of the actual testimony and evidence in the record." The Board noted that it was unable to determine whether the ALJ's findings were based on credible evidence in the record. The Board also noted that the ALJ found appellants had been laid off for reasons of economy and efficiency but nevertheless determined that the layoffs had been implemented in bad faith. The Board stated that this apparently contradictory finding "require[d] clarification." In addition, the Board found that the ALJ's proposed remedy was "not correct."
Because the ALJ who rendered the August 31, 2005 decision had retired, the matter was assigned on remand to ALJ Joseph Lavery. ALJ Lavery advised the parties that he intended to decide the matter based on the record previously compiled, with a limited evidentiary hearing, if required. The parties did not object to this procedure. Thereafter, the parties submitted additional information to the ALJ, and did not request any additional hearings. ALJ Lavery closed the record on June 5, 2006, and rendered an initial decision on July 18, 2006, upholding the layoffs.
By decision dated September 7, 2006, the Board adopted ALJ Lavery's initial decision. Germino, Merkel, and Wickman filed a notice of appeal on October 24, 2006. Coston filed a notice of appeal on April 24, 2007, and thereafter we granted Coston's motion for leave to file his appeal as within time. By order entered on July 23, 2007, we consolidated the appeals.
Appellants raise the following issues for our consideration:
UNDER N.J.S.A. 52:14B-10(c), THE INITIAL DECISION OF THE [ALJ] WAS DEEMED ADOPTED BY THE MERIT SYSTEM BOARD; THEREFORE THE LAYOFFS SHOULD REMAIN INVALID.
THE CORRECT STANDARD OF JUDICIAL REVIEW REQUIRES THAT THE BOARD'S DECISION BE REVERSED AS [THE ALJ] OPINION IS CONTRARY TO THE CREDIBLE EVIDENCE AND IS NOT SUPPORTED BY THE RECORD.
We have thoroughly reviewed the record on appeal in light of the issues raised and the applicable law. We are convinced that the appeal is entirely without merit. We therefore affirm the Board's decision substantially for the reasons stated by ALJ Lavery in his decision dated July 18, 2006, and by the Board in its final decision issued on September 7, 2006. R. 2:11-3(e)(1)(D) and (E). We add the following additional comments.
Appellants first argue that the initial ALJ decision dated August 31, 2005, which invalidated the layoffs, became the Board's final decision by operation of N.J.S.A. 52:14B-10(c). The statute provides that an ALJ's recommended decision shall be filed with the agency and the head of the agency shall adopt, reject or modify the recommended report and decision no later than 45 days after receipt of such recommendations . . . . Unless the head of the agency modifies or rejects the report within such period, the decision of the administrative law judge shall be deemed adopted as the final decision of the head of the agency. . . . For good cause shown, upon certification of the director [of the OAL] and the agency head, the time limits established herein may be subject to extension. [Ibid.]
Here, it is undisputed that the Director of the OAL granted the Board's request for an extension of time within which to accept, reject or modify the ALJ's August 31, 2005 decision. Therefore, the Board had until November 29, 2005 to take final action on the ALJ's recommended decision.
It is also undisputed that, at its meeting of November 22, 2005, the Board decided to reject the ALJ's initial decision and remand the matter to the OAL for further proceedings. As stated previously, the Board issued a written decision dated December 9, 2005, which explained the basis for its action of November 22, 2005.
Thus, the record establishes that the Board took formal action to reject the ALJ's initial decision within the time permitted by the extension order and issued a written decision explaining its action about ten days after the extension period expired. We conclude that, in these circumstances, the "deemed adopted" provision in N.J.S.A. 52:14B-10(c) does not apply and the ALJ's initial decision to invalidate the layoffs did not become the agency's final decision.
This conclusion is supported by our decision in Cavalieri v. Bd. of Trs. of Pub. Employees' Ret. Sys., 368 N.J. Super. 527, 539 (App. Div. 2004). There, the Director of the OAL had granted the agency an extension of time within which to accept, reject or modify the ALJ's recommended decision. Ibid. Before the deadline, the agency voted to reject the ALJ's decision. Ibid. The agency issued its final decision in the matter several weeks later. Ibid. We held that there was no basis to apply the "deemed adopted" provision of N.J.S.A. 52:14B-10(c) because the agency had "signaled its intentions to reject the initial decision" before the deadline "and issued its final decision reasonably promptly thereafter." Ibid.
Our conclusion is also supported by Wilson v. Bd. of Trs., Police and Fire Ret. Sys., 322 N.J. Super. 477 (App. Div. 1998). In that case, we held that the "deemed adopted" provision in N.J.S.A. 52:14B-10(c) did not apply because the agency had taken official action on the ALJ's initial decision within the prescribed statutory time period even though the agency did not issue its final decision memorializing its action until some time thereafter. Id. at 485-86.
In their reply brief filed on April 14, 2008, appellants argue that we should disregard the OAL's September 21, 2005 extension order because the order had not been listed in the statements of items comprising the record on appeal initially filed in these appeals pursuant to Rule 2:5-4(b). However, on May 1, 2008, the Board filed a motion for leave to file an amended statement of items, which specifically included the extension order. We granted the Board's motion by order entered on May 29, 2008. Therefore, the extension order was properly identified as part of the record on appeal.
Appellants next argue that the Board erred by adopting ALJ Lavery's findings of fact and conclusions of law. Appellants contend that ALJ Lavery's findings are flawed because he did not hear live testimony and did not have an opportunity to assess the credibility of the witnesses. Appellants further contend that ALJ Lavery failed to properly review and interpret the facts. Appellants additionally argue that the Board erred by adopting the ALJ's findings of fact and conclusions of law.
The standard of review in this matter is well established. The actions of administrative agencies are entitled to a "strong presumption of reasonableness." Newark v. Natural Res. Council,
82 N.J. 530, 539 (1980). We will not substitute our judgment "for the expertise of an administrative agency 'so long as [its] action is statutorily authorized and not otherwise . . . arbitrary or unreasonable.'" Williams v. Dep't of Human Servs., 116 N.J. 102, 107 (1989) (quoting Dougherty v. Dep't of Human Servs., 91 N.J. 1, 12 (1982)).
Therefore, our role in reviewing a final decision of an administrative agency is limited to three inquiries: 1) whether the agency's action is consistent with the governing statues and implied legislative policies; 2) whether there is substantial evidence in the record to support the agency's findings of fact; and 3) whether in applying the legislative policies to the facts, the agency reached a conclusion "that could not reasonably have been made after weighing the relevant factors." Id. at 108. Furthermore, we must "defer to an agency's expertise and superior knowledge of a particular field." Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992).
We initially note that, although appellants argue that ALJ Lavery's initial decision was flawed because he did not hear live testimony, appellants never objected to ALJ Lavery's announced intention to base his remand decision upon the record created in the earlier hearings and such additional hearings as might be required.
Moreover, contrary to appellants' assertions, ALJ Lavery's findings of fact and conclusions of law are supported by substantial credible evidence. As we pointed out previously, it is undisputed that at the time of the layoffs, the operations of the HACC were marked by serious fiscal and management deficiencies that resulted in its takeover by HUD. The HACC presented evidence which established that the layoffs of appellants and certain other employees were based on reasons of economy and efficiency. Although appellants claimed that their layoffs were implemented in bad faith, the ALJ found that the record did not support those allegations. The Board accepted the ALJ's conclusion.
In its final decision, the Board stated that the ALJ had properly determined that a layoff will not be reversed unless the appellants could demonstrate that the layoffs were grounded in bad faith. In this regard, the ALJ found that issues, such as appellant Coston's claim regarding his outof-title work, the proper application of lateral and demotional rights, privatization, ethics, competence, and fraud or contract law violations were not directly related to the appeal at hand, and, therefore, could not be adjudicated in this appeal. The ALJ noted that either jurisdiction was lacking or there was another specific process for considering these matters. However, the ALJ did consider these issues as going to motive. He found that the evidence demonstrated that the layoffs were part of an overall attempt to improve the fiscal and managerial operation of the HACC and that the appellants had not established a bad faith motive on the part of the appointing authority.
We are satisfied from our thorough review of the record that the Board's decision to uphold appellants' layoffs is supported by substantial credible evidence and there is no basis for our intervention.