July 31, 2012
LAWSON MCELROY, PETITIONER-APPELLANT,
BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, RESPONDENT-RESPONDENT.
On appeal from the Board of Trustees of the Public Employees Retirement System, Agency Docket No. 2-10-230674.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 8, 2012
Before Judges Lihotz and St. John.
Lawson McElroy, a former municipal court judge, appeals from the Board of Trustees (Board), Public Employees' Retirement System (PERS) August 19, 2010 decision reducing his pension by partially forfeiting his pension service credit after a finding he engaged in ethical and ordinance violations. After reviewing the record on appeal, we affirm the Board's decision.
The record discloses the following facts and procedural history.
On April 6, 1998, McElroy was appointed as a part-time municipal court judge for the City of Trenton. On July 24, 2000, McElroy was nominated by Trenton Mayor Douglas Palmer to the position of a full-time municipal court judge. However, the City of Trenton Clerk's Office has no record of the City Council confirming McElroy's appointment.
On March 7, 2008, the Advisory Committee on Judicial Conduct (ACJC) filed a complaint against McElroy, charging him with violating Canons 1, 2A, 3A(3), and 5G of the Code of Judicial Conduct, Rules 1:15-1(a), 2:15-8(a)(1), (4), and (6), and Trenton Municipal Ordinance No. 01-83 (the Ordinance), stating that a full-time judge may not engage in the practice of law.
Count one of the ACJC complaint stated that on June 13, 2007, McElroy intervened between a municipal court security officer and her supervisor regarding the regular presence of the security officer's niece in the courthouse. McElroy stated he was the security officer's lawyer, directed her to remain silent during the meeting, and threatened to sue her supervisor and the City of Trenton.
Count two stated McElroy practiced law while serving as a full-time judge. On September 20, 2001, Trenton adopted the Ordinance prohibiting full-time judges from practicing law. McElroy maintained a law office after his appointment. In 2005, he represented a deputy court administrator for the Trenton Municipal Court in the sale and purchase of real property. In 2006, McElroy represented another employee of the Trenton Municipal Court in the sale and purchase of real property.
On March 28, 2008, McElroy applied to PERS for ordinary disability retirement benefits and retired from the bench on April 1, 2008. On June 18, 2008, PERS approved his application, effective April 1, 2008.
On July 30, 2008, the ACJC presented to the New Jersey Supreme Court its findings that the charges against McElroy had been proven by clear and convincing evidence, and recommended that McElroy be disciplined. The ACJC also noted McElroy was involved in a prior disciplinary action in which the presentment of the ACJC was adopted and he was publicly reprimanded by the Supreme Court. See In re McElroy, 179 N.J. 418 (2004) (holding McElroy attempted to use his position as a judge to influence a municipal prosecutor). McElroy did not oppose the 2008 findings and recommendations of the ACJC, as he claims his failing health and doctor's advice precluded his objection. On September 29, 2008, the Supreme Court adopted the ACJC's findings and recommendations, and ordered McElroy be "censured and permanently barred from judicial office." In re McElroy, 196 N.J. 457 (2008). McElroy sought reconsideration of the Court's order, which was denied by order dated December 9, 2009.
Following the Supreme court's decision, on February 18, 2009, PERS considered whether McElroy's actions violated the statutory requirement of honorable public service set forth in N.J.S.A. 43:1-3. PERS concluded it did, and ascertained a partial forfeiture of McElroy's pension was necessary for the service period of January 1, 2005 to April 1, 2008, but determined McElroy would not have to return any payments already received. The partial forfeiture rendered McElroy unable to meet the requisite ten-year service credit requirement to qualify for continued receipt of ordinary disability retirement benefits and any corresponding employer-paid health benefits.
McElroy appealed the decision and the case was transferred to the Office of Administrative Law as a contested matter. Both PERS and McElroy filed motions before Administrative Law Judge Joseph F. Martone (ALJ) for summary decision.*fn1
McElroy contended that his appointment as a full-time judge was invalid because the City Council never confirmed the appointment and he reasonably believed he was a part-time judge allowed to practice law. Additionally, McElroy maintained he was changed from a part-time municipal court judge to a "prime-time" judge in 2001 but was never a full-time judge.*fn2 He also argued he was never advised by court administration that he was not allowed to practice law, despite certain personnel being aware of his law practice. He further asserted he should not be bound by the ACJC's findings because he waived his right to a hearing and did not defend the charges.
PERS argued McElroy's misconduct warranted partial forfeiture of his pension benefits. PERS asserted McElroy was barred by the doctrine of collateral estoppel from contending he was not a full-time judge. It also asserted that the de facto officer doctrine compels the recognition of McElroy as a full-time Trenton municipal court judge.
In an Initial Decision dated July 30, 2010, the ALJ granted PERS' motion and denied McElroy's motion, upholding the determination that McElroy's misconduct warranted the partial forfeiture of his service credit under N.J.S.A. 43:1-3.
On August 19, 2010, the Board issued its final administrative determination adopting the findings of fact, conclusions of law, and recommendation of the ALJ's Initial Decision.
On appeal, McElroy argues:
ISSUES REQUIRED TO SUPPORT FORFEITURE OF PENSION BENEFITS ARE MATERIALLY DIFFERENT FROM THOSE DECIDED [IN A SEPARATE MATTER] BY THE SUPREME COURT AND WARRANT FRESH CONSIDERATION BY DIVISION OF PENSIONS WITHOUT IMPOSITION OF COLLATERAL ESTOPPEL.
COLLATERAL ESTOPPEL DOCTRINE DOES NOT APPLY TO PERMIT DIVISION OF PENSIONS AND BENEFITS TO DENY FRESH CONSIDERATION OF ALL FACTORS BEARING ON FORFEITURE PENSION BENEFITS.
DE FACTO STATUS CANNOT APPLY TO APPELLANT WHO DID NOT OSTENSIBLY OR OTHERWISE HOLD HIMSELF OUT AS A FULL-TIME JUDGE.
DIVISION OF PENSIONS FAILED TO EVALUATE SUBMITTED EVIDENCE AS INSTRUCTD BY THE LEGISLATURE IN N.J.S.A. 43:1-3 BUT INSTEAD PRODUCED A CURSORY LIST, INSUFFICIENT TO ADDRESS THE STATUTE'S CONCERNS.
THE RULE BARRING FULL-TIME MUNICIPAL COURT JUDGES FROM CONDUCTING A PRIVATE LAW PRACTICE IS SELF-EVIDENTLY NOT INTENDED TO ENHANCE THE QUALITY OF JUSTICE ADMINISTERED IN THE MUNICIPAL COURT.
EVEN IF THE APPELLATE DIVISION FINDS A LOGICAL NEXUS BETWEEN THE VIOLATION OF THE NO-PRACTICE RULE AND THE QUALITY OF APPELLANT'S PENSIONABLE SERVICE, THE COURT IS URGED TO REVERSE AND REDUCE THE SEVERITY OF THE PENALTY OR ORDER THE SAME ON REMAND.
The scope of appellate review of an administrative agency's final determination is limited. In re Carter, 191 N.J. 474, 482 (2007). We accord to the agency's exercise of its statutorily delegated responsibilities a strong presumption of reasonableness. City of Newark v. Natural Res. Council, 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980). The burden of showing the agency's action was arbitrary, unreasonable, or capricious rests upon a petitioner. See Barone v. Dep't of Human Servs., Div. of Med. Assistance & Health Servs., 210 N.J. Super. 276, 285 (App. Div. 1986), aff'd, 107 N.J. 355 (1987).
A reviewing court "should not disturb an administrative agency's determinations or findings unless there is a clear showing that (1) the agency did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence." In re Application of Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008). See also Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9-10 (2009). The court "may not vacate an agency determination because of doubts as to its wisdom or because the record may support more than one result," but is "obliged to give due deference to the view of those charged with the responsibility of implementing legislative programs." In re N.J. Pinelands Comm'n Resolution PC4-00-89, 356 N.J. Super. 363, 372 (App. Div.), (citing Brady v. Bd. of Review, 152 N.J. 197, 210 (1997)), certif. denied, 176 N.J. 281 (2003). Accordingly, "[a]n administrative agency's final quasi-judicial decision will be sustained." In re Herrmann, 192 N.J. 19, 27-28 (2007) (citing Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)).
Although an appellate court is "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue," Mayflower Securities Co. v. Bureau of Securities, 64 N.J. 85, 93 (1973), if substantial evidence supports the agency's decision, "a court may not substitute its own judgment for the agency's even though the court might have reached a different result," Greenwood v. State Police Training Center, 127 N.J. 500, 513 (1992). "That deferential standard applies to the review of disciplinary sanctions as well." Id. at 28 (citing Knoble v. Waterfront Comm'n of N.Y. Harbor, 67 N.J. 427, 431-32 (1975)). "In light of the deference owed to such determinations, when reviewing administrative sanctions, the test is whether such punishment is so disproportionate to the offense, in light of all the circumstances, as to be shocking to one's sense of fairness." Id. at 28-29 (citation and internal quotation marks omitted). "The threshold of 'shocking' the court's sense of fairness is a difficult one, not met whenever the court would have reached a different result." Id. at 29.
McElroy first argues Eyers v. State Board of Trustees Public Employees' Retirement System, 91 N.J. 51 (1982), and Uricoli v. Board of Trustees, Police and Firemen's Retirement System, 91 N.J. 62 (1982), as codified in N.J.S.A. 43:1-3, require forfeiture of pension rights to be examined independently of other proceedings in order to assess the worthiness of the pension applicant's service. He contends the Board and the ALJ must make their own assessment, apply the statutory guidelines, and not blindly accept the decisions in McElroy's prior disciplinary hearings when determining forfeiture of pension rights. Therefore, he insists the application of collateral estoppel in this case is a stark departure from the requirements set forth in the Eyers, Uricoli, and N.J.S.A. 43:1-3. We disagree with McElroy's contention that the Board erred in failing to independently consider his position but rather applied the doctrine of collateral estoppel to preclude him from arguing whether he was a full-time judge.
The doctrine of collateral estoppel bars relitigation of an issue that was determined in a prior action, generally between the same parties, involving a different cause of action. Ziegelheim v. Apollo, 128 N.J. 250, 265 (1992). One of its purposes is "'to promote efficient justice by avoiding the re- litigation of matters which have been fully and fairly litigated and fully and fairly disposed of.'" Lopez v. Patel, 407 N.J. Super. 79, 93 (App. Div. 2009) (quoting Kortenhaus v. Eli Lilly & Co., 228 N.J. Super. 162, 166 (App. Div. 1988)). Collateral estoppel is an equitable doctrine, and the decision whether it is fair to apply rests in the motion court's discretion. Gannon v. Am. Home Prods., Inc., 414 N.J. Super. 507, 521 (App. Div. 2010).
The party asserting the bar of collateral estoppel must establish the following factors:
(1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on the merits; (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding. [First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007) (quoting Hennessey v. Winslow Twp., 183 N.J. 593, 599 (2005)).]
If any factor is not satisfied, the inquiry ends. Perez v. Rent-A-Center, Inc., 186 N.J. 188, 199 (2006), cert. denied, 549 U.S. 1115, 127 S. Ct. 984, 166 L. Ed. 2d 710 (2007). Even when these requirements are met, however, a court will not apply the doctrine if it would be unfair to do so. Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 521-22 (2006).
Here, the ALJ specifically addressed the five elements of the doctrine as follows:
The following facts show that the doctrine of collateral estoppel bars McElroy from arguing he did not practice law as a full-time judge. First, McElroy here argues that he did not practice law as a full-time judge despite the ACJC's finding (adopted by the Supreme Court) that McElroy did so. See ACJC Presentment to Supreme Court (R. 7). Second, the issue of whether McElroy practiced law as a full-time judge was effectively litigated before the ACJC. While McElroy affirmatively waived his right to a hearing, he did submit evidence and entered into stipulations. Ibid. Crucially, in a May 15, 2008, letter to the ACJC, McElroy's then-counsel stated, "Judge McElroy admits that [he] did conduct the real estate closings referenced in the complaint, and, thus, did engage in the practice of law while a full-time judge." See McElroy's Petition for Reconsideration. Third, "the court in the prior proceedings issued a final judgment on the merits" because the Supreme Court issued an order "that the findings and recommendation of the [ACJC] are adopted and [McElroy] is hereby censured and permanently barred from judicial office." The ACJC "carefully reviewed the stipulations and documentary record" and "made factual determinations supported by clear and convincing evidence that are the basis for its Findings and Recommendation." Fourth, the issue of whether McElroy practiced law as a full-time judge was essential to the judgments of the ACJC and the Supreme Court. The ACJC found that "[b]y maintaining a law office and engaging in the practice of law while sitting as a full-time municipal court judge, [McElroy] has violated Canon 5G of the Code of Judicial Conduct which prohibits full-time judges from engaging in the practice of law . . . and Rule 11:15-1(a) and [Trenton] Municipal Ordinance No. 01-83, both of which prohibit full-time judges from engaging in the practice of law." Ibid. It follows that McElroy would not have violated those rules if the respondent had not found that he had been a full-time judge. Finally, McElroy was a party to the prior proceeding before the ACJC. As a result, the doctrine of collateral estoppel forecloses the relitigation of the issue whether McElroy practiced law as a full-time judge.
The ALJ's decision clearly demonstrates that the criteria for collateral estoppel have been met, and McElroy has not provided any evidence or argument to persuade us that the ALJ's conclusions were improper. We see no reason to disturb the ALJ's decision, as adopted by the Board, that McElroy is barred from relitigating the Supreme Court's determination that he practiced law while serving as a full-time Trenton municipal court judge.*fn3
The ALJ next analyzed the eleven factors codified in the applicable forfeiture statute governing retirement benefits, N.J.S.A. 43:1-3(c)(1) through (11).
The substantive legal standards applicable to this case are well-established. The receipt of a public pension or retirement benefits is "expressly conditioned upon the rendering of honorable service by a public officer or employee." N.J.S.A. 43:1-3(a). The Board of Trustees of a state or local pension fund or retirement system is "authorized to order the forfeiture of all or part of the earned service credit or pension or retirement benefit of any member of the fund or system for misconduct occurring during the member's public service which renders the member's service or part thereof dishonorable[.]"
In evaluating a member's misconduct to determine whether it breaches the condition requiring that the member's service be "honorable" and whether total or partial forfeiture of the member's earned service credit is appropriate, the statute requires the following:
[T]he [Board] shall consider and balance the following factors in view of the goals to be achieved under the pension laws:
(1) the member's length of service;
(2) the basis for retirement;
(3) the extent to which the member's pension has vested;
(4) the duties of the particular member;
(5) the member's public employment history and record covered under the retirement system;
(6) any other public employment or service;
(7) the nature of the misconduct or crime, including the gravity or substantiality of the offense, whether it was a single or multiple offense and whether it was continuing or isolated;
(8) the relationship between the misconduct and the member's public duties;
(9) the quality of moral turpitude or the degree of guilt or culpability, including the member's motives and reasons, personal gain and similar considerations;
(10) the availability and adequacy of other penal sanctions; and
(11) other personal circumstances relating to the member which bear upon the justness of forfeiture. [N.J.S.A. 43:1-3(c).]
These eleven statutory factors codify the factors that the Supreme Court previously enumerated for determining whether an employee's service was "honorable" for purposes of receiving pension or retirement benefits. Uricoli, supra, 91 N.J. at 77-78.
If the Board determines that only a partial forfeiture is warranted, the employee's pension or retirement benefits shall be calculated "as if the accrual of pension rights terminated as of the date the misconduct first occurred[.]" N.J.S.A. 43:1- 3(d). However, "if termination as of that date would[,] in light of the nature and extent of the misconduct[,] result in an excessive pension or retirement benefit or in an excessive forfeiture," the Board may instead adopt "a date reasonably calculated to impose a forfeiture that reflects the nature and extent of the misconduct and the years of honorable service[.]" Ibid. When a partial forfeiture based upon the time of the misconduct would result in minimal or no reduction in retirement benefits, as compared with "the nature and extent of the misconduct and the years of honorable service, the Board may, in its sole discretion, provide a more equitable relief." N.J.A.C. 17:1-6.1(c).
The ALJ particularly focused upon factors seven ("the nature of the misconduct or crime, including the gravity or substantiality of the offense, whether it was a single or multiple offense and whether it was continuing or isolated"), N.J.S.A. 43:1-3(c)(7), eight ("the relationship between the misconduct and the member's public duties"), N.J.S.A. 43:1-3(c)(8), and nine ("the quality of moral turpitude or the degree of guilt or culpability, including the member's motives and reasons, personal gain and similar considerations"), N.J.S.A. 43:1-3(c)(9).
In addition to analyzing these three factors the ALJ stated:
Thus, [PERS], as is permitted by Corvelli
[v. Board of Trustees, 130 N.J. 539 (1992)], gave additional weight to factors seven, eight, and nine in determining that partial forfeiture is appropriate. Indeed, McElroy did not engage in an isolated incident of impropriety, but several during his tenure as a full-time judge. A judge is vested with the power and responsibility to uphold the law. McElroy engaged in misconduct that reflects a lack of the degree of character worthy of the public trust to faithfully perform his judicial duties, and [PERS] properly determined that McElroy should forfeit his service credit from the time it found that he began to practice law as a full-time judge until his retirement from his judgeship, or January 1, 2005 to April 1, 2008.
The issues presented in this case are analogous to those we addressed in Mount v. Trustees of the Public Employees' Retirement System, 133 N.J. Super. 72 (App. Div. 1975). We reasoned that a public employee's right to receive a pension is conditioned upon having rendered honorable service. Id. at 80-81; see also Corvelli, supra, 130 N.J. at 550. That condition exists separately from any statutory requirement. Mount, supra, 133 N.J. Super. at 81. In addition, an administrative agency has "the inherent power to reopen, modify or rehear orders" that it has entered, including a pension award. Id. at 82.
The ALJ applied the Uricoli balancing test in considering McElroy's service with Trenton. He found that a partial forfeiture was warranted with respect to McElroy's pension credits earned while practicing law and sitting as a full-time Trenton municipal court judge. Accordingly, the ALJ recommended McElroy forfeit all pension benefits earned from commencement of the wrongful conduct on January 1, 2005, to the end of his service with Trenton on April 1, 2008. This finding and recommendation were adopted by the Board.
The ALJ's findings are supported by the record, and McElroy has failed to provide this court with any credible argument that the ALJ's findings were inaccurate or misguided. Our review of the record convinces us that the Board's decision was not arbitrary, unreasonable, or capricious.
McElroy urges us to reduce the severity of the penalty or order the same on remand. We understand that when reviewing administrative sanctions, we should consider whether the "punishment is so disproportionate to the offense, in the light of all of the circumstances, as to be shocking to one's sense of fairness." In re Stallworth, 208 N.J. 182, 195 (2011). See also Herrmann, supra, 192 N.J. at 28-29.
The forfeiture of pension benefits earned from commencement of McElroy's serious and extensive misconduct to the end of his service with Trenton is not so disproportionate to the offense as to be shocking to our sense of fairness, and we see no reason to disturb the Board's decision.
We find McElroy's remaining contentions to be without sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(E).