a-1078-12t2 virginia bush vs. board of education of the warren

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1078-12T2
VIRGINIA BUSH,
Petitioner-Respondent/
Cross-Appellant,
v.
BOARD OF EDUCATION OF THE WARREN
COUNTY TECHNICAL SCHOOL DISTRICT,
WARREN COUNTY,
Defendant-Appellant/
Cross-Respondent.
___________________________________
Argued December 4, 2013 - Decided January 28, 2015
Before Judges Fuentes, Simonelli, and Haas.
On appeal from the New Jersey Commissioner
of
Education,
Department
of
Education,
Docket Nos. 209-8/09.
Allan P. Dzwilewski argued the cause for
appellant/cross-respondent (Schwartz, Simon,
Edelstein & Celso, L.L.C., attorneys; Mr.
Dzwilewski, of counsel and on the briefs;
Christopher A. Dzwilewski, on the brief).
Ty
Hyderally
argued
the
cause
for
respondent/cross-appellant
(Hyderally
&
Associates, P.C., attorneys; Mr. Hyderally
and Jennifer Vorih, on the briefs).
John J. Hoffman, Acting Attorney General,
attorney for respondent Commissioner of
Education (Lauren A. Jensen, Deputy Attorney
General, on the statement in lieu of brief).
The opinion of the court was delivered by
FUENTES, P.J.A.D.
The
Board
of
Education
of
the
Warren
County
Vocational
School District (Board) appeals the September 27, 2012 Final
Decision of the Commissioner of Education, awarding back-pay and
prejudgment
interest
to
petitioner
Virginia
Bush
and
holding
that petitioner was not obligated to mitigate her damages claim.
Petitioner has filed a cross-appeal contesting the amount of
prejudgment interest awarded by the Commissioner.
Commissioner's
interest.
decision
awarding
We affirm the
petitioner
prejudgment
However, we reverse the Commissioner's determination
that petitioner was not obligated to mitigate her claim for
back-pay damages, and remand for the Commissioner to recalculate
the award of back-pay accordingly.
I
In November 2007, petitioner Virginia Bush was employed as
a
tenured
secretary
Administrator.
originated
on
in
The
the
office
controversy
November
8,
of
the
Board's
that
led
to
2007,
when
the
Business
this
Board
appeal
demanded
petitioner sign an employment contract that would have vitiated
petitioner's tenure rights.
this
contract,
the
Board
When petitioner refused to sign
terminated
her
employment
effective
December 10, 2007.
2
A-1078-12T2
Petitioner
seeking
a
sought
vindication
declaratory
ruling
of
her
from
tenure
the
rights
by
Commissioner,
reinstatement to her prior position, and an award of back-pay
and emoluments.
The Commissioner referred the matter to the
Office of Administrative Law (OAL) for an evidentiary hearing
before an Administrative Law Judge (ALJ).
On April 23, 2009,
the ALJ issued an initial decision in petitioner's favor on the
central
issues
terminated
her
raised.
The
employment
as
ALJ
concluded
secretary
violation of her tenure rights.
the
without
Board
cause
and
had
in
However, the ALJ also found
petitioner had not mitigated her claim for back-pay by failing
to find or actively seek alternative comparable employment or
apply for unemployment compensation benefits.
On May 27, 2009, the Commissioner issued a final decision
upholding the ALJ's findings concerning the Board's violation of
petitioner's tenure rights.
The Commissioner rejected, however,
the ALJ's recommendation to deny petitioner an award of back-pay
and emoluments covering the time period she had been unlawfully
terminated from her employment.
Although
petitioner
had
mistakenly filed a petition seeking only a declaratory ruling,
the
Commissioner
determined
reinstatement
to
a
emoluments.
Because
she
secretarial
was
position
petitioner's
3
nevertheless
with
back-pay
was
entitled
back-pay
subject
to
and
to
A-1078-12T2
mitigation, and in light of the parties' inability to agree on
an
appropriate
petitioner
mitigation
needed
to
file
figure,
a
new
the
Commissioner
petition
found
addressing
these
particular issues.
Adhering to the Commissioner's findings, petitioner filed a
new petition on August 10, 2009, alleging the Board had refused
to award her back-pay or emoluments.
allegation.
The Board denied this
As reflected in a letter dated June 22, 2009, sent
to petitioner by the Board's counsel, in April 2009 the Board
offered petitioner a position as a secretary for the district's
Child Study Team (CST secretary), effective July 1, 2009, which
petitioner refused to accept.
Despite petitioner's refusal, the Board offered her the
CST secretary position two more times: once on June 3, 2009, and
again on July 27, 2009.
equal
to
the
salary
Business Administrator.
The CST secretary position's salary was
petitioner
earned
as
secretary
to
the
The Board's counsel's letter also noted
that "it is the District's position that no back pay or other
benefits are due as, on the record, [petitioner] testified that
she made no efforts of whatever nature to mitigate the claimed
damages."
In its September 15, 2009 answer to petitioner's claims,
the Board raised its offer to reinstate petitioner as a CST
4
A-1078-12T2
secretary as an affirmative defense.
The Board also emphasized
that
mitigate
petitioner
fashion.
did
not
attempt
to
damages
in
any
The Board argued that these factors were sufficient to
constitute a waiver by petitioner of any claims she may have had
against her employer, and showed the Board's compliance with the
Commissioner's prior ruling.
After
reviewing
this
record,
the
ALJ
issued
an
initial
decision finding petitioner was entitled to back-pay commencing
on
December
15,
2007,
the
date
the
Board
terminated
her
as
secretary to the Business Administrator, and continuing to April
27, 2009, the date the Board first offered petitioner employment
as a CST secretary.
The ALJ further concluded that enforcement
of the Commissioner's May 27, 2009 order regarding petitioner's
reinstatement
should
be
adjudicated
in
the
Superior
Court
pursuant to N.J.A.C. 6A:3-3.1(b)1 and Rule 4:67-6(a)(2).2
With respect to mitigation, the ALJ found it "undisputed
that [petitioner] made no efforts to mitigate her damages . . .
.
In fact, [petitioner] conceded at the hearing that since her
1
N.J.A.C. 6A:3-3.1(b) authorizes parties to contested matters in
an administrative proceeding to seek enforcement of judgments of
the Commissioner through "an action in the Superior Court as
provided in New Jersey Court Rules at [Rule] 4:67-6."
2
Rule 4:67-6(a)(2) authorizes the Superior Court to adjudicate
"all such enforcement actions brought by a party to the
administrative proceeding in whose favor a written order or
determination was entered affording that party specific relief."
5
A-1078-12T2
termination
she
had
neither
looked
applied for unemployment benefits."
the
Board
comparable
"failed
to
employment
April 27, 2009."
present
existed
for
another
position
nor
However, the ALJ also found
prima
between
facie
December
evidence
15,
that
2007,
and
Because the record did not have sufficient
facts to accurately calculate the amount of back-pay petitioner
was entitled to receive, the ALJ ordered the parties to provide
this information directly to the Commissioner, who would then be
in the position to decide the back-pay award.
The Commissioner issued a final decision on February 9,
2011, concurring with the ALJ's findings that petitioner had the
opportunity to mitigate her damages as of April 27, 2009, when
she declined the Board's offer to hire her as a CST secretary.
The Commissioner also found the Board did not meet its burden to
prove petitioner failed to mitigate damages between December 15,
2007, and April 27, 2009, and additional information was needed
to determine the amount of back-pay to award.
The Commissioner directed the OAL to hold a fact-finding
hearing to evaluate the gross amount of back-pay petitioner was
entitled to receive and address the Board's argument in favor of
subtracting
from
that
gross
attributable to mitigation.
amount
of
back-pay
a
figure
Although petitioner had not made an
initial claim for prejudgment interest, the Commissioner noted
6
A-1078-12T2
the ALJ had discretion to allow her to argue in favor of an
award
of
four
percent
prejudgment
interest.
Finally,
the
Commissioner determined that petitioner's decision to decline
the Board's offer of employment as a CST secretary terminated
her tenure rights in the position of secretary.3
On June 18, 2012, the parties agreed to file a stipulation
of facts before the Commissioner.
We quote here the pertinent
sections of these stipulated facts:
1.
The issue on Remand before the Court is
the amount of back pay for salary and
benefits due Petitioner for the period
between December 15, 2007 and April 27,
2009, less any applicable mitigation[.]
2.
Salary for the above relevant period
would have been $67,840.89, assuming a 2%
increment
for
the
2008-2009
year,
or
$69,860.27, assuming an 8% increment for the
2008-2009 year.
3.
Alternative
$2,703.24.
4.
Out
$54.38.
of
medical
pocket
medical
premiums
expenses
were
were
5.
Petitioner had earned and accumulated
29 vacation days. Payment for said days
would be $5,546.00, assuming a 2% increment
for
the
2008-2009
year,
or
$5,872.23,
assuming an 8% increment for the 2008-2009
year.
3
Petitioner was thus no longer entitled to institute an action
in the Superior Court to enforce the Commissioner's May 27, 2009
decision, as recommended by the ALJ in his initial decision.
7
A-1078-12T2
. . . .
7.
The legal issue before the Court
[defendant]'s
claim
for
an
offset
mitigation totaling $40,120,
is
in
. . . .
Petitioner disputes the claim that
unemployment compensation, even if received
by Petitioner, would be in mitigation of the
amounts set forth in paragraphs 2 through 6
above.
Petitioner further disputes that
Petitioner would have received the maximum
amount of benefits, for the full period
listed above.
. . . .
8.
The Court will also include in its
determination whether or not to award prejudgment interest in the amount of 4%.
The ALJ issued an initial decision on August 13, 2012 based
upon these stipulated facts and determined petitioner "was not
required
to
seek
unemployment
benefits
mitigating [the Board]'s damages[.]"
for
the
purpose
of
The ALJ reasoned that even
if petitioner had actually received these benefits, the Board
would
have
been
legally
required
to
reimburse
the
State
Department of Labor's unemployment compensation fund based upon
petitioner's wrongful termination.
8
A-1078-12T2
The
ALJ
prejudgment
also
found
interest
at
petitioner
a
rate
of
was
four
entitled
percent4
to
receive
because
the
Board's conduct constituted a deliberate violation of N.J.S.A.
18A:6-10,5 or at least an act of bad faith.
As to the question of mitigation, the ALJ relied on the
"collateral
source"
rule,
which
prohibits
an
employer
who
wrongfully terminates an employee from offsetting the damages it
owes the employee based upon compensation the employee receives
from a collateral source.
Relying on Sporn v. Celebrity, Inc.,
129 N.J. Super. 449, 453 (Law Div. 1974), the ALJ concluded that
unemployment
source
of
compensation
income.
benefits
Although
the
qualify
ALJ
as
a
acknowledged
collateral
that
as
a
general proposition an employee is not entitled to a windfall by
receiving back-pay and unemployment benefits, the ALJ, citing
our opinion in Willis v. Dyer, 163 N.J. Super. 152, 165 (App.
Div. 1978), held "[a] public employer must either pay damages
4
Pursuant to N.J.A.C. 6A:3-1.17, the Commissioner may award
prejudgment and/or post-judgment interest following the criteria
set forth in the regulation, and "in any circumstance in which a
petitioner
has
sought
such
relief
and
has
successfully
established a claim to a monetary award."
N.J.A.C. 6A:31.17(a).
5
N.J.S.A. 18A:6-10(a) protects an individual holding a tenured
position from being terminated or from receiving a reduction in
compensation "during good behavior and efficiency in the public
school system of the state."
9
A-1078-12T2
directly
to
the
employee,
or
reimburse
the
unemployment
compensation fund if the employee has received such benefits."
In
a
final
Commissioner
challenging
decision
declined
the
ALJ's
dated
to
September
27,
address
petitioner's
of
percent
award
four
2012,
the
argument
prejudgment
interest, noting that the parties had earlier stipulated to this
precise rate of interest.
findings
of
disposition
the
in
ALJ
the
The Commissioner concurred with the
and
adopted
matter,
and
that
decision
ordered
the
as
the
Board
to
final
pay
petitioner $79,190.29 for the period between December 15, 2007
and April 27, 2009.
The decision does not address the Board's
argument concerning petitioner's obligation to mitigate damages.
II
Generally, an appellate court will not upset an agency's
ultimate
establish
determination
the
unless
decision
was
the
challenging
arbitrary,
party
capricious,
can
or
unreasonable, or that it violated legislative policies expressed
or implied in the act governing the agency.
of Civil Serv., 39 N.J. 556, 562 (1963).
Campbell v. Dep't
However, the issues
presented by the parties for appellate review here concern only
questions of law.
In this context, we are "in no way bound by
the agency's interpretation of a statute or its determination of
a strictly legal issue."
US Bank, N.A. v. Hough, 210 N.J. 187,
10
A-1078-12T2
200 (2012) (quoting Univ. Cottage Club of Princeton N.J. Corp.
v. N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007)).
We first address the question of prejudgment interest on
petitioner's
claim
for
back-pay
damages.
Both
parties
have
challenged the Commissioner's determination of this issue for
different reasons.
Petitioner argues the Commissioner erred in
awarding a one-time amount of four percent interest.
According
to petitioner, interest should be calculated on an annual basis
for the two years she was awarded back-pay.
that
her
decision
to
stipulate
to
a
four
She also argues
percent
rate
of
interest should not preclude her from making this challenge on
appeal.
The Board argues the Commissioner erred in awarding
prejudgment interest altogether.
Alternatively, the Board urges
us to preclude petitioner from arguing against the previously
stipulated rate of prejudgment interest.
The
parties'
arguments
challenging
this
aspect
of
the
Commissioner's decision are unpersuasive.
N.J.A.C. 6A:3-1.17 provides:
(a)
The Commissioner may, pursuant to the
criteria of this section, award prejudgment
and/or
postjudgment
interest
in
any
circumstance in which a petitioner has
sought such relief and has successfully
established a claim to a monetary award.
1.
Any
petitioner
seeking
award
of
prejudgment interest shall so specify in the
petition's request for relief and shall
11
A-1078-12T2
propose, before the Commissioner or the ALJ,
whoever is hearing the case, an interest
calculation consistent with (d) below.
. . . .
(c)
. . .
1. The Commissioner shall award prejudgment
interest when he or she has concluded that
the denial of the monetary claim was an
action taken in bad faith and/or has been
determined to have been taken in deliberate
violation of statute or rule.
The
Commissioner
application
of
this
prejudgment interest.
accepted
the
regulation
ALJ's
in
calculations
awarding
and
petitioner
The regulation applies here because the
Board terminated petitioner's employment from a tenured position
without cause, in violation of N.J.S.A. 18A:6-10.
We discern no
rational or legal basis to disturb the Commissioner's decision
in this respect.
With respect to the specific rate of four percent interest
awarded
by
the
Commissioner
in
this
case,
Rule
4:42-11(a)
provides for specific rates to be applied to judgments "[e]xcept
as otherwise ordered by the court or provided by law, judgments,
awards and orders[.]"
The Commissioner's authority to award
prejudgment and post-judgment interest is well-settled.
See Bd.
of Educ. of Newark v. Levitt, 197 N.J. Super. 239, 246 (App.
Div. 1984).
Commissioner
In determining the rate of interest, however, the
is
not
necessarily
12
bound
by
the
standards
A-1078-12T2
applicable
to
judgments
judicial proceeding.
and
orders
entered
by
a
judge
in
a
Id. at 249 n.4.
Here, the parties stipulated four percent as the rate of
prejudgment interest.
Although petitioner filed an exception
objecting to the ALJ's reliance on this stipulation in setting
the rate of prejudgment interest, the Commissioner declined to
address the argument, finding it "disingenuous."
We agree with
the
no
Commissioner's
characterization
and
discern
reason
to
to
the
disturb his ruling in this respect.
We
will
now
address
the
Board's
challenge
Commissioner's decision concerning the petitioner's obligation
to mitigate damages.
Our jurisdiction empowers us to review
final decisions or actions of State administrative agents.
2:2-3(a)(1).
R.
Obviously, the initial decision of an ALJ is not
subject to appellate review because it is merely a penultimate
step subject to final review, modification, or outright adoption
by the head of the administrative agency – in this case, the
Commissioner of Education.
In this case, the Commissioner adopted the ALJ's ruling
without
modification.
After
reviewing
the
ALJ's
initial
decision with respect to petitioner's duty to mitigate damages,
we are bound to reverse.
Willis,
supra,
163
N.J.
The ALJ's reliance on our decision in
Super.
13
at
153,
for
his
ruling
is
A-1078-12T2
misplaced.
Our
holding
in
Willis
does
not
preclude
the
application of the collateral source rule to an employee who has
been wrongfully terminated, nor exempt such employee from the
obligation
to
mitigate
damages
from
any
source,
including
unemployment compensation benefits.
We
made
benefits
the
township
from
clear
in
Willis
plaintiff
the
that
"received
back
pay
unemployment
are
due
'mitigates' that award . . . ."
to
him,
be
compensation
deducted
and
in
Id. at 165.
by
that
the
sense
In fact, a
wrongfully terminated employee's obligation to mitigate damages
from any source was established by our Supreme Court long before
our
decision
in
Willis.
In
Miele
v.
McGuire,
31
N.J.
339
(1960), Justice Jacobs reaffirmed the Court's requirement that
mitigation
awarded
applies
back-pay
to
as
cases
a
in
measure
which
of
public
damages
employees
for
are
wrongful
termination:
We are satisfied that the plaintiff's claim
for back pay is justly governed by the
principles of the Ross[6] case and that the
cause must be remanded to the Law Division
for the allowance of back pay less any sum
which the plaintiff actually earned or could
have
earned
between
his
dismissal
and
reinstatement.
[Id. at 352 (emphasis added).]
6
Ross v. Bd. of Chosen Freeholders, 90 N.J.L. 522 (E. & A.
1917).
14
A-1078-12T2
The
Court
reaffirmed
its
prior
ruling
requiring
public
employees who have been wrongly terminated to mitigate damages
in Mason v. Civil Serv. Comm'n, 51 N.J. 115 (1968), and in
Mastrobattista v. Essex Cnty. Park Comm'n, 46 N.J. 138 (1965).
In Perrella v. Bd. of Educ. of Jersey City, 51 N.J. 323 (1968),
the
Court
provided
the
following
explanation
of
its
earlier
holdings in these two cases:
In Mastrobattista it was held that when a
public employee with tenure was improperly
dismissed, he was entitled to recover his
lost back pay less his earnings in outside
employment between the date of dismissal and
date of restoration to his position. We
recognized, however, that such an employee
might well have been obliged to incur
expenses and attorney's fees in order to
vindicate his right to the position.
In
this event, whenever his back-pay award was
to be mitigated by his outside earnings, it
seemed just and equitable to give him a
credit against the sum to be applied in
mitigation of the reasonable counsel fee and
expenses which he had paid or obligated
himself to pay in the successful prosecution
of his action.
Thus his interim outside
earnings less such fee and expenses would
represent the factor to be applied in
diminution of his back-pay recovery.
This
is the purport of Mastrobattista, as well as
of Mason v. Civil Service Comm'n, supra.
[Id. at 344.]
Against these clear and well-established principles of law,
we
are
compelled
to
remand
the
case
to
the
Commissioner
to
recalculate the award of back-pay to petitioner by applying the
15
A-1078-12T2
doctrine of mitigation endorsed by the Supreme Court.
In going
about
consider
this
analysis,
the
Commissioner
should
petitioner's decision to decline the Board's offer of employment
as a CST secretary, see Goodman v. London Metals Exch., Inc., 86
N.J. 19, 34-36 (1981), and whether she made reasonable efforts
to find other, comparable employment during the relevant time
period.
However, petitioner was not obligated to apply for
unemployment compensation benefits because any benefits she was
eligible to receive under these circumstances, she was obligated
to return to the Department of Labor.7
Affirmed
in
part,
further proceedings.
reversed
in
part,
and
remanded
for
We do not retain jurisdiction.
7
An employee who receives unemployment benefits and subsequently
is awarded back-pay must reimburse the Department of Labor any
funds received as unemployment benefits.
City of Newark v.
Copeland, 171 N.J. Super. 571, 575-76 (App. Div. 1980), certif.
denied, 85 N.J. 505 (1981).
16
A-1078-12T2

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