A-0BOROUGH OF PINE HILL - v. DIANA MAY - July 9 2014

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

BOROUGH OF PINE HILL,

Petitioner-Respondent,

v.

DIANA MAY,

Respondent-Appellant.

____________________________________

July 9, 2014

Argued May 6, 2014 Decided

Before Judges Alvarez, Carroll, and Higbee.

On appeal from the Division of Local Government Services, Local Finance Board, Docket No. DLGS-09-6.

Carolyn G. Labin argued the cause for appellant (Klineburger and Nussey, attorneys; Richard F. Klineburger, III, on the brief).

Christine P. O'Hearn argued the cause for respondent Borough of Pine Hill (Brown & Connery, LLP, attorneys; Ms. O'Hearn and Michael J. Watson, on the brief).

John J. Hoffman, Acting Attorney General, attorney for respondent Local Finance Board (Donald M. Palombi, Deputy Attorney General, on the statement in lieu of brief).

PER CURIAM

Diane May, the former tax collector for the Borough of Pine Hill (Borough) appeals from the decision of the Local Finance Board that she was terminated for good cause and was not entitled to an award of back pay for the period of time after she was suspended. Agency findings are given substantial deference and there is credible evidence in the record to support the decision of the agency; therefore, we affirm.

May was Pine Hill's tax collector for several years. As a certified tax collector under the supervision of the Department of Community Affairs (DCA), May was required to complete a certain number of hours of continuing education. Every two years, May had to file a certification with the DCA stating that she completed her required continuing education hours in order to obtain a renewed tax collector license.

In May 2008 and in May 2009, the Borough paid for May to attend the Tax Collectors and Treasurers Association of New Jersey (TCTANJ) conferences in order to obtain required continuing education units. It was reported to the Mayor by Pine Hill's Chief Financial Officer (CFO), who attended the 2009 conference, that he did not see May at the conference.

The Mayor contacted TCTANJ's executive director, who confirmed both orally and by letter that the organization had no record of May attending any classes at the 2009 conference and by letter confirmed that May only attended one course out of seven at TCTANJ's Spring 2008 conference. The Mayor referred the matter to the Borough's Chief of Police for investigation.

The police determined that at the conference each attendee was given a badge with a unique bar code on it which was scanned when the attendee entered the class. When May was interviewed by the police about the 2009 conference she first claimed she attended the courses and there was no bar scanning. She then stated she did not scan herself in correctly, and finally admitted she did not attend any of the courses claiming she was ill. There were no charges filed against her for the 2009 episode; however, the assistant prosecutor who reviewed the police investigative report directed the police to obtain information on what had been put on her application for renewal of her license.

It was then determined that in June 2009 May had certified she attended seven courses at the 2008 TCTANJ conference. However, there was only a record of May attending one class out of seven that the Borough had paid for her to take in 2008. The 2008 conference was the first to utilize badge-scanning technology. As a result, the Assistant Prosecutor filed a criminal complaint against May, and she was arrested and removed from the Borough premises on August 11, 2009, for falsification of records. She was suspended without pay without a hearing on August 10, 2009. This occurred the night before her arrest, but after the Mayor was advised that May would be arrested the next day. On December 14, 2009, the Borough filed a complaint seeking May's removal for good cause pursuant to N.J.S.A. 40A:9-145. A hearing was held by an Administrative Law Judge (ALJ). May invoked her Fifth Amendment right against self-incrimination and testified in only a limited fashion. The TCTANJ officer in charge of registration, Suzanne Olah, testified that TCTANJ had computerized records for the 2008 Conference. Each registrant would scan his or her badge before entering a class. There were "two scanners at each door scanning everyone's badge as they went into the room" for a total of four scanners per session. Olah herself made "announcements before each session reminding everyone that they must get their badge scanned in order to receive credit for being in the class" and the moderator for each class made a similar announcement. Upon leaving the course, each registrant was handed a generic signed certificate of attendance with a course name and number, although that form did not have the registrant's name on it. The procedures for the 2008 and 2009 sessions were the same. TCTANJ had a record of May attending the Internal Revenue Service Reporting class on May 21, 2008. However, there were no records of her attending the six other classes that she listed on her renewal form. Olah also testified that TCTANJ did not have any problems, reported failures or complaints concerning the computerized scanning system since its implementation.

Testimony was presented that TCTANJ is an approved continuing education provider with the DCA and is required to follow and comply with a variety of procedures related to attendance records. The DCA considers the TCTANJ's computerized records of attendance to be the official attendance records for purposes of certification.

A co-employee of May testified that she holds positions in the Borough in Accounts Payable, and as its Deputy Treasurer. She claimed she was present in April 2009, when the Mayor of the Borough allegedly told May, "I just want to smack you," and raised his hand up. On cross-examination, the witness admitted that she is friends with May and had socialized with her outside of work for over ten years.

The ALJ found that May did not attend six courses at the 2008 Conference, based on TCTANJ's records. The ALJ found that good cause existed to remove May. She noted that May did not attend classes at the 2009 Conference, but relied on that fact only to explain what spurred the investigation into the attendance records. The ALJ refused to draw a negative inference based on May's invocation of the Fifth Amendment. She rejected May's co-employee's testimony as "bizarre and not believable" noting that she was May's friend. Finally, she found that the investigation was not politically motivated, and that the Borough presented evidence that the Prosecutor's Office was involved, as well as the police, in pursuing the investigation against May.

The ALJ concluded that the Borough established by a preponderance of credible evidence that May misrepresented attending courses at the 2008 Conference on her renewal certification. She based her decision on the

official attendance records of the TCTANJ 2008 conference, coupled with the testimony that each attendee to the session is given a certificate upon leaving and can get a replacement if it is lost as long as there is a record of the person's attendance and May did not produce such certificates.

The ALJ also concluded that it was "dishonest to accept payment for the conference and salary for the time she was supposed to be attending the six courses, and that by doing so, impairment of the public interest resulted."

While the ALJ found that the Borough appropriately suspended May, she concluded that the Borough lacked the authority to do so without pay. Pursuant to N.J.S.A. 40A:9-145.8(b), a municipality cannot remove a tax collector without good cause shown and a hearing before the DCA. The ALJ ordered the Borough to pay May back pay, subject to May's mitigation with other employment.

On June 4, 2012, the Director affirmed in part, and reversed in part the ALJ's decision. The Director rejected May's arguments that the ALJ improperly relied on the 2009 Conference to establish May's lack of attendance in 2008. He found May's admission that she did not attend the 2009 Conference "glaring and very pertinent to the outcome of this matter." "It is reasonable to conclude that May's contradiction regarding her attendance at the 2009 Conference brings her claim of attendance at the 2008 Conference seminars into doubt, particularly when also considering the additional evidence that was provided . . . ." Finally, he rejected May's argument that she was still licensed as a tax collector, finding that it was "irrelevant to the question of her guilt on the disciplinary removal charges." The Director adopted the ALJ's factual findings and conclusion that the Borough had good cause to remove May.

However, the Director disagreed with the ALJ's decision that May was entitled to back pay for the time she was suspended without pay. He found that since May eventually received a hearing on her removal, "any defect in the statutory process has been cured, and May's rights under the statute have been vindicated, with the presentation of the charges and the hearing." Moreover, since May was ultimately found guilty of the disciplinary charges, she "is not entitled to back pay for the period of suspension in violation of the procedures required by statute." He characterized the award of back pay as "'tantamount to a windfall.'" (quoting Nicoletta v. N. Jersey Dist. Water Supply Comm'n, 77 N.J. 145, 178 (1978) (Pashman, J., concurring)).

May appealed to the Local Finance Board, which held a hearing on July 11, 2012 and voted to uphold the Director's decision. A final decision of an administrative body should not be disturbed on appeal unless it is arbitrary, capricious or unreasonable. Karins v. City of Atlantic City, 152 N.J. 532, 540 (1998); In re Zisa, 385 N.J. Super. 188, 194-95 (App. Div. 2006). Under the arbitrary and capricious standard, the scope of judicial review is limited to four inquiries:

(1) whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.

[George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994).]

May contends that the DCA's decision to remove her from office is arbitrary, capricious, and unreasonable. Specifically, she argues that the record does not "conclusively demonstrate" that she failed to attend classes in 2008. She claims the ALJ's findings of fact rested upon the "irrelevant" details of her lack of attendance at the 2009 Conference. May also claims that the DCA shifted the burden of proof to May because it noted that she failed to present witnesses who could acknowledge that she attended the 2008 Conference. Finally, she characterizes her removal as too harsh a remedy considering her otherwise unblemished disciplinary record as the Borough's tax collector.

May argues that the evidence of her nonattendance at the 2009 Conference was not relevant to her attendance at the 2008 Conference. This argument is incorrect. Preliminarily, in administrative proceedings, the parties are not bound by the formal rules of evidence. N.J.S.A. 52:14B-10(a)(1); N.J.A.C. 1:1-15.1(c); SSI Med. Servs. v. HHS, Div. of Med. Assistance & Health Servs., 146 N.J. 614, 626 (1996). Instead, "[e]vidence rulings shall be made to promote fundamental principles of fairness and justice and to aid in the ascertainment of truth." N.J.A.C. 1:1-15.1(b). An ALJ may admit all relevant evidence, and may exclude evidence if its probative value is substantially outweighed by the risk of undue consumption of time or prejudice or confusion. N.J.A.C. 1:1-15.1(c).

May's lack of attendance at the 2009 Conference is relevant to explaining why the Borough began to investigate May. The CFO's statement to the Mayor that he did not see May at that conference spurred the investigation into her certifications for the 2008 Conference. It rebuts May's argument that the entire investigation was politically motivated. Thus, the evidence of May's lack of attendance at the 2009 Conference was clearly relevant to contested issues of material fact in this case and has a "tendency in reason to prove or disprove any fact of consequence to the determination of the action." N.J.R.E. 401.

The ALJ relied upon ample, substantial and credible evidence to conclude that May did not attend the courses at the 2008 Conference. The ALJ based her decision on Olah's testimony, coupled with the official TCTANJ records of the conference. The final decision was based on substantial, credible evidence in the record, even if the 2009 Conference was not considered at all. See In re Tenure Hearing of Young, 202 N.J. 50, 71 (2010).

At no point was the burden of proof shifted from the Borough to May, but the fact she presented no witnesses to contradict the official record of non-attendance could properly be considered. May characterizes her removal as "politically motivated" and her removal as too harsh a penalty. May's removal was supported by substantial and credible evidence that she failed to attend six courses at the 2008 Conference paid for by taxpayers, and then falsely certified she had attended the courses to renew her license.

As to the penalty, the DCA's imposition of the sanction of removal of office is entitled to deference. May misused public funds by failing to attend the six courses in 2008, despite having the Borough pay for them. She falsely certified on a State form that she attended the courses. Her false certifications related directly to her continuing education requirements as a tax collector.

May argues the DCA erred in its decision finding that she was not entitled to back pay. The Borough did violate N.J.S.A. 40A:9-145.8 when it suspended May without pay without a hearing. The Director held that May eventually received a hearing, and any procedural infirmities were cured.

May was suspended without pay before the hearing, in violation of N.J.S.A. 40A:9-145.8, but eventually received a hearing that resulted in a finding of good cause to terminate her. Under these circumstances, May received procedural due process, albeit not before her suspension. This procedural violation on the part of the Borough which was corrected does not support the award of back pay to May. See Willis v. Dyer, 163 N.J. Super. 152, 161-62 (App. Div. 1978).

The decision to deny May back pay is affirmed, as is her termination for good cause.

Affirmed.