LAURAJ. FREDA v. BOARD OF REVIEW DEPARTMENT OF LABOR AND ATHENIA MASON SUPPLY INC

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-5106-15T1

LAURA J. FREDA,

              Appellant,

v.

BOARD OF REVIEW,
DEPARTMENT OF LABOR,
AND ATHENIA MASON SUPPLY,
INC.,

          Respondents.
____________________________________

              Argued October 16, 2017 – Decided February 26, 2018

              Before Judges Messano, Accurso, and Vernoia.

              On appeal from the Board of Review, Department
              of Labor, Docket No. 084,204.

              Sarah Hymowitz argued the cause for appellant
              (Legal Services of New Jersey, attorneys;
              Sarah Hymowitz and Melville D. Miller, on the
              briefs).

              Peter H. Jenkins, Deputy Attorney General,
              argued the cause for respondent Board of
              Review (Christopher S. Porrino, Attorney
              General, attorney; Melissa D. Schaffer,
              Assistant Attorney General, of counsel; Adam
              K. Phelps, Deputy Attorney General, on the
              brief).
          Respondent Athenia Mason Supply, Inc. has not
          filed a brief.

PER CURIAM

     Laura J. Freda was employed by respondent, Athenia Mason

Supply, Inc. (Athenia), from June 13, 2013 to January 28, 2016,

when her supervisor, Thomas Kievit, terminated her.    The Deputy

Director denied Freda's application for unemployment benefits, and

she appealed.   After a telephonic hearing, the Appeal Tribunal

(Tribunal) affirmed the Deputy's decision, finding and concluding:

          Substantial evidence provided during the
          hearing established that the claimant was
          discharged for theft.     Although the total
          value of the items was minimal, the claimant's
          actions were still theft. Giving the customer
          items which he had not purchased was a
          deliberate,    intentional    and    malicious
          act . . . and was substantially certain to
          cause the employer financial harm. Therefore,
          the claimant is disqualified for benefits
          under 
N.J.S.A. 43:21-5(b) . . . as the
          discharge was for severe misconduct connected
          with the work.

Freda immediately requested a reopening of the hearing.         See

N.J.A.C. 1:12-18.4(a)(3) (permitting a motion for reopening when

"[t]he party is seeking to amend the . . . Tribunal decision due

to a mistake in law or computation thereby affecting the legal

conclusion of the . . . Tribunal.").

     Freda contended the Tribunal failed to consider N.J.A.C.

12:17-10.1(f), which places the burden of proof on the employer


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"to show through written documentation that the employee's actions

constitute      misconduct."          She       noted   there   was     no   written

documentation offered by Athenia at the hearing. Freda also argued

the Tribunal's findings of fact were "inaccurate and biased in

favor   of    the   employer."        Lastly,      Freda    contended    there    was

insufficient evidence that her conduct was "intentionally wrong

or malicious" and therefore the Tribunal could not find she

committed "severe misconduct."                  See N.J.A.C. 12:17-2.1 (2015)

("'Severe misconduct' means an act which (1) constitutes 'simple

misconduct' . . .; (2) is both deliberate and malicious; and (3)

is not 'gross misconduct.'").

     The Tribunal denied Freda's request for a reopening, and

Freda appealed to the Board of Review (Board).                  She contended the

Tribunal erred in not reopening the case and reiterated the legal

arguments made to the Tribunal.                 The Board acknowledged receipt

of the appeal in a written notice that also provided:                        "please

take notice that the Board hereby exercises its authority pursuant

to 
N.J.S.A. 43:21-6(e) to take jurisdiction over any and all issues

arising      from   the   .   .   .    Tribunal         decision   regarding      the

determination(s) of the deputy/director."                  (emphasis added).

     The Board's July 6, 2016 final decision concluded the Tribunal

had not abused its discretion in denying Freda's request for

reopening.      The Board never addressed the Tribunal's decision

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denying Freda unemployment benefits because of severe misconduct

connected with the work.    This appeal followed.

       Before us, Freda essentially reiterates the arguments made

to the Tribunal and the Board.     The Board argues that our review

is limited to only the denial of Freda's request to reopen the

hearing, not the merits of the Tribunal's decision. 1   It contends

we should dismiss the appeal because Freda failed to present any

legal argument why the Tribunal's refusal to reopen was an abuse

of discretion.

       Initially, we reject the Board's position that Freda's appeal

is limited to the denial of her reopening request.   The Tribunal's

decision "shall be deemed to be the final decision of the [Board],

unless further appeal is initiated pursuant to [
N.J.S.A. 43:21-

6(e)]."    
N.J.S.A. 43:21-6(c).   Freda filed a timely appeal.

       
N.J.S.A. 43:21-6(e) provides:

            The [Board] may on its own motion affirm,
            modify, or set aside any decision of an appeal
            tribunal on the basis of the evidence
            previously submitted in such case, or direct
            the taking of additional evidence, or may
            permit any of the parties to such decision to
            initiate further appeals before it.

            [(emphasis added).]




1
    Athenia has not participated in the appeal.

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The Board itself invoked its full jurisdiction under this section

when it notified Freda of its receipt of her appeal, and that the

Board would "take jurisdiction over any and all issues arising

from the . . . Tribunal decision regarding the determination(s)

of the deputy/director."

     We discussed the scope of the Board's authority under section

6(e) many years ago in Charles Headwear, Inc. v. Board of Review,


11 N.J. Super. 321, 328 (App. Div. 1951), where we said:

           The Board had the power under [N.J.S.A.]
           43:21-6(e), which it exercised in the present
           case, to assume jurisdiction of any claim
           pending before the appeal tribunal and to hold
           a hearing thereon. The intent of the statute
           is that a claim shall go forward in its
           entirety in each successive step in its
           consideration.    There   is    no   statutory
           compulsion to remand a claim at any stage of
           its progress toward final determination. The
           deputy and the appeal tribunal are, in effect,
           merely representatives or agents of the Board
           which is the ultimate fact-finding body.
           Neither the statute nor procedural due process
           requires a hearing at any particular stage as
           long as a hearing is accorded before the final
           order becomes effective.

           [(emphasis added).]

     In   this   case,   the   Board's   final   decision   denied     Freda

consideration by "the ultimate fact-finding body," whether she

committed severe misconduct connected to the work, even though she

acted in the timely fashion required by the statute.           The Board

must have clearly understood that Freda was challenging the merits

                                    5                                A-5106-15T1
of the Tribunal's decision, and certainly could have considered

her appeal as amended so as to incorporate the Tribunal's earlier

decision.    See Von Ouhl v. Bd. of Review, 
254 N.J. Super. 147, 153

(App. Div. 1992) (citing Hopkins v. Bd. of Review, 
249 N.J. Super.
 84, 89-90 (App. Div. 1991)).

      Because the Board never addressed the merits of Freda's

appeal, we remand the matter to the Board.                 Remand is appropriate

for another reason.

      In Silver v. Board of Review, 
430 N.J. Super. 44, 48-49 (App.

Div. 2013), we traced the history of the statutory misconduct

disqualification, and attempts by the Department of Labor and

Workforce Development (the Department) to craft regulations in

response to changes in the statute.                  Although the Legislature

decided in 2010 to add to the statute "severe misconduct" as an

intermediate     level    of   misconduct    —     between    simple    and     gross

misconduct   —   the     Department   had    not     yet    adopted    regulations

defining the term.       Id. at 53-55.      Severe misconduct was undefined

in   
N.J.S.A.    43:21-5(b),     except     by   a    non-exhaustive      list       of

examples.

      We noted the Department's ongoing rulemaking.               Id. at 56.         At

the time, N.J.A.C. 12:17-10.2(a) only defined "misconduct":

            For an act to constitute misconduct, it must
            be improper, intentional, connected with one's
            work, malicious, and within the individual's

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          control, and is either a deliberate violation
          of the employer's rules or a disregard of
          standards of behavior which the employer has
          the right to expect of an employee.

          [Silver, 
430 N.J. Super. at 52-53 (emphasis
          added)    (quoting  N.J.A.C.  12:17-10.2(a)
          (2003)).]

We held that "[u]ntil any new definition is promulgated by rule,

the definition contained in the present version of N.J.A.C. 12:17-

10.2(a) controls, except to the extent it is superseded by the

2010 amendment of the statute."      Id. at 55.        As a result,

misconduct, whether simple or severe, required "wil[l]fulness,

deliberateness, intention, and malice."   Id. at 58.

     The Department's ongoing rulemaking we referred to in Silver

resulted in regulations that we reviewed in In re N.J.A.C. 12:17-

2.1, 
450 N.J. Super. 152, 164 (App. Div. 2017).    In particular,

the 2015 amendments defined simple misconduct as

          an act of wanton or willful disregard of the
          employer's interest, a deliberate violation of
          the employer's rules, a disregard of standards
          of behavior that the employer has the right
          to expect of his or her employee, or
          negligence in such degree or recurrence as to
          manifest culpability, wrongful intent, or evil
          design, or show an intentional and substantial
          disregard of the employer's interest or of the
          employee's duties and obligations to the
          employer.

          [Id. at 165 (emphasis added) (quoting N.J.A.C.
          12:17-2.1 (2015)).]



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The regulations defined severe misconduct as an act of "simple

misconduct" that "is both deliberate and malicious."        Id. at 164

(emphasis    added)   (quoting   N.J.A.C.   12:17-2.1   (2015)).        The

regulations further defined "malicious" as "an act . . . done with

the intent to cause injury or harm to another or others or when

an act is substantially certain to cause injury or harm to another

or others."    Ibid. (quoting N.J.A.C. 12:17-2.1 (2015)).

     We concluded

            the regulations the Department adopted in 2015
            fail to make th[e] critical distinction
            between simple negligence, on the one hand,
            and intentional, deliberate, or malicious
            conduct, on the other hand, at least not
            consistently.    Unfortunately, the literal
            wording of N.J.A.C. 12:17-2.1 defining and
            utilizing   the   term   "simple   misconduct"
            confusingly blends concepts of negligence with
            intentional wrongdoing that cannot be sensibly
            understood or harmonized.

            [Id. at 168.]

As a result, we set aside the regulatory definition of "simple

misconduct," which effectively also set aside the definition of

"severe misconduct," and ordered the Department to promulgate new

regulations within 180 days.     Id. at 173.   We stayed our decision

in the interim.

     The Department has yet to adopt new regulations.       This court

issued an order on November 27, 2017, that granted the Department

a further stay until March 1, 2018.     In re N.J.A.C. 12:17-2.1, No.

                                   8                               A-5106-15T1
A-4636-14 (order granting time and extending stay) (App. Div. Nov.

27, 2017).   The order further provided that the "invalidated"

regulations would "continue to be operative" until March 1, 2018,

but if the Department failed to adopt new regulations by March 2,

2018, "the nullified provisions shall become unenforceable . . .

and the Department and claimants shall be guided by the applicable

statutes and case law."   Ibid.

     We are rapidly approaching the deadline for the Department's

adoption of new regulations.      Against this unsettled landscape,

and because, as mentioned earlier, the Board never considered the

merits of Freda's appeal in the first instance, we choose not to

exercise original jurisdiction, see Rule 2:10-5, and reluctantly

remand the matter to the Board.       We do not retain jurisdiction.

     Reversed and remanded.




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