Title: Daniel Prado v. State of New Jersey, New Jersey Department of Labor, etc.,et al.

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). At a staff meeting in June of 2001, defendant Harry Pappas, Special Assistant to the Commissioner of the Department of Labor, addressed Department of Labor employees. Afterwards, a number of those present complained that Pappas made offensive or inappropriate remarks, particularly in describing Hispanic workers or women. The Department s affirmative action officer conducted an investigation. At the conclusion of the investigation, the Labor Commissioner determined that Pappas had made various offensive, discriminatory remarks and concluded that Pappas had violated both the letter and intent of the New Jersey State Policy Prohibiting Discrimination, Harassment or Hostile Environments in the Workplace. Plaintiff Daniel Prado and three other Labor Department employees filed separate complaints against the State of New Jersey, the Department of Labor, Pappas, the Labor Commissioner and other high-ranking Department officials. Plaintiffs lawsuits alleged that Pappas violated the Law Against Discrimination (LAD) and that Pappas and other officials retaliated against plaintiffs for complaining about Pappas offensive conduct. Pappas then made a request that the Attorney General provide him with a defense and that the State indemnify him in the event of an adverse judgment. Approximately a year later, in July of 2003, an Assistant Attorney General wrote to Pappas that his request had been denied. In March of 2004, Pappas filed a motion in the Law Division to compel the Attorney General to provide him with a defense and to indemnify him. The trial court ordered the Attorney General to provide a defense, but declined to hold the State responsible for indemnification until all the facts were in. On appeal, the Appellate Division affirmed the trial court s orders in a reported opinion. This Court granted the Attorney General s motion for leave to appeal. HELD: The Attorney General must provide a defense to a state employee who requests representation pursuant to N.J.S.A. 59:10A-1 unless the Attorney General determines that it is more probable than not that one of the three exceptions set forth in N.J.S.A. 59:10A-2 applies; if the Attorney General denies the employee s request, he must give a written statement of reasons justifying the denial; an appellate court should not reverse the Attorney General s determination unless it is arbitrary, capricious or unreasonable or it is not supported by substantial credible evidence in the record as a whole. An appeal from a final administrative decision of the Attorney General rests in the Appellate Division, barring a compelling policy reason to depart from the dictates of Rule 2:2-3(a). We have every confidence that the Appellate Division can speedily review and decide whether the Attorney General has abused his discretion in denying representation to a state employee. Of course early resolution of that issue requires the cooperation of not only the state employee, who must not delay in requesting representation, but also the Attorney General, who must render a prompt decision. (pp. 12-14) 2. There may be circumstances when the underlying action has been ongoing for a significant period by the time the issue of representation arises. In those circumstances, we leave to the sound discretion of the Appellate Division the authority to transfer jurisdiction to the Law Division if efficient judicial management calls for such action. (p.15) 3. The Attorney General s duty to defend is set forth in N.J.S.A 59:10A-1. Under that statutory scheme, an employee s right to counsel is triggered by his requesting that the Attorney General provide representation. The burden then is on the Attorney General to articulate reasons for not providing a defense. (pp. 17-18). 4. We hold that the Attorney General must provide a defense to a state employee who requests representation pursuant to N.J.S.A. 59:10A-1 unless the Attorney General determines that it is more probable than not that one of the three exceptions set forth in N.J.S.A 59:10A-2 applies; if the Attorney General denies the employee s request, he must give a written statement of reasons justifying the denial; an appellate court should not reverse the Attorney General s determination unless it is arbitrary, capricious or unreasonable or it is not supported by substantial credible evidence in the record as a whole. (pp. 19-20) 5. It is not acceptable for the Attorney General to take approximately one year to deny a state employee a defense after receipt of a timely request for counsel. In view of the substantial delay, it is understandable that the Appellate Division considered the trial court to be the proper forum to review the Attorney General s refusal-to-defend decision. As discussed earlier, however, an appeal of the Attorney General s decision must be taken to the Appellate Division. Once there, the appeal will be placed on an expedited track. The Appellate Division, however, has the authority to transfer the refusal-to-defend issue to the Law Division in those limited circumstances in which efficient judicial management calls for joining that issue with the underlying action. (pp. 21-22) The judgment of the Appellate Division is REVERSED and the matter is REMANDED for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES LaVECCHIA, ZAZZALI, WALLACE, and RIVERA-SOTO join in JUSTICE ALBIN s opinion. JUSTICE LONG did not participate. SUPREME COURT OF NEW JERSEY A- 33 September Term 2005 DANIEL PRADO, Plaintiff, v. STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF LABOR, LEONARD KATZ, LINDA CHESKO, MARTIN GARTZMAN and MARK BOYD, Defendants-Appellants, and HARRY PAPPAS, Defendant-Respondent. ----------------------------- ARTHUR O'KEEFE, Plaintiff, v. STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF LABOR, MICHAEL MCCARTHY, LEONARD KATZ, MARTIN GARTZMAN and MARK BOYD, Defendants-Appellants, and HARRY PAPPAS, Defendant-Respondent. ----------------------------- JAMES VALLE, Plaintiff, v. STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF LABOR, MICHAEL MCCARTHY, LEONARD KATZ, MARTIN GARTZMAN and MARK BOYD, Defendants-Appellants, and HARRY PAPPAS, Defendant-Respondent. Argued January 17, 2006 Decided May 8, 2006 On appeal from the Superior Court, Appellate Division whose opinion is reported at 376 N.J. Super. 231 (2005). Patrick DeAlmeida, Assistant Attorney General, argued the cause for appellants (Peter C. Harvey, Attorney General of New Jersey, attorney; Nancy Kaplen, Assistant Attorney General, of counsel; Mr. DeAlmeida and Leslie M. Gore, Deputy Attorney General, on the brief). Eric G. Kahn argued the cause for respondent (Javerbaum Wurgaft Hicks & Zarin, attorneys). JUSTICE ALBIN delivered the opinion of the Court. In this case, a state employee was sued by co-workers for, among other things, violating their rights under the Law Against Discrimination and the Conscientious Employee Protection Act. In accordance with N.J.S.A. 59:10A-1, the employee requested that the Attorney General undertake his defense. Based on an internal investigation, the Attorney General declined to do so, claiming that the employee acted outside the scope of his employment and engaged in willful misconduct. In this appeal, we articulate the standard that must inform the Attorney General s decision whether to defend a state employee in a civil suit within the purview of the New Jersey Tort Claims Act. We also set forth the manner of judicial review available when the Attorney General refuses to defend. [N.J.S.A. 59:10A-1.] The Attorney General, however, may refuse to provide for the defense of the state employee if he determines that: a. the act or omission was not within the scope of employment; or b. the act or the failure to act was because of actual fraud, willful misconduct or actual malice; or c. the defense of the action or proceeding by the Attorney General would create a conflict of interest between the State and the employee or former employee. [N.J.S.A. 59:10A-2.] Under that statutory scheme, an employee s right to counsel is triggered by his requesting that the Attorney General provide representation. The burden then is on the Attorney General to articulate reasons for not providing a defense. See Office of the Governor, News Release 2 (June 1, 1972) (stating that Attorney General will represent State employees on their request for the defense of matters arising out of the scope of their employment, except in the case of actual fraud, willful misconduct or actual malice of the employee (emphasis added)). If he determines that any one of three exceptions applies, the Attorney General may refuse to provide a defense to the employee. See N.J.S.A. 59:10A-1, -2. A general principle of statutory interpretation is that exceptions in a legislative enactment are to be strictly but reasonably construed, consistent with the manifest reason and purpose of the law. Serv. Armament Co. v. Hyland, 70 N.J. 550, 558-59 (1976). Thus, [a]ll doubt should be resolved in favor of the general provision contained in N.J.S.A. 59:10A-1, which is to afford representation, rather than the proviso or exception contained in N.J.S.A. 59:10A-2, which permits the Attorney General to refuse to defend. See N.J. State Bd. of Optometrists v. S.S. Kresge Co., 113 N.J.L. 287, 296 (Sup. Ct. 1934), aff d as modified, 115 N.J.L. 495 (E. & A. 1935) (per curiam); see also 2A Norman J. Singer, Sutherland Statutory Construction 47.11 (5th ed. 1992) (noting that where a general provision in a statute has certain limited exceptions, all doubts should be resolved in favor of the general provision rather than the exceptions ). For those reasons, we hold that the Attorney General must provide a defense to a state employee who requests representation pursuant to N.J.S.A. 59:10A-1 unless the Attorney General determines that it is more probable than not that one of the three exceptions set forth in N.J.S.A. 59:10A-2 applies. See SSI Med. Servs., Inc. v. State, 146 N.J. 614, 622 (1996) ( In the absence of any administrative rule or regulation to the contrary, the traditional preponderance of the evidence standard applies to administrative agency matters. ). That formulation places the appropriate burden on the Attorney General to justify a departure from the general rule of representation. If the Attorney General refuses to provide representation to the employee, he must give the employee a written statement explaining the reasons for the refusal. See State v. Leonardis, 71 N.J. 85, 117-19 (1976) (requiring that administrative agency provide statement of reasons explaining its actions to facilitate appellate review and protect against arbitrary action). In the event that the employee is denied representation, that statement will aid appellate review of the Attorney General s determination. On appeal, the Attorney General s final administrative decision is entitled to the usual deference accorded to such a decision. An appellate court should not reverse the Attorney General s determination unless it is arbitrary, capricious or unreasonable or it is not supported by substantial credible evidence in the record as a whole. See footnote 8 In re Taylor, 158 N.J. 644, 657 (1999) (per curiam) (internal quotation marks omitted). SUPREME COURT OF NEW JERSEY NO. A-33 SEPTEMBER TERM 2005 ON APPEAL FROM Appellate Division, Superior Court DANIEL PRADO, Plaintiff, v. STATE OF NEW JERSEY, NEW JERSEY DEPARTMENT OF LABOR, LEONARD KATZ, LINDA CHESKO, MARTIN GARTZMAN and MARK BOYD, Defendants-Appellants, and HARRY PAPPAS, Defendant-Respondent. DECIDED May 8, 2006 Chief Justice Poritz PRESIDING OPINION BY Justice Albin CONCURRING OPINION BY DISSENTING OPINION BY If the Attorney General refuses to provide for the defense of a State employee as required by the provisions of [N.J.S.A. 59:10A-1 to -6], the employee or former employee of the State shall be entitled to indemnification from the State if he establishes that the act or omission upon which the claim or judgment was based occurred within the scope of his employment as an employee of the State and the State fails to establish that he acted or failed to act because of actual fraud, actual malice or willful misconduct. [N.J.S.A. 59:10-2.] The right to indemnification thus is a counterweight to the administrative deference accorded to the Attorney General s duty-to-defend decision, which typically will be made in the early stage of the underlying case.