IN THE MATTER OF THE LAYOFF OF DAISEY BATTLE, BY THE CITY OF NEWARK (NEW JERSEY CIVIL SERVICE COMMISSION) (CONSOLIDATED)

I
                            NOT FOR PUBLICATION WITHOUT THE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-0066-18
                                                                A-0067-18
                                                                A-0069-18
                                                                A-0071-18
                                                                A-0074-18
                                                                A-0076-18
                                                                A-0078-18
                                                                A-0080-18
                                                                A-0082-18
                                                                A-0083-18
                                                                A-0084-18

IN THE MATTER OF THE
LAYOFF OF DAISEY BATTLE,
LATISHA D. BELL, YOLANDA
BELL, SHANTAH CANTY, LORENZO
O. CARTER, RACHERYL CHANCE,
LISA COX, ELAINE C. DANIEL,
WILL DAVIS, HECTOR ESPADA,
AWILDA FERNANDEZ, SHANEIKA
FORENBERRY, JERALD GOLSON,
GIGI L. GOODWIN, STEVEN R.
HAM, JR., DALHINE HARDIN,
VIRGEN HERNANDEZ, JUAREZ
HILL, JUANITA HOLT, UZERA
JACKSON, RASHEED JACOB,
MICHAEL JAMES, REGINA
JOHNSON, IRIS LABOY, OMAR
S. MACE, KENYLA MARSHALL,
ALNEISHA MCCLAIN, ARDELIE
MCELROY, OCTAVIA MCKINLEY,
RAJAHN MILES, SHARON MORRIS,
ANTONIO R. PADILLA, JACQUILLA
PATRICK, LINDA PHELPS, BOBBI
PITTMAN, JACLYN QUILES, CECILIA
RAMOS, KECIA L. RASBERRY,
NELSON R. RIVERA, TANYALE
ROBINSON, WANDA ROBINSON,
ELIZABETH J. ROSADO, AQUEELAH
SCOTT, SHANNON SHELTON, LOUIS
SLATER, DARRELL SMITH, LATEEFAH
C. TOWNES, ERIC TYSON, ROSE
VENABLE, GLORIA VINES, CARMELITA
L. WARD, LA-TONYA WARD, MELINDA
WHITEHEAD and KEISHA WILLIAMS
BY THE CITY OF NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
PARVEEN A. ARASTU, BETHZAIDA
CRUZ, RAFAEL A. PADILLA, SAMIAH
SALEEM and ROBERT WEST BY THE
CITY OF NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF RENU
NAGPAL BY THE CITY OF NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
PARVEEU A. ARASTU, JOIA R. BARNES,
DICKSON O. OGUINYE, MARGARET R.
PARISH, ELIZABETH RAINEY, TIMIA
L. WILSON, GAYLE WINSOME and
CELESTE R. WRIGHT BY THE CITY OF
NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF

                                           A-0066-18
                               2
VANCYEE WARREN BY THE CITY OF
NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
ZEKIA BENYARD, O. GINA CARTER,
MARY HILL, ANN KUILAN and DEICLES
MOSCHEN BY THE CITY OF NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
PAMELA LEWIS, KAWANDA CORSEY,
ELLA HARRIS, LATOSHA INGRAM,
ADELINA ORTIZ, CAROLYN PARKER,
TONYA SMITH, KENYETTA STEED,
CRYSTAL WILLIAMS, HENRIETTA
WILLIAMSON, LYNDA WORSLEY,
and DEISA WYCKOFF-VALENTINE BY
THE CITY OF NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
EVALDO SEGATTO BY THE CITY OF
NEWARK.
________________________________________

IN THE MATTER OF THE LAYOFF OF
MAYRA ACOSTA, TOMMY EASTERLING,
PAMELA D. ESTES, JOSEPH GROLLER,
LATEEF A. IBIKUNLE, DEBRA JACKSON,
SHASHAWNA A. KELLEY, RHONDA
MCDONALD, LUIS M. MUNOS, TRAKOR
U. PATEL, GLADYS PAUL, LAKINA D.
PORTS, DELIAPHINE M. ROBINSON,
MICHAEL A. SHEFTON, TAHSHEEN
WILLIAMS and WILLIAM TURNER BY
THE CITY OF NEWARK.
________________________________________

                                           A-0066-18
                               3
IN THE MATTER OF THE LAYOFF OF
MIKO ALEXANDER, YVONNE AUSTIN,
PRESTON BIGELOW, MICHELE BRAGG
and OBALAJI JONES BY THE CITY OF
NEWARK.
________________________________________

            Argued January 25, 2021 – Decided May 10, 2021

            Before Judges Messano, Hoffman and Smith.

            On appeal from the New Jersey Civil Service
            Commission, Docket Nos. 2011-3536, 2011-2422,
            2011-4168, 2011-3368, 2011-2627, 2011-3347, 2011-
            2645, 2011-3355, 2011-2629, 2011-3386, and 2011-
            3573.

            Cheyne R. Scott argued the cause for appellant City of
            Newark (Chasan Lamparello Mallon & Cappuzzo, PC,
            attorneys; Cheyne R. Scott, of counsel and on the
            briefs; Cindy Nan Vogelman, on the briefs).

            Edward H. Kerwin argued the cause for respondents
            Newark Council 21 and Represented Members/
            Employees (Law Offices of Daniel J. Zirrith, attorneys;
            Daniel J. Zirrith, of counsel and on the brief; Lindsay
            A. Stehling and Edward H. Kerwin, on the brief).

PER CURIAM

      In 2010, appellant City of Newark (the City) faced an unprecedented fiscal

crisis, including a significant budget deficit that affected its credit and bond

ratings.   Needing to reduce personnel costs, its most significant budget

expenditure, the City instituted a hiring freeze, returned employees to lesser job


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titles, terminated provisional employees, and implemented mandatory furlough

days. Realizing it could not avoid layoffs, the City began negotiating with union

representatives regarding proposed personnel cuts.

      In these consolidated appeals, we address the decision of the City to lay

off almost 1000 employees to address the 2010 budget crisis. In total, the City

laid off 983 employees, including 860 terminations and 123 demotions. The

City proposed the layoffs become effective on November 12, 2010.              On

September 23, 2010, the Civil Service Commission (the CSC) approved the

City's layoff plans.

      Respondents, 110 former employees of the City, filed appeals with the

CSC, pursuant to N.J.S.A. 11A:8-4, arguing that their layoffs were not made in

good faith. In 2011, the appeals were transferred to the Office of Administrative

Law (OAL), where they were consolidated and scheduled for a hearing before

an Administrative Law Judge (ALJ).

      Discovery disputes arose during the pendency of the layoff appeals, with

the City contending that it responded to all discovery requests by producing

nearly 6,000 pages of documents and interrogatory answers.          Respondents

disagreed and filed a motion for sanctions, seeking the suppression of the City's

defenses and counsel fees associated with the motion. Rather than merely


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deciding the pending discovery motion, the ALJ issued a dispositive decision in

an Initial Decision, dated January 19, 2018. Notably, the ALJ found that the

City failed to comply with prior discovery orders generally. Based on this

finding, the ALJ struck the City's Answer and defenses, suppressed any

testimony to be advanced on behalf of the City, awarded counsel fees, and

rendered a determination on the merits that the layoffs in question were not made

in good faith. The ALJ's Initial Decision became the CSC's Final Decision when

the CSC lacked a quorum to undertake a substantive review of the Initial

Decision.1

      This appeal followed, with the City asserting that the ALJ erred by finding

that it failed to provide discovery, imposing unreasonable sanctions, and

rendering a decision regarding the layoffs' propriety as part of the discovery

motion, rather than conducting a hearing on the merits. Following our review,

we discern no basis to disturb the ALJ's decision regarding discovery issues and

the imposition of non-dispositive sanctions; however, we conclude it was

arbitrary, capricious, and unreasonable to enter a dispositive decision without


1
  Because of two vacancies and a third member's conflict of interest, the CSC
lacked a quorum to undertake a substantive review of the ALJ's Initial Decision.
When respondents refused to give any further extension to the CSC to permit
the appointment of additional members, the Initial Decision was deemed
adopted and became a Final Decision.
                                                                           A-0066-18
                                       6
holding a merits hearing. As a result, we affirm, in part, and reverse and remand,

in part.

                                        I.

Background on Public Employee Layoff Procedures

      Under N.J.S.A. 11A:8-1(a) and N.J.A.C. 4A:8-1.1(a), a public employer

may lay off an employee or employees "for economy, efficiency, or other related

reason[s]." Before doing so, the employer, referred to in the relevant provisions

as the "appointing authority," must attempt to "lessen the possibility, extent or

impact of layoffs by implementing pre-layoff actions" including, but not limited

to, initiating temporary hiring or promotion freezes; terminating temporary

employees; returning provisional employees to their permanent titles;

reassigning employees; and/or assisting potentially affected employees to find

other employment. N.J.S.A. 11A:8-2(a); N.J.A.C. 4A:8-1.2. The employer

must also meet with the majority representative for the potentially affected

employees and obtain the approval of the Chairperson of the CSC prior to

implementing such measures. N.J.S.A. 11A:8-2(b); N.J.A.C. 4A:8-1.2 to -1.3.

      If the employer decides that a layoff or layoffs are necessary, it must

submit information to the CSC detailing its plans at least thirty days before

issuing layoff notices to any potentially affected employees, including:


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               1. The reason for the layoff;

               2. The projected effective date of the layoff;

               3. Sample copies of the layoff notice and the
                  projected date for issuance;

               4. The number of positions . . . by title to be vacated,
                  reclassified, or abolished and the names, status,
                  layoff units, locations and, as of the effective date
                  of the layoff, permanent titles of employees
                  initially affected, including employees on leave;

               5. The vacant positions in the layoff unit . . . that the
                  appointing authority is willing to fill as of the
                  effective date of the layoff;

               6. A detailed explanation of all alternative and pre-
                  layoff actions that have been taken, or have been
                  considered and determined inapplicable;

               7. A summary of consultations with affected
                  negotiations representatives; and

               8. A list of affected negotiations representatives,
                  including addresses and the units they represent.

               [N.J.A.C. 4A:8-1.4(a).]

The CSC will then approve the plan or direct the employer to take additional

alternative measures, provide corrected information, or change the plan as

necessary. N.J.A.C. 4A:8-1.4(b), (d).

      Once the CSC approves the plan, the employer must give at least forty-

five days written notice of its decision to lay off an employee. N.J.S.A. 11A:8-

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1(a); N.J.A.C. 4A:8-1.6(a). The employer must also provide the CSC with "a

list of the names and permanent titles of all employees receiving the notice."

N.J.S.A. 11A:8-1(a). The CSC ensures the list's compliance with N.J.S.A.

11A:8-1(b), which requires that employees in State or local service "shall be laid

off in inverse order of seniority." N.J.A.C. 4A:8-1.1(b); N.J.A.C. 4A:8-2.2;

N.J.A.C. 4A:8-2.4. The CSC also determines whether any listed employee has

"lateral [or] demotional title rights" that would allow him or her to remain

employed by "bumping" a less senior employee, and/or "reemployment rights"

to be placed on a list to be rehired later on. N.J.S.A. 11A:8-1(f), (h); N.J.A.C.

4A:8-1.1(b); N.J.A.C. 4A:8-2.1; N.J.A.C. 4A:8-2.3. These determinations are

made prior to the effective date of the layoff, and the CSC then assumes

responsibility for sending its final notices to the affected employees. N.J.A.C.

4A:8-1.1; N.J.A.C. 4A:8-1.6(f).

      A laid off employee has the right to "appeal the good faith" of his or her

layoff to the CSC within twenty days of receiving the final notice. N.J.S.A.

11A:8-4. In such an appeal, the employee may "claim that the appointing

authority laid [him or her] off . . . for reasons other than economy, efficiency,

or other related reasons." N.J.A.C. 4A:8-2.6. The employee has the burden to

demonstrate that he or she was laid off in bad faith. N.J.S.A. 11A:8-4; N.J.A.C.


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4A:8-2.6(c). In the event of a finding of bad faith, the employee may be awarded

"back pay, benefits and counsel fees . . . ." N.J.A.C. 4A:2-1.5.

The Newark Layoffs

       As noted, in 2010, the City faced, in the words of its Acting Business

Administrator Michael Greene, "an unprecedented fiscal crisis due to a vast

range of circumstances," including the loss of "millions of dollars in both

ordinary and extraordinary municipal state aid" and other "key revenue sources."

According to Greene, the City faced a "significant budget deficit"2 and a review

of the City's budget demonstrated that its "most significant budget expenditure

[was] personnel costs"; as a result, any changes to the City's budget required the

reduction of these costs.

       Once the City realized that it could not avoid layoffs, it began negotiating

with union representatives for the Departments in which it planned to propose

personnel cuts. In a July 6, 2010, e-mail to Newark's Council President, Vice-

President, Clerk, and Deputy Clerk, Greene stated that the Mayor had directed

the City to "right-size" its work force, because this would put it on a "'pathway'

to achieving structural integrity and balanced budgets."




2
    In a July 2010 email, Greene projected a "budget gap" of $188 million.
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                                       10
       On August 24, 2010, the City sent letters to the CSC detailing "proposed

layoff plans" for the following Departments:

   •   Mayor's Office and related agencies
   •   Department of Neighborhood and Recreational Services
   •   Police Department
   •   Department of Administration
   •   Department of Child and Family Well-Being
   •   Department of Economic and Housing Development
   •   Department of Engineering
   •   Fire Department
   •   Department of Finance

       Each plan listed the positions within the relevant Department that would

be vacated, reclassified, or abolished, and the names and salaries of the

individuals holding those titles who would be laid off. On September 27, 2010,

the City sent an amendment to the CSC asking that the layoff proceedings for

all seven proposed employees in the Mayor's Office be rescinded. It sent similar

letters on October 26 and 27, 2010, regarding four of the 395 employees

proposed for layoff in the Department of Neighborhood and Recreational

Services, and four of the eight employees proposed in the Department of

Finance, respectively.

       The plans all stated the City proposed the layoffs for "economy and

efficiency." They also provided some Department-related reasons for removing

positions. For example, the plan for the Department of Neighborhood and

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Recreational Services stated that many services this Department provided were

not "revenue generating," and that its expenses had grown. The City thus wished

to eliminate employees and "outsourc[e]" to contractors.         For the Police

Department, the City stated that laying off officers would allow the City to

"operate more efficiently." Similar explanations were stated in other plans;

however, the plans did not state why the City had chosen the specific titles or

individuals listed for elimination. The City proposed the layoffs would become

effective on November 12, 2010. In total, the City contemplated the layoff of

983 employees, including 860 terminations and 123 demotions.

      On September 23, 2010, the CSC approved the City's layoff plans. It

directed the City to issue "general and individual notices of layoff" to affected

employees by September 28, 2010. On September 27, 2010, the City issued a

"General Notice of Layoff or Demotion" to the selected employees. The notice

informed these employees that it was "possible" they may be "subject to layoff,"

and explained that the CSC would determine each employee's "seniority, lateral

displacement, demotional and/or special reemployment rights."

      Subsequently, in letters dated October 29, and December 9, 2010, the CSC

informed the affected Newark employees, including respondents, that they

would be laid off as of November 12 for those receiving October 29 letters or


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December 23 for those receiving December 9 letters. The letters explained to

each employee that the CSC had determined he or she had no "displacement

rights" to move to another employee's position.      They also stated that the

employees' names would be placed on a "Special Reemployment List" for their

job titles and "other titles that may be deemed appropriate," "for certification

against future vacancies." In addition, the letters informed the employees of

their appeal rights.

Prior Discovery Proceedings

      Respondents served the City with a set of fifty-one interrogatories. Of

relevance here, Question 1 asked for the names of "all persons having knowledge

of any facts or information relating to the [City']s decision to lay off

[respondents]" and "the source of knowledge of each such person . . . and the

facts or information (not just conclusions) within the knowledge of each such

person." It asked the City to provide copies of "all documents that embody any

facts or information within the knowledge of each such person." The City listed

fourteen individuals and stated, "Layoffs were for economy and efficiency.

Person[s] identified reviewed the budgets and staffing (all materials attached as

answers to questions within)."




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      Questions 7 through 15 asked for the names of individuals who had

information regarding how the City "determined which titles and/or positions

would be eliminated in the layoff"; names of individuals who "participated in or

contributed to the decision to lay off" respondents; the sources of these people's

knowledge and information; the "facts and circumstances (not conclusions)

upon which [the City] relied in making the decision to lay off" respondents;

documents upon which the City relied; and "the reasons why [the City] chose to

lay off each of the [respondents] . . . including, but not limited to, stating why

[the City] chose to lay them off as opposed to the City of Newark employees

who were not laid off." The City responded to Questions 7 through 9 with "See

Answer #1," and to Questions 10 through 15 with "Please see attachment marked

Question #10."

      Questions 18 through 20 asked for organizational charts for the City from

the period of January 1, 2008, through the time of the City's responses to

interrogatories, and descriptions of each Department and subunit, including

information about the work each performed, lists of titles employed in each,

numbers of employees employed in each title, and job descriptions for each title.

In answer, the City attached various documents described below.




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      Questions 28 through 42 asked for information including: the number of

employees on the City's payroll from January 2008 through the date of the

interrogatory responses; the number of employees for each individual

Department; the salaries of each respondent at the time of his or her layoff; the

names, titles, units, work locations, and salaries or wages of all employees of

the City as of the last pay periods prior to January 1 in 2008, 2009, 2010, 2011,

2012, and the date of the responses; information about individuals hired by the

City after January 1, 2008, including salaries or wages, union status, and titles;

information about any individuals re-hired after being laid off; information of

"all individual employees who [were] currently performing the duties and

functions of the positions that were held by [respondents] at the time of each of

their respective layoffs"; and information about any employees who were

transferred to other Departments within the City after January 1, 2008.

      On January 8, 2013, the parties conducted a telephone conference during

which the ALJ asked them to engage in good faith efforts to resolve outstanding

discovery issues. On January 21, 2013, respondents sent a letter to the City with

a chart listing deficiencies it had found in the interrogatory responses.

Respondents stated that the City's answer to Question 1 did not truly provide the

sources of information held by the identified individuals. They asserted that this


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deficiency extended to the answers to Questions 7 through 15, because these

referred back to the Question 1 response or to "a stack of documents ." They

contended that these answers thus did not describe any of the information,

methods, processes, or reasons underlying the City's decision to lay them off.

For Questions 18 through 20, respondents stated that the documents the City

provided did not actually include any organizational charts, or any statement

that such charts did not exist.      For Questions 28 through 42, they again

complained that the City's response merely referred to "a stack of documents,"

which they contended was "improper."

      The City responded on March 1, 2013, stating that the only outstanding

information was the City's 2012 budget, information about temporary

employees, and information about experts. The City provided the budget shortly

thereafter.

      On March 8, 2013, respondents' counsel wrote to the ALJ documenting

the deficiencies it identified in the City's responses, their attempts to obtain

additional information from the City, and the City's answer to those efforts.

Respondents stated that the City's March 1 response ignored the bulk of the

discovery deficiencies they had reported, including all of those pertaining to the

City's answers to interrogatories.


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      On April 30, 2013, respondents filed a motion to compel discovery, again

listing deficiencies in the responses they received from the City. The City filed

a response on May 23, 2013, asserting that it had sent "over 500 pages of

information" to respondents on November 9, 2012, followed by "additional

information" on March 1, 2013. The ALJ granted respondents' motion on May

31, 2013, ordering that the City provide fully responsive answers to the

discovery requests as addressed in respondents' list of deficiencies, within

fourteen days. Respondents' request for attorney's fees associated with the

motion was denied.

      On June 17, 2013, the City provided respondents with revised answers to

the fifty-one interrogatories. However, the answer to Question 1 remained the

same apart from adding four more individuals who possessed knowledge

concerning the layoffs; it again stated only that the layoffs were for "economy

and efficiency" and that the identified individuals reviewed their budgets and

staffing. For Questions 7 through 15, the City provided the names of relevant

individuals and stated again that these people reviewed "their budgets and

staffing" to determine "which services should be consolidated or more

economically performed by an outside vendor."         The City stated that the

directors of the departments in which respondents worked reviewed "the 2008-


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                                      17
2010 budgets" and "the City of Newark ordinances" outlining the functions of

each department. It further indicated that respondents should "see the City of

Newark Layoff plan submitted to the [CSC]" for a description of the reasons

why they were chosen for layoff.

      In answer to Questions 18 through 27, which requested budget

information and organizational charts, the City stated that it had provided

documents including "payment registers for all employees of the City" for the

years respondents listed. The City once again referred to sets of documents in

its response to Questions 28 through 42.

      On June 27, 2014, the City provided another new set of answers to

respondents' interrogatories. Its answer to Question 1 added a further four

individuals' names, but still referred only to "economy and efficiency" and

"budgets and staffing." The answers to Questions 8, 10, and 13 were also the

same as in the previous response. The City's responses to the questions about

salaries and other information for laid off, newly hired, and all other employees

now referred to each year's budgets, and to a document called the "Employee

Head Count Report."

      On June 28, 2013, respondents wrote to the ALJ, reporting that "few" of

the City's interrogatory responses had been changed and that the "specifics" they


                                                                           A-0066-18
                                      18
had requested were "rarely given." Respondents asserted the City's answers

were not "fully responsive," as ordered, and therefore requested adjournment of

the hearing dates on the merits to allow completion of discovery.

      Respondents filed two more motions to compel discovery, on February

19, 2015, and November 25, 2015, arguing that there were still deficiencies in

the City's responses.    Specifically, respondents maintained that the City's

answers to the interrogatories requesting the reasons why they, in particular,

were chosen for layoff remained non-responsive. These motions were granted

on September 16, 2015, and January 12, 2016, respectively. Each time, the ALJ

ordered the City to provide fully responsive answers within twenty days, and

imposed attorney's fees and costs.

Final Discovery Provided

      Based on the record on appeal, it appears that ultimately, the City provided

the following documents in response to Questions 1, 10 through 12, and 15:

1) the City's layoff plans for each Department; 2) the CSC's approval of those

plans; 3) personnel orders from the Police Department to employees regarding

their impending layoff; 4) a list of laid off employees of the Department of

Neighborhood and Recreational Services stating who had assumed those

employees' duties; 5) a November 25, 2013 e-mail from the Director of the


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Department of Child and Family Well-Being stating that six of the nine

employees laid off in that Department were terminated due to "discontinuance

of laboratory services" or for "economy and efficiency"; and 6) a September 28,

2010 e-mail from the same Department informing employees that there would

be nine layoffs, and listing the titles affected.

      In an area of the record not specifically designated as part of the response

to these questions, the City also provided various correspondences among City

employees discussing the layoffs. In one conversation, a personnel officer in

the Department of Administration asked to substitute one title for another in the

group to be laid off, based on the fact that the initially chosen title was one the

Department could not "afford to loose [sic]." The other correspondences do not

discuss specific reasons for choosing the titles to be terminated, but instead

contain lists of titles – and in some instances the individuals holding those titles

– to be eliminated from each Department, and discussions about the need for

cost savings in each Department. The City also provided respondents with

documents concerning Newark's budget crisis in general.

      In response to Questions 18 through 20, which requested organizational

charts and descriptions of the work performed by each affected Department, the

City provided: 1) a collective bargaining agreement between the City and the


                                                                              A-0066-18
                                        20
Union Newark Council No. 21; 2) City Executive Orders regarding personnel

and salaries; 3) City Administrative Code provisions regarding the affected

Departments; and 4) the requested organization charts. A 2012 budget provided

in response to Question 28 also appears to have information about the

organization of the City's Departments within it. The City additionally provided

respondents with official CSC job specifications/descriptions for the titles

affected by the layoffs, by Department.

      In answer to Question 21, which requested that the City "state [its] total

aggregate salary expenditures" for 2008, 2010, 2011, and from 2012 through the

time of the interrogatory response, on an annual, monthly, and biweekly basis,

the City provided budgets for each of the Departments affected by the layoffs

and other municipal budget documents. These documents showed the amounts

budgeted for personnel salaries and wages for each year, and expenditures by

job title, for each of the years requested.

      The City provided the following documents in response to Questions 28

and 29: 1) a document labeled "City of Newark Employee Headcount," which

listed every City employee's name, job code and description, work hours, annual

salary, and hire date; 2) municipal budgets for 2008, 2009, 2010, and 2012; and

3) documents titled "Transaction Logs" for 2008, 2009, 2010, and 2011 showing


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similar information. Two other documents labeled "Headcounts" for 2009 and

2011 were provided in response to Questions 21 through 25, 28, 29, 32 through

34, 36 through 38, 41, and 42. The documents included information for City

employees for the given years, including titles, salaries, and if they were

promoted, suspended, or terminated, or if they retired or passed away during the

year. In answer to Question 36, the City provided a list of individuals re -hired

after the layoffs.

Discovery Sanctions Motion

      On August 24, 2017, nearly six years after the cases were transmitted to

the OAL, respondents filed a motion for sanctions against the City for failure to

comply with the prior discovery orders.      They argued that their discovery

demands "reasonably [sought] specific information about how [the City] chose

to lay off the employees it did, how the duties of the [laid off] employees were

handled after the layoffs, and other related inquiries," but that the City had

"refuse[d] to provide any such specifics, instead choosing to hide behind general

documents and declarations about 'economy and efficiency.'"         Respondents

requested attorney fees and costs associated with the motion as well as the

suppression of the City's evidence and defenses to their claims. The City

responded on September 20, 2017, asserting that it had provided complete


                                                                           A-0066-18
                                      22
answers to the discovery requests and requesting a determination as to the

responsiveness of these answers.

      On October 2, 2017, the ALJ heard oral argument on the motion.

Respondents' counsel argued that the City's response to Questions 1, 7, 8, 1 0

through 12, and 15 remained deficient, because it did not provide specific

answers regarding the sources of knowledge for each individual the City named.

He also asserted that the layoff plans the City sent to the CSC were not

responsive, because the questions had asked for "the actual facts that were relied

on in forming" those plans. Counsel conceded that respondents were provided

with organizational charts in response to Questions 18 and 19; however, he

argued that the City had not provided the additional information about the work

performed by the departments requested in Question 20. He further stated that

the Headcount documents the City claimed responded to several questions were

not satisfactory because they were not searchable and did not state what City

witnesses might "testify to" at a hearing on the merits.

      For Question 33, which asked for the salaries and job descriptions of

individuals hired after January 1, 2010, respondents' counsel stated that the

descriptions were never provided. He explained that these were necessary to

learn whether the City had laid off respondents and then hired other individuals


                                                                            A-0066-18
                                       23
to do newly-named jobs with all of the same responsibilities rather than re-hiring

respondents as normally would be required. Counsel also asserted that the City's

response to Question 34, which requested further information about individuals

identified in Question 33, did not provide this information and simply referred

to the Headcount documents. He argued that the Headcounts similarly did not

answer Question 40, which asked the City to identify individuals who were

currently performing the duties of the positions formerly held by respondents,

or Questions 41 and 42, which requested information about transferred

employees.

      The City's counsel explained that she was not "the original attorney on the

matter," but that she had reviewed the City's response and felt that it "was

compliant in answering the interrogatories." Specifically, she argued that the

layoff plans submitted to the CSC properly stated the reasons for the layoffs in

each department.      She further asserted that while the City "made the

recommendation" for certain positions and individuals "to potentially be

affected by the layoff," the ultimate "decision based on seniority and

displacement rights and special reemployment [was] up to [the CSC]."

      Counsel also stated that the City undertook the layoffs because of its fiscal

difficulties, and that the department heads "reviewed their budgets" and made


                                                                             A-0066-18
                                       24
decisions "as to . . . maybe we could consolidate some of these assignments or

it's more economically efficient to go with outside vendors as opposed to having

these individuals continue on staff." She argued that "ultimately the reason that

the City decided to lay off was for economy and efficiency," and that the budget

and Headcount documents the City provided to respondents answered the

questions about the reasons for the layoffs and the City's employees after the

layoffs were completed. She stated that respondents would simply "have to go

through the documents and find" the information they sought.

ALJ's Decision

      On January 19, 2018, the ALJ issued an Initial Decision addressing

respondents' motion.      He explained that a layoff action by an appointing

authority like the City "must be based in good faith on a desire to achieve

economy and efficiency," and that respondents had the burden of proof to

demonstrate that their layoffs were not implemented for such a reason. He stated

that "[i]n short, the validity of the layoff[s] is based on the intention, or state of

mind, of the appointing authority," and that therefore, respondents needed "a

statement from [the City] as to the reasons for the layoffs and in particular for

choosing the specific individuals in question."




                                                                                A-0066-18
                                         25
      The ALJ said that respondents had asked for "specific details as to the

reasons" they were laid off, and that the City's response did not "give an

explanation as to the reasons that specific individuals were chosen for layoff"

from among all City employees.        He further found that the City failed to

demonstrate at oral argument that it had produced fully responsive answers to

respondents' discovery requests. As a result, the ALJ found that the City failed

to comply with the May 13, 2013, September 16, 2015, and January 12, 2016,

discovery orders.

      Next, the ALJ found that the City's failure to comply was unreasonable.

He noted that significant time had passed since respondents served their

discovery requests, and that the questions and document requests at issue were

"central to the case."    He stated that the City "did not offer an adequate

explanation for its failure to provide appropriate response."

      As to respondents' request that the City's answer, defenses, and evidence

be suppressed as a sanction for failure to provide discovery, the ALJ found that

the City did not produce "essential information concerning the reasons for the

layoffs," and that this "substantially hinder[ed]" respondents' "efforts to provide

that the layoffs were not done in good faith." He concluded that "a lesser

sanction . . . would not be adequate" redress for the City's discovery-related


                                                                             A-0066-18
                                       26
failures. As a result, he granted respondents' suppression request. The ALJ then

stated that the "effect" of this sanction was that "a determination that the layoffs

in question were not done in good faith should be entered in [respondents']

favor." The ALJ ended his opinion by so ordering, and by additionally ordering

the City to pay respondents' attorney's fees and costs associated with the motion.

      The City filed exceptions to the Initial Decision with the CSC on March

2, 2018, arguing that it had adequately answered respondents' interrogatories.

Specifically, it asserted that it told respondents the layoffs were "due to economy

and efficiency" and that the individuals listed as having knowledge about the

layoffs reviewed their budgets.      It said it also provided the budget-related

documents "that each [City] Department used to determine that a layoff was

necessary" and emails between Department heads detailing "reasons why the

City was in such a dire financial condition" and potential consequences of the

budget crisis. The City further argued that the CSC approved its layoff pla n,

and that the plan and the approval letter were provided to respondents. Finally,

it contended that its "Headcount" documents contained "all information

requested" by respondents regarding the numbers of City employees of various

types; their wages; their union status; and other similar information.




                                                                              A-0066-18
                                        27
      The City argued that it had "supplied over 5,000 pages of documents and

several supplemental interrogatory answers in a good faith attempt to resolve

discovery issues." It stated that despite this, respondents "simply continued to

assert that [they] were not in possession of discovery." The City asserted the

ALJ's decision would have "far-reaching and substantial consequences,"

because it would require the City to "add several employees for whom it does

not have vacancies to its payroll," causing cash flow problems and affecting the

City's bond rating.     It argued that the ALJ's decision imposed "drastic,

unbalanced and inequitable" sanctions without sufficient review of the record

and without making sufficient findings.

      Respondents filed an answer to the City's exceptions on May 15, 2018,

contending that the City had "never provided answers to the interrogatories that

would bind [it] at the hearing in this matter," and instead merely "referred to

attached documents and a general answer that the layoffs were for 'economy and

efficiency.'" Respondents asserted that the City had "failed to litigate this matter

in good faith, causing [them] to suffer delay after delay without any basis for

their actions."

      As previously noted, the Initial Decision was deemed adopted and became

a Final Decision of the CSC on July 27, 2018, because the CSC lacked a quorum


                                                                              A-0066-18
                                        28
to undertake a substantive review of the ALJ's Initial Decision. As a result, the

CSC never completed a substantive review of the ALJ's Initial Decision. Nor

did the CSC consider the City's exceptions to the decision. These appeals

followed. On October 9, 2018, we granted the City's motion to consolidate the

cases.

                                         II.

         The City argues that the ALJ acted arbitrarily, capriciously, and

unreasonably when he decided the discovery motion in respondents' favor,

imposed sanctions, and rendered a decision on the merits, without holding a

hearing placing the burden on respondents to prove that the layoffs were

conducted in bad faith.

         On appeal, the judicial capacity to review agency actions is "limited."

Pub. Serv. Elec. and Gas Co. v. N.J. Dep't of Env't. Prot., 

101 N.J. 95

, 103

(1985). An agency's "final quasi-judicial decision" should be affirmed unless

there is a "'clear showing' that it is arbitrary, capricious, or unreasonable, or that

it lacks fair support in the record . . . ." Circus Liquors, Inc. v. Governing Body

of Middletown Twp., 

199 N.J. 1

, 9 (2009) (quoting In re Herrmann, 

192 N.J. 19

,

27-28 (2007)). The reviewing court is restricted to three inquiries:

              (1) whether the agency action violates the enabling act's
              express or implied legislative policies; (2) whether

                                                                                A-0066-18
                                         29
            there is substantial evidence in the record to support the
            findings upon which the agency based [its] application
            of legislative policies; and (3) whether, in applying the
            legislative policies to the facts, the agency clearly erred
            by reaching a conclusion that could not reasonably have
            been made upon a showing of the relevant factors.

            [Pub. Serv. Elec. and 

Gas, 101 N.J. at 103

.]

      "Even if a court may have reached a different result had it been the initial

decision maker, it may not simply 'substitute its own judgment for the agency's.'"

Circus 

Liquors, 199 N.J. at 10

(quoting In re Carter, 

191 N.J. 474

, 483 (2007)).

The court's "strong inclination" is to "defer to agency action that is consistent

with the legislative grant of power." Lower Main St. Assocs. v. N.J. Hous. and

Mortg. Fin. Agency, 

114 N.J. 226

, 236 (1989). Courts typically defer to an

administrative agency's "technical expertise, its superior knowledge of its

subject matter area, and its fact-finding role." Messick v. Bd. of Rev., 420 N.J.

Super. 321, 325 (App. Div. 2011).

      However, "[t]he interest of justice" allows a court to "abandon its

traditional deference . . . when an agency's decision is manifestly mistaken."

Outland v. Bd. of Trs. of the Tchrs. Pension and Annuity Fund, 

326 N.J. Super.

395

, 400 (App. Div. 1999). Further, a court is "not bound by an agency's

conclusions of law." Brambila v. Bd. of Rev., 

124 N.J. 425

, 437 (1991).

A. Finding That the City Failed to Comply With Discovery

                                                                            A-0066-18
                                       30
      The City asserts that it provided respondents with "information regarding

its budget, as well as fiscal and economic data and documentation" and that it

therefore complied fully with respondents' discovery requests and the ALJ's

orders. It argues that the ALJ wrongfully focused on "state of mind evidence,"

because "the applicable legal standard . . . only require[d] the City to

demonstrate that the Layoff Plan was the result of a documented budget crisis."

It states that the discovery documents and interrogatory answers it provided

"were sufficient to demonstrate that the layoff[s were] made in good faith for

purposes of economy and efficiency." The City further contends that it is

"impossible to discern" from the Initial Decision "what particular information"

the ALJ felt the City failed to supply and "why it would have allowed

[respondents] to meet their burden of proof."

      The Administrative Procedure Rules, N.J.A.C. 1:1-1.1 through -21.6, set

forth the rules governing "procedural aspects" of all "contested cases" requiring

a hearing by an ALJ or agency head. N.J.A.C. 1:1-1.1(a). N.J.A.C. 1:1-10.1

states that the Rules specifically regarding discovery are intended to "facilitate

the disposition of cases" by "giving litigants access to facts which tend to

support or undermine their position or that of their adversary." To that end,

parties in a contested case "shall commence immediately to exchange


                                                                            A-0066-18
                                       31
information voluntarily," and "shall immediately serve discovery requests."

N.J.A.C. 1:1-10.4(a) to (b). Any party may notify another party to provide

discovery through interrogatories or requests for documents. N.J.A.C. 1:1-10.2.

The party receiving a discovery request "shall provide the requested

information, material or access [thereto] or offer a schedule for reasonable

compliance with the notice" within fifteen days of receipt. N.J.A.C. 1:1-10.4(c).

The parties must complete discovery at least ten days before the first scheduled

evidentiary hearing or by a date ordered by the ALJ. N.J.A.C. 1:1-10.4(e).

      We are satisfied the ALJ did not err in concluding that the City did not

provide full and complete answers to respondents' properly issued

interrogatories and failed to comply with the prior discovery orders.            The

documents the City submitted in response to Questions 1, 10 through 12, and

15, did not state the "source of knowledge" for each individual listed in response

to Question 1, and did not include "written statements received from each such

person and copies of all documents that embody any facts or information within

the knowledge of each such person" as demanded by that question. They also

did not describe "in detail and with specificity, the facts and circumstances . . .

that each of the individuals identified . . . relied upon to determine to lay off any

or all of [the affected employees],"or the "methods and processes" and "reasons"


                                                                               A-0066-18
                                        32
underpinning the decision to lay off respondents specifically, as requested in

Questions 10 through 12 and 15.

      The City's answers and documents explain Newark's need for layoffs in

general. Respondents do not appear to dispute that the City was experiencing

financial difficulties in 2010 or that some layoffs may have been necessary.

However, respondents' interrogatories asked for information concerning how the

City decided which titles or positions would be eliminated and the reasons why

the City chose to lay off each individual respondent. In effect, responden ts

asked why they were selected instead of other employees. The City's response

that the layoffs were conducted "for economy and efficiency" did not provide

this information, nor did any of the documents turned over to respondents.

      Further, the "Headcount" documents the City provided in response to

many questions from 28 through 42 did not specifically state the "total number

of employees on the [City's] payroll . . . for each month from January 2008

through the date of [the City's] answers" to interrogatories, or the "total number

of employees . . . for each individual department . . . for fiscal years 2008, 2009,

2010, 2011, and 2012," as requested by these questions. Additionally, if the

Bates stamping on these documents accurately represents how their pages were

provided to respondents, they would have been difficult to read; the wide charts


                                                                              A-0066-18
                                        33
of information could not be presented on a single landscape-oriented page, so

the entries for any given employee were, and remain in the record on appeal,

spread out over several disconnected pages that did not always even contain

rows denoting the information in each column. Respondents' counsel noted at

the October 2, 2017, hearing that these documents were not searchable for

specific information. The "Transaction Log" documents were provided in a

similar format, displaying the same difficulties with reading and interpreting

them. The budget documents the City provided also gave information about

each Department's expenditures, but only the 2012 budget contained data

regarding employees specifically.

      We reject the City's argument that the ALJ erred by focusing on "state of

mind evidence." To succeed in their appeal, respondents needed to show that

the City's reasons for laying them off were improper.        N.J.S.A. 11A:8-4;

N.J.A.C. 4A:8-2.6(c). Respondents sought discovery from the City regarding

the reasons they as individuals were laid off and why their specific positions

were chosen for elimination. This information was highly relevant to the issue

of bad faith. Even if, as the City argues, respondents could not have met their

burden had the material and information they sought been provided, that does

not negate the fact that they properly and reasonably requested it in discovery.


                                                                           A-0066-18
                                      34
      It also does not excuse the fact that the City did not provide what

respondents demanded and what the ALJ repeatedly ordered must be given. We

reject the City's argument that its discovery responses were adequate because

they were "sufficient to demonstrate" that the layoffs were conducted in good

faith. An employer facing a layoff appeal under N.J.S.A. 11A:8-4 should not be

permitted to choose not to answer the specific questions appealing employees

ask in their interrogatories, then use its production of evidence presenting its

actions in the best light to argue that its discovery responses were complete

despite this deficiency. Again, the issue at this stage of the inquiry is not

whether respondents could have succeeded on the merits with full answers to

their interrogatories or whether any more responsive answers by the City would

have demonstrated bad faith. It is whether the City answered the questions asked

and provided the information requested. We conclude the City did not, and that

the ALJ did not act arbitrarily, capriciously, or unreasonably in finding that the

City violated his discovery orders.

      The City next argues that even if the ALJ correctly found that it did not

comply with discovery requirements, the sanctions he imposed – the striking of

the City's briefs, defenses and evidence – were "impermissibly harsh."




                                                                            A-0066-18
                                       35
      In general, the discovery rules that govern both cases in the Superior Court

and contested cases in the OAL are designed "to further the public policies of

expeditious handling of cases, avoiding stale evidence, and providing

uniformity, predictability and security in the conduct of litigation." Zaccardi v.

Becker, 

88 N.J. 245

, 252 (1982). The rules are meant to "eliminate, as far as

possible, concealment and surprise" in the administration of a matter, so that

decisions may "rest upon [the] real merits . . . and not upon the skill and

maneuvering of counsel." Oliviero v. Porter Hayden Co., 

241 N.J. Super. 381

,

387 (App. Div. 1990). To that end, discovery rules and orders issued to enforce

them "'must be adhered to' absent good cause." N.J. Dep't of Child. and Fams.

v. E.L., 

454 N.J. Super. 10

, 20 (App. Div. 2018) (quoting Abtrax Pharms., Inc.

v. Elkins-Sinn, Inc., 

139 N.J. 499

, 512 (1995).

      The courts have recognized "it is necessary that there be adequate

provisions for the enforcement of the rules [regarding] discovery against those

who fail or refuse to comply." Lang v. Morgan's Home Equip. Corp., 

6 N.J.

333

, 338 (1951). Indeed, they have held that sanctions for failure to provide

discovery or comply with discovery-related orders "are peculiarly necessary,"

ibid., and that a judge has the power to impose such sanctions "subject only to

the requirement that they be just and reasonable in the circumstances."


                                                                            A-0066-18
                                       36
Calabrese v. Trenton State Coll., 

162 N.J. Super. 145

, 151-52 (App. Div. 1978).

When reviewing the imposition of sanctions by an ALJ, as affirmed by an

administrative agency, the "arbitrary, capricious, or unreasonable" standard of

review applies. 

E.L., 454 N.J. Super. at 21-22

.

      Here, N.J.A.C. 1:1-10.5 provides that "[b]y motion of a party or on his or

her own motion, [an ALJ] may impose sanctions pursuant to N.J.A.C. 1:1-14.14

and 14.15 for failure to comply with the requirements of" the rules regarding

discovery discussed above. Of relevance here, N.J.A.C. 1:1-14.14 states that for

"unreasonable failure to comply with any order of a judge or with any

requirements of [the rules]," the ALJ may "suppress a defense or claim";

"exclude evidence"; "order costs or reasonable expenses, including attorney's

fees, to be paid"; and "take other appropriate case-related action." Thus, the

ALJ was permitted by the procedural rules to strike the City's briefs, defenses,

and evidence due to its failure to comply with the prior discovery orders.

      We conclude the ALJ did not act arbitrarily, capriciously, or unreasonably

in imposing those sanctions. In Kolczycki v. City of East Orange, 317 N.J.

Super. 505, 512 (App. Div. 1999), this court found that a trial judge

appropriately suppressed the defendants' answer and defenses, because of their

"persistent dereliction in providing discovery . . . ." There, the defendants were


                                                                             A-0066-18
                                       37
ordered to provide answers to the plaintiffs' interrogatories and document

requests but did not do so, causing the court to enter an order suppressing their

answer and separate defenses.

Id. at 513.

The court granted the defendants'

request that this order be vacated to allow them another opportunity to respond

to the requests, and ordered them to provide discovery within fourteen days; the

defendants again failed to comply, leading to the entry of the second suppression

order which this court found was proper.

Id. at 513-14.

During the discovery

dispute, the defendants "never filed any motions for protective orders or to limit

the scope of plaintiffs' discovery . . . ."

Id. at 514.

      Here, the City repeatedly failed to provide the specific information

respondents requested. Respondents made clear in their January 21, 2013, letter

listing deficiencies, and in their later motions to compel documents, that they

wanted the City to answer their questions regarding its choice to eliminate their

positions/titles and lay them off specifically. They also listed other missing

information. The City eventually turned over documents that responded to some

of the interrogatories it initially failed to answer, such as the organizational

charts and lists of re-hired employees. However, as previously noted, despite

multiple orders from the ALJ, the City never provided several key answers. The

City's failure to respond to discovery demands was therefore "persistent,"


                                                                            A-0066-18
                                         38

Kolczycki, 317 N.J. Super. at 512

, in a case where the ALJ was lenient, giving

the City multiple opportunities to address its deficient discovery responses. The

discovery period here went on for years, longer than in either of the above cases.

While the City now asserts on appeal that respondents' requests were "overbroad

and overly burdensome," it never filed any motions before the ALJ asking for

relief from any part of them.

      Under these circumstances, we conclude the ALJ's choice of sanctions was

not arbitrary, capricious, or unreasonable, because he was permitted under

N.J.A.C. 1:1-10.5 and -14.14 to order the suppression of the City's briefs,

defenses, and evidence as a remedy for the City's unreasonable failure to comply

with the discovery rules or with the prior orders.

      The City alternatively argues that even if the ALJ was correct to strike its

briefs, evidence, and arguments, he erred by going further and rendering a

decision on the merits of respondents' appeals without further process. The City

notes that such a determination was not requested by respondents in their motion

to compel discovery. The City further argues that regardless of any finding that

it did not comply with discovery, respondents had the burden of proof to show

that the layoffs were not carried out in good faith. As a result, it contends, the

ALJ should have held a hearing on the merits. The City asserts the consequences


                                                                            A-0066-18
                                       39
of the ALJ's decision, which could involve requiring the City to reinstate all 110

respondents to their positions with a decade of back pay, are unduly severe.

      We are satisfied the ALJ erred in concluding that the "effect" of the

discovery sanctions he imposed should be the entry of a determination that the

City's layoff action against respondents was not conducted in good faith under

the relevant statutes and regulations. N.J.A.C. 1:1-14.14 does not explicitly

include rendering a decision on the merits of an action in favor of the party

making a discovery motion among the permitted sanctions, and respondents did

not request this remedy. Further, the ALJ's action does not appear to be an

"appropriate case-related action" under the circumstances.

Ibid.

As noted, the

burden in this type of case is upon the employee to show

that the employer laid him or her off in bad faith. N.J.S.A. 11A:8-4; N.J.A.C.

4A:8-2.6(c). The courts have long held that the power of a municipality to

abolish a position or title or terminate an employee "cannot be questioned where

such action is motivated by a bona fide desire to effect economies and increase

municipal efficiency." Greco v. Smith, 

40 N.J. Super. 182

, 189 (App. Div.

1956). A presumption of good faith attends a municipal layoff action.

Ibid.

“The mere fact

that the removal of an individual from the municipal

payroll results in an economy is not the exclusive test," and a public employer


                                                                            A-0066-18
                                       40
may not adopt a layoff plan simply "to effect the removal of a public employee,

protected by civil service, without following the statutory procedure for

removal." 

Greco, 40 N.J. Super. at 190

. An affected employee may prove that

his or her layoff, ostensibly based on economic reasons, was in bad faith if he

or she demonstrates that those stated reasons were a pretext for an improper

removal not truly related to economy or efficiency. Prosecutor's Detectives &

Investigators Ass'n v. Hudson Cnty. Bd. of Chosen Freeholders, 

130 N.J. Super.

30

, 43 (App. Div. 1974).

      However, if the presumption of good faith "is not overcome by sufficient

proofs, it is of no consequence that there is proof showing that considerations

other than economy underlay or played some part in that action." Schnipper v.

N. Bergen Twp., 

13 N.J. Super. 11

, 15 (App. Div. 1951). Even if the motive for

an employee's removal is tainted by improper considerations, the layoff will be

upheld if his or her position was unnecessary and could be abolished without

impairing departmental efficiency. Santucci v. Paterson, 

113 N.J.L. 192

(Sup.

Ct. 1934). Further, the court in Prosecutor's Detectives & Investigators 

Ass’n

130 N.J. Super. at 43

, noted that discriminatory and other unfair and improper

reasons for a layoff or other adverse employment action "most often surface[]




                                                                         A-0066-18
                                     41
in the form of action taken against an individual employee, rather than large

groups of similarly situated persons" as occurred here.

      The courts have also held that even where a defendant's answer is properly

stricken for failure to make discovery, the plaintiff may be "precluded from

recovery where the proof which he offers in support of his own case reveals a

legal defense to his claim," Johnson v. Johnson, 

92 N.J. Super. 457

, 465 (App.

Div. 1966), or "if her proofs reveal[] that she was not entitled to recovery."

Kolczycki, 317 N.J. Super. at 517

. For example, in 

Kolczycki, 317 N.J. Super.

at 514-17

, where the trial court struck the defendants' answer and defenses, this

court nevertheless remanded the matter for a new hearing on the merits of the

plaintiffs' complaint because there was a remaining question about whether the

statute of limitations had passed before they filed their action.

      By contrast, in Interchemical Corp. v. Uncas Printing & Finishing Co., 

39

N.J. Super. 318

, 321-23 (App. Div. 1956), where the defendant repeatedly failed

to produce discovery despite the entry of court orders directing it to do so, this

court found that the trial judge acted properly by not only suppressing the

defendant's answer, but also ordering a default judgment against it and requiring

the plaintiff to prove only its damages.       We stated that the defendant had

"invited" this sanction "by the course [that] it chose to pursue in the face of [the]


                                                                               A-0066-18
                                        42
plaintiff's persistent efforts to get at necessary facts," and that the default

judgment was "a just one, for the discovery proceedings went to the very

foundation of [the] plaintiff's cause of action, and [the] defendant's refusal to

comply was deliberate and contumacious."

Id. at 324-26.

The Supreme Court

later cited Interchemical favorably when holding that the dismissal of the

plaintiff's complaint in Abtrax 

Pharmaceuticals, 139 N.J. at 521-22

, was proper,

and stated that a litigant who "willfully violates [the] bedrock principle" of full

disclosure of evidence during discovery "should not assume that the right to an

adjudication on the merits of its claims will survive . . . ." Nevertheless, the

case at hand is distinguishable, because while Rule 4:23-2(b)(3) explicitly

permits the entry of a default judgment against a defendant who violates

discovery orders in the Superior Court, N.J.A.C. 1:1-14.14 does not.

      Here, the burden on respondents to prove that the City's layoffs were

conducted in bad faith was a heavy one. The documentary evidence turned over

by the City demonstrated the financial difficulties that Newark experienced at

the time of the layoffs, that the City undertook appropriate alternative and pre -

layoff actions, and that there were some discussions as to whether certain

Departments could outsource services to private vendors or eliminate some

services entirely. Cases like Schnipper and Santucci establish that an employee


                                                                             A-0066-18
                                       43
cannot meet his or her burden even by showing that an employer's action was

tainted by some inappropriate concerns so long as economy and efficiency were

the main goals of the layoff. As a result, it may well be that even if respondents

had received all requested discovery, they would not have been able to overcome

the strong presumption that the City laid them off in good faith.

      We conclude the ALJ erred by rendering a decision on the merits in

respondents' favor as part of his determination on the discovery sanctions

motion. The remedies for discovery violations in matters like this one do not

explicitly include automatic entry of a decision in favor of the employee,

respondents did not request such a remedy, the burden remained upon

respondents to prove bad faith, and case law indicates that even where a

defendant's answer and evidence have been stricken, a plaintiff is not necessarily

entitled to recovery. Entitlement to the relief sought by plaintiff was not self-

evident in this case. A proper conclusion on the merits could only be reached

after factual findings were made and correlated to legal consequences.

      We therefore hold that the ALJ, and thus the CSC, acted arbitrarily,

capriciously, and unreasonably by finding in respondents' favor on the issue

whether their layoffs were in good faith as part of the discovery decision. As a




                                                                            A-0066-18
                                       44
result, we reverse this portion of the decision and remand for a hearing on the

merits of respondents' claims of bad faith.

      In sum, we affirm the portions of the decision finding that the City failed

to comply with the ALJ's discovery orders and sanctioning the City by

suppressing its briefs, defenses, and evidence, and reverse the portion entering

a determination that the layoffs were conducted in bad faith, and remand for a

hearing on the merits. Because the ALJ already rendered a determination on the

merits in his Initial Decision, we direct that a different ALJ shall preside at the

hearing on the merits.

      Affirmed, in part, reversed and remanded, in part. We do not retain

jurisdiction.




                                                                             A-0066-18
                                       45

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