                NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-3675-15T1
                                       APPROVED FOR PUBLICATION
IN THE MATTER OF WILLIAM R.
HENDRICKSON, JR., DEPARTMENT                July 19, 2017
OF COMMUNITY AFFAIRS.
                                         APPELLATE DIVISION


         Argued December 21, 2016 – Decided July 19, 2017

         Before Judges Alvarez, Manahan, and Lisa.1

         On appeal from the Civil Service Commission,
         Docket No. 2015-859.

         Melanie R. Walter, Deputy Attorney General,
         argued the cause for appellant New Jersey
         Department of Community Affairs (Christopher
         S. Porrino, Attorney General, attorney;
         Melissa   H.   Raksa,   Assistant   Attorney
         General, of counsel; Ms. Walter, on the
         briefs).

         Arnold Shep Cohen argued the cause for
         respondent    William   Hendrickson    (Oxfeld
         Cohen,   P.C.,   attorneys;  Mr.   Cohen,   of
         counsel and on the brief).

1
  This appeal was argued before Judges Carmen H. Alvarez and
Carol E. Higbee. The opinion was not approved for filing prior
to Judge Higbee's death on January 3, 2017. Pursuant to Rule
2:13-2(b), "Appeals shall be decided by panels of 2 judges
designated by the presiding judge of the part except when the
presiding judge determines that an appeal should be determined
by a panel of 3 judges." That rule further provides that if a
judge is added after argument who did not participate in the
argument, the appeal shall be reargued "unless reargument is
waived."   The presiding judge has determined that this appeal
shall be decided by a panel of three judges, and the parties
have consented to the addition to the panel of Judges Thomas V.
Manahan and Joseph F. Lisa and have waived reargument.
              Christopher S. Porrino, Attorney General,
              attorney   for   respondent  Civil  Service
              Commission   (Pamela   N.   Ullman,  Deputy
              Attorney General, on the statement in lieu
              of brief).

     The opinion of the court was delivered by

ALVAREZ, P.J.A.D.

     The Department of Community Affairs (DCA) appeals from a

December      21,   2015     administrative       law   judge's   (ALJ)      decision

reducing      the    Bureau     of     Fire     Code    Enforcement's2       (Bureau)

disciplinary        action    terminating       William    Hendrickson,       a   fire

safety inspector, to a six-month suspension.                    Because the Civil

Service    Commission        (CSC    or   Commission)     did   not   have    a   full

roster of three members constituting a quorum, N.J.S.A. 11A:2-3,

it could not adopt or reject the ALJ's decision until months

after   the    mandatory      forty-five-day       time   frame     elapsed.       See

N.J.S.A.      52:14B-10(c).          Thus   the   ALJ's   initial     decision     was

"deemed-adopted" as the Commission's final decision.3                    Ibid.


2
   The Bureau of Fire Code Enforcement operates within the
Division of Fire Safety.      The Division of Fire Safety "is
established in the Department of Community Affairs[.]" N.J.S.A.
52:27D-25b.
3
  Hendrickson does not challenge the DCA's right to pursue an
appeal of the Commission's final decision when it results from
application of the deemed-adopted statute.        That question
remains for another day. See Mastro v. Bd. of Trs., Pub. Emps.'
Ret. Sys., 266 N.J. Super. 445, 452-53 (App. Div. 1993).     Had
the Commission rendered a decision in the normal course, the DCA
                                                     (continued)


                                            2                                A-3675-15T1
       For the reasons that follow, we conclude that when the lack

of     a    quorum     attributable         to       vacancies      caused       the       agency

inaction, the current version of the deemed-adopted statute does

not    require       traditional         deferential         appellate        review   of     the

ALJ's decision.          Applying the standard of review applicable to

bench trials, we vacate the six-month suspension and reinstate

the DCA's decision ending Hendrickson's employment.

       After    the    departmental         hearing,         the    DCA    issued      a    final

notice of disciplinary action (FNDA) imposing the sanction of

removal.       Hendrickson appealed and the matter was transmitted to

the    Office    of    Administrative            Law    (OAL)      for    a    hearing      as   a

contested      case    under       the    Administrative           Procedure     Act       (APA),

N.J.S.A.       52:14B-1       to    -15,     and       the     Uniform        Administrative

Procedure Rules, N.J.A.C. 1:1-1.1 to -21.6.

       The preliminary notice of disciplinary action (PNDA) that

followed        the    incident          charged        Hendrickson           with     conduct

unbecoming an employee, N.J.A.C. 4A:2-2.3(a)(6); discrimination

that       affects    equal    employment            opportunity,         including        sexual

harassment, N.J.A.C. 4A:2-2.3(a)(9); and other sufficient cause,




(continued)
would have the right of appeal. See In re Stallworth, 208 N.J.
182, 191 (2011) (agency appealed Commission's final decision
modifying employee's removal to a suspension).




                                                 3                                     A-3675-15T1
in   violation       of       New    Jersey's           state     policy   prohibiting

discrimination in the workplace, N.J.A.C. 4A:2-2.3(a)(12).

     The incident that triggered disciplinary proceedings was

described by the eyewitnesses, two of Hendrickson's co-workers,

at the administrative law hearing.                        Briefly, on December 1,

2013, when Hendrickson and the others began their shifts in the

parking     lot    of     a    sports       stadium,       a    supervisor     modified

Hendrickson's work assignment.                   Hendrickson was overheard by his

co-workers calling his supervisor, a woman, a "f---ing c--t."

Hendrickson       testified        that     he    did    not    remember   using      that

language, but       admitted saying that he wished "she [would get] a

disease."

     The ALJ's written decision found the outburst occurred as

Hendrickson's       co-workers        had        described,       and   further      found

Hendrickson's failure of memory to be incredible.                             Since the

language    he     used    was      "akin    to     a    racial    slur[,]"    the      ALJ

therefore concluded that DCA had met its burden of proof by a

preponderance of the credible evidence.

     The ALJ also observed that Hendrickson's use of obscenities

in the presence of other employees hurt the morale of both the

supervisor    as    well      as    the   co-workers        who    heard   "the    gender

slur."     Furthermore, because the incident occurred in a parking

lot, she took "into consideration the possibility that members




                                             4                                    A-3675-15T1
of    the   public      also    heard    the       gender    slur      and    inappropriate

comments."        The ALJ held that Hendrickson had violated the New

Jersey state policy prohibiting discrimination in the workplace,

defined     in    the    handbook       he    was     provided       when     he    commenced

employment with the Bureau fifteen or sixteen months prior.

       In weighing the appropriate discipline for the misconduct,

the ALJ took into account that this was the first blemish in

Hendrickson's disciplinary record, and that he incurred no other

charges for the months he worked with the Bureau thereafter.

Although troubled by his denial of having made the statement by

virtue      of   lack    of    memory,        and     refusal     to    acknowledge          his

wrongdoing,        she        opined      that        removal        was       unwarranted.

Considering       "the     nature        of     the       offense,      the    concept        of

progressive       discipline,      and       the    employee's       prior     work     record

[]," the ALJ determined that "removal was excessive []" and that

a six-month term of suspension sufficed.                          The OAL transmitted

the     initial      decision      to     the       CSC     and   the        parties      filed

exceptions.

       On the first date the initial decision was scheduled for

review by the Commission, it consisted of only one member, the

other    seats    being       vacant.4        Accordingly,        the    CSC       obtained     a


4
  When CSC members, Thomas Perna's and Richard Williams's, terms
ended in December 2015, the CSC was left with only one member,
                                                     (continued)


                                               5                                       A-3675-15T1
forty-five-day extension to March 20, 2016, pursuant to statute.

See N.J.S.A. 52:14B-10(c).           Because on that date it still did

not have a sufficient number of appointed members to constitute

a quorum, the agency requested a second forty-five-day extension

from    the    parties.      Hendrickson    did    not    consent.      See    id.;

N.J.A.C. 1:1-18.8(f) ("Extensions for filing initial or final

decisions may not exceed [forty-five] days from the original

decision       due   date.   Additional     extensions      of   not   more    than

[forty-five] days each may be granted only for good cause shown.

For    final    decisions,    the   order   must   additionally        state   that

unanimous consent to extend the due date was obtained from the

parties.").

       Under     the   deemed-adopted   statute,     no    further     extensions

could be granted to the Commission.                Thus, the ALJ's initial

decision was deemed to be the final pronouncement on the matter.

See In re Restrepo, 449 N.J. Super. 409, 418 (App. Div. 2017);

N.J. Election Law Enf't Comm'n v. DiVincenzo, 445 N.J. Super.

187, 197-99 (App. Div. 2016).


(continued)
Chairperson Robert Czech.    The CSC met regularly during 2015
with Czech, Perna, and Williams. However, beginning in January
2016, the CSC cancelled all of its meetings through October 2016
due to Czech being the only member remaining on the CSC.       On
October 19, 2016, the CSC began holding regular meetings with
its now current members, Czech, Dolores Gorczyca, and Daniel
O'Mullan.    See Meetings of the Civil Service Commission,
available at http://www.state.nj.us/csc/about/meetings/schedule.



                                        6                                 A-3675-15T1
       On   appeal,    the    DCA    contends          that     Hendrickson's        conduct

warranted the termination originally imposed, not merely a six-

month   suspension.          The    DCA    also        contends    that    Hendrickson's

egregious      conduct       violated        not        only      the     State's       anti-

discrimination        policy,      but    basic        behavioral       norms    that      the

agency has a right to expect from its employees.

       Finally,   the     DCA      asserts        that     the     ALJ's     analysis       of

Hendrickson's work history, if anything, supported termination.

The agency argues that if a new employee engages in significant

misconduct directed at a supervisor in response to a routine

work    change,   he    patently         lacks    the     good    judgment      and     self-

control necessary for a fire code inspector.                            Persons employed

in that capacity must interact with the public regularly.                                    In

the    DCA's   view,     Hendrickson's           nine     subsequent       incident-free

months do not offset the egregious conduct.                        The DCA also urges

us to consider the level of trust reposed in a fire inspector,

who    conducts   essential         safety       inspections        and    monitors        the

implementation of fire safety standards.

       Hendrickson     responds      that        the    ALJ's     decision      is   "deemed

adopted" under the statute, is the final agency decision, and

therefore entitled to deferential review as a matter of law.                                He

further claims that termination is an unwarranted overreaction




                                             7                                       A-3675-15T1
by the DCA, and not in line with other cases regarding employee

misconduct.

    The    process    by     which    an       ALJ's    initial        decision   in    a

contested case becomes the final agency decision is spelled out

in the statute:

           The head of the agency, upon a review of the
           record submitted by the [ALJ], shall adopt,
           reject or modify the recommended report and
           decision no later than [forty-five] days
           after receipt of such recommendations . . .
           . Unless the head of the agency modifies or
           rejects the report within such period, the
           decision of the [ALJ] shall be deemed
           adopted as the final decision of the head of
           the agency.

           [N.J.S.A. 52:14B-10(c).]

    In prior years, the statute allowed the time limits to be

extended for "good cause shown."                N.J.S.A. 52:14B-10(c) (2001),

amended by N.J.S.A. 52:14B-10(c) (2013).                   The prior version of

the statute read:         "For good cause shown, upon certification by

the director and the agency head, the time limits established

herein may be subject to extension."                   Ibid.     Now, however, that

possibility no longer exists.

    The    2014    amendment     to     the     statute        requires      "unanimous

agreement of the parties" as the only means for an extension of

time beyond an initial forty-five days.                 N.J.S.A. 52:14B-10(c).

    In    most    cases    in   which   the      agency        seeks    an   extension,

unanimous agreement is unattainable.                   A prevailing party has no



                                           8                                   A-3675-15T1
reason to agree.     Effectively then, the current statute makes no

distinction between agency failures to act that are unavoidable,

such as the lack of a quorum, and those to which some "fault"

can be attributed.       The implementing regulation, N.J.A.C. 1:1-

18.8(f), is similarly worded.

      Our caselaw has historically disfavored automatic approval

statutes such as the deemed-adopted law.           King v. N.J. Racing

Comm'n, 103 N.J. 412, 422 (1986).           While recognizing the need

for   the    provision    in    the   statute   "to      encourage     prompt

consideration and disposition of contested cases[,]" the Court

was   also    mindful    of    "agency    jurisdiction     and     regulatory

responsibility."     Id. at    419-20.

      In    discussing   the    necessary    balance     between     the   two

competing interests, the Court explained the creation of the OAL

thusly:

             While the statute creating the OAL focuses
             on the integrity of the hearing function,
             it also seeks to foster, enhance, and
             preserve agency jurisdiction and regulatory
             responsibility.     See   Unemployed-Employed
             Council v. Horn, 85 N.J. 646 (1981).      The
             Court   in [In   re  Uniform   Administrative
             Procedure Rules, 90 N.J. 85 (1982)] stressed
             that   while   the  OAL   is   possessed   of
             significant authority in the actual conduct
             of administrative hearings in contested
             cases on behalf of administrative agencies,
             the agency itself retains the exclusive
             right ultimately to decide these cases. [Id.
             at 96.] In In re Kallen, 92 N.J. 14 (1983),
             the Court emphasized that the agency itself



                                      9                              A-3675-15T1
           in    the    exercise    of    its   essential
           jurisdiction has the exclusive right to
           decide contested cases in administrative
           hearings.   Id. at 20.      The Court further
           observed the agency's jurisdiction in the
           final analysis is nondelegable and that the
           agency head remains accountable for the
           efficient   and   effective   use  of   public
           resources in carrying out the agency's
           delegated statutory responsibilities.      Id.
           at 21.

           [King, supra, 103 N.J. at 420.]

For that reason, i.e. the need to offset an agency's expertise,

jurisdiction,    and     authority    against   the   benefit   of     prompt

disposition of contested cases through transmission to the OAL,

the Court held that the deemed-adopted statute would not be

applied    unless      the   agency    acted    in    "bad   faith,"     with

"inexcusable negligence, or with gross indifference."                  Id. at

421.    In King, because the agency decision was unavoidable——the

lack of a quorum——the deemed-adopted statute was not applied.

Id. at 421-23.      Instead, the matter was remanded for the agency

"to take remedial steps to cure the deficiency and to issue a

decision."   Id. at 423.

       The Court in Matturri v. Board of Trustees of the Judicial

Retirement System, 173 N.J. 368 (2002) reaffirmed the need to

balance deference to an agency's expertise against the need to

promptly dispose of contested cases.            Id. at 378-81.       In that

case, the State House Commission, "a most unusual agency head,"




                                      10                             A-3675-15T1
failed to timely respond to an ALJ decision in the area of

judicial pensions.                  Id. at 380.          Because the agency head was

required to meet only every three months, and rarely met more

frequently, it missed the deadline by two and one-half weeks.

Id. at 376, 380.              The Court said:           "[i]t would make little sense

to apply the automatic approval provision of N.J.S.A. 52:14B-

10(c)       on     these           facts    simply       for     the     sake     of     agency

efficiency[,]" and declined to do so.                       Id. at 381.

       In        sum,        the     pre-2014          amendment        precedent       limited

application of the deemed-adopted provision to "reserve [the]

decisional authority in administrative agencies .                                     . . while

still    promoting           efficiency      and       protecting      against    agency      bad

faith or inexcusable negligence."                          N.J. Election, supra, 445

N.J.     Super.         at    198-99       (alteration         in     original)       (internal

citation and quotation marks omitted).

       Pre-amendment                examples       of     the         gross     indifference,

inexcusable neglect, or bad faith that made imposition of the

deemed-adopted statute appropriate can be found in Capone v. New

Jersey Racing Commission, 358 N.J. Super. 339, 341 (App. Div.

2003).      In Capone, the Racing Commission delayed seven months as

to one matter, and over a year on another.                                    Ibid.     In both

instances,         "the       records      were     small       and    the     issues    simple

. . . ."         Id. at 349-50.            The Racing Commission historically had




                                                  11                                    A-3675-15T1
difficulties      meeting    its       review         responsibilities,       and   other

published cases had addressed the problem, to little effect.

Because    we    found   the     Racing       Commission's         failure     to   issue

decisions to be inexcusable neglect or gross indifference to

agency     and   regulatory        responsibilities,            the     deemed-adopted

statute was applied.        Id. at 350.

     The circumstances here are entirely different from those

described in Capone, and are more like the scenarios in King and

in Matturri.       The Commission's inability to act was entirely

beyond its control.          Under the prior iteration of the deemed-

adopted statute, when good cause excused agency inaction, as in

King, the Court remanded the matter to allow the agency to apply

its expertise, implement its legislative mandate, and render the

final decision.      In Matturri, the agency requested and received

an   extension     granted       out    of        time,   and   that    decision       was

affirmed. Absent that "good cause" escape clause, as in the case

with the current version of the law, remand is not possible.

     Because automatic approval statutes are held in disfavor,

and we have historically deferred to an agency's expertise on

appellate    review,     some    accommodation            should   be   made    when   an

agency's    inability       to    act    on       a    timely   basis    is    entirely

involuntary.      Certainly it was not the Legislature's intent when

it enacted the 2014 version of the statute, which seemingly has




                                             12                                 A-3675-15T1
no   escape    clause,   to   "up-end    the    allocation     of    [regulatory]

responsibilities."       See N.J. Election, supra, 445 N.J. Super. at

199.

       We only play a limited role on the appeal of administrative

agency    decisions.     Stallworth,         supra,   208   N.J.    at   194.     To

reverse an agency's decision, it must be demonstrated to be

arbitrary, capricious, or unreasonable.                Ibid.       In making that

determination, the following factors are taken into account:

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

              [Ibid. (quoting In re Carter, 191 N.J. 474,
              at 482-83 (2007)).]

This highly deferential review of agency decisions is animated

by our acknowledgment of an agency's particular and superior

expertise in the legislative arena in which it functions.                        Id.

at 195.

       The deferential standard of review applies to disciplinary

actions.      Ibid.   With regard to such sanctions, we ordinarily do

not substitute our judgment for that of the agency, even though

we might have reached a different result.                   Id. at 194-95.        We



                                        13                                 A-3675-15T1
only do so when the "punishment is so disproportionate to the

offense,      in   the     light    of    all     the        circumstances,          as     to   be

shocking      to   one's    sense    of   fairness."               Id.   at     195      (quoting

Carter, supra, 191 N.J. at 484).

       Accordingly,        we   conclude        that,        in   applying         the    deemed-

adopted statute, we must attempt to balance the Legislature's

commitment to the timely disposition of contested cases in the

OAL with the ability of regulatory agencies to act within their

own statutorily defined responsibilities.                          See King, supra, 103

N.J.    at    419-21;      Matturri,      supra,        173       N.J.   at     379-80.           In

maintaining that balance, it follows that, at a minimum, an

ALJ's        deemed-adopted         decision        should           not      be         reviewed

deferentially.           The    rationale       behind        that    deferential          review

provides additional support for our conclusion.

       We will therefore apply the equally familiar standard of

review for bench trials.                 The ALJ's factual findings will be

affirmed      to   the     extent     they        are    supported         by      substantial

credible evidence in the record.                  Zaman v. Felton, 219 N.J. 199,

215    (2014).       No     deference      will         be    accorded        to    her      legal

conclusions; they will be reviewed de novo.                          Id. at 216.

       Initially, we note that the ALJ credited the eyewitness

testimony that Hendrickson used the particular gender-specific

foul language towards his supervisor while in a public place.




                                             14                                           A-3675-15T1
The   ALJ   did   not    accept   his    lapse      in   memory    as    truthful.

Additionally, she was troubled by his "failure to acknowledge

his wrongdoing" even though he admitted saying he wished his

supervisor would get a disease.               Despite finding Hendrickson

engaged in the conduct, and holding that it violated the State's

policy against discrimination and was unacceptable both towards

other employees and the public, she considered the doctrine of

progressive       discipline      required     a     lesser       penalty     than

termination.      The ALJ's factual findings are supported by the

record; the propriety of the disciplinary sanction, however, is

a question of law which we will review de novo.

      It was clear from her decision that the ALJ was at least

uncomfortable     with   Hendrickson's       lack   of   candor    and    remorse,

while concerned that his clean disciplinary record before and

after the event mandated a lesser sanction.                  Hendrickson's job,

which involves enforcement of safety standards while interacting

with the public, bears similarity to the role played by law

enforcement officials.         The record does not allow for a more

detailed comparison, but it cannot be disputed that Hendrickson

is required to interact with members of the public in performing

enforcement duties that impact public safety.

      The concept of progressive discipline has been employed to

impose   severe    disciplinary     sanction     when    a   public     employee's




                                        15                                A-3675-15T1
misconduct        is     habitual,         or    to    mitigate     a    penalty.       In    re

Herrmann, 192 N.J. 19, 30-33 (2007).                       When employed to mitigate,

it results in incremental punishment.                         Id. at        33.     But, the

doctrine has been bypassed "when the misconduct is severe, when

it    is   unbecoming          to    the    employee's       position      or    renders     the

employee unsuitable for continuation in the position, or when

application of the principle would be contrary to the public

interest."         Ibid.; see State v. Saavedra, 222 N.J. 39, 74 (2016)

(noting     New     Jersey's         "long-expressed         []   strong     public    policy

against discrimination" in the workplace); Lehmann v. Toys 'R'

Us,        Inc.,         132         N.J.         587,     600          (1993)      ("Freedom

from discrimination is one of the fundamental principles of our

society. Discrimination based on gender is 'peculiarly repugnant

in a society which prides itself on judging each individual by

his or her merits.'" (quoting Grigoletti v. Ortho Pharm. Corp.,

118 N.J. 89, 96 (1990))).                       Additionally, the doctrine will not

be    applied       if    an        employee      "engages     in       severe    misconduct,

especially when the employee's position involves public safety

and the misconduct causes risk of harm to persons or property."

In re Herrmann, supra, 192 N.J. at 33.                              Termination has been

affirmed where the employee's conduct was unbecoming his or her

position regardless of a blameless work history.                            Id. at 34.




                                                  16                                  A-3675-15T1
      In    this     case,    in    addition        to    the    fact   Hendrickson's

position involves public safety and requires interaction with

the public, his lack of truthfulness during the hearing, and

lack of remorse for his loss of control, make him a poor choice

for incremental discipline.               As a result, we find as a matter of

law   that     the     conduct       of     this     fire       inspector     warranted

termination.          Incremental         sanctions       in    light    of   his    job

responsibilities, which require interaction with the public, are

too much of a risk.           And his lack of candor and remorse do not

inspire     confidence       in    his    ability    to     conduct     himself     in    a

measured fashion in an undoubtedly demanding position.                              This

incident, at the very beginning of Hendrickson's career, augured

ill for his future.

      The    incident        violated      the     State's       anti-discrimination

policy and societal norms.               As a matter of law, the doctrine of

progressive discipline should be bypassed.

      Reversed;       the     original        sanction          of   termination         is

reinstated.




                                            17                                 A-3675-15T1
