                            NOT FOR PUBLICATION WITHOUT THE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-2891-16T1

IN THE MATTER OF MICHAEL
MULCAHY, MICHAEL SMITH,
and CITY OF BAYONNE.
______________________________

                Submitted February 27, 2019 – Decided March 28, 2019

                Before Judges Accurso, Vernoia and Moynihan.

                On appeal from the New Jersey Civil Service
                Commission, Docket No. 2016-819.

                Joel S. Silberman, attorney for appellant Michael
                Mulcahy.

                Christine Finnegan, attorney for appellant Michael
                Smith, joins in briefs of appellant Michael Mulcahy.

                Roth D'Aquanni, LLC, attorneys for respondent City of
                Bayonne (Allan C. Roth, on the brief).

                Gurbir S. Grewal, Attorney General, attorney for
                respondent Civil Service Commission (Melissa Dutton
                Schaffer, Assistant Attorney General, of counsel;
                Pamela N. Ullman, Deputy Attorney General, on the
                brief).

PER CURIAM
      Petitioners Michael Mulcahy and Michael Smith appeal from the Civil

Service Commission's February 10, 2017 final decision rejecting their challenge

to the City of Bayonne's decision laying them off from their Municipal Services

Department (MSD) positions. We affirm.

      Bayonne hired Mulcahy in 2011 as a housing inspector and Smith in 2012

as a field representative. They worked in the MSD enforcing Bayonne's property

maintenance and municipal codes. On May 25, 2015, Bayonne submitted a

layoff plan to the Commission stating in part that "[d]ue to reasons of economy

and severe budget shortfalls," it intended to lay off Mulcahy, Smith and their

co-employee in the MSD, Gary Parlatti. The plan described pre-layoff actions

taken by Bayonne to lessen the impact of the proposed layoffs on permanent

employees, such as reviewing overtime requests, eliminating intern positions,

and reviewing expense accounts.

      On June 1, 2015, the Commission approved the layoff plan and Bayonne

served Mulcahy and Smith with notices laying them off effective July 17, 2015.

Mulcahy and Smith challenged the layoffs, claiming Bayonne did not lay them

off in good faith for reasons of efficiency or economy. 1 See N.J.A.C. 4A:8-


1
   Gary Parlatti exercised bumping rights and was demoted to a different
position. Parlatti joined Mulcahy's and Smith's challenge to the layoffs in the


                                                                       A-2891-16T1
                                      2
1.1(a). The Commission referred the matter to the Office of Administrative Law

for a hearing before an administrative law judge (ALJ).

      Following the hearing, the ALJ issued a written decision finding Mulcahy,

Smith and Parlatti "performed property code enforcement for Bayonne and

handled citizen complaints" by "respond[ing] to complaints and issu[ing]

warnings, and summonses when appropriate, for code violations." The ALJ

further found that following the layoffs, Bayonne "hired in excess of 100 new

employees," "continued to hire seasonal employees" and never offered Mulcahy

or Smith a seasonal employee position.

      The ALJ noted that Bayonne relied on an alleged change in its property

code enforcement philosophy to support its claim that there was a reduced need

for employees performing Mulcahy's, Smith's and Parlatti's MSD job duties.

The ALJ noted it was "not disputed that Bayonne had a budget deficit and needed

to cut costs," but found the change in code enforcement philosophy was "never

articulated" in a memorandum or meeting with the employees and there was "no

credible evidence that this change in philosophy was put in place."




proceedings before the administrative law judge and Commission but has not
participated in the appeal of the Commission's final decision.
                                                                       A-2891-16T1
                                         3
      The ALJ found the testimony of Robert Wondolowski, MSD's director at

the time of the layoffs, and Joseph DeMarco, Bayonne's City Administrator, was

not credible. Wondolowski and DeMarco testified the layoffs resulted from a

reduced need for the code enforcement duties previously performed by Mulcahy,

Smith and Parlatti because, following the election of Mayor Jimmy Davis in

2014, Bayonne changed its code enforcement philosophy due to complaints from

Bayonne's citizens.     More particularly, the code enforcement philosophy

changed from actively seeking out violations of Bayonne's property maintenance

ordinances and aggressively ticketing violators until the violations were

resolved, to responding only to citizen complaints about alleged violations.

      The ALJ concluded "Bayonne did not effectuate the layoffs due to reasons

of economy and severe budget shortfalls" and "[t]here is no credible evidence

that [the] change in philosophy was put into place."         The ALJ found that

Bayonne had not done what it indicated it would do in its layoff plan and,

although the evidence did not "establish[] why Bayonne wished to remove

[Mulcahy and Smith] . . . it is clear that the purpose of the layoff plan was their

removal, and not for purposes of economy or budget shortfalls."          The ALJ

recommended that Mulcahy and Smith be restored to their respective positions




                                                                           A-2891-16T1
                                        4
with back pay, "subject to mitigation for income earned during" the period

following the layoffs.

      Bayonne filed exceptions to the ALJ's decision. In the Commission's final

decision, it declined to adopt the ALJ's findings and concluded the ALJ's

credibility determinations as to Wondolowski and DeMarco were not supported

by the evidentiary record. The Commission recognized an ALJ "is generally in

a better position to determine the credibility and veracity of the witnesses," and

that it "appropriately gives due deference to such determinations."                The

Commission further observed that it may only reject or modify an ALJ's

"findings of fact as to issues of credibility of lay witness testimony [if] it is first

determined from a review of the record that the findings are arbitrary, capricious

or unreasonable or are not supported by sufficient, competent and credible

evidence in the record."       See N.J.S.A. 52:14B-10(c).         The Commission,

however, determined the ALJ's credibility determinations are not supported by

sufficient credible evidence in the record, and found Wondolowski's and

DeMarco's testimony credible.

      The ALJ found Wondolowski's testimony was not credible because

Wondolowski testified on direct examination "he did not speak with . . .

DeMarco regarding layoffs," but on cross-examination said he discussed "the


                                                                               A-2891-16T1
                                          5
budget and possibility of layoffs" with DeMarco.         But the Commission

concluded the ALJ's findings are not supported by the record. Wondolowski

was asked during direct examination if DeMarco ever spoke to him "about laying

[Mulcahy and Smith] off." In response, Wondolowski said, "[w]e talked about

our budgets and where there were inefficiencies," but he never denied discussing

layoffs. As explained by the Commission, when Wondolowski was asked on

cross-examination if he ever had a "conversation with . . . DeMarco regarding

the potential layoffs," he testified "there were discussions about what [they]

needed to do as far as the budgets and layoffs, yes." The Commission did not

find Wondolowski's testimony inconsistent and rejected the ALJ's determination

that it was.

      The ALJ also found Wondolowski testified that he did not know about a

change in philosophy regarding property maintenance enforcement, but actually

he only denied discussing a philosophy of "not enforc[ing] the [p]roperty

[m]aintenance [c]odes." The Commission noted the ALJ stated that on direct

examination Wondolowski said he did not tell Mulcahy and Smith to stop

writing tickets for property maintenance violations, but the record shows

Wondolowski was never asked about that issue on direct examination. In sum,

the Commission determined the ALJ's finding Wondolowski was not credible


                                                                        A-2891-16T1
                                       6
was based on findings of fact about his testimony that were bereft of support in

the record.

      The Commission similarly found the ALJ's credibility determination

concerning DeMarco was undermined by the record. The ALJ observed that

DeMarco's "testimony was straightforward and direct," but concluded his

testimony that the layoffs resulted from a change in the property maintenance

enforcement philosophy was not credible because there was no corroborative

evidence of the change. More particularly, the ALJ noted that there was no

memorandum concerning the change or meetings during which it was discussed

and that "[a]ll other witnesses, including . . . Wondolowski, were unaware of the

change in philosophy."

      The Commission rejected the ALJ's findings and conclusion concerning

DeMarco's credibility, explaining that "multiple witnesses . . . testified that there

was a change in philosophy from active to passive code enforcement and that

this change went into effect," and they corroborated "DeMarco's testimony

regarding the change in philosophy."          The Commission summarized the

testimony of MSD employee Thomas Keyes who explained that prior to Mayor

Davis taking office in 2014, "it was standard practice . . . to write multiple

summonses on a property owner even if the summonses were repetitive," but


                                                                             A-2891-16T1
                                         7
following Mayor Davis taking office, "the program became less punitive and

'went back to the way the job was supposed to be, which was to be rehabilitative

to the neighborhood.'" The Commission also cited the testimony of Laura Kline,

"who worked directly with" Mulcahy and Smith, and understood that following

Mayor Davis taking "office[] there was a determination not to actively look for

property maintenance violations," "there was a change in philosophy" and "she

was in at least one or two meetings where Wondolowski told Keyes[, Mulcahy

and Smith] to stop actively looking for property maintenance violations."

      The Commission found that based on the credible evidence presented,

including the testimony of Wondolowski and DeMarco, Bayonne "underwent a

shift in its philosophy as to how it would enforce its property maintenance code,

and [the] change was effected notwithstanding that it was not written." The

Commission noted that Mulcahy acknowledged DeMarco instructed him to slow

down his code enforcement actions, and Bayonne's Chief Financial Officer,

Terrance Malloy, testified Mayor Davis's administration had "a different

philosophy" of property code enforcement than "the [previous] administration"

and "there were no longer roving patrols out looking to write tickets."

      The Commission also found that under the changed approach, "Bayonne

did not send employees into the field to look for violations and write tickets,"


                                                                          A-2891-16T1
                                       8
and that it was "reasonable for it to conclude that it no longer needed to maintain

the same staff level." Noting that "an appointing authority has discretion as to

how it runs its operation," the Commission concluded Mulcahy and Smith failed

to sustain their burden of proving Bayonne laid them off in bad faith for reasons

other than efficiency and economy. This appeal followed.

      Mulcahy and Smith present the following arguments for our

consideration:

            THE CIVIL SERVICE COMMISSION'S DECISION
            MUST [BE] OVERTURNED BECAUSE IT IS
            ARBITRARY, CAPRICIOUS, UNREASONABLE
            AND IS UNSUPPORTED BY THE RECORD
            BELOW.

            A. THE RECORD CLEARLY ESTABLISHES THAT
            BAYONNE DID NOT EFFECTUATE APPELLANT'S
            LAYOFF FOR ECONOMY AND EFFICIENCY AS
            INDICATED IN THEIR LAYOFF PLAN.

            B. THE OAL'S CREDIBILITY DETERMINATIONS
            SHOULD NOT HAVE BEEN DISTURBED.

      Smith also presents the following argument:

            THE INITIAL DECISION IS DEEMED ADOPTED,
            N.J.S.A. §52:14b-10(C). DECEMBER 17, 2016 WAS
            THE 45TH DAY.

      Our scope of review of administrative decisions is limited.            In re

Stallworth, 208 N.J. 182, 194 (App. Div. 2011). Appellate courts should not


                                                                           A-2891-16T1
                                        9
disturb an administrative decision unless the court finds it to be arbitrary,

capricious, or unreasonable. Karins v. City of Atl. City, 152 N.J. 532, 540

(1998). "The precise issue is whether the findings of the agency could have

been reached on substantial credible evidence in the record, considering the

proofs as a whole." In re Hess, 422 N.J. Super. 27, 34 (App. Div. 2011) (citing

Close v. Kordulak Bros., 44 N.J. 589, 599 (1965)).

      We are not persuaded by Mulcahy's and Smith's contention that the

Commission erred by rejecting the ALJ's determination that Wondolowski and

DeMarco were not credible witnesses. An agency head sitting in review of an

ALJ's initial decision cannot "reject or modify any findings of fact as to issues

of credibility of lay witness testimony unless it is first determined from a review

of the record that the findings are arbitrary, capricious, or unreasonable or are

not supported by sufficient, competent, and credible evidence in the record."

N.J.S.A. 52:14B-10(c). Where an agency head rejects or modifies an ALJ's fact

finding or credibility determinations, "the agency head shall state with

particularity the reasons for rejecting the findings and shall make new or

modified findings supported by sufficient, competent, and credible evidence in

the record."     Ibid.    Overturning an ALJ's fact finding or credibility

determinations cannot be done by merely "relying upon additional evidence


                                                                           A-2891-16T1
                                       10
present in the record." Cavalieri v. Bd. of Trs. of Pub. Emps. Ret. Sys., 368 N.J.

Super. 527, 534 (App. Div. 2004).

      Here, the Commission stated with particularity its reasons for rejecting

the ALJ's credibility determinations as to Mulcahy and Smith. See N.J.S.A.

52:14B-10(c). The Commission found the ALJ's determinations were either not

supported by the record or, in some instances, were contradicted by the record.

See ibid.   We observe that the Commission did not "simply substitute its

judgment for that of the ALJ's," Cavalieri, 368 N.J. Super. at 534, but instead

relied on credible testimony that directly contradicted the ALJ's credibility

determinations. Our independent review reveals that the record undermines the

ALJ's credibility findings and includes sufficient evidence supporting the

Commission's credibility determinations.      We therefore discern no basis to

reverse the Commission's credibility findings or its other findings of fact, all of

which find support in the evidence.

      Mulcahy and Smith further argue the Commission's decision should be

reversed because their layoffs were not for reasons of efficiency or economy.

"An appointing authority may institute layoff actions for economy, efficiency,

or other related reasons." N.J.A.C. 4A:8-1.1(a). An employee laid off subject

to this regulation may challenge the termination by asserting "the appointing


                                                                           A-2891-16T1
                                       11
authority laid off . . . the employee . . . for reasons other than economy,

efficiency, or other related reasons." N.J.A.C. 4A:8-2.6(a)(1); see also N.J.S.A.

11A:8-4.   A municipality's actions are presumed to be in good faith, see

Schnipper v. Twp. of N. Bergen, 13 N.J. Super. 11, 15 (App. Div. 1951), and

the employee bears the burden of proving that the appointing authority acted in

bad faith by a preponderance of the evidence, N.J.S.A. 11A:8-4. An employee

seeking to establish that an appointing authority acted in bad faith must prove

that the municipality's "design in adopting the [layoff] plan was [not] to

accomplish" economy or efficiency, but "was to effect the removal of a public

employee, protected by civil service, without following the statutory procedure

for removal." Greco v. Smith, 40 N.J. Super. 182, 190 (App. Div. 1956).

      There is sufficient credible evidence supporting the Commission's

determination that Mulcahy and Smith failed to sustain their burden of proving

the layoffs were made in bad faith. The evidence the Commission deemed

credible showed that following Mayor Davis's election in 2014, Bayonne's

property maintenance philosophy changed from an aggressive to a more passive

approach. Under the new philosophy, MSD inspectors were no longer required

to seek out and ticket violators, but instead only responded to complaints about

alleged code violations. The change in philosophy resulted in a reduction in the


                                                                         A-2891-16T1
                                      12
need for MSD inspectors. The evidence showed Wondolowski understood the

change in philosophy would require layoffs and that after Mulcahy and Smith

were laid off and Parlatti was transferred, the number of MSD-issued tickets

dropped dramatically.

      "[I]t was not the design of the Civil Service Act to perpetuate offices

regardless of whether they [are] needed or not." Amodio v. Civil Serv. Comm'n,

81 N.J. Super. 22, 31 (App. Div. 1963). The testimony and evidence supported

Bayonne's determination that Mulcahy's, Smith's and Parlatti's positions were

unnecessary to complete the MSD's property maintenance enforcement

responsibilities following Bayonne's implementation of the new enforcement

philosophy. As the Commission correctly determined, Mulcahy and Smith

failed to sustain their burden of demonstrating otherwise.

      We are not persuaded by Smith's argument that the ALJ's decision should

be deemed adopted by the Commission under N.J.S.A. 52:14B-10(c) because

the Commission did not modify or reject the decision within forty-five days.

Smith's challenge is a limited one: he argues only that the Commission failed

to properly obtain a forty-five-day statutory extension during which it could

reject or modify the ALJ's initial decision.




                                                                      A-2891-16T1
                                       13
      N.J.S.A. 52:14B-10(c) provides that "[u]nless the head of the agency

modifies or rejects" an ALJ's decision within forty-five days, it "shall be deemed

adopted as the final decision of the head of the agency." N.J.S.A. 52:14B-10(c).

The statute also allows a "single extension of not more than [forty-five] days"

where "good cause" is shown. 2 Ibid. A request for such an extension "must be

submitted no later than the day on which that time period is to expire." N.J.A.C.

1:1-18.8(b).    To request an extension for good cause, the "agency

head . . . [must] sign and forward a proposed order to the Director of the Office

of Administrative Law," who, if he or she approves the request, "shall within

[ten] days of receipt of the proposed order sign the proposed order and return it

to the transmitting agency head, who shall issue the order and cause it to be

served on all parties." N.J.A.C. 1:1-18.8(e). The Commission obtained such an

extension and timely rendered its decision here.

      The ALJ issued his decision on November 2, 2016. Under N.J.S.A.

52:14B-10(c), the ALJ's decision would be deemed adopted unless the

Commission modified or rejected the decision within forty-five days, or any

extensions of the initial forty-five-day period. Here, the initial forty-five-day


2
  N.J.S.A. 52:14B-10(c) permits additional extensions of time "subject to, and
contingent upon, the unanimous agreement of the parties." No such extension
was obtained or required here.
                                                                          A-2891-16T1
                                       14
period expired on December 17, 2016, but was extended to Monday, December

19, 2016, because December 17, 2016, was a Saturday. See N.J.A.C. 1:1-1.4.

      On December 19, 2016, the Commission submitted a proposed order

granting a forty-five-day extension until January 31, 2017, for it to "review the

testimony . . . in order to make a final determination and issue a written

decision." See N.J.A.C. 1:1-18.8(e). Thus, the Commission timely submitted

the extension request to the Director of the Office of Administrative Law within

the initial forty-five day period, see N.J.A.C. 1:1-18.8(b), and the extension was

timely granted by the Director of the Office of Administrative Law on December

20, 2016, within ten days of the request, see N.J.A.C. 1:1-18.8(e). The Director

determined the Commission demonstrated "good cause" for the forty-five-day

extension, and the Commission "mailed [the] executed order to parties" the same

day. See N.J.A.C. 1:1-18.8(e). Thus, the Commission properly requested and

obtained a forty-five-day extension to adopt, reject, or modify the ALJ's initial

decision. See N.J.S.A. 52:14B-10(c).

      The Commission also rejected the ALJ's initial decision within the forty-

five-day extension, and petitioners do not argue otherwise. Our Supreme Court

has explained that the Legislature amended N.J.S.A. 52:14B-10(c) "to set a strict

deadline for administrative agencies 'to adopt, reject or modify' an ALJ's


                                                                          A-2891-16T1
                                       15
decision." In re Hendrickson, 235 N.J. 145, 158 (2018) (quoting N.J.S.A.

52:14B-10(c)). "Under the amendment, when the agency does not act within the

forty-five-day statutory timeframe—or within the single extension period not to

exceed forty-five days—the ALJ's decision is 'deemed adopted as the final

decision of the head of the agency.'" Ibid. (emphasis added) (quoting N.J.S.A.

52:14B-10(c)).

         Here, the record shows that the Commission acted to reject the ALJ's

initial decision at its meeting "on the [eighteenth] day of January, 2017[]" see

N.J.S.A. 52:14B-10(c), well within the forty-five-day extension deadline that

ended on January 31, 2017. The Commission later formally memorialized its

January 18, 2017 action on February 10, 2018, by publishing its final agency

decision. As we held in Cavalieri, where, as here, an agency "signaled its

intentions to reject the initial decision" within the statutory deadline and "issued

its final decision reasonably promptly thereafter," the ALJ's initial decision is

not deemed adopted pursuant to N.J.S.A. 52:14B-10(c). Cavalieri, 368 N.J.

Super. at 539. We are therefore satisfied there is no basis to conclude the ALJ's

decision should be deemed adopted by the Commission under N.J.S.A. 52:14B -

10(c).

         Affirmed.


                                                                            A-2891-16T1
                                        16
