Opinion
DOCKET NO. A-5592-11T4
02-04-2014
DONALD SALAAM, Petitioner-Respondent/Cross-Appellant, v. BOARD OF EDUCATION OF THE CITY OF IRVINGTON, ESSEX COUNTY, Respondent-Appellant/Cross-Respondent.
Hunt, Hamlin & Ridley, attorneys for appellant/cross-respondent Board of Education of the City of Irvington, Essex County (Raymond L. Hamlin, of counsel and on the brief; Rasheedah R. Terry, on the brief). John J. Hoffman, Acting Attorney General, attorney for appellant/cross-respondent Commissioner of Education (Angela L. Velez, Deputy Attorney General, on the brief). Caruso Smith Edell Picini, attorneys for respondent/cross-appellant (Steven J. Kaflowitz, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Reisner and Carroll.
On appeal from the Commissioner of Education, Agency Docket No. 659-11/10.
Hunt, Hamlin & Ridley, attorneys for appellant/cross-respondent Board of Education of the City of Irvington, Essex County (Raymond L. Hamlin, of counsel and on the brief; Rasheedah R. Terry, on the brief).
John J. Hoffman, Acting Attorney General, attorney for appellant/cross-respondent Commissioner of Education (Angela L. Velez, Deputy Attorney General, on the brief).
Caruso Smith Edell Picini, attorneys for respondent/cross-appellant (Steven J. Kaflowitz, on the brief). PER CURIAM
Petitioner Donald Salaam is employed as a teacher by respondent Irvington Board of Education (Board). On August 31, 2008, Salaam was charged in the Irvington Municipal Court with the petty disorderly persons offense of harassment, N.J.S.A. 2C:33-4(c), for allegedly having inappropriate contact with a female student. Salaam was represented in the municipal court action by the law firm of Timothy Smith & Associates, LLC. Following numerous court appearances, the charge was ultimately dismissed by the State on October 29, 2009.
Salaam then sought reimbursement from the Board for his legal fees and costs totaling $33,405.38 expended in the defense of the municipal court complaint, pursuant to N.J.S.A. 18A:16-6.1. The Board did not respond to this request. Consequently, on November 15, 2010, Salaam petitioned the Commissioner of Education (Commissioner) for reimbursement. On December 13, 2010, the matter was transmitted to the Office of Administrative Law (OAL) as a contested case.
On February 17, 2012, a hearing was held on the fee dispute before Administrative Law Judge Barry E. Moscowitz. Salaam's lead attorney, Timothy Smith (Smith), was the sole witness to testify at the hearing. In a comprehensive twelve-page Initial Decision dated May 16, 2012, the ALJ ordered that the Board reimburse Salaam a total of $18,755.28 for the reasonable fees and costs attributable to Smith's services. Fees relating to Smith's associates were disallowed because they did not testify or submit certifications that would permit a determination as to whether their fees were reasonable.
Following the filing of exceptions by both parties, the Commissioner adopted the ALJ's Initial Decision on June 25, 2012. The Board now appeals the counsel fee award, and Salaam cross-appeals that portion of the final agency decision that denied reimbursement for services rendered by Smith's associates. Having considered the parties' arguments in light of the record and applicable legal standards, we affirm.
Our scope of review of an administrative agency's final determination is limited. In re Carter, 191 N.J. 474, 482 (2007). We accord a "strong presumption of reasonableness" to the agency's exercise of its statutorily delegated responsibilities. City of Newark v. Natural Res. Council, 82 N.J. 530, 539, cert. denied, 449 U.S. 983, 101 S. Ct. 400, 66 L. Ed. 2d 245 (1980). The burden of showing the agency's action was arbitrary, unreasonable, or capricious rests upon the appellant. See Barone v. Dep't of Human Servs., Div. of Med. Assistance & Health Servs., 210 N.J. Super. 276, 285 (App. Div. 1986), aff'd, 107 N.J. 355 (1987).
The reviewing court "should not disturb an administrative agency's determinations or findings unless there is a clear showing that (1) the agency did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence." In re Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 422 (2008); see also Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9-10 (2009). Nevertheless, an appellate court is "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." Mayflower Sec. Co. v. Bureau of Sec, 64 N.J. 85, 93 (1973).
Essentially this appeal requires us to determine (1) whether Salaam was entitled to reimbursement by the Board of his reasonable counsel fees and costs pursuant to N.J.S.A. 18A:16-6.1; and, if so, (2) the extent to which the fees charged by Smith and his associates constituted reasonable fees subject to reimbursement under the statute.
N.J.S.A. 18A:16-6.1, provides for indemnification in criminal and quasi-criminal actions:
Should any criminal or quasi-criminal action be instituted against any such person for any such act or omission and should such proceeding be dismissed or result in a final disposition in favor of such person, the board of education shall reimburse him for
the cost of defending such proceeding, including reasonable counsel fees and expenses of the original hearing or trial and all appeals. No employee shall be entitled to be held harmless or have his defense costs defrayed as a result of a criminal or quasi-criminal complaint filed against the employee by or on behalf of the board of education.
The Board first argues that Salaam did not testify at the OAL hearing, and that he otherwise failed to establish his burden to demonstrate that the conduct complained of in the municipal court action arose out of and in the course of his duties as a teacher. We disagree.
In Bower v. Bd. of Educ. of E. Orange, 149 N.J. 416 (1997), the Supreme Court provided guidance as to when a board of education employee is entitled to indemnification for counsel fees and expenses incurred in the defense of criminal charges. Public school teacher Paul Bower was indicted on charges alleging the sexual abuse of his students in the bathroom adjacent to the kindergarten classroom during school hours. Id. at 419, 421. The charges were dismissed and he sought indemnification from the East Orange Board of Education for his criminal defense costs. Id. at 419. Bower's claim for indemnification was based on N.J.S.A. 18A:16-6.1, which the court found refers back to N.J.S.A. 18A:16-6. Id. at 423 (citation omitted). The Court held "indemnification is mandatory," under N.J.S.A. 18A:16-6, "if the charges are dismissed or result in a favorable final disposition and if the 'act or omission' on which the criminal charges are predicated arises out of and in the course of the performance of the duties of employment." Id. at 419.
The applicable standard is that there be "proof by a preponderance of the evidence that the act on which the charges are predicated arose out of and in the course of performance of the duties of employment." Id. at 434. The charges against Bower arose from his assistance to students who used the school lavatory. Because all charges were dismissed before trial, the Court found there was no other evidence to refute that the allegations arose from the conduct of his employment.
In the present case, the municipal court complaint and the underlying discovery were introduced in evidence at the OAL hearing. We conclude that the proofs adequately established that the charge arose out of Salaam's employment, and that the Commissioner properly applied the Court's holding in Bower when it determined:
Petitioner here seeks reimbursement for legal fees and costs expended in the defense of a criminal complaint filed against him in the Irvington Municipal Court alleging that he assaulted a 15-year old girl in his classroom. Such criminal complaint was ultimately dismissed by the court. The Commissioner notes that N.J.S.A. 18A:16-6.1Accordingly, reimbursement to Salaam was mandated under the statute, leaving open only the issue of the reasonableness of the legal fee awarded for our consideration.
requires a board to reimburse its employees for reasonable counsel fees and expenses incurred in defending against certain criminal actions. If the requisite statutory standard is satisfied, such indemnification is mandatory, N.J.S.A. 18A:16-6.1, read in conjunction with the complementary provisions of the immediately preceding statutory section, N.J.S.A. 18A:16-6, sets forth a two-pronged test for determining whether board employees are entitled to indemnification in this regard, i.e., 1) the underlying criminal action must be dismissed or result in a final disposition in favor of the employee, 2) any act or omission upon which the criminal charge is based must arise out of and during the course of the employee's performance of the duties and responsibilities of his position.
Here, there is no dispute that the first prong of the requisite test was satisfied by the dismissal of the complaint against respondent by the Irvington Municipal Court. As to the second prong, with the dismissal of the complaint there is no proof on this record that respondent engaged in untoward conduct against any child. Rather, the only undisputed conduct existing in this matter is that the alleged events took place at school, during school hours, while respondent was engaged in performing his duties as a teacher. Consequently, the alleged behavior on which the criminal complaint was predicated arose out of and in the course of the performance of the duties of respondent's employment (See [Bower, supra, 149 N.J. at 416]), thereby satisfying the criteria which entitles petitioner to indemnification pursuant to the terms of N.J.S.A. 18A:16-6.
After establishing that the party seeking fees is entitled to recover, a reasonable fee must be determined. In order to determine a reasonable attorney fee, the starting point is the determination of the "lodestar," which equals the "number of hours reasonably expended multiplied by a reasonable hourly rate." Rendine v. Pantzer, 141 N.J. 292, 335 (1995).
The trial court's determination of the lodestar amount is the most significant element in the award of a reasonable fee because that function requires the trial court to evaluate carefully and critically the aggregate hours and specific hourly rates advanced by counsel for the prevailing party to support the fee application.
[Ibid.]
Guidelines have been developed for evaluating the lodestar. "[A] trial court may exclude hours from the lodestar calculation if in its view the hours expended exceed 'those that competent counsel reasonably would have expended to achieve a comparable result,' in the context of 'the damages prospectively recoverable, the interests to be vindicated, and the underlying statutory objectives.'" Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346, 355 (1995) (quoting Rendine, supra, 141 N.J. at 336). The trial court should exclude hours that are unnecessary. "Hours are not reasonably expended if they are excessive, redundant, or otherwise unnecessary." Rendine, supra, 141 N.J. at 335 (quoting Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)).
Turning to the lodestar calculation, the first step in the calculation considers the number of hours that were "reasonably" devoted to the matter. Rendine, supra, 141 N.J. at 334-35. However, "trial courts should not accept passively the submissions of counsel to support the lodestar amount . . . ." Id. at 335. Thus, "[i]t does not follow that the amount of time actually expended is the amount of time reasonably expended." Id. (emphasis added) (citing Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980)). The "determination need not be unnecessarily complex or protracted, but the trial court should satisfy itself that the assigned hourly rates are fair, realistic, and accurate, or should make appropriate adjustments." Rendine, supra, 141 N.J. at 337.
Here, the ALJ expressly employed the framework established in Rendine for determining the reasonableness of attorney's fees, and determined Smith's reasonable counsel fees and expenses to be $17,650 and $1105.28, respectively. He reasoned:
In this case, Smith submitted contemporaneously recorded time records that fully supported the calculation of hours expended by all attorneys who participatedIn its final decision, the Commissioner adopted the ALJ's methodology and conclusions.
in the municipal court proceeding. In addition, the hourly rate Smith charged is one that would be charged by an adequately experienced attorney possessed of average skill and ordinary competence. Therefore, I CONCLUDE that the total time Smith expended and the hourly rate he charged were reasonable.
None of the other attorneys who appear in the time records, however, testified or submitted certifications. Without their testimony or certification, I cannot assess their experience and compare their rates to the rates prevailing in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. Therefore, I CONCLUDE that a preponderance of the evidence does not exist that the hourly rates they charged were reasonable.
In its reply brief, the Board acknowledges that "the ALJ cited the correct fee-setting standard." The Board argues, however, that (1) the $33,405.38 bill submitted by the Smith firm for a municipal court matter that was ultimately dismissed was unreasonable; (2) the ALJ erred when he denied the Board the opportunity to introduce into evidence an independent expert report as to the reasonableness of the attorney's fees; and (3) the Smith firm billed at a higher rate than attorneys who participate in the New Jersey Education Association (NJEA) legal services program, of which Salaam was a member. Because we find that the Commissioner's final determination was supported by substantial credible evidence in the record, we reject these arguments, and decline to disturb the fee award.
At the OAL hearing, Smith testified that he is a certified criminal trial attorney with thirteen years' experience, and that he normally charges $250 per hour. Although Salaam was only charged with a petty disorderly persons offense, he faced the collateral consequence of loss of his employment if convicted. As a result, it was necessary to retain a private investigator to interview witnesses, and to file motions in the municipal court to obtain discovery from the Board and from the Division of Youth and Family Services. Further, Smith explained that some twenty trial notices were issued by the court, that he had to prepare for trial on numerous occasions, and that he made sixteen court appearances before the complaint against Salaam was ultimately dismissed. Smith's billing records showed that he personally expended 70.6 hours on Salaam's behalf, which when multiplied by his $250 hourly billing rate validated the $17,650 counsel fee award.
We reject the Board's argument that the Commissioner erred in awarding a higher hourly rate than that allowed by the NJEA legal services program through which Salaam procured Smith's representation. The NJEA legal fund allowed payment of Smith's fees at a "volume discount rate" of $142 to $145 per hour. However, as noted, N.J.S.A. 18A:16-6.1 mandates the reimbursement of "reasonable" counsel fees. As the ALJ aptly stated, the fact that a third-party finances the defense does not relieve the Board of its statutory obligation to pay those reasonable fees. We agree with the ALJ that the purposes and policies of the statute are advanced by allowing a school employee to rely upon his union's insurance policy as a means to fund his legal representation, and thereby "protect himself from the potentially ruinous defense costs," which in turn "cannot inure to the benefit of the Board."
We also find no abuse of discretion in the ALJ's decision to preclude the Board's belated attempt to introduce expert opinion evidence with respect to the reasonableness of Smith's fee. As the ALJ noted, the first scheduled hearing date was November 15, 2011, which was adjourned at the Board's request due to the unavailability of the Board Administrator. The hearing was rescheduled for December 30, 2011, but was again adjourned due to the Administrator's unavailability. The Board never represented that it planned to offer an expert witness, nor did it produce an expert report until February 10, 2012. Under N.J.A.C. 1:1-10.4(e), discovery must be completed no later than ten days before "the first scheduled evidentiary hearing." Here the Board first proffered its expert report substantially after the discovery end date, which afforded Salaam insufficient opportunity to counter it before the February 17, 2012 hearing, or, alternatively, would have resulted in additional delay to meet this new evidence. Notably also, since the Board failed to raise this issue in its exceptions for the Commissioner's consideration, we deem it waived.
Finally, as to Salaam's cross-appeal, the Commissioner did not act arbitrarily in disallowing the fees charged by Smith's associates. Since they neither testified nor submitted any affidavits of services, there was simply no competent evidence in the record to establish the reasonableness of their services or their hourly billing rates.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION