Cohen v. Board of Trustees of University of Medicine and Dentistry of New Jersey

Decision Date22 December 1989
Citation572 A.2d 1191,240 N.J.Super. 188
Parties, 59 Ed. Law Rep. 1105 Philip COHEN, Nicholas Ingoglia, Gordon MacDonald, Alan Siegel, Norman Sissman, Joseph Thornton and Betty Whalen, Plaintiffs, v. BOARD OF TRUSTEES OF THE UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY, Defendants.
CourtNew Jersey Superior Court

Mark D. Shorr for plaintiffs (Hannoch Weisman, Trenton, attorneys).

Jack M. Sabatino, Trenton, for defendants (Peter N. Perretti, Jr., Atty. Gen., attorney).

BACHMAN, J.S.C.

On June 24, 1988, plaintiffs, all salaried employees of the University of Medicine and Dentistry of New Jersey ("UMDNJ"), filed a complaint alleging improper calculation and payment of salaries. Defendant, Board of Trustees of UMDNJ controls, manages and administers the university pursuant to statute with the power to establish the method of payment of its employees' salaries.

The UMDNJ has paid the named plaintiffs, and all others similarly situated, biweekly salaries calculated on a fiscal day basis. To obtain this biweekly amount, an employee's annual salary is divided by the number of working days in the State's fiscal year. This number is the daily rate of pay. The daily rate is then multiplied by the number of days worked in a two-week pay period. The resulting figure represents the employee's biweekly amount. The biweekly amount will fluctuate in each fiscal year dependent upon the number of fiscal days in a year. There will be either 260, 261 or 262 fiscal days in any given fiscal year.

Plaintiffs contend that both their collective bargaining agreement and N.J.S.A. 52:14-15 mandate calculation of salaries in a pure biweekly amount. This figure is realized by dividing an employee's annual salary by the number of two-week periods in a year. They further contend that the UMDNJ's method of calculation not only fails to compensate the employees completely but also results in less contribution to pensions and retirement systems by UMDNJ.

The present motion by the UMDNJ seeks to transfer this action to either the Appellate Division or the salary adjustment committee. As a consequence, the status of the UMDNJ as well as the actions of its board of trustees must be evaluated in light of R. 2:2-3.

The Legislature established the UMDNJ as a "body corporate and politic" possessing a high degree of self-government. N.J.S.A. 18A:64G-3 (Medical and Dental Education Act of 1970). In recognition of this legislative directive, the UMDNJ claims a unique status as "a truly independent entity whose autonomy is substantive rather than merely formal or organizational." DeAngelis v. Addonizio, 103 N.J.Super. 238, 251-252, 247 A.2d 39 (Law Div.1968). However, the university is still dependent upon the State for funding, N.J.S.A. 18A:64G-6(f), while responsible to the State to further declared public policies of higher education, N.J.S.A. 18A:64G-2.

The type of agency established, if any, by this statutory scheme and subsequent judicial interpretation becomes relevant in determining the applicability of R. 2:2-3 which guides appeals to the Appellate Division. The relevant portion of the rule states that appeals may be taken as a matter of right to the Appellate Division:

[t]o review final decisions or actions of any state administrative agency or officer, and to review the validity of any rule promulgated by such agency or officer.... [R. 2:2-3(a)(2) ].

Hence, if the UMDNJ may be termed a state administrative agency within the ambit of this rule, the appeal of its final decision regarding the method of calculating payment of salaries may properly lie in the Appellate Division.

In determining the status of the UMDNJ, the court must focus on "whether the function and life of the particular agency is dependent upon the State in its management and control, and whether, it depends solely and entirely upon the financial subsistance it receives from the State." DeAngelis, supra, 103 N.J.Super. at 251-252, 247 A.2d 39, citing State v. Clark, 15 N.J. 334, 339, 104 A.2d 685 (1954).

The UMDNJ, through its board of trustees, possesses autonomy and discretion to direct and control the expenditure of funds appropriated by the State. N.J.S.A. 18A:64G-6. It also retains independent control over funding, bequests and grants received from sources other than the State. Ibid. Further, it is the board of trustees of UMDNJ which determines its policies, development and administrative directions including the authority to adopt by-laws, rules and regulations. N.J.S.A. 18A:64G-6(c), (g). Hence, the university is to act as "guilds of scholars ... responsible only to themselves." Snitow v. Rutgers University, 103 N.J. 116, 122, 510 A.2d 1118 (1986), quoting N.L.R.B v. Yeshiva University, 444 U.S. 672, 680, 100 S.Ct. 856, 861, 63 L.Ed.2d 115 (1980).

In recognition of this unique status as a state university, the Judiciary and the Legislature have denied agency status to the UMDNJ under particular circumstances. See DeAngelis, supra (Civil service status of UMDNJ employees denied as university functions as an autonomous entity rather than as agency of the State); see also N.J.S.A. 18A:64G-6(l ) (University may enter into contracts with the State or any public body, department or agency of the State); N.J.S.A. 18A:64G-6, 7 (University capable of being sued and has the power to sue and therefore is not an agency of the State for purposes of the New Jersey Contractual Liability Act, N.J.S.A., 59:13-1 et seq.).

Similarly, expressing an identical rationale, Rutgers University has recently been held neither as an arm of the State entitled to Eleventh Amendment protections, Kovats v. Rutgers, The State University, 822 F.2d 1303 (3 Cir.1987), nor an alter-ego of the State but rather a "person" subject to 42 U.S.C.A. 1983 liability, Fuchilla v. Layman, 109 N.J. 319, 537 A.2d 652, certif. den. --- U.S. ----, 109 S.Ct. 75, 102 L.Ed.2d 51 (1988). Rutgers is also not a state agency or instrumentality for purposes of the New Jersey Conflicts of Interest Law, N.J.S.A. 52:13D-12 to -27. In re Exec. Com'n on Ethical Stand., 116 N.J. 216, 561 A.2d 542 (1989). As Rutgers and UMDNJ are both state universities possessing equal autonomy and pursuing similar policies, they should be accorded the same status.

Yet, state universities may be classified as instrumentalities of the State for particular purposes. Rutgers, The State University v. Piscataway Township, 1 N.J.Tax 164 (Tax Ct.1980) (Rutgers classified as a state agency so as to achieve immunity from local land use regulations and property taxation.); Rutgers, The State University v. Piluso, 60 N.J. 142, 286 A.2d 697 (1972) (State University termed an instrumentality of the State thereby immune from local zoning ordinances.). The UMDNJ itself has expressly been made an instrumentality of the State so as to function as a public employer under the New Jersey Employer-Employee Relations Act, N.J.S.A. 34:13A-1 et seq. See, N.J.S.A. 18A:64G-6(s). Further, the university has been deemed a "public agency" within the meaning of the Public Employees' Retirement System Act, N.J.S.A. 43:15A-1 et seq. See, N.J.S.A. 18A:64G-12. 1

In light of these legislative and judicial recognitions, the UMDNJ cannot be held to be a state administrative agency within the meaning of R. 2:2-3(a)(2). The university maintains financial and managerial independence from the State. Its autonomy is substantive rather than merely formal. The fact that the UMDNJ has expressly been made an instrumentality of the State for limited purposes not only fails to classify it as such for all purposes but also evidences an intent that the university shall remain independent unless expressly brought within the scope of the directive in issue. Thus, the independent, autonomous nature of the UMDNJ removes this action from the ambit of R. 2:2-3.

The above examination focuses on a statutory definition of an agency in light of the Legislature's intent in creating the UMDNJ. Yet, the requirements of Supreme Court Rule 2:2-3 would nonetheless remain inapplicable as the two judicially recognized exceptions to this rule would mandate trial level action. Foremost, jurisdiction will lie in the trial division where the authority of the state administrative agency is limited to a particular locality. Baldwin Constr. Co. v. Essex County Board of Taxation, 27 N.J.Super. 240, 242, 99 A.2d 214 (App.Div.1953); Colon v. Tedesco, 125 N.J.Super. 446, 449-450, 311 A.2d 393 (Law Div.1973).

The classification of the agency being challenged as a state agency is irrelevant in determining whether the agency's authority is confined to a single locality. Baldwin Constr., supra, 27 N.J.Super. at 242, 99 A.2d 214 (County board of taxation an agency of the State); See also Estelle v. Bd. of Educ., 26 N.J.Super. 9, 97 A.2d 1 (App.Div.1953) (Local board of education considered a state agency); State v. Mundet Cork Corp., 126 N.J.Eq. 100, 8 A.2d 105 (Ch.1939) (Local board of health a state agency). While an agency may be "classified for most purposes as an agency of the State," actions would properly be brought in the Law Division under R. 2:2-3 and R. 4:69-1 where that agency's authority is limited to the county. Baldwin Constr. Co., supra, 27 N.J.Super. at 242, 99 A.2d 214. The proper focus, then, rests on the scope of authority exercised by the agency in applying this exception to R. 2:2-3.

This analysis further requires a determination of the true parties in interest in deciding whether a court will ultimately review a state administrative determination or a local agency action. Theodore v. Dover Bd. of Educ., 183 N.J.Super. 407, 413, 444 A.2d 60 (App.Div.1982) (Trial level challenge to action of local board of education held to effectively question policies and decisions of state department of education. Any appeal from this latter agency reviewable in the Appellate Division.); DeNike v. Bd. of Trustees of State Employees...

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