RADIATION DATA, INC. VS. NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION (L-1260-16, SOMERSET COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0707-17T2

RADIATION DATA, INC.,

Plaintiff-Respondent, APPROVED FOR PUBLICATION

November 2, 2018

v.

APPELLATE DIVISION

NEW JERSEY DEPARTMENT

OF ENVIRONMENTAL

PROTECTION, PAUL ORLANDO,

JENNIFER GOODMAN, and ANITA

KOPERA,

Defendants-Appellants,

and

BOB MARTIN, PAUL BALDAUF,

CHARLES RENAUD, and

HERBERT ROY,

Defendants.

________________________________

Argued October 9, 2018 – Decided November 2, 2018

Before Judges Sabatino, Haas and Sumners.

On appeal from Superior Court of New Jersey, Law

Division, Somerset County, Docket No. L-1260-16.

Robert J. McGuire, Deputy Attorney General, argued

the cause for appellants (Gurbir S. Grewal, Attorney

General, attorney; Jason W. Rockwell, Assistant

Attorney General, of counsel; Robert J. McGuire and

Benjamin H. Zieman, Deputy Attorney General, on the

briefs).

David J. Singer argued the cause for respondent

(Vella, Singer and Associates, PC, attorneys; David J.

Singer and Lisa M. Leili, of counsel and on the

briefs).

The opinion of the court was delivered by

SABATINO, P.J.A.D.

On leave granted, the New Jersey Department of Environmental

Protection ("DEP") and three individual DEP officials named as co-defendants

in this civil action appeal the Law Division's June 30, 2017 interlocutory order

insofar as it partially denied defendants' motion to dismiss plaintiff's claims

asserting constitutional and certain statutory violations.

Because we are persuaded the trial court misapplied principles of

qualified immunity from suit in partially denying the dismissal motion, we

reverse the court's ruling and remand for further proceedings to adjudicate the

remaining counts of plaintiff Radiation Data, Inc.'s ("RDI's") complaint. The

agency did not violate "clearly established" equal protection and due process

rights by pursuing a regulatory enforcement action against plaintiff, and by

directing that communications between plaintiff and the agency be channeled

through their respective attorneys while the contentious administrative

litigation was ongoing.

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I.

Briefly stated, the backdrop of this matter is as follows. 1 RDI is a New

Jersey corporation and is the largest radon measurement business in the State.

RDI has been certified periodically by the DEP to provide radon services

pursuant to the Radiation Protection Act, N.J.S.A. 26:2D-1 to -89, and

associated regulations, N.J.A.C. 7:28-27.1 to -27.35. The regulatory program

is administered through the DEP's Radon Section.

Between August 2009 and June 2010, the DEP issued six Administrative

Orders and Notices of Prosecution ("AO/NOP") to RDI. RDI requested

adjudicatory hearings for each of the six AO/NOPs. The matters were

transmitted to the Office of Administrative Law ("OAL") and consolidated.

On March 14, 2013, an Administrative Law Judge ("the first ALJ") issued a

partial summary decision on the six AO/NOPs. The first ALJ found in favor

of the DEP on all but two of the violations in the AO/NOPs.

The DEP then issued three additional AO/NOPs against RDI in February

2011, June 2013, and December 2014. RDI requested an administrative

hearing before the OAL on these additional claimed violations. The matter was

1

For a more comprehensive discussion of the related administrative litigation

involving the DEP and RDI, we refer to our unpublished opinion issued today

in A-1777-17. In that opinion, we affirmed the DEP's findings of regulatory

violations in part, and reversed and remanded them in part.

A-0707-17T2

3

tried on intermittent days before a second Administrative Law Judge ( "the

second ALJ") between October 2015 and February 2016.

Ultimately, on June 28, 2017, the second ALJ issued a lengthy decision

finding the DEP had proven a majority of the violations. RDI filed exceptions

to those findings with the DEP Commissioner. On November 1, 2017, the

Commissioner issued a final agency decision adopting the decision of both

ALJs, with slight modification. RDI's appeal in A-1777-17 ensued. Given the

pendency of that appeal, the DEP has yet to bring a penalty enforcement action

against RDI based on the violations.

Meanwhile, in September 2016, RDI filed the present civil action in the

Law Division against the DEP and various DEP officials. 2 In general, the

lawsuit alleges defendants retaliated against RDI after the company contested

the AO/NOPs issued by the agency.

More specifically, RDI alleges that defendants engaged in a "pattern of

harassing, intimidating, discriminatory, and threating conduct." RDI contends

this retaliation began in September 2015, approximately one month before the

OAL hearing before the second ALJ, and continued through the trial. The

alleged misconduct includes: refusing to respond to RDI's telephone calls and

emails regarding business and compliance matters because of the pending

2

Several named officials have since been dismissed from the case.

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4

OAL hearing; and prohibiting RDI from hand-delivering a license renewal

form to the DEP's offices. In addition, RDI contends DEP officials made

several threatening remarks to or about RDI, refused to meet with an RDI

representative, and that one DEP official uttered an anti-Semitic slur about the

President of RDI.

As amended, RDI's complaint asserts claims of equal protection,

procedural due process, and substantive due process violations of the New

Jersey Constitution, the Law Against Discrimination ("LAD"), N.J.S.A. 10:5-1

to -49; and tortious interference with prospective economic advantage.

Although it is not expressly pled in its complaint, RDI also relies on the New

Jersey Civil Rights Act, N.J.S.A. 10:6-1 to -2 ("NJCRA"). Only the

constitutionally-based and NJCRA claims are presently at stake in this

interlocutory appeal.

Shortly after the filing of RDI's lawsuit, a trial judge denied RDI's ex

parte motion for temporary restraints. Thereafter, the judge conducted a

hearing and issued a preliminary injunction that partially granted relief to RDI.

The judge found that RDI had failed to demonstrate a sufficient nexus between

defendants' alleged misconduct and any irreparable harm to RDI. However,

the preliminary injunction requires defendants to accept email communications

from RDI and respond within one business day if the email is not marked

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5

"urgent," or respond within one hour if the email is so marked and is

transmitted within business hours. The injunction also requires RDI to submit

documents to DEP by regular, certified, or overnight mail during the pendency

of the litigation. 3

Defendants moved to dismiss various claims asserted in the complaint.

Most pertinent to the present appeal, defendants invoked principles of

qualified immunity and argued that RDI's constitutional and NJCRA claims

must be dismissed because defendants violated no "clearly established" laws in

their alleged interactions with RDI and its representatives.

A second trial judge heard oral argument on defendants' motions.

Following that argument, the second judge allowed the LAD claim and the

tortious interference claim to continue against the DEP and the remaining

individual defendants in their official capacities. The judge also allowed RDI's

constitutional claims of equal protection and substantive due process violations

and the related NJCRA claims to proceed against three individual defendants

in their unofficial capacities. The judge found that RDI's claims "implicate

clearly established constitutional or statutory right[s] and [as] such [present]

an issue that the court will consider when, and if, summary judgment motions

3

Defendants have not sought leave to appeal the terms of the preliminary

injunction.

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6

based on [same] are filed." The judge denied defendants' ensuing motion for

reconsideration.

Thereafter, defendants moved for leave to appeal solely the judge's

denial of its dismissal motion based on qualified immunity. Defendants have

not sought review of the continuation of the LAD and tortious interference

counts.

II.

Our review of a ruling on a motion to dismiss a complaint for failure to

state a cause of action is de novo. As such, "we apply a plenary standard of

review . . . [and] owe no deference to the trial court's conclusions." Rezem

Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103, 114 (App.

Div. 2011) (citing Sickles v. Cabot Corp., 379 N.J. Super. 100, 106 (App. Div.

2005)).

Applying the same standard under Rule 4:6–2(e) that governed the trial

court, we are required to "examin[e] the legal sufficiency of the facts alleged

on the face of the complaint . . . ." Printing Mart-Morristown v. Sharp Elecs.

Corp., 116 N.J. 739, 746 (1989). We therefore accord RDI the benefit of

"'every reasonable inference of fact' and read the complaint in the light most

favorable to plaintiff." Jenkins v. Region Nine Hous. Corp., 306 N.J. Super.

258, 260 (App. Div. 1997) (quoting Printing Mart, 116 N.J. at 746). In doing

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so, however, we must adhere to the applicable standards of the law, in this

instance the law of qualified immunity.

Qualified immunity shields government officials from civil liability

unless a plaintiff pleads facts showing: "(1) that the official violated a statutory

or constitutional right, and (2) that the right was 'clearly established' at the

time of the challenged conduct." Ashcroft v. al-Kidd, 563 U.S. 731, 735

(2011). New Jersey's qualified immunity doctrine tracks the federal standard.

Brown v. State, 230 N.J. 84, 98 (2017).

Where applicable, qualified immunity protects public officials "from

personal liability for discretionary actions taken in the course of their public

responsibilities, 'insofar as their conduct does not violate clearly established

statutory or constitutional rights of which a reasonable person would have

known.'" Brown, 230 N.J. at 97–98 (quoting Morillo v. Torres, 222 N.J. 104,

116 (2015)). Courts reviewing qualified immunity claims are free to address

the two prongs in either order. Morillo, 222 N.J. at 118 (citing al–Kidd, 563

U.S. at 735); see also Pearson v. Callahan, 555 U.S. 223, 236 (2009)

(instructing that courts are no longer required to consider the two prongs of

qualified immunity in sequential order).

Particularly germane to the present appeal is the "clearly established"

prong. A government official's conduct violates clearly established law when,

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8

at the time of the challenged conduct, "[t]he contours of [a] right [are]

sufficiently clear that a reasonable official understands that what he is doing

violates that right." Anderson v. Creighton, 483 U.S. 635, 640 (1987); see also

Gormley v. Wood-El, 218 N.J. 72, 113 (2014) (quoting Creighton, 483 U.S. at

640).

In White v. Pauly, 580 U.S. ___, 137 S. Ct. 548, 552 (2017), the United

States Supreme Court reiterated the strict standard for what constitutes a

"clearly established" right:

Today, it is again necessary to reiterate the

longstanding principle that "clearly established law"

should not be defined "at a high level of generality."

al-Kidd, 563 U.S. at 742. As this Court explained

decades ago, the clearly established law must be

"particularized" to the facts of the case. Otherwise,

"[p]laintiffs would be able to convert the rule of

qualified immunity . . . into a rule of virtually

unqualified liability simply by alleging violation of

extremely abstract rights." Creighton, 483 U.S. at

639.

[(Emphasis added).]

Although a published opinion directly on point is not required for a right to be

clearly established, "existing precedent must have placed the statutory or

constitutional question beyond debate." al–Kidd, 563 U.S. at 741 (emphasis

added).

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9

The strong policy rationale for qualified immunity is well recognized.

See Harlow v. Fitzgerald, 457 U.S. 800, 814 (1982); Creighton, 483 U.S. at

638; Pearson, 555 U.S. at 231. "Qualified immunity balances two important

interests—the need to hold public officials accountable when they exercise

power irresponsibly and the need to shield officials from harassment,

distraction, and liability when they perform their duties reasonably." Pearson,

555 U.S. at 231. The doctrine is intended to "avoid excessive disruption of

government and permit the resolution of many insubstantial claims . . . ."

Harlow, 457 U.S. at 818. Indeed, the United States Supreme Court has

expressed concern about the general cost of subjecting public officials to the

risks of litigation, which include not only potential liability for monetary

damages, but also "distraction . . . from their governmental duties, inhibition of

discretionary action, and deterrence of able people from public service."

Mitchell v. Forsyth, 472 U.S. 511, 526 (1985) (citing Harlow, 457 U.S. at

816).

Furthermore, because qualified immunity "'is an immunity from suit

rather than a mere defense to liability' [it] is effectively lost if the case is

allowed to go to trial." Wildoner v. Borough of Ramsey, 162 N.J. 375, 387

(2000) (emphasis in original) (quoting Mitchell, 472 U.S. at 526). Typically,

the "application of the defense of qualified immunity is a legal question for the

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10

court rather than the jury; therefore, the defense should be raised and resolved

'long before trial.'" Brown, 230 N.J. at 98 (citations omitted).

"[T]he trial court must exercise its discretion in a way that protects the

substance of the qualified immunity defense. It must exercise its discretion s o

that officials are not subjected to unnecessary and burdensome discovery or

trial proceedings." Crawford-El v. Britton, 523 U.S. 574, 597-98 (1998); see

also Mitchell, 472 U.S. at 526 (noting that qualified immunity is intended to

avoid "subject[ing] government officials either to the costs of trial or to the

burdens of broad-reaching discovery."). Therefore, "unless the plaintiff's

allegations state a claim of violation of clearly established law, a defendant

pleading qualified immunity is entitled to dismissal before the commencement

of discovery." Mitchell, 472 U.S. at 526 (emphasis added).

RDI alleges defendants violated RDI's right to equal protection

guaranteed under the New Jersey Constitution. That equal protection claim

essentially hinges on the following factual allegations: (1) defendants declined

to speak to RDI on the phone, and DEP employees were instructed to stop

cooperating with RDI and to refuse to provide RDI with any help, and those

communication limitations did not apply to other similarly-situated radon

companies (i.e., a disparate treatment claim); (2) defendants did not pursue

enforcement actions against other radon companies for the same kinds of

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violations allegedly committed by RDI (i.e., a selective enforcement claim);

(3) defendants denied RDI equal access to DEP offices and staff, as required

by the regulation; (4) defendants retaliated against RDI for requesting OAL

hearings by issuing unjustified violations; and (5) defendants harassed,

intimidated, and threatened RDI during the pendency of the OAL hearings.

As the trial court noted, RDI's equal protection claims boil down to a

"class-of-one" theory. In Village of Willowbrook v. Olech, 528 U.S. 562, 564

(2000), the United States Supreme Court recognized the class-of-one doctrine

under equal protection jurisprudence. A class-of-one theory permits a plaintiff

to bring an equal protection claim alleging that plaintiff was "intentionally

treated differently from others similarly situated and that there is no rational

basis for the difference in treatment." Ibid. In Olech, 528 U.S. at 563, the

plaintiff Olech alleged that Village officials demanded she provide a thirty-

three-foot easement as a condition of connecting her property to the municipal

water supply. However, the Village had only required a fifteen-foot easement

from other similarly-situated property owners. Olech alleged that the Village's

demand was "irrational and wholly arbitrary" and was done in retaliation after

Olech had filed previous, unrelated litigation against the Village. Ibid. In its

per curiam opinion, the United States Supreme Court affirmed the Seventh

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Circuit's judgment, which had held that the plaintiff adequately alleged an

equal protection violation. Id. at 565.

New Jersey courts likewise have recognized such a class-of-one theory,

where it is supported by the facts. See, e.g., Paul Kimball Hosp., Inc. v. Brick

Twp. Hosp., Inc., 86 N.J. 429, 448 (1981).

A class-of-one theory requires a plaintiff to prove: (1) the defendant

intentionally treated him differently from others similarly-situated; and (2)

there was no rational basis for the difference in treatment. Hill v. Borough of

Kutztown, 455 F.3d 225, 239 (3d Cir. 2009). Regarding the first element,

"[p]ersons are similarly-situated under the Equal Protection Clause when they

are alike in 'all relevant aspects' . . . ." Startzell v. City of Phila., 533 F.3d

183, 203 (3d Cir. 2008) (emphasis added) (quoting Nordlinger v. Hahn, 505

U.S. 1, 10 (1992)). See also Griffin Indus., Inc. v. Irvin, 496 F.3d 1189 (11th

Cir. 2007) (rejecting a class-of-one equal protection claim where the plaintiff

company charged by state regulators with environmental violations failed to

establish that other companies not likewise charged were actually similarly-

situated). As the court noted in Irvin, 496 F.3d at 1203-04, where the

government's regulatory action is based on "multi-dimensional" factors and

"varied decision-making criteria," a class-of-one equal protection claim is

more difficult to establish.

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Here, it is patently clear from the administrative record in the related

appeal that the DEP's enforcement action against RDI was "multi-

dimensional," involving a host of regulatory subjects spanning from radon

sampling, radon measurement, radon testing, radon mitigation, and radon

detection equipment sales. The Law Division complaint does not identify any

other particular certified radon measurement and mitigation business in New

Jersey that is similarly-situated.

As RDI acknowledges, it is the largest radon measurement company in

this State, owning about half of the industry's market share. The decision to

charge such a dominant market leader for regulatory violations does not

bespeak selective enforcement, since no other competitor appears to be

similarly-situated in size or market share. Government is "afforded broad

discretion to decide whom to prosecute based on such factors as strength of

case and general deterrence value." Twp. of Pennsauken v. Schad, 160 N.J.

156, 183 (1999); see also State v. Ballard, 331 N.J. Super. 529, 539 (App. Div.

2000) (likewise recognizing this principle).

Nor is RDI similarly-situated to other radon companies with respect to

the DEP's decision to channel communications between RDI and the DEP

through counsel while their highly contentious administrative litigation was

ongoing. Given the contentious adversarial context, it was not discriminatory

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or unreasonable for the DEP to take protective steps to have the adverse parties

communicate through their attorneys while the acrimonious regulatory case

was pending. No other company has been identified that was embroiled in an

equivalent adversarial proceeding with the DEP Radon Section. The

requirement of "similarly-situated" parties is simply not met.

Turning to the second prong of whether the agency had a reasonable

basis for undertaking certain stringent actions with respect to RDI, we concur

with the DEP that such a basis is present here. The administrative case

involved numerous charges of regulatory violations by RDI, most of which

were sustained by the two ALJs who served as independent fact-finders, and

many of which we have upheld today in our partial affirmance of the

Commissioner's final agency decision. The history of RDI's regulatory non-

compliance, and the adversarial context existing while the administrative case

was pending, justified the DEP in taking reasonable steps to protect its

litigation interests.

Indeed, the mutual adversarial intensity appears to have become

progressively worse as the administrative hearings went forward. The record

reflects that at one point the DEP threatened to get the police involved. The

DEP asserts that it began limiting and channeling RDI's contacts with staff in

the Radon Section out of a concern that RDI might use such contacts to

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generate possible statements against interest that could be used against the

DEP in the administrative litigation. For instance, as the second ALJ noted in

her findings, during the eighteen months while the OAL case was pending, the

DEP received about 250 phone calls and emails from RDI, compared to about

300 phone calls and emails it received from the other twenty-nine radiation

mitigation businesses combined. That statistic bolsters both our determination

that RDI was not similarly situated to other radon companies, and also that the

DEP had at least colorable reasons for treating its communications with RDI 's

representatives differently.

The DEP's decision to channel communications between the adverse

parties through counsel, rather than through staff, also is consistent with the

public policies underlying Rule of Professional Conduct ("RPC") 4.2. In

pertinent part, RPC 4.2 states: "In representing a client, a lawyer shall not

communicate about the subject of the representation with a person the lawyer

knows, or by the exercise of reasonable diligence should know, to be

represented by another lawyer in the matter . . . ." RPC 4.2. The rule contains

certain exceptions, including situations where the communication is

"authorized by law." Ibid.

We recognize the literal terms of RPC 4.2 do not apply here, because

there is no claim that RDI's counsel was attempting to communicate directly

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with staff in the DEP's Radon Section while the DEP was being represented by

its own counsel in the ongoing administrative case. Even so, the DEP had a

legitimate interest in channeling communications through the parties'

respective counsel to assure that further staff-to-staff communications did not

become evidential fodder in the administrative litigation. 4

Stated differently, RDI had no "clearly established right" to dictate how

this particular government agency was to communicate with RDI while the

hotly-contested litigation was ongoing. Government must retain the discretion

to respond to private parties in a manner it finds most efficient and effective.

The fact that the DEP's website for the radon program generically advises the

public to contact the Radon Section directly with questions 5 is immaterial,

given the distinctive setting of ongoing litigation between the DEP and an

entity it regulates. So long as the DEP responds to an adversary's inquiries

within a reasonable time and in a reasonable manner, no "clearly established"

right of access to government has been infringed. Although we recognize the

DEP could have been more courteous and cooperative when it declined to

4

We do not read the "authorized by law" proviso in RPC 4.2 to preclude an

agency from choosing to have outside inquiries from an adverse party handled

by the agency's attorneys instead of its staff, as long as the means of access

and the agency's response time is reasonable.

5

See N.J.A.C. 7:28-27.3(i).

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accept a hand-delivery of RDI's license renewal material from RDI's President,

that isolated incident does not suffice to defeat defendants' assertion of

qualified immunity, particularly since there was still ample time for the

renewal application to be received and processed.

In short, RDI's claims of an equal protection violation – even viewing

the facts alleged in the complaint in a light most favorable to the company –

fall short of presenting a viable cause of action under constitutional principles.

Defendants are entitled as a matter of law to qualified immunity dismissing

those claims.

The same analysis and legal conclusion essentially extend to RDI's

claims of a constitutional deprivation of due process. It is well established that

the right to engage in common occupations of life "free from unreasonable

governmental interference comes within both the 'liberty' and 'property'

concepts of the . . . [federal] Fourteenth Amendment." Piecknick v.

Pennsylvania, 36 F.3d 1250, 1259 (3d Cir. 1994) (citing Greene v. McElroy,

360 U.S. 474, 492 (1959)). The New Jersey Constitution recognizes similar

principles. See N.J. Const. art. I, ¶ 1; see also Rivkin v. Dover Twp. Rent

Leveling Bd., 143 N.J. 352, 366 (1996). However, this is not an open-ended

right.

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In County of Sacramento v. Lewis, 523 U.S. 833, 846 (1998), the United

States Supreme Court illuminated the due process standard that applies when a

plaintiff alleges that an action taken by an executive branch official, or as in

the present case, a regulatory agency, violated substantive due process. The

Court held in Lewis, 523 U.S. at 845-46, that because the "touchstone of due

process is the protection of the individual against arbitrary action of the

government[,]" only the "most egregious official conduct can be said to be

'arbitrary in the constitutional sense.'" (Emphasis added). The "substantive

component of the Due Process Clause is violated by executive action only

when it 'can properly be characterized as arbitrary, or conscience shocking, in

a constitutional sense.'" United Artists Theatre Circuit, Inc. v. Twp. of

Warrington, 316 F.3d 392, 399 (3d Cir. 2003) (emphasis added) (quoting

Lewis, 523 U.S. at 847).

The Supreme Court of New Jersey has likewise recognized and adopted

the "conscious shocking" test for substantive due process claims. See

Gormley, 218 N.J. at 112 (applying the "conscious shocking" test to a state-

created danger claim asserted by plaintiff alleging a substantive due process

violation).

For the reasons we have already expressed with respect to the

immunized equal protection claims, we conclude that defendants are similarly

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entitled to qualified immunity with respect to RDI's due process infringement

allegations. The conduct alleged by RDI did not infringe upon any "clearly

established" constitutional rights of RDI. The DEP's decisions to pursue

regulatory violations against RDI and to channel communications through

counsel as the administrative case became increasingly contentious do not

"shock the conscience."

Lastly, we reject RDI's argument that defendants' actions violated a

clearly established statutory right under the NJCRA or otherwise. The only

statutory right that properly remains in the case is the LAD claim of alleged

religious or ethnic discrimination. That pending claim is unaffected by the

present interlocutory appeal. 6

These substantive points aside, we add that we discern no need to

withhold immunity-based dismissal, pending discovery. As we have noted,

qualified immunity is not simply immunity from a final judgment, but is

immunity from suit. See Mitchell, 472 U.S. at 526 (finding qualified

immunity is intended to avoid "subject[ing] government officials either to the

costs of trial or to the burdens of broad-reaching discovery."). The claims of

constitutional deprivation are ripe in this case for dismissal on immunity

6

Our comments in this regard should by no means suggest approval or

tolerance of any religious or ethnic slurs that may be proven to have been

uttered by any DEP representative.

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grounds. There is no need for discovery on those claims. Discovery on the

remaining LAD and tortious interference claims, however, is left to the trial

court's pre-trial case management and discretion.

The trial court's orders are therefore reversed with respect to defendants'

assertion of qualified immunity. The matter is remanded for the trial court to

adjudicate solely the open LAD and tortious interference claims.

Reversed and remanded. Jurisdiction is not retained.

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