Under the New Jersey Constitution, civil service appointments “shall be made according to merit and fitness to be ascertained, as far as practicable, by examination, which, as far as practicable, shall be competitive.”  Those merit and fitness principles are implemented by the Civil Service Act and its regulations.  When an appointing authority decides, as it can pursuant to the Civil Service Act, to choose a lower-ranked candidate for a position instead of one who ranked higher on a competitive examination, the authority must report to the Department of Personnel (“DOP”) to explain why it did so.  The reason for the report is to ensure that the authority did not abuse its appointing power.  In IMO Foglio, ___ N.J. ___ (2011), the Supreme Court examined the detail that must be provided by the appointing authority when passing over a higher ranked candidate.  In doing so, the Court rejected the authority’s “boilerplate” explanation because it was “equally applicable to any bypass case and utterly lacking in specific explanatory language[.]”

The City of Ocean City (“Ocean City”) wanted to fill three vacant firefighter positions. In May 2007, the Civil Service Commission (“Commission”) certified a list of eligible candidates to Ocean City.  The candidates on the list were ranked based on their scores on a competitive examination.  Nicholas Foglio (“Foglio”) was second on the list.  He had served for eight years as a fireman/emergency medical technician in several volunteer fire departments and had several relevant licenses and certifications.  Of the candidates on the eligible list, Foglio was the only one with any previous firefighting experience and training.

In June 2007, Ocean City interviewed Foglio and the other candidates.  In July, Ocean City appointed the candidates that were ranked first, third, and fourth – thereby passing over Foglio.  Pursuant to the governing regulations, Ocean City reported to the DOP that it passed over Foglio for two lower-ranked candidates because they “best meet[] the need of Department.”  Foglio appealed to the Division of Local Human Resources Management, which ruled that Ocean City had properly invoked the Rule of Three and provided a sufficient explanation of why it bypassed Foglio.  Foglio then sought the Commission’s review, but it concluded that Foglio did not meet his burden of showing that the appointing authority’s decision to pass over him was improper.  Foglio then appealed to the Appellate Division, which affirmed the Commission’s decision.

The Supreme Court granted Foglio’s petition for certification and reversed.  The Court began its analysis by reviewing the governing constitutional, statutory, and regulatory provisions and requirements, including the process by which an appointing authority fills vacancies.  Turning to the Rule of Three, which controls the authority’s hiring discretion, the Court noted that it allows the appointing authority to pick one of the three highest scoring candidates from an open competitive examination.  Pursuant to that rule, once a list of at least three candidates is certified, the appointing authority can choose among the top three candidates to fill a vacancy.  It is well established that “[t]he [R]ule of [T]hree recognizes employment discretion and seeks to ensure that such discretion is not exercised in a way inconsistent with ‘merit’ considerations.”  Terry v. Mercer Cty. Bd. of Chosen Freeholders, 86 N.J. 141, 149-50 (1981).  In other words, the Rule of Three limits, but does not eliminate, an appointing authority’s discretion in its hiring decisions.

After the appointing authority makes its selection, it must file a report with the DOP.  When the authority bypasses a higher ranked candidate, it must provide a statement of reasons why it selected the lower-ranked candidate.  That requirement is designed to prevent the authority from using favoritism or acting in an arbitrary manner in choosing candidates; however, the authority can bypass a higher ranked candidate for any reason that is based upon the candidate’s merit.

Turning to the facts of the case, the Court noted that Foglio conceded that Ocean City had the discretion to bypass him under the Rule of Three.  The Court focused narrowly on whether the authority had provided an adequate statement of reasons for bypassing Foglio, and it concluded that it had not.  In that regard, the Court reasoned that “it is clear that the boilerplate advanced by the City as an explanation for the bypass here was inadequate insofar as it failed to provide any real enlightenment whatsoever as to why the bypass occurred.  That is not to suggest that the statement of reasons need be lengthy or multifaceted to pass muster.  What is wrong with ‘best meets needs of Department’ is not its brevity, but its failure to reveal anything about the bypass decision.  The City might just as well have stated: ‘we liked them better,’ an equally unrevealing explanation.”

Providing guidance on what an appointing authority must do, the Court stressed that “[t]he required statement needs to address the reasons why a higher ranked candidate was bypassed.”  The Court elaborated that “the City might have relied on a preference for a college degree; or the performance of the applicants in the give-and-take of an interview; or on extraordinary character and employment references.  Had Foglio been chosen over a higher-ranked eligible, the City could have pointed to his vast firefighting experience and training. Each of those reasons would have satisfied N.J.A.C. 4A:4-4.8(b)(4).  The possibilities are endless -- as varied as the candidates themselves. What is not permitted is the kind of conclusory, unrevealing statement issued in this case that did not explain the selection process or otherwise assure that the bypass of a higher-ranked candidate was not arbitrary.”  Lastly, the Court rejected Ocean City’s argument that Foglio had not proven that its decision was arbitrary or discriminatory, emphasizing that the City bore the initial burden of providing a statement of legitimate reasons why he was bypassed, which it had failed to do.

Accordingly, the Court reversed and remanded the matter to Ocean City so that it could produce a proper statement as to why the lower-ranked candidates were chosen instead of Foglio.  The Court observed that once Ocean City provided an adequate explanation, Foglio could then appeal and try to prove that Ocean City had acted arbitrarily in bypassing him.