Full Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-4112-24 KISMET LIMOUSINE and EMIN KAHYAOGLU, President and Individually, Appellants, v. NEW JERSEY DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, Respondent. ______________________________ Argued September 22, 2026 – Decided November 9, 2026 Before Judges Gilson and Paganelli. On appeal from the New Jersey Department of Labor and Workforce Development, Docket No. GE-244- 0217-SAN. Borce Martinoski (Borce Martinoski, LLC) argued the cause for appellants. Kevin K.O. Sangster, Deputy Attorney General, argued the cause for respondent (Jennifer Davenport, Attorney General, attorney; Sookie Bae-Park, Assistant Attorney General, of counsel; Kevin K.O. Sangster, on the brief). PER CURIAM Appellants Kismet Limousine and Emin Kahyaoglu (Kismet) appeal from a July 14, 2025 final agency decision of the Commissioner of the Department of Labor and Workforce Development (Department). The Commissioner adopted the Administrative Law Judge's (ALJ) decision, which applied the doctrine of collateral estoppel and found Kismet had violated the New Jersey Wage and Hour Law (WHL) and New Jersey Wage Payment Law (WPL) and assessed unpaid wages, an administrative fee, and penalties. Because we conclude Kismet fails to establish the Department's decision was arbitrary, capricious, or unreasonable, we affirm. I. The Department had conducted two audits of Kismet. In one audit, the Department determined Kismet had failed to contribute, on behalf of its employees, to the unemployment and temporary disability benefits fund, pursuant to the Unemployment Compensation Law (UCL), N.J.S.A. 43:21-1 to -71. In the second audit, the Department determined Kismet had failed to maintain proper payroll records, properly pay its employees, and took illegal deductions from their employees' wages, pursuant to N.J.S.A. 34:11-4.2, A-4112-24 2 N.J.S.A. 34:11-4.4, N.J.S.A. 34:11-56a20, and N.J.A.C. 12:56-4.1. In response to each audit, Kismet contended the Department had erred when it found its workers were employees, and argued the workers were, in fact, independent contractors, pursuant to N.J.S.A. 43:21-19(i)(6)(A) to (C) (ABC test), and therefore it was not subject to the referenced statutes. The parties' disputes concerning both audits proceeded to hearings before ALJs. Concerning the audit of unemployment and temporary disability benefits, the ALJ determined Kismet had not established the workers were independent contractors pursuant to N.J.S.A. 43:21-19(i)(6)(A) to (C). The Department concurred with that determination in its final agency decision. Kismet appealed the Department's final agency decision to this court. When the second audit reached the ALJ it placed that dispute on an inactive list, pending resolution of the appellate process concerning the first audit. In Kismet International v. New Jersey Department of Labor & Workforce Development (Kismet I), No. A-1424-21 (App. Div. Aug. 2, 2023), we affirmed the Department's final agency decision that Kismet's workers were employees, not independent contractors, and thus Kismet was "required to pay into an unemployment benefits fund under N.J.S.A. 43:21-7." Kismet I, slip op. at 8. We noted that "[w]hether a putative employer is required to pay into an A-4112-24 3 unemployment benefits fund . . . turns on whether its workers are employees or independent contractors," and "[t]he UCL sets forth the so-called ABC test for making that determination." Ibid. (citing E. Bay Drywall, LLC v. Dep't of Lab. & Workforce Dev., 251 N.J. 477, 493 (2022)); see N.J.S.A. 43:21-19(i)(6)(A) to (C). Further, we explained Kismet bore the "burden of 'establish[ing] the existence of all three criteria.'" Id. at 9 (alteration in original) (quoting E. Bay Drywall, 251 N.J. at 495). We noted the ALJ had held "an extensive hearing," id. at 2, and after we reviewed each criterion pursuant to N.J.S.A. 43:21- 19(i)(6)(A) to (C), we were not persuaded Kismet carried its burden to establish the Department's decision was arbitrary, capricious, or unreasonable. See id. at 16. On January 29, 2024, the New Jersey Supreme Court denied Kismet's petition for certification. See Kismet Int'l v. N.J. Dep't of Lab. & Workforce Dev., 256 N.J. 194 (2024). After the Supreme Court denied Kismet's petition, the ALJ removed this matter from the inactive list and scheduled the matter for a hearing. The Department moved for summary decision pursuant to N.J.A.C. 1:1-12.5, relying on our opinion in Kismet I, concerning the employment status and its undisputed calculations. A-4112-24 4 The ALJ found "Kismet failed to provide a responding affidavit" to establish a genuine issue of fact "and did not address the appropriateness of the Department's assessments for those violations." Instead, the ALJ found "Kismet attempt[ed] by way of its brief to relitigate whether the [workers we]re independent contractors and not employees." The ALJ concluded Kismet's attempt to relitigate was "precluded . . . under the doctrine of collateral estoppel." On July 14, 2025, the Commissioner after "de novo review of the record, and after consideration of the ALJ's initial decision . . . accept[ed] and adopt[ed] the findings of facts, conclusions[,] and recommendation contained in the ALJ's initial decision." II. On appeal, Kismet argues the Department erred in granting summary decision because there are material facts in dispute regarding whether it satisfied Part A and Part C of the ABC test. Concerning Part A, Kismet argues that our findings in Kismet I support that it "do[es] not have control or direction of the driver's performance." Regarding Part C, Kismet contends, in Kismet I we "failed to address and ignored whether the [workers] are in an independent trade, independent occupation, or independent profession." Kismet argues, in Kismet A-4112-24 5 I, we "specifically stated that [we we]re not persuaded by the argument establishing Part C of the test since none of the drivers claimed unemployment insurance," however, Kismet asserts "if the drivers did not join the ranks of the unemployed, then the [Part] C standard is satisfied." III. "[A]n 'agency's determination . . . will be sustained unless there is a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record.'" Friends of Team Charter Schs., Inc. v. Bd. of Educ. of Newark, 483 N.J. Super. 495, 504 (App. Div. 2026) (quoting Saccone v. Bd. of Trs., Police & Firemen's Ret. Sys., 219 N.J. 369, 380 (2014)) (internal quotation marks omitted). "The burden to make that showing 'rests upon the [party] challenging the administrative action.'" In re Protests Filed by El Sol Contracting & Constr. Corp., 260 N.J. 362, 373 (2025) (alteration in original) (quoting Lavezzi v. State, 219 N.J. 163, 171 (2014)). In determining whether an agency's decision was arbitrary or capricious, we consider: (1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. A-4112-24 6 [Lavezzi, 219 N.J. at 171-72 (quoting In re Stallworth, 208 N.J. 182, 194 (2011)).] We review "an agency's interpretation of . . . case law" and legal issues de novo. H.F. v. Bd. of Trs., Police & Firemen's Ret. Sys., 483 N.J. Super. 166, 178 (App. Div. 2026) (quoting Russo v. Bd. of Trs., Police & Firemen's Ret. Sys., 206 N.J. 14, 27 (2011)). "[T]he application of collateral estoppel is an issue of law," which we consider de novo. Selective Ins. Co. v. McAllister, 327 N.J. Super. 168, 173 (App. Div. 2000). "The doctrine of collateral estoppel . . . bars re[-]litigation of any issue actually determined in a prior action generally between the same parties and their privies involving a different claim or cause of action." Ibid. (quoting Figueroa v. Hartford Ins. Co., 241 N.J. Super. 578, 584 (App. Div. 1990)) (internal quotation marks omitted). A party asserting collateral estoppel must establish: (1) the issue to be precluded is identical to the issue decided in the prior proceeding; (2) the issue was actually litigated in the prior proceeding; (3) the court in the prior proceeding issued a final judgment on the merits; A-4112-24 7 (4) the determination of the issue was essential to the prior judgment; and (5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding. [Id. at 173-74 (quoting In re Est. of Dawson, 136 N.J. 1, 20 (1994)).] The doctrine of collateral estoppel is applied when "fairness requires." Id. at 174 (quoting Pivnick v. Beck, 326 N.J. Super. 474, 485 (App. Div. 1999)). Thus, its application is not "rigid" but includes "a careful assessment and consideration of all relevant factors both in support of and against its application." Ibid. We have identified: Some of the factors favoring application of [collateral estoppel] are: conservation of judicial resources; avoidance of repetitious litigation; and prevention of waste, harassment, uncertainty and inconsistency. State v. Gonzalez, 75 N.J. 181, 190 (1977). In contrast, factors disfavoring application of collateral estoppel include: the party against whom preclusion was sought could not have obtained review of the judgment in the initial action; the quality or extensiveness of the procedures in the two actions were different; it was not foreseeable at the time of the initial action that the issue would arise in subsequent litigation; and the party sought to be precluded did not have an adequate opportunity to obtain a full and fair adjudication in the first action. Restatement (Second) of Judgments § 278 (1980). A-4112-24 8 [Ibid. (citation reformatted) (quoting Pivnick, 326 N.J. Super. at 486).] In conducting a de novo review, we conclude the doctrine of collateral estoppel barred Kismet's arguments regarding the status of its employees concerning the second audit. We are convinced the Department established that the status of Kismet's workers was identical in each matter; there was actual litigation concerning the workers' status; there was a final determination regarding the workers' status; and Kismet was a party in both proceedings. See id. at 173-74. Further, in assessing the factors favoring the doctrine's application we are convinced that "conservation of judicial resources; avoidance of repetitious litigation; and prevention of waste," id. at 174 (quoting Pivnick, 326 N.J. Super. at 486), all weigh in favor of preclusion. Moreover, we conclude none of the factors against the application of collateral estoppel are present. Indeed, Kismet had every opportunity for the review of the status of its workers during the Department's first audit and our review in Kismet I. We note "collateral estoppel applies to the final decisions of administrative agencies," Mansoldo v. State, 187 N.J. 50, 60 (2006), and here we have the additional layer of our review in Kismet I. A-4112-24 9 We add that Kismet's arguments in this appeal focus on our opinion in Kismet I. However, Kismet filed a petition for certification in Kismet I, which the New Jersey Supreme Court denied. Thus, the issues resolved in Kismet I cannot be relitigated in the present appeal. See Lewis v. Dep't of Corr., 365 N.J. Super. 503, 506 (App. Div. 2004) (stating the "appellate process . . . was . . . final [when appellant's] petition for certification was denied"). Having determined the Department correctly applied collateral estoppel, we conclude Kismet failed to establish the final agency decision was arbitrary, capricious, or unreasonable. Affirmed. A-4112-24 10