On November 2, 1987, the Supreme Court of New Jersey decided O’Malley v. Department of Energy, 109 N.J. 309 (1987). That case involved a civil service employee who had been provisionally reassigned from his permanent job to a different position. He sought to remain in the provisional position rather than having to return to his permanent job. O’Malley contended that the Department’s failure to give a timely promotion exam created an estoppel that allowed him to keep the provisional position. In an opinion by Justice Pollock, a unanimous Court rejected O’Malley’s argument that an estoppel had arisen against the Department.
In the course of its rejection of O’Malley’s particular estoppel argument, the Court uttered the words quoted in the title of this post: “Equitable estoppel is rarely invoked against a governmental entity.” That language has been cited repeatedly since.
As the Court noted, the important public policy of maintaining fidelity to the civil service laws, by itself, trumped any alleged unfairness to O’Malley. There was no need for the Court to go further. The assertion that equitable estoppel is rarely invoked against governmental entities was unfortunate, in that it can be used to give cover to inequitable conduct by government agencies. Nonetheless, exactly 24 years later, that dicta has become iconic.