Paul D. Jonson v. Federal Deposit Insurance Corporation ( 2016 )

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
PAUL D. JONSON, DOCKET NUMBER
Appellant, PH-0752-13-0236-B-1
v.
FEDERAL DEPOSIT INSURANCE DATE: September 20, 2016
CORPORATION,
Agency.
THIS FINAL ORDER IS NONPRECEDENTIAL 1
Elizabeth S. Dillon, Esquire, Boston, Massachusetts, for the appellant.
Eric S. Gold, Esquire, Arlington, Virginia, for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 The appellant has filed a petition for review of the remand initial decision,
which affirmed his removal. Generally, we grant petitions such as this one only
when: the initial decision contains erroneous findings of material fact; the initial
decision is based on an erroneous interpretation of statute or regulation or the
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
erroneous application of the law to the facts of the case; the administrative
judge’s rulings during either the course of the appeal or the initial decision were
not consistent with required procedures or involved an abuse of discretion, and
the resulting error affected the outcome of the case; or new and material evidence
or legal argument is available that, despite the petitioner’s due diligence, was not
available when the record closed. See title 5 of the Code of Federal Regulations,
section 1201.115 (5 C.F.R. § 1201.115). After fully considering the filings in this
appeal, we conclude that the petitioner has not established any basis under section
1201.115 for granting the petition for review. Therefore, we DENY the petition
for review and AFFIRM the remand initial decision, which is now the Board’s
final decision. 5 C.F.R. § 1201.113(b).
BACKGROUND
¶2 The Federal Deposit Insurance Corporation (FDIC) removed the appellant
from his position as Case Manager effective February 1, 2013. Initial Appeal File
(IAF), Tab 4 at 80. The charged misconduct was failure to meet the minimum
standards for employment with the FDIC. Id. at 124. Specifically, the FDIC
alleged that the appellant violated its regulations concerning the minimum
standards of fitness for employment (the minimum fitness regulations) by failing
to satisfy eight separate debts to FDIC-insured institutions totaling more than
$50,000. Id. at 123-26; see generally 12 C.F.R. part 336, subpart B (containing
these regulations). Under the minimum fitness regulations, this conduct is
defined as “a pattern or practice of defalcation.” 12 C.F.R. § 336.3(i)(1).
¶3 In two prior Opinions and Orders, we considered a number of issues
regarding the minimum fitness regulations and the appellant’s removal. Jonson v.
Federal Deposit Insurance Corporation, 121 M.S.P.R. 56 (2014) (Jonson I),
reversed in part by 122 M.S.P.R. 454 (2015) (Jonson II). Originally, in Jonson I,
we reversed the appellant’s removal on interlocutory review based on the FDIC’s
failure to obtain concurrence from the Office of Government Ethics (OGE) for its
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minimum fitness regulations. Jonson I, ¶¶ 5, 10-15, 17. We returned the appeal
for a decision on the appellant’s affirmative defenses. Id., ¶¶ 18-19. After the
appellant withdrew those defenses, the administrative judge issued an initial
decision reversing the appellant’s removal. IAF, Tab 32, Tab 34, Initial Decision
at 1, 5.
¶4 The FDIC filed a petition for review of the initial decision. Petition for
Review (PFR) File, Tab 1. With its petition for review, it submitted a declaration
from OGE stating that the FDIC was not required to obtain concurrence from
OGE prior to promulgating the minimum fitness regulations. Jonson II, ¶¶ 11,
13; PFR File, Tab 1 at 7, 28. Based on that declaration, and as a matter of comity
and cooperation with OGE, in Jonson II, we reversed our prior finding that the
FDIC was required to obtain OGE approval. Jonson II, ¶¶ 13-14. We remanded
the appeal to the Board’s regional office to determine if the FDIC met its burden
to prove the charge. Id., ¶ 20 n.11. We advised the regional office to permit the
appellant to reinstate his affirmative defenses, which appeared to have been
withdrawn in reliance on the Board’s decision in Jonson I. Id., ¶ 24 n.14.
However, we observed that removal is the mandatory penalty for the charged
misconduct under both the applicable statute and the minimum fitness
regulations. Id., ¶¶ 21‑23; 12 U.S.C. § 1822(f)(4)(B)(ii), (E)(iii); 12 C.F.R.
§ 336.8(a).
¶5 On remand, the FDIC filed a motion to compel due to the appellant’s failure
to respond to its discovery requests. Remand File (RF), Tab 4. After almost a
month had passed with no response from the appellant to the FDIC’s motion, the
administrative judge ordered him to respond to the FDIC’s discovery request.
RF, Tab 5. The FDIC moved for sanctions after the appellant did not respond by
the ordered deadline. RF, Tab 6. The administrative judge issued an order to the
appellant to show cause why sanctions should not be granted. RF, Tab 7. The
appellant did not respond, and the administrative judge granted sanctions. RF,
Tab 8.
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¶6 After obtaining new counsel, the appellant requested reconsideration of the
sanctions. RF, Tab 9, Tab 11 at 4-5. He argued that his failure to respond to the
FDIC’s discovery, the motion to compel, and the order to show cause was solely
the fault of his former counsel. RF, Tab 11 at 5, 8-12, 16-19. The FDIC
responded to his motion. RF, Tab 12. After considering the parties’ submissions,
the administrative judge modified her prior order, still imposing sanctions on the
appellant. RF, Tab 13 at 2-4. As part of her sanctions, she drew inferences in
favor of the FDIC regarding the information sought and prohibited the appellant
from introducing evidence regarding this requested information. Id. at 2. As
another sanction, she decided the case on the written record without affording the
appellant a hearing. Id. at 4.
¶7 In her remand initial decision, the administrative judge affirmed the
appellant’s removal. RF, Tab 17, Remand Initial Decision (RID) at 13.
Specifically, she found that the FDIC proved its charge. RID at 8. She further
found that the appellant failed to prove his disability discrimination affirmative
defense, and that his remaining affirmative defenses were effectively precluded
by the ordered sanctions. RID at 8-11. She determined that the FDIC proved that
removal promoted the efficiency of the service and, because termination is the
required penalty for violating the FDIC’s minimum fitness regulations, she
sustained the removal penalty. RID at 11-13.
¶8 The appellant has filed a petition for review, in which he contests the
administrative judge’s finding that his removal promotes the efficiency of the
service. Remand Petition for Review (RPFR) File, Tab 1 at 13-16. He also
asserts that the administrative judge abused her discretion by imposing sanctions
and seeks to raise his affirmative defenses again. Id. at 9-13, 16-21; RF, Tab 15
at 7‑11, 17.
¶9 The FDIC has responded to the petition for review, and the appellant has
replied. RPFR File, Tabs 3-4.
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The administrative judge properly found that the appellant’s removal promotes
the efficiency of the service.
¶10 When taking an adverse action against an employee, an agency must prove
by preponderant evidence that the charged conduct occurred, there is a nexus
between the conduct and the efficiency of the service, and the particular penalty
imposed is reasonable. 2 Dixon v Department of Commerce, 109 M.S.P.R. 314,
¶ 8 (2008); see 5 U.S.C. § 7513(a) (permitting adverse actions “only for such
cause as will promote the efficiency of the service”). Nexus generally may be
shown in one of three ways: (1) a rebuttable presumption of nexus that may arise
in certain egregious circumstances based on the nature and gravity of the conduct;
(2) a showing by preponderant evidence that the conduct affects the employee’s
or his coworkers’ job performance, or management’s trust and confidence in the
employee’s job performance; or (3) a showing by preponderant evidence that the
conduct interfered with or adversely affected the agency’s mission. Johnson v.
Department of Health & Human Services, 86 M.S.P.R. 501, ¶ 18 (2000), aff’d per
curiam, 18 F. App’x 837 (Fed. Cir. 2001), and aff’d sub. nom. Delong v.
Department of Health & Human Services, 264 F.3d 1334 (Fed. Cir. 2001).
¶11 The appellant disputes the administrative judge’s nexus finding, arguing
that his conduct was not egregious, his “performance was unaffected by his
Bankruptcy action,” and his personal debts had no impact on the FDIC’s mission.
RPFR File, Tab 1 at 14-16.
¶12 Here, the removal was based on the FDIC’s minimum fitness regulations,
which in turn were enacted pursuant to section 1822(f)(4) of title 12. Jonson II,
¶ 16. Section 1822(f)(4) required the FDIC to prescribe minimum fitness
regulations, which “prohibit any person who has . . . demonstrated a pattern or
practice of defalcation regarding obligations to incurred depository
2
The appellant does not challenge the administrative judge’s findings that he engaged
in the conduct alleged in the charges and that the penalty was appropriate. RPFR File,
Tab 1; RF, Tab 14 at 14; IAF, Tab 4 at 81‑85, 123‑27. Therefore, we decline to disturb
these findings.
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institutions . . . from performing any service on behalf of the [FDIC].” 12 U.S.C.
§ 1822(f)(4)(A), (f)(E)(iii). By enacting the mandatory language in section
1822(f)(4), we find that Congress created a presumption of nexus. See
Johnson, 86 M.S.P.R. 501, ¶¶ 2, 11, 19 (finding a presumption of nexus based on
similar language in the Indian Child Protection and Family Violence Prevention
Act). This presumption is further supported by the minimum fitness regulations,
which also require removal for the charged conduct. 12 C.F.R. §§ 336.3(i)(1),
336.8(a). In promulgating the minimum fitness regulations, the FDIC explained
that employing individuals who engage in a pattern or practice of defalcation by
failing to pay debts owed to financial institutions “reflects adversely on the
FDIC’s integrity and credibility.” 3 Minimum Standards of Fitness for
Employment with the FDIC, 61 Fed. Reg. 28,725, 28,727 (June 6, 1996).
¶13 Therefore, we agree with the administrative judge’s finding that the
appellant’s removal promotes the efficiency of the service. RID at 11-12.
The administrative judge properly denied the appellant’s affirmative defenses.
¶14 On review, the appellant argues that the administrative judge erred in
denying his affirmative defense of disability discrimination. RPFR File, Tab 1
at 16-21. He argues that his debts were the result of expenses related to his
daughter’s medical condition. Id. at 16-19. He also asserts that the
administrative judge abused her discretion by imposing sanctions that precluded
him from presenting evidence concerning his disability discrimination affirmative
defense. Id. We disagree.
3
The appellant argues that the Board previously has rejected a finding of nexus based
on an employee’s private debts. RPFR File, Tab 1 at 15-16 (citing Byars v. Department
of the Army, 9 M.S.P.R. 225, 228-29 (1981)). However, Byars did not involve an
employee with a specific obligation to the financial institutions to whom the employee
was indebted. See Byars, 9 M.S.P.R. at 228 (observing that an employee’s personal
debts are to transpire between the debtor and creditor unless the agency establishes that
the employee’s nonpayment of just debts has or will have a deleterious effect on that
employee’s performance or the agency’s ability to perform its assigned mission). For
this reason, we find the present situation distinguishable from Byars.
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¶15 In Jonson I, we deferred to the decision of the Equal Employment
Opportunity Commission (EEOC) to permit claims of discrimination, such as this
one, based on an employee’s association with an individual with a disability.
Jonson I, ¶ 18. An appellant raising such a claim must show that the
discrimination was based on his relationship or association with an individual
with a known disability. 29 C.F.R. § 1630.8.
¶16 According to the appellant, he was unable to pay his debts because of his
daughter’s medical bills. RPFR File, Tab 1 at 17-19. However, the American
with Disabilities Amendments Act does not require employers to provide a
reasonable accommodation based on a claimant’s association with a disabled
individual. See Jonson I, ¶ 18 (citing Simms v. Department of the Navy, EEOC
Appeal No. 01992195, 2002 WL 1057094, at *3-*4 (May 16, 2002) (denying a
complainant’s claim that the agency discriminated against her when, in pertinent
part, it declined to continue providing her with leave to care for her disabled
daughter)). Thus, we agree with the administrative judge that the appellant’s
claim that the FDIC discriminated against him when it did not excuse his debts
must fail. RID at 11.
¶17 The appellant also argues that he was subjected to disparate treatment.
Specifically, he alleges he has direct evidence that he was targeted for removal
because he was perceived to be using his children’s medical conditions as an
excuse for his debts. RPFR File, Tab 1 at 19; RF, Tab 15 at 20, 83;
see Southerland v. Department of Defense, 119 M.S.P.R. 566, ¶¶ 19, 22 (2013)
(finding direct evidence of discriminatory motive based on a deciding official’s
statements in an appellant’s removal decision that he considered the detrimental
impact of the appellant’s medical inability to fulfill the full range of his duties on
the efficiency of the organization and his coworkers). To support his claim, he
relies on affidavits that the administrative judge declined to consider because they
were precluded by her sanctions order. RPFR File, Tab 1 at 19-20; RID at 10-11.
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She therefore found that he failed to meet his burden to prove disparate treatment
based on disability. RID at 11.
¶18 It is well settled that administrative judges have broad discretion to regulate
the proceedings before them, including the authority to rule on discovery motions
and to impose sanctions as necessary to serve the ends of justice. Defense
Intelligence Agency v. Department of Defense, 122 M.S.P.R. 444, ¶ 16
(2015); 5 C.F.R. § 1201.43(a); see Smets v. Department of the
Navy, 117 M.S.P.R. 164, ¶ 12 (2011) (declining to find that an administrative
judge abused her discretion by precluding an appellant from submitting additional
evidence regarding her disability discrimination claim as a sanction for failure to
comply with an order to appear for a deposition), aff’d per curiam, 498 F. App’x
1 (Fed. Cir. 2012). Sanctions should only be imposed if: (1) a party has failed to
exercise basic due diligence in complying with Board orders; or (2) a party has
exhibited negligence or bad faith in his efforts to comply. Williams v. U.S. Postal
Service, 116 M.S.P.R. 377, ¶¶ 7-8 (2011).
¶19 Here, the appellant argues on petition for review that his failure to respond
to discovery and the administrative judge’s discovery-related orders was due to
his then-attorney’s dilatory conduct. RPFR File, Tab 1 at 20. He presented
evidence below of this dilatory conduct. RF, Tab 11 at 16-85, 88, 94-96. He also
presented evidence that he repeatedly contacted his attorney regarding the failure
to respond to the FDIC’s discovery, its motion to compel, and the administrative
judge’s order to show cause why sanctions should not be issued. Id. at 16-19, 49,
51-54, 56, 59-61, 63-64, 69-72, 81, 84, 91, 95-96. In some instances, the
appellant received no response, while, on a few occasions, his attorney assured
him that he was “[w]orking it” and would “file a timely response.” Id. at 16-19,
50-51, 82-83, 96. On other occasions, the appellant’s attorney’s responses
suggested that he was not focused on the case, such as that he “[g]ot bogged
down,” and, “When you shoot at the king you don’t want to miss. Stop
squeezing.” Id. at 16-19, 72, 82-83.
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¶20 Generally, an appellant is responsible for the errors of his chosen
representative. Miller v. Department of Homeland Security, 110 M.S.P.R. 258,
¶ 11 (2008). However, there is a limited exception to this rule if an appellant has
proven that his diligent efforts to prosecute his case were thwarted by his
attorney’s deception and negligence. Id.; see Herring v. Merit Systems Protection
Board, 778 F.3d 1011, 1014-15 (Fed. Cir. 2015) (considering such factors as the
appellant’s medical conditions, her executing a power of attorney in favor of her
legal representatives, and her active follow-up shortly before the deadline for
filing her appeal which revealed that her counsel’s false reassurance into
believing that no additional action on her part was necessary to timely file her
appeal). Nonetheless, even if an appellant’s representative misleads him as to the
status of a filing, the appellant has a personal duty to monitor the progress of his
appeal at all times and not leave the matter entirely to his attorney.
Miller, 110 M.S.P.R. 258, ¶ 12.
¶21 Here, the FDIC notified the appellant and his attorney via email on
August 18 and 20, 2015, that it had not received the appellant’s discovery
responses. RF, Tab 11 at 78-80. During the next 3 1/2 months, the appellant and
his attorney received the FDIC’s motion to compel, the order compelling the
appellant’s discovery responses, the FDIC’s motion for sanctions, the order to
show cause why sanctions should not be imposed, and, finally, the order imposing
sanctions. RF, Tabs 4-8. Because both the appellant and his attorney were
registered e-filers, they are deemed to have received these electronically served
documents on the date of electronic submission and were responsible for
monitoring case activity to ensure that they received all case-related documents.
RF, Tab 4 at 21, Tab 5 at 3, Tab 6 at 8, Tab 7 at 2, Tab 8 at 3; IAF, Tab 1 at 2,
10; 5 C.F.R. § 1201.14(j)(3), (m)(2).
¶22 Despite repeated notifications that his attorney was not responding to the
FDIC’s discovery and discovery-related motions and orders, the appellant waited
until after the administrative judge imposed sanctions, 4 months after initially
10
learning that his attorney had not responded to the FDIC’s discovery, to terminate
his attorney and hire a new one. RF, Tab 11 at 19. On review, he has not
claimed any special circumstances, such as a medical condition, that might excuse
his failure to intervene once he learned that his attorney was not acting diligently.
RPFR File, Tab 1 at 20-21. Under these circumstances, we agree with the
administrative judge that the appellant did not exercise basic due diligence in
relying on his attorney. Because the appellant’s alleged evidence of disparate
treatment was properly precluded by the administrative judge’s ordered sanctions,
we affirm the administrative judge’s denial of the appellant’s disparate-treatment
disability claim. 4 RID at 10-11; RF, Tab 13 at 2, 4; see Simon v. Department of
Commerce, 111 M.S.P.R. 381, ¶¶ 11, 14-15 (2009) (discussing appropriate
sanctions for failure to comply with an order); 5 C.F.R. § 1201.43(a) (listing
possible sanctions for failure to comply with an order).
¶23 In addition, the appellant reargues on review that the minimum fitness
regulations are contrary to both law and public policy. RPFR File, Tab 1 at 8-13,
16-17; RF, Tab 15 at 7-11. The gravamen of the appellant’s claim is that the
minimum fitness regulations discriminate against individuals whose debts are
related to bankruptcy. RPFR File, Tab 1 at 9-13, 16-17; see 11 U.S.C. § 525(a)
(generally prohibiting discrimination based solely on debts that are, or could be,
discharged under the Bankruptcy Act). The administrative judge implicitly found
4
The appellant also argues that the administrative judge’s sanctions prevented him from
conducting discovery regarding the FDIC’s “intentions in terminating” him. RPFR File,
Tab 1 at 21. He does not allege that he timely propounded discovery. Id. Nor does he
explain how the administrative judge’s two orders concerning sanctions, both of which
were issued more than 4 months after the deadline she set for initiating discovery,
prevented him from obtaining this information. RF, Tabs 3, 8, 13. Because he did not
file a motion to compel below, his argument that he was denied discovery provides no
basis for reversal of the initial decision. Szejner v. Office of Personnel Management,
99 M.S.P.R. 275, ¶ 5 (2005) (finding that an appellant’s failure to file a motion to
compel discovery precluded him from raising an agency’s failure to respond to
discovery for the first time on petition for review), aff’d, 167 F. App’x 217 (Fed. Cir.
2006).
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this argument was effectively precluded by her ordered sanctions. RID at 10;
RF, Tab 15 at 7-11. We agree.
¶24 The administrative judge advised the parties that, as a sanction, she would
draw an inference in favor of the FDIC regarding the information it sought in
discovery, specifically including the appellant’s affirmative defenses. RF, Tab 8
at 1, Tab 13 at 2. In discovery, the FDIC requested that the appellant identify the
factual bases for his claims that the FDIC’s actions constituted harmful error and
were not in accordance with law. RF, Tab 4 at 11. The FDIC also requested that
he identify the factual and legal bases for his claims of discrimination. Id. The
appellant’s response, which he did not provide, should have identified his
bankruptcy discrimination defense. Therefore, because the FDIC was entitled to
an inference regarding the appellant’s affirmative defenses, we find that the
administrative judge acted within her discretion in denying this affirmative
defense. See Simon, 111 M.S.P.R. 381, ¶ 14 (finding that an administrative judge
went too far by striking an appellant’s affirmative defenses, but that she could
have acted within her discretion by simply barring the appellant from presenting
any evidence to support those defenses or drawing an inference in favor of the
agency regarding the information sought).
¶25 Thus, we find that the administrative judge properly denied the appellant’s
affirmative defenses.
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request further review of this final decision.
Discrimination Claims: Administrative Review
You may request review of this final decision on your discrimination
claims by the EEOC. See title 5 of the U.S. Code, section 7702(b)(1) (5 U.S.C.
§ 7702(b)(1)). If you submit your request by regular U.S. mail, the address of the
EEOC is:
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Office of Federal Operations
Equal Employment Opportunity Commission
P.O. Box 77960
Washington, D.C. 20013
If you submit your request via commercial delivery or by a method requiring a
signature, it must be addressed to:
Office of Federal Operations
Equal Employment Opportunity Commission
131 M Street, NE
Suite 5SW12G
Washington, D.C. 20507
You should send your request to EEOC no later than 30 calendar days after your
receipt of this order. If you have a representative in this case, and your
representative receives this order before you do, then you must file with EEOC no
later than 30 calendar days after receipt by your representative. If you choose to
file, be very careful to file on time.
Discrimination and Other Claims: Judicial Action
If you do not request EEOC to review this final decision on your
discrimination claims, you may file a civil action against the agency on both your
discrimination claims and your other claims in an appropriate U.S. district court.
See 5 U.S.C. § 7703(b)(2). You must file your civil action with the district court
no later than 30 calendar days after your receipt of this order. If you have a
representative in this case, and your representative receives this order before you
do, then you must file with the district court no later than 30 calendar days after
receipt by your representative. If you choose to file, be very careful to file on
time. If the action involves a claim of discrimination based on race, color,
religion, sex, national origin, or a disabling condition, you may be entitled to
representation by a court‑appointed lawyer and to waiver of any requirement of
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prepayment of fees, costs, or other security. See 42 U.S.C. § 2000e-5(f)
and 29 U.S.C. § 794a.
FOR THE BOARD: ______________________________
Jennifer Everling
Acting Clerk of the Board
Washington, D.C.