Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-03-05313/USCOURTS-caDC-03-05313-0/pdf.json

Parties Involved:
Federal Deposit Insurance Corporation
Appellee
Michael J. Koszola
Appellant

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2004 Decided January 7, 2005

No. 03-5313

MICHAEL J. KOSZOLA,

APPELLANT

V.

FEDERAL DEPOSIT INSURANCE CORPORATION,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 96cv00174)

Mitchell J. Rotbert argued the cause and filed the briefs for

appellant.

Jaclyn C. Taner, Counsel, Federal Deposit Insurance

Corporation, argued the cause for appellee. With her on the

brief was Colleen J. Boles, Senior Counsel. Kathryn R.

Norcross, Counsel, entered an appearance.

Before: GINSBURG, Chief Judge, and GARLAND and

ROBERTS, Circuit Judges.

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Opinion for the Court filed by Circuit Judge ROBERTS.

ROBERTS, Circuit Judge: A former employee of the

Resolution Trust Corporation (RTC) sued its statutory successor,

the Federal Deposit Insurance Corporation (FDIC), alleging that

the RTC violated his rights by disciplining and firing him in

retaliation for disclosures protected under the RTC Whistleblower Act, 12 U.S.C. § 1441a(q), and the First Amendment.

After a bench trial, the district court entered judgment for the

defendant on the ground that the RTC would have taken the

same employment actions regardless of any protected disclosures. The plaintiff appeals, but we affirm.

I.

The RTC’s Office of Inspector General (OIG) was responsible for investigating waste, fraud, and illegal activity within the

RTC. In December 1991, OIG hired plaintiff-appellant Michael

Koszola as an agent assigned to its Chicago office. Initially,

Koszola’s supervisors were stationed in Kansas City. Trouble

began in June 1992, however, when OIG hired a new Supervisory Agent stationed in Chicago, George Sullivan, to whom

Koszola was to report. The introductory meeting between the

two did not go well: Sullivan advised David Sherry, the Regional Inspector General back in Kansas City, that Koszola had

been “verbally abusive and insubordinate.” Mem. Op. at 2. For

his part, Koszola told Sherry that Sullivan “lacked investigative

skills and management ability.” Id.

It was downhill after that: Koszola was “openly resentful”

of Sullivan’s authority and “frequently complained to Sherry

about Sullivan’s decision making and management skills.” Id.

The resulting tension was exacerbated by incidents of insubordination by Koszola, such as submitting an investigative report

almost two months late and ignoring instructions to attend

training and to serve a subpoena in a particular manner.

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Sullivan also became concerned that Koszola was submitting

questionable overtime claims.

Initially, Sherry counseled Sullivan to respond with the

carrot rather than the stick, instructing him in December 1992 to

give Koszola a favorable performance appraisal in hopes that

Koszola would respond positively to praise. Sullivan duly

issued a sunny performance report that did not mention his

dissatisfaction with Koszola’s behavior or attitude. Soon after,

however, Sullivan received an angry complaint from the FBI

alleging that Koszola, in connection with a joint RTC/FBI

investigation in California, had falsely presented himself to a

suspect as an FBI agent, questioning the suspect without

advising him of his Miranda rights. Sullivan immediately

removed Koszola from the case. Despite this action, an FBI

agent and an Assistant U.S. Attorney later complained that

Koszola had contacted witnesses and may have disclosed

information about the operation after he had been taken off the

case. The OIG opened a formal investigation of the matter.

In January 1993, Koszola wrote Sullivan a brief memorandum concerning RTC contract employees assigned to the

copyroom who were allowed to “sit and read” when there was

no copying work to be performed. Sullivan determined that the

matter was better handled by referring it to RTC contracting

officials rather than by launching an OIG investigation. The

following month, Jack Anderson’s syndicated newspaper

column detailed alleged incidents of waste and fraud at the RTC,

and the column included charges that some contract employees

were paid to “sit and read.” The RTC ordered an investigation

into possible sources for the column; because of the similar

phrasing in Koszola’s January memorandum, Sullivan suspected

Koszola. At the direction of his superiors, Sullivan retrieved a

copy of the memorandum from Koszola’s desk while he was

away and forwarded it to Sherry. 

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While retrieving the January memorandum, Sullivan came

upon another memorandum addressed to him — one he testified

he never received — concerning anonymous allegations that the

Chairman of the RTC had been buying RTC properties through

straw purchasers. Sullivan forwarded this memorandum to

Sherry as well. See Tr. Exh. 1-J-2 at 1, 8. A subsequent RTC

investigation determined that Koszola discussed the allegations

against the Chairman in a May 1993 telephone call to a former

RTC employee at her home. See Mem. of Proposed Removal at

11–13.

Soon after retrieving the memoranda from Koszola’s office,

Sullivan became aware of yet another problem. In the course of

an investigation of employees suspected of fraudulent billing

and attendance reporting, Koszola prepared an investigative

report noting that the employees’ timekeeper had found no

evidence of improper activity. The timekeeper advised Sullivan,

however, that Koszola’s report was incorrect — she had told

Koszola that she believed the employees’ records indicated

misconduct. After this incident, Sherry testified, he decided to

fire Koszola. He placed Koszola on paid administrative leave

on April 19, 1993, pending preparation of a formal memorandum proposing Koszola’s discharge.

Less than two weeks later, the first investigation of Koszola

— concerning his activities in connection with the FBI — was

completed. Due to conflicting evidence, the report of the

investigation reached no conclusion on the accusation of

impersonating an FBI agent, but it did detail how Koszola had

not followed proper procedures with respect to reporting his

activities, had filed questionable overtime claims, and had

disobeyed direct orders. See RTC Report of Investigation at

16–27. On September 23, 1993 — five months after Koszola

had been placed on administrative leave — he testified with

other RTC employees before the Senate Banking Committee

about, as described in Koszola’s complaint, “waste, fraud and

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abuse within RTC operations, ensuing retaliation by the RTC

against whistleblowers for speaking out, and the failure of RTC

to hold culpable managers accountable.” Compl. ¶ 22.

On December 2, 1993, Koszola received a formal memorandum of proposed removal based on charges that he had failed to

follow instructions and proper investigative procedures. The

memorandum also charged that he had twice improperly

released confidential information. It first alleged that he was a

source for the February 1993 Jack Anderson column. The

memorandum also charged that Koszola breached confidentiality during the May 1993 call to the former RTC employee, when

he discussed the allegations about the improper straw purchases.

See Mem. of Proposed Removal at 11–13.

After Koszola was given an opportunity to reply to the

charges, the Deputy Inspector General completed his investigation. On February 2, 1994, the Deputy concluded that charges

about failure to follow instructions and correct procedures were

supported by the evidence, but found the allegation that Koszola

had leaked the “sit and read” memorandum unsupported. The

Deputy did conclude, however, that the charge of unauthorized

release of confidential information regarding the straw purchases was supported by a preponderance of the evidence. On

the basis of the entirety of the record, the Deputy concluded that

Koszola’s termination was warranted. Koszola filed an appeal

with the Merits Systems Protection Board (MSPB), but later

withdrew it.

On February 1, 1996, Koszola filed this civil action against

the FDIC, the successor to the RTC. He sought legal and

equitable relief under the theory that he was fired in retaliation

for disclosing “possible violations of law or regulation; gross

mismanagement; gross waste of funds; or abuse of authority by

the RTC.” Compl. ¶ 31. The complaint details numerous

disclosures — including the memoranda to his supervisor about

contract employees “sitting and reading” and alleged straw

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purchases by the RTC Chairman, id. ¶¶ 12, 14 — and contends

that they contributed to his termination and other disciplinary

measures against him. Consequently, the complaint concludes,

these personnel decisions violated the RTC Whistleblower Act,

12 U.S.C. § 1441a(q), and the First Amendment. Compl. ¶¶ 34,

39. 

On November 8, 2001, the district court concluded a fourday bench trial, after hearing the testimony of nine witnesses,

including Koszola, Sullivan, Sherry, and the Deputy Inspector

General who conducted the final investigation and recommended Koszola’s termination. The district court concluded

that even assuming that Koszola had established a prima facie

case of retaliation, the FDIC had demonstrated by clear and

convincing evidence that the RTC would have fired him

regardless of any protected disclosures. Mem. Op. at 9–10. The

district court credited the trial testimony of the Deputy Inspector

General, who explained that Koszola had been dismissed

because he was neither credible nor reliable, and that his poor

performance was a product of “his contempt for the organization

and for authority” rather than a lack of training. Id. at 11. The

district court further concluded that, “[i]n light of Plaintiff’s

testimony on cross-examination,” the Deputy’s “skepticism was

readily understandable, and the Court is convinced that the

agency was determined to fire Plaintiff without regard to any

allegedly protected disclosures.” Id.

The court similarly disposed of Koszola’s First Amendment

claim. Without disputing that a public employee like Koszola

enjoys substantial protection from retaliation for exercising his

right to free speech, the court observed that the government

could defeat such a prima facie claim by showing by a preponderance of the evidence that it would have taken the same action

regardless of the protected speech. Id. at 14. The district court

concluded that because the FDIC had already adduced clear and

convincing evidence that the RTC would have fired Koszola

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regardless of any protected disclosures, the defendant easily

carried its lighter burden under the First Amendment.

Koszola appeals.

II.

Koszola first challenges the district court’s interpretation

and application of the RTC Whistleblower Act. Although this

court has addressed the threshold requirements for establishing

a prima facie case under the Act, see Taylor v. FDIC, 132 F.3d

753, 763–66 (D.C. Cir. 1997), we have never addressed whether

and how the government may rebut such a showing. As the

district court explained, 12 U.S.C. § 1441a(q)(5) provides that

the “legal burdens of proof that prevail” under 5 U.S.C. § 1221

also apply under the RTC Act. Pursuant to 5 U.S.C.

§ 1221(e)(2), the government is not liable if it “demonstrates by

clear and convincing evidence that it would have taken the same

personnel action in the absence of [a protected] disclosure.”

Koszola does not challenge any of this. He argues instead

that, in making its “clear and convincing evidence” evaluation,

the district court should have followed a three-prong test

adopted by the MSPB and the Federal Circuit in the context of

§ 1221 actions. Under this test, the reviewing body considers

“the strength of the agency’s evidence in support of its personnel

action; the existence and strength of any motive to retaliate on

the part of the agency officials who were involved in the

decision; and any evidence that the agency takes similar actions

against employees who are not whistleblowers but who are

otherwise similarly situated.” Carr v. Soc. Sec. Admin., 185

F.3d 1318, 1323 (Fed. Cir. 1999). Koszola contends that this

three-factor test is in fact the legal burden that “prevail[s]” under

§ 1221, and so should govern under § 1441a(q)(5). He also

contends that Congress reenacted the RTC Whistleblower Act

on December 17, 1993, without any changes to the burden of

proof provision, thereby incorporating the test into the statute.

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See Reply Br. at 2 (citing Lorillard v. Pons, 434 U.S. 575,

580–81 (1978)). Koszola concludes that, because the district

court “evaluated none of these factors,” Koszola Br. at 9, it

committed an error of law.

Nothing in the text of 5 U.S.C. § 1221, however, requires

the district court to undertake the “clear and convincing” inquiry

in terms of any particular legal “test,” multi-factor or otherwise.

“Clear and convincing evidence” is a common legal standard.

See generally 9 WIGMORE ON EVIDENCE § 2498, at 424

(Chadbourn rev. 1981) (standard of clear and convincing proof

“commonly applied”); id. at 424–31 (cataloging instances in

which standard is applied). Given the familiarity trial judges

have with this standard, we do not think it grounds for reversal

that the district court did not explicate its ruling according to a

particular gloss. 

Koszola’s “reenactment” argument does not shake our

confidence in this conclusion. His contention that Congress

reenacted the RTC Whistleblower Act without change to the

burden of proof provision in December 1993 is inaccurate; the

1993 amendments instead introduced the reference to the legal

burden of proof under § 1221 for the first time. See Pub. L. No.

103-204, § 21(b)(2), 107 Stat. 2369, 2406 (Dec. 17, 1993). In

any event, we do not think Congress incorporated the three-part

test Koszola insists the district court must apply. The very

factor upon which Koszola now claims the FDIC’s evidence was

lacking — treatment of otherwise similarly situated nonwhistleblowers — was not even adopted by the MSPB until the

year after the 1993 amendments. See Smith v. Dep’t of Agriculture, 64 M.S.P.R. 46, 66 (1994). Although the MSPB had

adopted the other two factors by the time of the 1993 amendments, it did so only in the previous year, see Braga v. Dep’t of

the Army, 54 M.S.P.R. 392, 399 (1992), and Koszola has given

us no indication that Congress considered — let alone endorsed

— the two-part test when passing the 1993 amendments. See

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1We are particularly reluctant to reverse the district court on the

ground that it failed to follow a particular three-part test when it was

never asked to do so. Before the district court, Koszola raised neither

the three-part test for “clear and convincing evidence” nor his

argument for its incorporation into the statute. See Plaintiff’s

Proposed Findings of Fact and Conclusions of Law at 37–40. “For

decades, we have emphasized that an argument not made in the lower

tribunal is deemed forfeited and will not be entertained absent

exceptional circumstances.” United States v. Hylton, 294 F.3d 130,

135–36 (D.C. Cir. 2002) (citations and internal quotation marks

omitted). Because the FDIC did not object to Koszola’s presentation

of this argument for the first time on appeal, it may have forfeited

Koszola’s forfeiture, see Belton v. Washington Metro. Area Transit

Auth., 20 F.3d 1197, 1202 (D.C. Cir. 1994), but the argument is

unavailing in any event.

Lorillard, 434 U.S. at 581–85 (detailing record of Congress’s

intention to incorporate a contemporaneous construction of a

statute); cf. Am. Fed’n of Labor& Cong. of Indus. Org. v. Brock,

835 F.2d 912, 915 (D.C. Cir. 1987) (we give weight to a

contemporaneous construction of a reenacted statute only when

there is indication Congress considered the interpretation).1

Koszola also charges that the district court erred by giving

dispositive weight to the agency’s removal memorandum, rather

than engaging in an independent inquiry into the reasons for

Koszola’s removal. The record does not support any such

challenge. The trial took four days and involved nine witnesses,

including the principal actors. As is clear from the discussion of

the court’s factual findings below, see Part III, infra, the district

court explicitly relied on trial testimony in drawing its factual

conclusions — not just the removal memorandum.

Nor is there merit to Koszola’s argument that the district

court erroneously treated his decision not to appeal his termination through the MSPB as a “waiver” of his rights under the

RTC Act. The district court merely — and correctly — conUSCA Case #03-5313 Document #869731 Filed: 01/07/2005 Page 9 of 14
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cluded that it could evaluate the merits of the decision to

terminate Koszola only to the extent relevant to the retaliation

inquiry. The merits of the decision to fire an employee may

play a role in evaluating whether retaliation was a motive; a

frivolous reason for firing would support an inference that

retaliation was the real reason. That does not mean, however,

that a district court may step into the shoes of the MSPB and

weigh whether, on balance, an employee should have been fired

for the reasons given. The scope of the RTC Act, which

addresses only retaliatory action, undermines any such suggestion. See 12 U.S.C. § 1441a(q)(1). Cf. Marren v. Dept. of

Justice, 51 M.S.P.R. 632, 638 (1991) (5 U.S.C. § 1221 provides

appellate jurisdiction over the merits of an employment decision

only to the extent they are material to an allegation of retaliation), aff’d, 980 F.2d 745 (Fed. Cir. 1992).

III.

Koszola also disputes the district court’s finding by clear

and convincing evidence that the RTC would have fired him

regardless of any alleged protected activity. We review findings

of fact for clear error. See Fed. R. Civ. P. 52(a) (“Findings of

fact . . . shall not be set aside unless clearly erroneous, and due

regard shall be given to the opportunity of the trial court to judge

of the credibility of the witnesses.”); Massachusetts v. Microsoft

Corp., 373 F.3d 1199, 1207 (D.C. Cir. 2004). We consider a

finding of fact to be “clearly erroneous” only if we are “left with

a firm conviction that a mistake has been committed.” Anderson

v. City of Bessemer, 470 U.S. 564, 572 (1985). Thus, we will

upset the district court’s finding of “clear and convincing

evidence” in this case only if we are firmly convinced that it was

merely probable or unlikely that the RTC would have fired

Koszola regardless of any protected disclosures. Cf. Addington

v. Texas, 441 U.S. 418, 425 (1979) (the burden of “clear and

convincing evidence” falls between preponderance of the

evidence and proof beyond a reasonable doubt); MCCORMICK

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ON EVIDENCE § 340 (5th ed.) (approving the suggestion that

“clear and convincing evidence” be interpreted as meaning

“highly probable”).

After referencing the detailed set of charges put forward by

the RTC in its memorandum proposing Koszola’s removal, the

district court concluded that the RTC “based its decision to

remove Plaintiff on numerous grounds having nothing to do

with Plaintiff’s disclosures.” Mem. Op. at 12. The court based

this conclusion on the testimony of the Deputy Inspector

General who recommended termination “because [Koszola]

could not be trusted to do his job” and that further training,

rehabilitation, or lesser punishment would not remedy the

problem. Id. at 11. Having witnessed Koszola’s testimony and

cross-examination, the district court observed that the “skepticism” about Koszola’s reliability and prospects for improvement

“was readily understandable.” Id. 

We give substantial deference to the district court’s

evaluation of witness credibility. See Anderson, 470 U.S. at 575

(“[w]hen findings are based on determinations regarding the

credibility of witnesses, Rule 52(a) demands even greater

deference to the trial court’s findings”). Such deference is

particularly appropriate in this case, for the disputed question

turns on the employer’s motivation and subjective assessment of

the employee, as well as the parties’ interpretations and explanations of events. A trial judge “aware of the variations in

demeanor and tone of voice that bear so heavily on the listener’s

understanding of and belief in what is said,” id., is in a far better

position than this court to make such evaluations.

In an attempt to show that the RTC’s decision to fire him

was pretextual, Koszola argues that in light of past practice the

RTC’s response to the incident triggering his termination was

suspiciously disproportionate. He observes that prior alleged

infractions — such as impersonating an FBI agent and improperly contacting witnesses — did not cause the RTC to initiate

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termination proceedings against him. Shortly after an allegedly

protected disclosure, however, the RTC moved to fire him for

the less grievous error of inaccurately reporting the results of an

investigative interview. This disparity, he contends, indicates

that retaliation for the disclosure was the reason for his termination. 

This reasoning fails to take into account the cumulative

effect of Koszola’s misconduct. The adage about the straw

breaking the camel’s back is familiar because of the truth it

conveys. Koszola was fired not simply because of the misreporting episode, which in any event was no mere straw. That

episode was simply the latest in an accumulation of incidents

that exhausted the patience of Koszola’s supervisors and left

them with no confidence in him. Indeed, the sworn testimony

of the Deputy Inspector General — the officer who recommended Koszola’s termination — confirms this conclusion. See

Trial Tr. (Nov. 7, 2001) at 49 (“The things that had occurred

were so serious and occurred in the three areas of charges . . .

and had somewhat of a pattern . . . of contempt for the organization, contempt for authority . . . that I didn’t really see being

corrected through a lesser penalty.”). 

Koszola also challenges the sufficiency of the evidence of

his misconduct. He attempts to undermine the foundation of the

charge of inaccurate investigative reporting, hypothesizing that

it could have been the result of confusion and contending that

the Deputy Inspector General admitted as much. The record

does not support this interpretation. It indicates that although

the Deputy Inspector General observed “there may be some

confusion” about the matter, he concluded that he found “persuasive” the timekeeper’s testimony that Koszola had inaccurately

recorded her interview. Handwritten Notes of Deputy Inspector

General at J.A. 628 (emphasis added). It is unclear where the

investigating officer thought the confusion might lie, but it is

clear that he found the timekeeper’s testimony more credible

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than Koszola’s, in part because the timekeeper was “outside” the

area of dispute. Id. We have no basis for questioning that

conclusion.

Koszola also dismisses one incident of insubordination as

trivial. See id. at 13–14 (characterizing as minor Koszola’s

decision not to wait to serve an attorney a subpoena). Had the

RTC placed dispositive weight on that incident, this characterization might give us pause. But the subpoena spat was plainly

just one episode of many in the unhappy saga culminating in

Koszola’s dismissal. Overall, Koszola describes the removal

memorandum as documenting only that he “had been less than

slavish in his attention to the details of some of his duties,”

Koszola Br. at 10, but this simply gives euphemism a bad name.

The removal memorandum stated that Koszola’s “misconduct

created extreme embarrassment for both [an Assistant U.S.

Attorney] and the RTC,” that his failure to follow proper

investigative procedure meant he “cannot be trusted to conduct

future investigations without the [RTC] risking ultimate

compromise of the case,” and that his “serious misrepresentations” in a Report of Investigative Activity undermined the

Regional Inspector General’s confidence that Koszola could

“discharge this essential function of [his] position with integrity.” Mem. of Proposed Removal at 2, 7, 10. Like the district

court, we need not decide whether Koszola should have been

terminated. We need only affirm that the district court did not

clearly err in deciding that the RTC showed, by clear and

convincing evidence, that it did not fire Koszola in retribution

for any protected disclosures.

IV.

Our determination that the district court’s factual conclusions are not clearly erroneous is fatal to Koszola’s contention

that the court erred by not inquiring into whether he had stated

a First Amendment claim. He correctly contends that courts

conduct a multifactor inquiry to decide whether a public

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employee has established a cause of action under the First

Amendment. See Connick v. Myers, 461 U.S. 138, 142 (1983);

Hall v. Ford, 856 F.2d 255, 258 (D.C. Cir. 1988). The government, however, can rebut any such claim by showing by a

preponderance of the evidence that it would have taken the same

action regardless of any protected speech by the employee. See

Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,

287 (1977). The statutory and First Amendment counts in

Koszola’s complaint refer to identical disclosures. See Compl.

9–10. The district court correctly reasoned that, because the

RTC had already adduced clear and convincing evidence that it

would have terminated Koszola regardless of any protected

activity, a fortiori it would prevail under the First Amendment’s

less demanding rebuttal standard. As we do not disturb the

district court’s finding of clear and convincing evidence, its

ruling on Koszola’s First Amendment claim stands.

In light of our disposition, we have no occasion to reach the

FDIC’s arguments that Koszola’s disclosures were not protected

under the RTC Whistleblower Act or the First Amendment.

The judgment of the district court is affirmed.

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