UNI TED STATES DI STRI CT COURT FOR THE DI STRI CT OF COLUMBIA

___________________________________________ ) RI CHARD AMERI CA, ) ) Plaintiff, ) ) v. ) Civil Action No. 03-1807 ( PL F) ) KAREN G. MI L L S, ) Administrator, Small

Business Administrati on , ) ) Def endant. )

1 ___________________________________________)

OPI NI ON, F I NDI NGS OF F ACT AND CONCL USI ONS OF LAW This matter ca

me bef ore the Court for a thr ee- day bench tr ial, which wa s the first part of a bifurca ted trial on plaintiff Richar d Americ a’s c laims ag ainst his former e mploy er, the United States Small Business Administration (“SBA ”). Plaintiff a lleg es that the SBA discriminated ag ainst him on account of his ra ce ( Afric an-A merica n) and r etaliated a g ainst him for c omplaining a

bout such discrimination. The par ties previously

enter ed into a settlement ag ree ment reg arding

these discr imination and retaliation cla ims (the “Settlement Agree ment”). Plaintiff now alleg es that the SBAbrea ched the Settlement Ag ree ment, and he the ref ore se eks to have his unde rlying c laims reinstated a nd tried to a jury . The Court bifurc ated the tr ial into two phases, the f

irst of which wa s the benc h trial which a ddresse d the question of whe ther the SB A had bre ache d the Settlement Ag ree ment. The sec ond phase, if ne cessa ry , will be a jury

trial reg ardingplaintiff’s under lying disc rimination and reta liation claims.

Under Rule 25(d)(1) of the F eder al Rules of Civil P roce dure, A dminist rator K are n 1 G. Mills has been substituted for for mer Administrator Steven Pre ston. F E D . R. C I V . P. 25(d).I . FI NDI NGS OF F ACT The re levant fa cts in this phase of the tria l relate to the cre ation of the Settlement Ag ree ment, plaintiff’s lac k of succ ess in finding a job followinghis departur e fr om the SBA in 1997, and two sets of r efe renc e che ck phone c alls that plaintiff alleg es we re ma de by Documente d Refer ence Check to the SBAin 2000 and 2002. Plaintiff argues that throug h its 2 employ ees’ response s to the 2002 phone ca lls the SBA mater ially brea ched its contra ctual obligation under the Settlement Ag ree ment to provide neutra l refe renc es for plaintiff. Upon

car eful c onsideration of the testimony of all of the w itnesses and the doc umentary evidenc e admitted at trial, and making c redibility finding s as nec essar

y and appr opriate to re solve any materia l discrepa

ncies in the testimony , the Court makes the f ollowing f

indings of f

act. 3 A. Plaintiff’s Employm ent at the SBA Richard Ame rica , an Af

rica n-Amer ican man, be g an his employ ment at the SBAin 1980. In 1995, he wa s workingat a GS-14, step 10 le vel in the Off ice of Financ ial Assistance (“O FA” ) within the SBA. At the time John Cox led the OF A. J ane B utler wa s his deputy . In the summer of 1995, Mr. A merica applied for

a promotion to a GS-15 position. Duringthe The followingwitnesses testified at trial: Richard Amer ica, L inda Opar nica ( by 2 videotaped de position), Michael Rankin (by videotaped de position), J ane B utler, Arnold Rosenthal, and L inda Rusche. The Court has ca ref ully considere d all of the e vidence prese nted by the par ties at trial but does not discuss in this Opini on the evidenc e it ultimately found unpersua sive or immateria l to the outcome.

Counsel for the SB A moved for judgme nt under Rule 52 of the Fe dera l Rules of 3 Civil Procedur e at the c lose of the plaintiff’ s case and ag ain at the c lose of all of the evidenc e, and the Court hea

rd ar g ument from counse l for the pa rties on ea ch occ asion. The Court re serve d ruling on the first motion. Rather than de cide the motions, the Court will evaluate all of the evidenc e pre sented at trial and the re levant ca se law a nd deter mine whether

plaintiff has prove n a materia l brea ch of the Settlement Ag ree ment by a pre pondera

nce of the evidenc e. 2interview f or that position, Mr. Cox informed plaintiff that the SBA ha d decide d on a

reor g anization plan that, amongother thing s, would include the tra nsfer of Mr. Ame rica ’s cur

rent position t o Kansa s City

.

Mr. Amer ica, who ha d lived in the District of Columbia are a for many y ear s, did not wish to relocate to Kansas City . He be g an lookingfor a lternative e mploy ment within the SBA itself, a s well as at other ag encie s of the fe dera l gove rnment by way of a de tail from the SBA to anothe r ag ency . He testified that he was suc cessf ul in obtaining re quests for de tails from other a g encie s. For e x ample, in August 1996, the Depa rtment of Agriculture r equeste d that the SBA de tail Mr. Americ a to an of fice within the Ag riculture D epar tment to help streng then Ag riculture’ s staff c apac ity in rural de velopment. See Plaintiff Exhibi t (“PX”) 25. The SBA denied this reque st, stating that Mr. Ame rica was “ the only

employ ee in the Rura l Affa irs Br anch, a nd the Ag ency

needs his ser

vices in his prese nt capa city .” See PX 26; see also PX 27 at 2-3. Mr. Amer ica testified that he believe d that manag ers at the SBA re fused to allow this detail and others be cause they wanted to se nd him to Kansas City for discriminatory

or reta liatory

rea sons. Mr. Americ a also testified that in 1996 he beg an to suspect that SB A manag ers we re making dispa rag ing r emar

ks about him and g iving potential e mploy ers of ag encie s with whom he soug ht details neg ative re ports about his perf ormanc e in orde r to preve nt him from obtaining a

detail or other

employ ment in the District of Columbia are a. Mr. Ame rica admitted that he has no pe rsonal knowledg e that such ne g ative re fer ence s were g iven, and he did not present a

ny direc t evidence that SBA mana g ers we re g iving ne g ative re fer ence s about him. The Court will not credit Mr. Ame rica ’s unsupported suspicions, belief s, or spec ulation.
3In Marc h 1997, rathe r than report to Kansas City , Mr. Amer ica r etired f rom the SBA. He then filed a dminist rative c omplaints of rac e, sex and ag e discrimination and r etaliation ag ainst the SBA. The se cla ims were r esolved whe n he and the SBA e ntere d into the Settlement Ag ree ment in September of 1998. T he re levant par t of the Settlement Ag ree ment for pur poses of this trial provides:

The Ag ency

will remove a

nd expunge f

rom Complainant’s Offic ial Personnel F older (“ OPF”) , and fr om the officia l and per sonal files of Complainant’s last line supervisors in the Of fice of F inancial Assistance ( “OF A”) , all documentation and r efe renc es, if any , relating to his remova l from the F eder al Service , which would have become eff

ective in Ma

rch of 1997, and all docume ntation and ref ere nces, if a

ny , to any periods identified a s Absent Without L eave (“A WOL ”) dur ing 1996 a nd 1997 (such pe riods of AWOL will be conver

ted to L eave Wit hout Pay). In addition, all inquiries from prospe ctive employ ers r ece ived by OFAshall be re fer

red to and handle d by

the Ag ency ’s Off

ice of Human Resourc es. J oint Ex hibit (“J X”) 3 ¶ 6. Mr. Ame rica testified that this provision was important to him beca use it require d the expunge ment of all re cords r elatingto his removal or for ced r etireme nt from the SB A and, by

requiringthe re fer

ral of a ll inquiries about him to Human Resources, it

ensure d that the SBA w ould provide neutra l refe renc es to prospec tive employ ers. He stated that the assura nce that refe renc es be ne utral mattere d to him because of his belief that the SBA ha d impeded his eff

orts to obtain details to other ag encie s to avoid beingtransfe rre d to Kansas City and bec ause he believed the SBA wa s continuing to block his attempts to find full-time employ ment afte r his depar

ture fr om the ag ency . After Mr. Amer ica lef

t the SBA in Mar ch 1997, he a ctively soug ht alternative full-time employ

ment (he a lso had part- time employ ment as an a djunct profe ssor at the Geor g etown Univer sity

Business School). See PX 36 (letters sent by Mr. Amer ica to var ious

4potential employ ers a nd contac ts and his responses to listed job opening s); PX 37 (same)

. After 4 signingthe Settlement Ag ree ment, Mr. Amer ica ha d a number of discussions or interview s with potential employ ers, includingNationsBa nk, Fa nnie Mae , and Te leg ent, that he f elt wer e positive, but the potential employ ers ne ver f ollowed up with him. He suspecte d that SBA manag ers we re g iving potential e mploy ers ne g ative re fer ence s despite the re quirement of the Settlement Ag ree ment that they not do so. Ag ain, he c ould provide no evide nce to support this suspicion other than the f act that he could not g et a job. Mr. Amer ica a dmitted on cross-examination that he had not provide d to NationsBa

nk, Fa nnie Mae , or Tele g ent the name s of any one at the SB A as re fer ence s, and that he had not told anyone at the SB A about these job prospects. In fac t, he had ne ver listed individuals at the SBAas re fer ence s for a possible job, and he had ne ver told anyone at the SB A about a possible job opportunity . He state d, howeve r, that his experience duringhis searc h for a detail convince d him that indivi duals at the SBAwer e attemptingto block his employ ment. He a lso stated that he w as surprise d that it took him so long to find a nother full-time job, which convince d him that SBA employ ees w ere providing neg ative re fer ence s to potential employ ers. The SBA ’s cr oss-examination of Mr. Americ a made clea r, howe ver, that Mr. Americ a had no persona l knowledg e to support his suspicion that the SBA wa s g iving ne g ative re fer ence s. The Court finds no basis from which to conc lude that the SBAwas providingneg ative re fer ence s for Mr. Amer ica.

Since 1999 or 2000, Mr. A merica has taug ht full-time at Geor g etown, but his 4 compensation is m inimal. 5B. Docum ented Re ferenc e Chec k In 2000, Mr. Amer ica sa

w an a dvertisement in the W all Street Journal reg arding ref ere nce te sting c ompanies which me ntioned Documente d Refer ence Check (“ DRC”). DRC is a business that tests what kind of re fer ence s employ ers a re pr oviding f

or cur rent or f ormer employ ees. The Court hear d and sawvideotaped te stimony from Micha el Rankin, the chie f service office r, about DRC’s pra ctices. D uringhis deposition, Mr. Rankin refused to a nswer basic que stions about DRC’s busi ness, such a s the number of employ ees it has or

whether it is incorpora ted, on the g round that such infor mation constituted trade se cre ts. One of DRC’s employ ees, L inda Opar

nica, a lso testified about how DRC opera tes. Despite Mr. Ra

nkin’s unwillingness to answ er que stions about the company ’s business prac tices and his g ener al evasive ness and be lliger ence duringhis deposition, with t he help of Ms. Oparnic a’s testimony , the Court is able to understa nd important aspec ts of how DRC operates, althoug h the full scope of DRC’s business operations sti ll remains unclea r. Once DRC rece ives an a

pplication from a c lient to do a ref ere nce c heck, it is DRC’s prac tice to mail the re fer ence chec k application to an “ associate ,” a tr ained c ourt repor ter employ ed by

DRC, who conducts the re fer ence chec ks. See De position of L inda Opar nica Goncha r (“ Opar nica De p.”) at 7, 15. The a ssociates wor k from home, not fr om DRC’s office, 5 and make the phone c alls from their own phone numbers. See id. at 17. They never call the client, id. at 19-20, but they do call ea ch of the individuals li sted on the application in the process of per formingthe re fer ence chec k. I d. at 19. The a ssociates wor k from a sc ript which sug g ests

L inda Opar

nica de scribed he rself a s a for mer c ourt repor

ter, now a 5 “tra nscriptionist.” She testified that she is a c ertified c ourt repor ter who ha s been lice nsed since 1994. Opar

nica De p. at 9. 6basic que stions, such as askingabout the for mer e mploy ee’ s job tit le, whethe r he or she had noteworthy

projec ts or acc omplishm ents, whethe r the e mploy ee ha d problems with attendanc e or tardiness, a

nd whether

he or she was e ligible f

or re hire. See id. at 14-15. The a ssociates a re allowed to deviate from the sc ript in order to make the conve rsation see m natural.

Ms. Oparnic a testified that she would transcr ibe the re sponses to the questions on her stenograph ma chine while on the telephone w ith the refe renc e. See O parnic a De p. at 13, 32. I t was her prac tice to ac curately

transcr ibe the conve rsations she had w ith refe renc es. See id. at 31-32. To complete a re port she filled in blank spac es in an e lectronic template of a ref ere nce chec k repor

t. See id. at 22. The r eport a lso included dates f or attempted c ontact of r efe renc es. See id. at 23. I f Ms. Opar nica wa s unable to re ach a listed refe renc e af

ter a pproxi mately

ninety day s, she would mail a questionnaire to the ref ere nce a nd indicate that she had done so in the repor t; sometim es the re fer ence would respond to the que stionnaire. See id. at 24-25. Once she had c ompleted all of the r efe renc e ca lls, Ms. Oparnica w ould save the repor t on a disk and mail the disk back to DRC. See Opa rnica Dep. a t 23-24, 89-90. The template for

the re port included a

n elec tronic copy

of her signature a fter the statement “I state under pe nalty

of per jury that the pre cedingref

ere nce c heck, a s stated above , is true and c orre ct.” See JX 1 at 3; J X 2 at 6; see also Opar nica De p. at 92-94. Upon r ece ipt of the disk, Mr. Rankin testified that he would r eview the repor t for ty pos and g ener al quality

control. See D eposition of Michae l Rankin (“Rankin De p.”) at 11-12. I f he ha d conce rns about the r eport, sometimes he would make a

follow up phone c all to the ref ere nce. See id. at 11. Mr. Rankin testified that he would never

alter the substance of

a re port bec ause only

the associa

te who made the ca lls knows the fa cts; he (Mr. Ra

nkin) does not. See Rankin De p. at 12-13. Ms. Opa rnica testified, howeve r,
7that beca

use she sig ned the r eports bef ore se nding the m to Mr. Rankin, her ce rtification of the ir

acc urac y does not ac count for the possibili ty that Mr. Rankin might have cha ng ed a r eport without her knowingit. See Opar nica De p. at 93-95. C. The 2000 and 2002 DRC Reports 6 1. The 2000 DRC Report Mr. Amer ica f

irst submit ted an a

pplication for a

ref ere nce c heck to DRC on August 20, 2000. See PX 45 at 2. He ma y have pr ovided a r esume to DRC alongwith his application, but he testified that he did not provide a written narr ative re g ardinghis employ ment experience or re g ardinghis suspicions that the SBA had provide d or would provide ne g ative comments about him. In this application he listed three individuals to contact as re fer ence s — J ane B utler, L inda Rusche, a nd Arnold Rosenthal — alongwith their phone number s. See id. The SBAargued that these individuals were not a ppropriate ref

ere nces, be cause none of the m

ever direc tly supervised Mr . Americ a. On c ross-examination, Mr. Americ a did not disag ree with this assertion. He e x plained, howe ver, that he included these individuals for the following

rea sons: J ane B utler wa s a senior of ficial at OFA a

nd had bee n intimately

involved in the proce ss that led to his removal. (John Cox , the hea d of OF A when Mr . Americ a wa s there ha d since retire d, and Ms. B utler wa s his deputy). Ms. Rusche for mally was Mr. A merica ’s direc t supervisor in Ka

nsas City , even though Mr. Amer ica ha d never met her or

worke d with her, beca use he ha d never

actua lly moved to Kansa s City . In addition, she had be en involved in the

The Court pre viously

admitted both of these doc uments over de fenda nt’s 6 objection under

the business rec ords exception to the hear say rule. See F E D . R. E V I D . 803(6); see also Memora

ndum Opinion and Orde r, Dkt. No. 95 at 2-3 (F eb. 9, 2010). 8events that led to his depa rture f rom the ag ency . Mr. Rosenthal was a senior off

icial in OFAand was pre sent when Mr . Americ a wa s removed f rom the building on his last day of work. 7 In response to this application, DRC produced a r efe renc e che ck re port dated Dec ember

13, 2000 (the “ 2000 Report”) . See JX 1. The 2000 Report indicates that Ms. Opar nica wa s the associate who made the re fer ence chec k phone ca lls. S ee id. Ms. Opa rnica does not specif

ically reme mber c reating the 2000 Re port, but the format is consistent with ot her DRC Reports she prepa

red a nd it has her sig nature on it. Oparnica Dep. at 97-118. Mr. America testified that he ne ver ha d any direc t contact with Ms. Opar nica, whic h was ty

pical of D RC’s prac tices. The 2000 Re port is in the standard DRC format. I t list s eac h date on whic h Ms. Opar nica attempted to contact one or more of the re fer ence s — 38 times in tot al betwe en September 2000 a

nd Dec ember

2000. See JX 1 at 1. Acc ordingto the 2000 Report, Ms. Opar nica r eac hed Mr. Rosenthal on the telephone on Septe mber 14, 2000. See J X 1 at 1. In response to her introductor y questions, Mr. Rosenthal stated (a ccor ding to the Re port) that althoug h he re membere d Mr. Amer ica, Mr. Americ a did not work for him, and he wa s surprised that Mr. America had listed him as a ref ere nce. See id. He did not ref er Ms. Opa

rnica to the Human Resourc es De partment (a s require d by

the Settlement Ag ree ment). See id. at 1-2. Mr. Rosenthal testified that he never spoke to Ms. Oparnic a. He also testified that while he did rec eive a phone ca ll from someone

J ane B utler testified that she ne ver dire ctly supervised Mr . Americ a, neve r wrote 7 perf ormanc e eva luations for him, never worke d with him on a project, a nd never made promotion decisions with respec t to him. Arnold Ros enthal testified that he never supervised Mr. Amer ica, ne ver e valuated his wor k or par ticipated in per formanc e eva luations, never w orked with him, and was not involved in the dec ision to t ransf er him to Kansa s City

or re move him from the a g ency . 9reg ardingMr. Amer ica within a year or two af ter Mr. A merica

left the SBAin 1997, he did not g ive a job re fer ence in that call.

The 2000 Repor

t also rec ords a c onversation between Ms. Opa rnica and Elana Ander son on Dec ember

11, 2000. See JX 1 at 2-3. Ms. Anderson wa s J ane B utler’s a ssistant at the time. Acc ordingto the repor t, Ms. Anderson ca lled Ms. Oparnic a in re sponse to a messag e that Ms. Oparnic a lef

t for Ms. B utler. See id. at 2. Ms. Anderson mentioned that she believed that she had spoke n with Ms. Oparnica befor e, and a sked whe ther the c all was a bout Mr. Americ a. See id. Ms. Opa rnica stated that the c all was a

bout Mr. Americ a, that she ha d been trying to r eac h Ms. Butler, but that it appe are d that Ms. Butler w as not g oing to r eturn he r phone calls. See id. Ms. Ande rson offe red to take another messag e for

Ms. Butler, a

nd they conclude d the phone c all. See id. at 3. Ms. Opar nica ne ver spoke to Ms. Butler. At the conc lusion of the 2000 Report is a comment that “ despite leaving numerous messag es for

J ane B utler and L inda Rusche, no r eturn c alls were rec eived.” The re port also states that Ms. Opar

nica ha d forwa

rded a written questionnaire to Ms. Butler a nd to Ms. Rusche. See JX 1 at 3. Ms. Rusche testified that she r eca lls rece iving a telephone me ssag e fr om

a woman c alling a

bout a re fer ence for Mr. A merica in 2000, but said she did not return the c all. Ms. Butler doe s not reca ll any phone ca lls from Ms. Oparnica . Ms. Oparnic a sig ned the r eport on Dec ember

11, 2000. See id. On De cembe r 13, 2000, Mr. Rankin signed the line statingthat he had r eviewe d the re port. See id.

Mr. Amer ica testified that upon rec eivingthe 2000 Report, he c oncluded that DRC was not complying w ith paragraph 6 of the Settlement Ag ree ment beca use the re port indicated that ne ither Mr. Rosenthal nor Ms. Ande rson re fer red Ms. Opa

rnica ’s ca ll to Human
10Resource s. He did not at that time bringthe issue to the SBA’ s attention, howeve r. Assuming f

or the moment that Ms. Opar nica in fa ct spoke with Mr. Rosenthal a nd Ms. Anderson in 2000 and a ccur ately repor ted these c onversations in t he 2000 Report, the Court finds that neither of

them said any

thing ne g ative about Mr. A merica . Fur thermore , nothing in the repor t rec ords them as having sa id any thing that c ould have ha d a neg ative impact on Mr. Americ a’s job prospe cts eve n if these state ments had bee n made to an a ctual prospe ctive employ er. A s for Ms. B utler and Ms. Rusche , all of the e vidence is consistent: they never had a

conver sation with Ms. Oparnica in 2000. 2. The 2002 DRC Report In ear ly 2002, Mr. Amer ica met with a la wy er, Elizabeth Ne wman, re g ardinghis claims ag ainst the SBA. Mr. America then hired D RC to perform a se cond re fer ence chec k (the “2002 Report” ) in April 2002. See PX 45 at 1. He provided the same names a nd phone numbers — Jane Butler , L inda Rusche, a nd Arnold Rosenthal — for DRC to contact. DRC ag ain assig ned Ms. Opar

nica to make these re fer ence chec k calls. As with the 2000 Report, Ms. Opar nica doe s not specifica lly rec all cre atingthe 2002 Report. See O parnic a De p. at 29-30. The repor t Ms. Oparnica

produce d is simi lar in for m to the 2000 Report. See JX 2. Ms. Oparnica signe d the 2002 Report and dated it J une 4, 2002. See id. at 6. Mr. Rankin signe d the re port, stating that he had r eviewe d it, on J une 10, 2002. See id.

The 2002 Repor

t indicates that Ms. Opar

nica spoke with L inda Rusche on the phone on May

2, 2002. See JX 2 at 1. I n response to Ms. Oparnica ’s re quest for a ref ere nce, the 2002 Report indicates that Ms. Rusche said: “I was a ctually

involved in a job transfe r of his

11from Washing ton to here, but he did not report.” See id. at 1. Acc ordingto the 2002 Report, Ms.

Rusche also stated that Mr. Americ a had le ft the ag ency instead of r eportingto her off ice in Kansa s City , and that she w as neve r his supervisor. See id. Ms. Rusche told Ms. Oparnica to call the SB A offic e in Washington for information, and that she thought Ms. Opa rnica should start with the Personnel De partment. See id. Ms. Rusche testified that this conversation never took place a

nd that she neve r spoke to any one about Mr. A merica , stating une quivocally : “I know I did not speak to her [Ms. Oparnic a].” The 2002 Repor

t also indicates that Ms. Opar nica spoke with Ms. Butler on June 4, 2002. See JX 2 at 4. Accor ding to the Re port, Ms. Butler immediately

ref err ed Ms. Opar

nica to Human Resourc es. See id. Ms. B utler does not re call this phone ca ll. Ms. Oparnica also spoke with a woma

n in the Personnel De partment who c onfirmed the da tes of Mr. Ame rica ’s employ ment and stated tha

t he would be e ligible f

or re hire. See id. at 5. Finally , the 2002 Report indicate s that Ms. Oparnica spoke with Mr. Rosenthal on the phone on Ma

y 11, 2002. See JX 2 at 2. I n contra st to the 2000 Report, the 2002 Report states that Mr. Rosenthal provide d substantive answe rs to Ms. Oparnic a’s que stions. He said of Mr. Amer ica that “ [h] e wa s a ver y brig ht think tank-ty

pe of individual,” that Mr. Americ a worke d in financia l assistance, a nd that he ra

n the SCORE P rogram. I d. at 2. Acc ordingto the 2002 Report, Mr. Rosenthal also stated that Mr. Americ a is “a very g ood g uy . I

rea lly think his streng th is, he is a think tank-ty pe of guy . Hig h level thinker. H e may not be the guy

to take it to the next level, but he is very g ood about identify

ing ide as. He ’s ver

y smart.” I d. at 2-3. Mr. Rosenthal also repor

tedly stated that Mr. Ame rica

“did g et transf

err ed to Kansa s City . He took

car e of a rura l initi ative. That was a diff icult experience for him. . . . I don’t think he g ot along

12with ever

y body the way he g ot alongwith me. There was a n internal battle goingon with his transfe r.” I d. at 3. Mr. Rosenthal at f irst testified that he neve r spoke with Ms. Opar nica, but on

cross-e x amination, he said only that he did not reme mber or r eca ll having ha d a phone

conver sation with her. Somewhat incr edibly for someone who worke d in a manag ement position for so long , Mr. Rosenthal also testified that he does not reme mber e ver g iving r efe renc es for former employ ees. Assuming f

or the moment that Ms. Opar nica in fa ct had c onversations with Ms. Rusche, Ms. Butler

and Mr. Rosenthal in May and ea rly J une of 2002, a

nd that those

conver sations are acc urate ly repor ted in the 2002 Report, the Court make s the followingfinding s: Ms. Butler ma de no stateme nts to Ms. Oparnica a nd immediately

ref err ed her to Human Resource s. The fe w statements Ms. Rusche made to Ms. Oparnica wer e not neg ative and c ould not have ha d a neg ative impact on Mr. A merica ’s employ ment prospec ts. She also told Ms. Opar nica to ca ll the Personnel Depa rtment. As for Mr . Rosenthal, he did not ref er Ms. Opa

rnica to Human Resourc es. Ac cordingto the repor t, he did make substantive state ments, most of which we re positive or ne utral, to Ms. Oparnic a about Mr. A merica . Calling him a “ very brig ht think tank-ty

pe of individual,” a

“ver y g ood g uy ,” “ve ry

smart,” a “high level thinker,” and “ve ry g ood about identifying ide as” a re a ll posit ive statements. Mentioningthe fa ct of his transf er to Kansa s City

is a neutra l statement. The only neg ative stateme nts related to the “ internal battle” about the Ka

nsas City transfe r which w as cha

rac terized as a “ difficult experienc e” f or Mr. Americ a; the stateme nt that “he may not be the guy

to take it to the next l evel” ; and the observation that “Idon’t think he g ot alongwith ever y body the way he g ot alongwith me.” The statements alleg edly

made by Mr. Rosenthal that wer e positive or neutr al — eve n if some wer e

13inacc urate , as Mr. Ame rica asser ts — could not have ha d a neg ative impact on Mr. A merica ’s employ ment prospec ts. D. Reliability of the DRC Reports and Credibilit y of DRC W

itnesses The re liability

of the two DRC Reports is hotly contested by

the par ties. SBA argues that Mr. Rankin had the incentive to alter the re ports to cre ate ne g ative re fer ence s in order to satisfy clients intereste d in pursuing litig ation ag ainst former employ ers. DRC’s public persona cer tainly supports such a c onclusion — for e x ample, the c ompany ’s website is www.ba dref

ere nces.c om . In addition, Mr. Rankin’s testimony is completely

incre dible — he made unr easona

ble asser tions of privacy

and tra de sec rets re g ardingsuch straig htforwa rd fa cts as the company ’s size and corpor ate struc ture. He was e vasive a nd bellige rent a

nd display ed g ener al contempt for

the lawyers involved in the de position. Nothi ngin his manner convinc es the Court that he is telling the truth or that his testimony can be cre dited. Nor do DRC’s business pra ctices pr ovide assura nces of acc urac y and re liability

in the re ports’ conte nt. The re fer ence chec king industry appar ently

does not have industry standards or

other for mal quality

controls. DRC’s internal qua lity controls appe ar va

riable a nd not reliable. The company is not open and for

thrig ht about its business practice s. DRC does not keep r ecor ds beyond two or three y ear s, nor does it have any formal r ecor d-re tention policy . See Rankin Dep. at 74-75. Whil e DRC associate s transcr ibe the re sponses to the questions as they

are talking to the r efe renc e, they do not contempora

neously cre ate a n audio re cordingof the phone ca lls, so there is nothing a g ainst which to che ck the tra nscription or the fina l report. See Rankin Dep at 73-74. Fina lly , Mr. Rankin is in a position t o chang e a r eport without the

14knowledg e of the person who c reated the re port. Havingsaid this, however , the Court finds Ms. Oparnic a entire ly cre dible. The Court cre dits her desc ription of her ty pical pra ctices on be half of D RC and her testimony that she

was c onfident she f

ollowed the same prac tices with respe ct to the two re ports at issue in this

case . And the Court cr edits her testimony that she would not have had any rea son to falsify

the repor ts to create a ne g ative re fer ence . See Opa rnica Dep. at 33-34. She was pa id per re port, and her f ee w as not based on the content of the repor t or whethe r it cast the e mploy er in a positive or neg ative lig ht. See id. at 28, 35. She does not have any direc t contact with clients such a s Mr. Americ a. See id. at 19-20. Neve rtheless, while Ms. Opa rnica ’s testimony

is completely

cre dible, she simply

does not reme mber these specific repor ts or the conve rsations ref lected in them. Fur thermore , she ac knowledg ed that Mr. Rankin c ould have c hang ed them af ter she c ompleted her w ork without her knowle dg e. As a result, she c ould not testify as to the ac cura cy

of the content of the repor

ts. None of the SBA w itnesses rec all the phone c alls with Ms. Oparnica having taken plac e, and Mr . Rosenthal and Ms. Rusche de ny that they spoke to Ms. Oparnic a in 2002. They point to it ems in the 2002 Report that ca ll its acc urac y into question. For example, Ms. Rosenthal testified that he a lway s answer ed the phone “Rosenthal,” not “ this is Arnold,” as

rec orded in the 2002 D RC R eport. JX 2 at 2. The 2002 Report indicates that Ms. Oparnic a spoke with Mr. Rosenthal on May 11, 2002, a Saturda

y , but Mr. Rosenthal testified that he did not work at the of

fice on Saturday s. Ms. Rusche was not in the Ka nsas City office on May

2, 2002, the day

she is repor

ted to have spoke n with Ms. Oparnica ; she was tra veling . See Def endant Exhibit5 (trave l voucher).
15Other indicia in the repor

ts sugg est, howeve r, that at lea st some of the re ported

conver sations had to have oc curr ed bec ause the repor ts include signif

icant deta ils about the SBA and Mr. Ame rica ’s employ ment there that no one at DRC could have known without speakingto people at the SBA. The se include state ments conce rningMr. Amer ica’ s association with the SCORE P rog ram, his involvement with the rura l development program or initiative, the circ umstances surr ounding Mr . Americ a’s pr oposed transf er to Ka nsas City , the fa ct that he did not report ther e, the inter

nal battle over

Mr. Amer ica’ s proposed tra nsfer , the name of

Ms. Butler ’s assistant, and a ccur ate state ments about the super visor-employee r elationship betwee n Mr. Amer ica a

nd various of the people c alled. As Ms. Opa rnica cre dibly explained: I t would be har d to fabric ate a nswers f rom people that Idid not know. I mean, it is like y our job. I f I called up your boss, I wouldn’t know what noteworthy projec t y ou have done . Ican’ t make stuff

like that up. * * * Iwould have to c hang e my way of talkingso Iwould prete nd that I was spea king like the people, have their c erta in way of speaking. But hone stly , there is no reason f or me to have to do that. Opar nica De p. at 33-34. 8

The Court finds that DRC did not manufactur e the r efe renc e che ck re ports from whole cloth. The Court finds that Ms. Oparnica made phone calls to persons a t the SBA a

nd had

Mr. Amer ica a

ppare ntly submitt ed a r esume a long w ith the refe renc e che ck 8 applications, but this resume is not befor e the Court. The Court finds it unli kely that the re sume would have inc luded information about his propose d transfe r to Kansa s City or other inf

ormation that would have e nabled a ny one at DRC to cre ate the r efe renc e che ck re ports without speakingto someone at the SBA. As f or the a ssertion that some of the state ments attributed to Mr. Rosenthal about the SCORE Progr am wer e inac curate, that is not the point. The point is t hat Ms. Opar nica would have known nothing a bout the SCORE P rog ram if she had not talked to someone at the SBA. 16at least some of the conve rsations she re ported having ha d. In view of the testimony of Ms. Butler, Ms. Rusche and Mr. Rosenthal, howe ver, the Court cannot find by a pre pondera

nce of the e vidence that either r eport is a totally acc urate transcr iption of phone ca lls with Ms . Butler , Ms. Rusche and Mr. Rosentha l. 9

I I . CONCLUSI ONS OF LAW

The issue be fore the Court is whether on the se fa cts there was a materia l brea ch of the Settlement Ag ree ment. That there was a brea ch is clea

r and a lrea dy

has bee n deter

mined by this Court. S ee A merica

v. Preston, 468 F. Supp. 2d 118, 124 (D.D .C. 2006)(the SBA“bre ache d the Settlement Ag ree ment when its employ ees did not immediately forwa rd DRC’s telephone calls to defe ndant’s Human Re source s Depa rtment as re quired by

para g raph six of the Settlement Ag ree ment”). The question theref ore is whe ther the br eac h was mate rial bec ause only a mater ial brea ch would per

mit rescission of the Settlement Ag ree ment and re instatement of plaintiff’ s claims. See L

utz v. U.S . Postal S ervic e, 485 F .3d 1377, 1381 (F ed. Cir. 2007) (in or der to preva il, plaintiff must show “material non-c ompliance with the ter ms of the settlement ag ree ment”); L ary

v. U.S. Post al Service , 472 F.3d 1363, 1367 ( Fe d. Cir. 2006); Thomas v. Dep’ t of Housing& Urban D evelopment, 124 F .3d 1439, 1442 (F ed. Cir. 1997); see also Americ a v. Preston, 468 F. Supp. 2d at 122 (se ttlement ag ree ments “ar e in the natur e of c ontrac ts”).

I t also came to light at trial that Ms. Rusche violate d the Settlement Ag ree ment 9 beca use she did not destroy

cer tain documents re lated to Mr. Amer ica, but instead took them home. Ms. Rusche testified that she put the documents in her ba sement and ne ver showe d them to anyone. She explained that she ke pt them beca use she ha d a pre vious ex perie nce in whic h documents bea

ringher sig nature had bee n falsified in litigation. Despite plaintiff’s a rgument that these fa cts should lead the Court to question Ms. Rusche’s c redibility , the Court finds that none of this is relevant to a de termination of the matter s at issue. 17Whether a br eac h of contra ct — in this case the Settlement Agree ment — is material or,

conver sely , whether

it has been substantially

perf ormed turns on the f

ollowing f

actor s: (1) the extent to which the plaintiff was de prived of the benef it that he rea sonably

expected under

the contra ct; (2) the e x tent to which he c an be a dequate ly compensated for the part of tha t benef it of which he w as depr ived; (3) the e x tent to which the par ty failingto perfor

m (the def

endant) has suffe red f orfe iture; (4) the likelihood that the defe ndant will cure its failure, takingacc ount of all the circ umstances includingany rea sonable a ssuranc es; and (5) the extent to which the behavior of the de fenda

nt comports with standards of g ood faith and f air de aling . See L ary

v. U.S. Post al Service , 472 F.3d at 1367; Grey hound L ines, Inc. v. B ender , 595 F. Supp. 1209, 1224 (D.D .C. 1984) (both quotingR ESTA TEMENT (S ECOND ) OF C ONT RA CT S § 241 (1981)) ; see a lso America v. Preston, 468 F. Supp. 2d at 125. The standard of materia lity

for the pur

poses of de ciding whether a contr act wa s brea ched “ is nece ssarily imprecise a

nd flexibl e.” Stone F orest I ndustries v. United States, 973 F.2d 1548, 1550- 51 (F ed. Cir. 1992) (quotingR ESTA TEMENT (S ECOND ) OF C ONT RA CT S § 241 cmt. a (1981) ). A bre ach is mate rial only if it “rela tes to a matter of

vital importance ,” Thomas v. De p’t of Housing& Urban D evelopment, 124 F .3d at 1442, or if it “g oes to the esse nce [of the c ontrac t] and fr ustrates substantially

the purpose f

or which the contra ct was a g ree d to by the injured pa

rty .” The Cuneo L aw Gr oup, P.C. v. J oseph, 669 F

. Supp. 2d 99, 109 (D.D.C. 2009) (quotingDra im v. Virtual Geosate llite Holdings, Inc., 522 F .3d 452, 454-55 (D.C. Cir. 2008))

.

Plaintiff only

asser ts that the SBA mater ially brea ched the Settlement Ag ree ment based on the phone ca lls recor ded in the 2002 Report, not those re flec ted in the 2000 Report. See Pretrial Statement, Dkt. No. 78 at 3. The def endant a rgues that eve n if the 2002 Report a ccur ately
18repor

ted phone c alls that actua lly occur red, it does not esta

blish that the SBA mater ially brea ched the Settlement Ag ree ment. Assuming that the c onversations between Ms. Opa rnica and the SB A employ ees oc curr ed more or less as they are rec orded in the 2002 D RC R eport, ther e ar e two separ ate que stions related to mater iality . The fir st is whether Ms. Rusche’ s and Mr. Rosenthal’s failure s immediately

to refe r Ms. Opar

nica to the Of

fice of Human Resour ces standing alone constituted material br eac hes of the Settlement Agree ment. The sec ond question is whether the 1 0 content of a

ny of the stateme nts made by Ms. Rusche and Mr. Rosentha l constituted material brea ches of

the Settlement Ag ree ment. Wit h reg ard to the f

irst question — whether or not the failure to refe r Ms. Opar nica immediately

to the Offic e of H uman Resourc es wa s itself a mater ial brea ch of the Settlement Ag ree ment — the Court previously deter mined that the question of whe ther the brea ch wa s material should be de cided by the finder

of fa ct, and not re solved at the summary judgme nt stag e, bec ause it re quired re solution of disput ed issues of mate rial fa ct. See Ame rica v. Preston, 468 F. Supp. 2d at 125-26. A s discussed in the Finding s of Fa ct, supra at 4, the testimony at trial has he lped the Court make a finding as to the purpose of par ag raph 6 of the Settlement Ag ree ment. See The Cuneo L aw Gr oup, P.C. v. J oseph, 669 F . Supp. 2d at 109-10 (examining c ircumstance s that led to cre ation of a se ttlement ag ree ment to determine the rea son for inclusion of a

particula r cla use). Mr. A merica

testified that the Settlement Agree ment’s require ment that inquiries be re fer red to the O ffice of Human Resour ces w as important to him to

ensure that the SBA pr ovided only neutra l refe renc es about him, which a ssuranc e in turn wa s
Acc ordingto the 2002 Report, Ms. Butler complied with the Settlement 1 0 Ag ree ment by

promptly ref err ing Ms. Opa

rnica to the Offic e of Human Resourc es, so her conver sation repor

ted in that Report is not at issue. 19important beca use of his belief

that the SBA w as blockinghis effor ts to find alternative employ ment both before and af

ter he left the a g ency . See F indings of F act, supra at 4. The “esse nce” of the a g ree ment to provide neutra l refe renc es there fore was that a ny ref ere nces provided by

the ag ency

not hinder Mr. Ame rica ’s ef forts to find employ

ment following his depar ture fr om the SBA. See The Cuneo L aw Gr oup, P.C. v. J oseph, 669 F . Supp. 2d at 109. Requiringthe Off

ice of Human Resourc es to respond to re fer ence calls wa s one way of ensur ing that the ag ency provide ne utral re fer ence s — the bene fit Mr. Americ a re asonably expected to re ceive from this provision of the Settlement Ag ree ment — it was not an end in itself. Neither

Mr. Amer ica nor

any other witness testified that there w as somethingparticula r about the Of

fice of Human Resour ces that persuade d the par ties to the contrac t to include it in the Settlement Ag ree ment. The Court conc ludes, there fore , that the fa ilure to ref er c alls to Human Resourc es immediately was not a material bre ach of the Settlement Ag ree ment. See Stone Fore st I ndus., Inc. v. United States, 973 F .2d at 1550 (“Not ever y depar ture fr om the literal terms of a

contra ct is sufficient to be de emed a materia l brea ch.”) . What may be material was whe ther that fa ilure in any case led to the provision of re fer ence information that was not neutra l and pre

judiced plaintiff in his sear ch for employ ment. The Court there fore will address the se cond question — whe ther the c ontents of any of the stateme nts made by Mr. Rosenthal and Ms. Rusche ( as re corde d in the 2002 Report) constituted material br eac hes of the Settlement Agree ment. This is a closer que stion than the 1 1

The SBAargues that the bre ach w as not materia l beca use DRC was not an a ctual 1 1 potential employ er. The Court previously reje cted this argument. See Amer ica v. Pre ston, 468 F. Supp. 2d at 124. As the Court e x plained: “The re is no question that Ms. Rusche a nd Mr. Rosenthal rea sonably

believed that the caller

from DRC was in fa ct a pr ospective e mploy er a nd they still did not comply

with that require ment. . . . The fa ct that Ms. Opar nica wa s not in fact a 20first bec ause Ms. Rosenthal a nd Ms. Rusche did respond substantively to Ms. Oparnica ’s questions, which the Settlement Ag ree ment should have pre vented. To de termine mate riality , howeve r, the Court is instructed to consider “the e x tent to which plaintiff wa s deprived of the benef it which he re asonably

expected under

the contra ct.” Gr ey

hound L ines, Inc. v. B ender , 595 F. Supp. at 1224; see also Americ a v. Preston, 468 F . Supp. 2d at 125. As the Court expl ained in its Findings of

Fa ct, the stateme nts made by Ms. Rusche to Ms. Oparnic a we re not ne g ative and could not have ha d a pre

judicial impact on Mr. America’ s employ ment prospec ts, even if Ms. Opar nica ha d been the repr esentative of an a ctual potential employ er. See Finding s of Fa ct, supra at 11, 13-14. In addition, Ms. Rusche complied with the Settlement Ag ree ment in that she ultimately

told Ms. Oparnica

to call the Personne l Depar tment. As for the neg ative stateme nts reporte dly made by Mr. Rosenthal, nothing he may have sa id could be construe d as an e ffor t to “block” Mr. A merica from obtainingemploy

ment elsewhe re, or

to have ha d that eff

ect if ma de to a pr ospective e mploy er — the rea l benef it which para g raph 6 of

the Settlement Ag ree ment serve d. Mr. Rosenthal’s re fer ence to the “diffic ult experience ” that the “ internal battle” over Mr. Amer ica’ s possible transfer to Kansas City

was not a matter of

“vital importance ,” Thomas v. De p’t of Housingand Ur ban De velopment, 124 F.3d at 1442, and did not “frustrate[] substantially ” the pur pose of the c ontrac t. The Cuneo L aw Group, P.C. v. J oseph, 669 F . Supp. 2d at 109. Even if Mr. Rosenthal’ s statements that Mr. Americ a may

not have g otten alongwith ever y one as w ell as he g ot alongwith Mr. Rosenthal

prospec tive employ er, but a tester e mploy ed by

Americ a, does not pre clude r elief unde r Title VI I

. The Supreme Court has long rec og nized the value of te sters with respe ct to civil rig hts claims.” I d. Be cause the Court has dete rmined that the bre ach w as not materia l for other rea sons, it need not revisit this i ssue. 21and that Mr. Ame rica might not be the pe rson to “take it to the nex t level” c ould be construe d as havinga neg ative connotation to a potential employ er, a ll of the other state ments made by Mr. Rosenthal wer e either

positive or neutra l. Taken tog ether , the Court conclude s that his statements could not have prejudice d Mr. Amer ica’ s employ ment prospec ts, so Mr. America was not deprived of

the bene fit he re asonably expected under

the Settlement Ag ree ment. This conclusion distinguishes this case from those in which a brea ch of a settlement ag ree ment has bee n found to be mate rial. F or example, in Thomas v. Dep’ t of Housing & Urban D evelopment, 124 F .3d at 1441, the cour t concluded tha

t a settlement ag ree ment with simi lar ne utral re fer ence require ments had bee n materia lly brea ched when a manag er at the ag ency

told someone inquiring a bout the job perfor

mance of the plaintiff that Thomas had be en the subjec t of an Inspector G ener al Investig ation. That statement wa s unambig uously

neg ative and w ould serve a s a re d flagto any prospec tive employ er. A ssuming that Mr. Rosenthal made the statements to Ms. Oparnic a that have been a ttributed to him, t hey did brea ch the Settlement Agree ment, but the brea ch wa s not material.

Finally , even if

one we re to c onclude that some of Mr. Rosenthal’s stateme nts would have ha d a neg ative impact on a potential employ er, a

nd there fore amounted to a mate rial brea ch, such a

conclusion would turn on a f ew wor ds that Mr. Rosenthal is reporte d to have sa id, not on the g ener al tenor of his recor ded conve rsation with Ms. Oparnic a. The problem for plaintiff in that context is that while the Court has c oncluded that plaintiff ha s shown by a preponde ranc e of the evidenc e that the c onversations between Ms. Opa rnica and SBAemploy ees

occur red in some f

orm, see F indings of F act supra at 14-17, it also has c oncluded that plaintiff has not shown that the 2002 DRC Report “is a totally acc urate transcr iption of phone ca lls.” I d.

22at 17. In light of the Court’s doubts as to the acc urac y of the 2002 DRC Report, the Court ca nnot conclude that the two or thre e conc eivably neg ative stateme nts attributed to Mr. Rosenthal, standing alone, a

re a dequate to meet plaintiff’s bur den of pr oof that a ma terial bre ach oc curr ed. I f eve n a fe w of Mr. Rosentha l’s repor ted words we re tra

nscribed or

repor ted inacc urate ly

or perha ps were never

said at all, there would be no neg ative connotations from his reported

conver sation with Ms. Oparnica . Plaintiff simpl y has not shown by

a pre pondera

nce of the evidenc e that such a

n inacc urac y

did not occur.

I I I . CONCLUSI ON The Court has c oncluded that plaintiff ha s not shown by a pre pondera

nce of the evidenc e that def

endant mate rially

brea ched the Settlement Ag ree ment. I t theref ore w ill not

resc ind the Settlement Ag ree ment and re instate Mr. Amer ica’ s claims. Acc ording ly , the Court will enter judg ment for the de fenda nt. An appropr iate Or der a nd J udg ment will issue this same day

. /s/_______________________________ PAULL . FRI EDMAN United States District J udg e DATE: May

28, 2010

23