Opinion ID: 787764
Heading Depth: 2
Heading Rank: 3

Heading: Civil Service Reform Act Claim/Whistleblower Protection Act

Text: 36 In reviewing a Merit Systems Protection Board decision, a court shall review the record and hold unlawful and set aside any agency action, findings, or conclusions found to be — (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule, or regulation having been followed; or (3) unsupported by substantial evidence.... 5 U.S.C. § 7703(c); see also Sloan v. West, 140 F.3d 1255, 1260 (9th Cir.1998). 37 Although Coons challenged in the district court the Merit Systems Protection Board's decision on several grounds relating to the Civil Service Reform Act, in this appeal he limits his argument to the Whistleblower Protection Act claim. 4 38 There are four elements required to successfully prove a whistleblower claim: (1) the acting official has the authority to take, recommend, or approve any personnel action; (2) the aggrieved employee made a disclosure protected under section 2302(b)(8) [Whistleblower Protection Act]; (3) the acting official used his authority to take, or refuse to take, a personnel action against the aggrieved employee; (4) the acting official took, or failed to take, the personnel action against the aggrieved employee because of the protected disclosure. Lachance v. White, 174 F.3d 1378, 1380 (Fed.Cir.1999) (citation and internal quotation marks omitted). 39 There is no dispute that an acting official of the IRS, Ah Nee, had and used his authority to take a personnel action against Coons (prongs 1 and 3). The dispute regards whether Coons's disclosures were protected under the Whistleblower Act (prong 2). Because some of Coons's disclosures are protected under the Act, and because the Merit Systems Protection Board did not address causation (prong 4), we reverse the district court's grant of summary judgment on this count and remand to the district court and instruct the court to remand to the Merit Systems Protection Board to consider whether Coons was demoted because he made these disclosures.
40 Coons made disclosures to District Director Ah Nee regarding the IRS's handling of the cases of several taxpayers. Coons complained that these taxpayers were receiving favorable treatment. In the case of Taxpayer A, Coons alleged that a former Regional Counsel for the IRS was intervening in the matter on the taxpayer's behalf, and that he was violating post-employment conflict of interest rules. The district court held that this was not a protected disclosure because it did not involve government misconduct. Whether or not a protected disclosure must implicate wrongdoing by current government employees, the Administrative Judge's finding that Coons's disclosures regarding Taxpayer A are limited to allegations about wrongdoing by a former employee is not supported by substantial evidence. 41 Coons clearly expressed concern that Taxpayer A's attorney was using his influence to corrupt the IRS's collection of taxes from Taxpayer A. Furthermore, Coons disclosed that various officials to whom he complained about the attorney's actions did nothing to address the problem. Current IRS officials have an obligation to enforce the post-employment ethics laws against former officials. See, e.g., 5 C.F.R. § 2637.101(c)(6) (Departments and agencies have primary responsibility for the administrative enforcement of the post employment restrictions found in the Act.). Thus, Coons's disclosures implicated current IRS employees who were conferring with Taxpayer A's attorney in violation of the postemployment restrictions of the Ethics in Government Act. 42 More importantly, it is clear from the record that Coons alleged that current IRS staff were sharing information illegally with Taxpayer A's counsel. For example, the Merit Systems Protection Board's April 11, 2000 decision states that Coons alleged that members of the Regional Counsel staff made unauthorized disclosures to [Taxpayer A's] attorney. Importantly, District Director Ah Nee admitted that Coons's disclosure addressed wrongdoing by current IRS employees. The following is an excerpt of Ah Nee's testimony: 43 Q: Did Mr. Coons ever raise any issues with you that suggested a perception on his part that there were irregularities or wrongdoing of any kind occurring with respect to the handling of the Taxpayer A case, other than the involvement of a former Regional Counsel? 44 Ah Nee: He — yes. He did raise to me the concern that there may have been disclosure by Regional Counsel.... 45 Q: In other words that, in fact, there had been an — an improper disclosure; is that correct? 46 Ah Nee: That's right. 47 The Administrative Judge's decision discusses neither Coons's disclosures regarding unauthorized communications between a current IRS official and Taxpayer A's attorney nor Ah Nee's admission that Coons disclosed these leaks. Instead, the decision states, counter factually, that Ah Nee testified that Coons's disclosures in the Taxpayer A case dealt exclusively with alleged, post-employment violations by the former R[egional] C[ounsel]. The Administrative Judge's finding that Coons's disclosures about wrongdoing in the Taxpayer A case were limited to alleged wrongdoing by a former employee of the agency, is not supported by substantial evidence.
48 In the case of Taxpayer B, Coons claims to have made disclosures regarding Ah Nee's unreasonable concessions in a tax collections case. The Merit Systems Protection Board's finding that Coons did not make a protected disclosure is supported by sufficient evidence. The Board found that the testimony of two witnesses regarding the meeting, at which Coons allegedly made the disclosures, was more credible than Coons's own uncorroborated testimony. There is no indication that this finding is arbitrary, capricious, or an abuse of discretion.
49 Coons also alleges he made a protected disclosure regarding a possible fraudulent refund for Taxpayer D. The Merit Systems Protection Board held that even if Coons made the statements he alleges he made to Ah Nee, the disclosures are not protected. The Board held that the event 50 amounted to a normal disagreement between managers over a debatable matter of internal policy, and that a disinterested observer, with knowledge of the essential fact known to and readily ascertainable by the appellant, could not reasonably have concluded that it evidenced government wrong doing of the type contemplated by the [Whistleblower Protection Act]. 51 Coons made disclosures regarding the manual processing of a large refund that he believed to be fraudulent for Taxpayer D under highly irregular circumstances. Coons's disclosure cannot reasonably be characterized as a normal disagreement between managers over a debatable matter of internal policy. A disinterested observer with knowledge of the essential facts ... reasonably [would] conclude that a disclosure alleging that the IRS, whose mission is to collect taxes, improperly processed a large, fraudulent refund for a wealthy taxpayer is an allegation of gross mismanagement, a gross waste of funds, [or] an abuse of authority. See 5 U.S.C. § 2302(b)(8); Lachance, 174 F.3d at 1381. Therefore, we hold that the Merit Systems Protection Board's interpretation of this allegation as a policy disagreement, rather than a protected disclosure, is contrary to law.
52 Coons disclosed to investigators from the Office of the Inspector General (OIG) that IRS senior officials interfered in some cases of wealthy or influential taxpayers resulting in preferential treatment. Coons admits that he did not tell the agents who was giving or receiving the alleged preference or any other details. He also admits that he did not pursue the matter further with the Office of Inspector General. 53 However, these statements, though unspecific, do satisfy the requirements of the Whistleblower Protection Act. A disclosure is protected by the Act if a disinterested observer with knowledge of the essential facts known to and readily ascertainable by the employee [could] reasonably conclude that the actions of the government evidence gross mismanagement, a gross waste of funds, an abuse of authority, or a violation of any law, rule, or regulation. Lachance, 174 F.3d at 1381. 54 IRS senior officials interfering in the tax cases of certain wealthy individuals is certainly an abuse of authority and a violation of law. The Merit Systems Protection Board abused its discretion in finding that this disclosure was not protected under the Whistleblower Protection Act.
55 Coons gave interviews to both the San Jose Mercury News and the New York Times about his first whistleblowing complaint, and the pressure to file favorable treatment to certain taxpayers. The Merit Systems Protection Board found that Coons's interviews with the newspapers were not protected. The Board found that the interviews appeared to violate 26 U.S.C. § 6103 (governing confidentiality of taxpayer information), and that Coons did not meet his burden under 5 U.S.C. § 2302(b)(8) of providing that these disclosures were not specifically prohibited by law. The Board found that although the taxpayers' names were not disclosed, they could be identified from published reports. This finding was supported by substantial evidence. 26 U.S.C. § 6103(b)(2)(A). 5 Furthermore, these disclosures do not support Coons's whistleblower claim because the newspaper interviews post-dated the IRS's decision to demote Coons. See Willis v. Dep't of Agric., 141 F.3d 1139, 1143 (Fed.Cir.1998). Therefore, they are not protected disclosures under the Whistleblower Protection Act.
56 The district court erred in finding that the Merit Systems Protection Board's decision on the whistleblower claim was not an abuse of discretion and was supported by substantial evidence. We reverse the district court's grant of summary judgment on this claim.