Court Opinion

ID: 210007
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:02:27+00
Date Added: 2024-06-11T12:41:00.143695
License: Public Domain

NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                      2007-3282

                              JESUS G. BABAUTA, JR.,

                                                            Petitioner,

                                           v.

                            DEPARTMENT OF DEFENSE,

                                                             Respondent.

      John S. Unpingco, The Law Office of John S. Unpingco & Associates, LLC, of
Sinajana, Guam, for petitioner.

      Michael J. Dierberg, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for respondent. With him on
the brief were Jeffrey S. Bucholtz, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was
Bradley R. Hansen, Attorney, Defense Commissary Agency, of Fort Lee, Virginia.

Appealed from: Merit Systems Protection Board
                      NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit

                                      2007-3282

                              JESUS G. BABAUTA, JR.,

                                                            Petitioner,

                                          v.

                            DEPARTMENT OF DEFENSE,

                                                            Respondent.

Petition for review of the Merit Systems Protection Board in SF0752060750-I-1.

                          ___________________________

                            DECIDED: March 21, 2008
                          ___________________________

Before RADER, Circuit Judge, CLEVENGER, Senior Circuit Judge, and MOORE,
Circuit Judge.

RADER, Circuit Judge.

       The United States Merit Systems Protection Board ("Board") sustained the

United States Defense Commissary Agency's removal of Mr. Babauta from his position

as store director of the commissary in Orote, Guam for the negligent performance of his

duties. Because substantial evidence supports the removal of Mr. Babauta and the

penalty of removal was not outrageously disproportionate to the proven charge, this

court affirms.
                                            I

      Title 10 of the United States Code § 2481(b) sets for the purpose for the

commissary system:

      The defense commissary system and the exchange system are intended
      to enhance the quality of life of members of the uniformed services, retired
      members, and dependents of such members, and to support military
      readiness, recruitment, and retention.

10 U.S.C. § 2481(b).

      Consistent with this purpose, commissaries sell food and other merchandise to

military personnel and their dependants at "reduced prices."       10 U.S.C. § 2481(a).

Commissary stores may add a 1% surcharge, to cover "shrinkage, spoilage, and

pilferage," as well as a building maintenance surcharge of 5%, but these surcharges are

strictly mandated by Congress. 10 U.S.C. § 2484. Thus, the commissaries provide

service personnel with the opportunity to buy goods at, or as close as possible to, cost.

      Often, vendors agree to sell their product to the commissary at reduced prices to

promote particular items or to resolve overstock problems. The price reduction comes

in the form of a vendor credit. For example, if the vendor wants to promote a particular

product that normally costs three dollars, it may agree to sell 100 units of that product

for two dollars. The vendor compensates the commissary by paying the difference

between the original price paid for the item and the commissary sales price. A Vendor

Credit Memorandum ("VCM") memorializes these transactions.            These agreements

indicate the price the commissary initially paid for the item, the reduced price and

quantity to be sold, and the amount the vendor agrees to pay the commissary to make

up the difference.

2007-3282                                   2
      Mr. Larry J. Bentley, Guam Zone Manager, recommended Mr. Babauta's removal

because he did not follow seven VCMs.           On June 12, 2006, the reviewing official,

Deputy Director Owen C. Boutelle, sustained the charges for four VCM agreements

involving the following products: Nestle Iced Tea with Lemon; Nestle Creamer Coffee

Instant; Farmers Rice Rice CLRS; and Kraft Capri Sun Pacific Cooler, Fruit Punch, and

Orange Jammers.

                                           II

      This court must affirm any agency actions, findings, or conclusions unless they

are: (1) arbitrary or capricious, an abuse of discretion, or otherwise not in accordance

with the law; (2) obtained without procedure required by law, rule, or regulation having

been followed; or (3) unsupported by substantial evidence. 5 U.S.C. § 7703 (c) (1996);

Hayes v. Dep’t of Navy, 727 F.2d 1535, 1537 (Fed. Cir. 1984).

      Mr. Babauta contends that he did not generate the inaccurate prices, but instead

the error came from the computer system that tracks purchases ("POS-TR system").

Although several witnesses testified that there had been some problems with the POS-

TR system in the past, the record showed no malfunction during the precise periods

when the inaccurately high prices were being charged for the four products at issue.

The Board credited Deputy Director Boutelle's testimony on the functioning of the POS-

TR system over the testimony of Mr. Babauta.          Credibility determinations, such as

these, are virtually unreviewable by this court. J.C. Equipment Corp., v. England, 360

F.3d 1311, 1315 (Fed. Cir. 2004). Accordingly, this court agrees that the record shows

no malfunctioning of the POS-TR system for the products at issue during the relevant

time frames.

2007-3282                                  3
       Directive 40-23, paragraph 4-18, outlines the processing of voluntary price

reductions, including VCMs.      Although the plain language of the directive does not

specifically state that the reduced price should be applied until the quantity of goods

specified in the VCM are sold, it also says nothing that would allow Mr. Babauta to raise

and lower the price for no reason as he did during the relevant time period.     Directive

70-6 describes proper accounting procedures for VCMs. The Board found that this

directive supports the charge against Mr. Babauta because it demonstrates

inaccuracies in the required accounting. This court perceives no errors in the Board's

interpretations of these directives.

       This court also perceives no difficulty with the Board's findings about the motives

for Mr. Babauta's removal. The Board accepted the testimony of Mr. Boutelle that Mr.

Babauta's disinterest in transfer was no concern to him. Further, Mr. Boutelle noted that

if he had wanted to transfer Mr. Babauta, he could have done so despite any lack of

interest.

       This court also detects no valid Whistleblower Protection Act ("WPA") defense.

Mr. Babauta argues that his removal was retaliation for disclosures that he made which

were protected under the WPA. Mr. Babauta alleges that he was removed from his

position for directing a subordinate to send photos to Mr. Boutelle of rotting food in the

process of being (wastefully) sent to the dump. The Board found that this disclosure

receives no protection under the WPA, and even if it were, the record shows no

evidence that Mr. Boutelle knew that it was Mr. Babauta that was causing the photos to

be sent to him. Mr. Babauta argues that the photos were also intended to show that the

items were being disposed of without the proper documentation required by agency

2007-3282                                   4
regulations. But no indication of the lack of documentation was sent to Mr. Boutelle

along with the pictures and nothing in the pictures would suggest that the items were

being disposed of without the proper documentation.          The affirmative defense of

retaliation under the WPA was properly rejected by the Board.

                                                 III

       With regard to the suitability of the penalty, Mr. Boutelle testified that Mr.

Babauta's negligent performance was serious and a violation of one of the four most

important criteria upon which store managers are judged – accountability:

       . . . [W]e serve the military members, the Army, Navy, Air Force, and
       Marines who we as a country put in harm's way. And we – he broke that
       trust to them by not selling the items that we had agreed to sell for at a
       cheaper price to them. And he broke a trust with the companies that we
       deal with by them giving us money, paying us to mark the product down,
       and not doing it. And that is pretty substantial.

       Determination of the appropriate penalty is a matter committed primarily to the

sound discretion of the employing agency. Connolly v. Dep't of Justice, 766 F.2d 507,

514 (Fed. Cir. 1985) (citing Miguel v. Dep't of the Army, 727 F.2d 1081, 1083 (Fed. Cir.

1984)). The Board's decision to sustain the agency's penalty of removal must be

affirmed unless the penalty is "outrageously disproportionate" to the proven offense.

Bryant v. Nat'l Science Foundation, 105 F.3d 1414, 1418 (Fed. Cir. 1997); Yeschick v.

Dep't of Transp., 801 F.2d 383, 384-85 (Fed. Cir. 1986). Because the penalty, though

severe, is not outrageously disproportionate to the proven offence, this court affirms.

                                            IV

2007-3282                                   5
       Because the Board's decision sustaining the removal of Mr. Babauta from his

position as store manager is supported by substantial evidence and the penalty is not

outrageously disproportionate to the offence, this court affirms.

                                       AFFIRMED

2007-3282                                    6