Court Opinion

ID: 4035290
Source: CourtListenerOpinion
Date Created: 2016-09-20 20:00:30.009156+00
Date Added: 2024-06-11T13:29:12.952686
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     PAUL D. JONSON,                                 DOCKET NUMBER
                   Appellant,                        PH-0752-13-0236-B-1

                  v.

     FEDERAL DEPOSIT INSURANCE                       DATE: September 20, 2016
       CORPORATION,
                  Agency.

             THIS FINAL ORDER IS NONPRECEDENTIAL 1

           Elizabeth S. Dillon, Esquire, Boston, Massachusetts, for the appellant.

           Eric S. Gold, Esquire, Arlington, Virginia, for the agency.

                                           BEFORE

                              Susan Tsui Grundmann, Chairman
                                 Mark A. Robbins, Member

                                       FINAL ORDER

¶1         The appellant has filed a petition for review of the remand initial decision,
     which affirmed his removal. Generally, we grant petitions such as this one only
     when: the initial decision contains erroneous findings of material fact; the initial
     decision is based on an erroneous interpretation of statute or regulation or the

     1
        A nonprecedential order is one that the Board has determined does not add
     significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
     but such orders have no precedential value; the Board and administrative judges are not
     required to follow or distinguish them in any future decisions. In contrast, a
     precedential decision issued as an Opinion and Order has been identified by the Board
     as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
                                                                                       2

     erroneous application of the law to the facts of the case; the administrative
     judge’s rulings during either the course of the appeal or the initial decision were
     not consistent with required procedures or involved an abuse of discretion, and
     the resulting error affected the outcome of the case; or new and material evidence
     or legal argument is available that, despite the petitioner’s due diligence, was not
     available when the record closed. See title 5 of the Code of Federal Regulations,
     section 1201.115 (5 C.F.R. § 1201.115). After fully considering the filings in this
     appeal, we conclude that the petitioner has not established any basis under section
     1201.115 for granting the petition for review. Therefore, we DENY the petition
     for review and AFFIRM the remand initial decision, which is now the Board’s
     final decision. 5 C.F.R. § 1201.113(b).

                                      BACKGROUND
¶2        The Federal Deposit Insurance Corporation (FDIC) removed the appellant
     from his position as Case Manager effective February 1, 2013. Initial Appeal File
     (IAF), Tab 4 at 80. The charged misconduct was failure to meet the minimum
     standards for employment with the FDIC. Id. at 124. Specifically, the FDIC
     alleged that the appellant violated its regulations concerning the minimum
     standards of fitness for employment (the minimum fitness regulations) by failing
     to satisfy eight separate debts to FDIC-insured institutions totaling more than
     $50,000. Id. at 123-26; see generally 12 C.F.R. part 336, subpart B (containing
     these regulations).   Under the minimum fitness regulations, this conduct is
     defined as “a pattern or practice of defalcation.” 12 C.F.R. § 336.3(i)(1).
¶3        In two prior Opinions and Orders, we considered a number of issues
     regarding the minimum fitness regulations and the appellant’s removal. Jonson v.
     Federal Deposit Insurance Corporation, 121 M.S.P.R. 56 (2014) (Jonson I),
     reversed in part by 122 M.S.P.R. 454 (2015) (Jonson II). Originally, in Jonson I,
     we reversed the appellant’s removal on interlocutory review based on the FDIC’s
     failure to obtain concurrence from the Office of Government Ethics (OGE) for its
                                                                                     3

     minimum fitness regulations. Jonson I, ¶¶ 5, 10-15, 17. We returned the appeal
     for a decision on the appellant’s affirmative defenses. Id., ¶¶ 18-19. After the
     appellant withdrew those defenses, the administrative judge issued an initial
     decision reversing the appellant’s removal. IAF, Tab 32, Tab 34, Initial Decision
     at 1, 5.
¶4         The FDIC filed a petition for review of the initial decision. Petition for
     Review (PFR) File, Tab 1. With its petition for review, it submitted a declaration
     from OGE stating that the FDIC was not required to obtain concurrence from
     OGE prior to promulgating the minimum fitness regulations. Jonson II, ¶¶ 11,
     13; PFR File, Tab 1 at 7, 28. Based on that declaration, and as a matter of comity
     and cooperation with OGE, in Jonson II, we reversed our prior finding that the
     FDIC was required to obtain OGE approval. Jonson II, ¶¶ 13-14. We remanded
     the appeal to the Board’s regional office to determine if the FDIC met its burden
     to prove the charge. Id., ¶ 20 n.11. We advised the regional office to permit the
     appellant to reinstate his affirmative defenses, which appeared to have been
     withdrawn in reliance on the Board’s decision in Jonson I.        Id., ¶ 24 n.14.
     However, we observed that removal is the mandatory penalty for the charged
     misconduct under both the applicable statute and the minimum fitness
     regulations.   Id., ¶¶ 21‑23; 12 U.S.C. § 1822(f)(4)(B)(ii), (E)(iii); 12 C.F.R.
     § 336.8(a).
¶5         On remand, the FDIC filed a motion to compel due to the appellant’s failure
     to respond to its discovery requests. Remand File (RF), Tab 4. After almost a
     month had passed with no response from the appellant to the FDIC’s motion, the
     administrative judge ordered him to respond to the FDIC’s discovery request.
     RF, Tab 5. The FDIC moved for sanctions after the appellant did not respond by
     the ordered deadline. RF, Tab 6. The administrative judge issued an order to the
     appellant to show cause why sanctions should not be granted. RF, Tab 7. The
     appellant did not respond, and the administrative judge granted sanctions. RF,
     Tab 8.
                                                                                     4

¶6         After obtaining new counsel, the appellant requested reconsideration of the
     sanctions. RF, Tab 9, Tab 11 at 4-5. He argued that his failure to respond to the
     FDIC’s discovery, the motion to compel, and the order to show cause was solely
     the fault of his former counsel.    RF, Tab 11 at 5, 8-12, 16-19.      The FDIC
     responded to his motion. RF, Tab 12. After considering the parties’ submissions,
     the administrative judge modified her prior order, still imposing sanctions on the
     appellant. RF, Tab 13 at 2-4. As part of her sanctions, she drew inferences in
     favor of the FDIC regarding the information sought and prohibited the appellant
     from introducing evidence regarding this requested information. Id. at 2. As
     another sanction, she decided the case on the written record without affording the
     appellant a hearing. Id. at 4.
¶7         In her remand initial decision, the administrative judge affirmed the
     appellant’s removal.     RF, Tab 17, Remand Initial Decision (RID) at 13.
     Specifically, she found that the FDIC proved its charge. RID at 8. She further
     found that the appellant failed to prove his disability discrimination affirmative
     defense, and that his remaining affirmative defenses were effectively precluded
     by the ordered sanctions. RID at 8-11. She determined that the FDIC proved that
     removal promoted the efficiency of the service and, because termination is the
     required penalty for violating the FDIC’s minimum fitness regulations, she
     sustained the removal penalty. RID at 11-13.
¶8         The appellant has filed a petition for review, in which he contests the
     administrative judge’s finding that his removal promotes the efficiency of the
     service.   Remand Petition for Review (RPFR) File, Tab 1 at 13-16.        He also
     asserts that the administrative judge abused her discretion by imposing sanctions
     and seeks to raise his affirmative defenses again. Id. at 9-13, 16-21; RF, Tab 15
     at 7‑11, 17.
¶9         The FDIC has responded to the petition for review, and the appellant has
     replied. RPFR File, Tabs 3-4.
                                                                                          5

      The administrative judge properly found that the appellant’s removal promotes
      the efficiency of the service.
¶10           When taking an adverse action against an employee, an agency must prove
      by preponderant evidence that the charged conduct occurred, there is a nexus
      between the conduct and the efficiency of the service, and the particular penalty
      imposed is reasonable. 2 Dixon v Department of Commerce, 109 M.S.P.R. 314,
      ¶ 8 (2008); see 5 U.S.C. § 7513(a) (permitting adverse actions “only for such
      cause as will promote the efficiency of the service”). Nexus generally may be
      shown in one of three ways: (1) a rebuttable presumption of nexus that may arise
      in certain egregious circumstances based on the nature and gravity of the conduct;
      (2) a showing by preponderant evidence that the conduct affects the employee’s
      or his coworkers’ job performance, or management’s trust and confidence in the
      employee’s job performance; or (3) a showing by preponderant evidence that the
      conduct interfered with or adversely affected the agency’s mission. Johnson v.
      Department of Health & Human Services, 86 M.S.P.R. 501, ¶ 18 (2000), aff’d per
      curiam, 18 F. App’x 837 (Fed. Cir. 2001), and aff’d sub. nom. Delong v.
      Department of Health & Human Services, 264 F.3d 1334 (Fed. Cir. 2001).
¶11           The appellant disputes the administrative judge’s nexus finding, arguing
      that his conduct was not egregious, his “performance was unaffected by his
      Bankruptcy action,” and his personal debts had no impact on the FDIC’s mission.
      RPFR File, Tab 1 at 14-16.
¶12           Here, the removal was based on the FDIC’s minimum fitness regulations,
      which in turn were enacted pursuant to section 1822(f)(4) of title 12. Jonson II,
      ¶ 16.      Section 1822(f)(4) required the FDIC to prescribe minimum fitness
      regulations, which “prohibit any person who has . . . demonstrated a pattern or
      practice     of   defalcation   regarding   obligations   to   incurred    depository

      2
        The appellant does not challenge the administrative judge’s findings that he engaged
      in the conduct alleged in the charges and that the penalty was appropriate. RPFR File,
      Tab 1; RF, Tab 14 at 14; IAF, Tab 4 at 81‑85, 123‑27. Therefore, we decline to disturb
      these findings.
                                                                                             6

      institutions . . . from performing any service on behalf of the [FDIC].” 12 U.S.C.
      § 1822(f)(4)(A), (f)(E)(iii).    By enacting the mandatory language in section
      1822(f)(4), we find that Congress created a presumption of nexus.                    See
      Johnson, 86 M.S.P.R. 501, ¶¶ 2, 11, 19 (finding a presumption of nexus based on
      similar language in the Indian Child Protection and Family Violence Prevention
      Act). This presumption is further supported by the minimum fitness regulations,
      which also require removal for the charged conduct. 12 C.F.R. §§ 336.3(i)(1),
      336.8(a). In promulgating the minimum fitness regulations, the FDIC explained
      that employing individuals who engage in a pattern or practice of defalcation by
      failing to pay debts owed to financial institutions “reflects adversely on the
      FDIC’s integrity and credibility.” 3          Minimum Standards of Fitness for
      Employment with the FDIC, 61 Fed. Reg. 28,725, 28,727 (June 6, 1996).
¶13         Therefore, we agree with the administrative judge’s finding that the
      appellant’s removal promotes the efficiency of the service. RID at 11-12.
      The administrative judge properly denied the appellant’s affirmative defenses.
¶14         On review, the appellant argues that the administrative judge erred in
      denying his affirmative defense of disability discrimination. RPFR File, Tab 1
      at 16-21.   He argues that his debts were the result of expenses related to his
      daughter’s medical condition.         Id. at 16-19.       He also asserts that the
      administrative judge abused her discretion by imposing sanctions that precluded
      him from presenting evidence concerning his disability discrimination affirmative
      defense. Id. We disagree.

      3
        The appellant argues that the Board previously has rejected a finding of nexus based
      on an employee’s private debts. RPFR File, Tab 1 at 15-16 (citing Byars v. Department
      of the Army, 9 M.S.P.R. 225, 228-29 (1981)). However, Byars did not involve an
      employee with a specific obligation to the financial institutions to whom the employee
      was indebted. See Byars, 9 M.S.P.R. at 228 (observing that an employee’s personal
      debts are to transpire between the debtor and creditor unless the agency establishes that
      the employee’s nonpayment of just debts has or will have a deleterious effect on that
      employee’s performance or the agency’s ability to perform its assigned mission). For
      this reason, we find the present situation distinguishable from Byars.
                                                                                          7

¶15         In Jonson I, we deferred to the decision of the Equal Employment
      Opportunity Commission (EEOC) to permit claims of discrimination, such as this
      one, based on an employee’s association with an individual with a disability.
      Jonson I, ¶ 18.      An appellant raising such a claim must show that the
      discrimination was based on his relationship or association with an individual
      with a known disability. 29 C.F.R. § 1630.8.
¶16         According to the appellant, he was unable to pay his debts because of his
      daughter’s medical bills. RPFR File, Tab 1 at 17-19. However, the American
      with Disabilities Amendments Act does not require employers to provide a
      reasonable accommodation based on a claimant’s association with a disabled
      individual. See Jonson I, ¶ 18 (citing Simms v. Department of the Navy, EEOC
      Appeal No. 01992195, 2002 WL 1057094, at *3-*4 (May 16, 2002) (denying a
      complainant’s claim that the agency discriminated against her when, in pertinent
      part, it declined to continue providing her with leave to care for her disabled
      daughter)).   Thus, we agree with the administrative judge that the appellant’s
      claim that the FDIC discriminated against him when it did not excuse his debts
      must fail. RID at 11.
¶17         The appellant also argues that he was subjected to disparate treatment.
      Specifically, he alleges he has direct evidence that he was targeted for removal
      because he was perceived to be using his children’s medical conditions as an
      excuse for his debts.       RPFR File, Tab 1 at 19; RF, Tab 15 at 20, 83;
      see Southerland v. Department of Defense, 119 M.S.P.R. 566, ¶¶ 19, 22 (2013)
      (finding direct evidence of discriminatory motive based on a deciding official’s
      statements in an appellant’s removal decision that he considered the detrimental
      impact of the appellant’s medical inability to fulfill the full range of his duties on
      the efficiency of the organization and his coworkers). To support his claim, he
      relies on affidavits that the administrative judge declined to consider because they
      were precluded by her sanctions order. RPFR File, Tab 1 at 19-20; RID at 10-11.
                                                                                        8

      She therefore found that he failed to meet his burden to prove disparate treatment
      based on disability. RID at 11.
¶18        It is well settled that administrative judges have broad discretion to regulate
      the proceedings before them, including the authority to rule on discovery motions
      and to impose sanctions as necessary to serve the ends of justice.         Defense
      Intelligence Agency v. Department of Defense, 122 M.S.P.R. 444, ¶ 16
      (2015);   5 C.F.R.    § 1201.43(a);     see   Smets   v.    Department     of    the
      Navy, 117 M.S.P.R. 164, ¶ 12 (2011) (declining to find that an administrative
      judge abused her discretion by precluding an appellant from submitting additional
      evidence regarding her disability discrimination claim as a sanction for failure to
      comply with an order to appear for a deposition), aff’d per curiam, 498 F. App’x
      1 (Fed. Cir. 2012). Sanctions should only be imposed if: (1) a party has failed to
      exercise basic due diligence in complying with Board orders; or (2) a party has
      exhibited negligence or bad faith in his efforts to comply. Williams v. U.S. Postal
      Service, 116 M.S.P.R. 377, ¶¶ 7-8 (2011).
¶19        Here, the appellant argues on petition for review that his failure to respond
      to discovery and the administrative judge’s discovery-related orders was due to
      his then-attorney’s dilatory conduct.    RPFR File, Tab 1 at 20.      He presented
      evidence below of this dilatory conduct. RF, Tab 11 at 16-85, 88, 94-96. He also
      presented evidence that he repeatedly contacted his attorney regarding the failure
      to respond to the FDIC’s discovery, its motion to compel, and the administrative
      judge’s order to show cause why sanctions should not be issued. Id. at 16-19, 49,
      51-54, 56, 59-61, 63-64, 69-72, 81, 84, 91, 95-96.         In some instances, the
      appellant received no response, while, on a few occasions, his attorney assured
      him that he was “[w]orking it” and would “file a timely response.” Id. at 16-19,
      50-51, 82-83, 96.    On other occasions, the appellant’s attorney’s responses
      suggested that he was not focused on the case, such as that he “[g]ot bogged
      down,” and, “When you shoot at the king you don’t want to miss.                 Stop
      squeezing.” Id. at 16-19, 72, 82-83.
                                                                                        9

¶20        Generally, an appellant is responsible for the errors of his chosen
      representative. Miller v. Department of Homeland Security, 110 M.S.P.R. 258,
      ¶ 11 (2008). However, there is a limited exception to this rule if an appellant has
      proven that his diligent efforts to prosecute his case were thwarted by his
      attorney’s deception and negligence. Id.; see Herring v. Merit Systems Protection
      Board, 778 F.3d 1011, 1014-15 (Fed. Cir. 2015) (considering such factors as the
      appellant’s medical conditions, her executing a power of attorney in favor of her
      legal representatives, and her active follow-up shortly before the deadline for
      filing her appeal which revealed that her counsel’s false reassurance into
      believing that no additional action on her part was necessary to timely file her
      appeal). Nonetheless, even if an appellant’s representative misleads him as to the
      status of a filing, the appellant has a personal duty to monitor the progress of his
      appeal at all times and not leave the matter entirely to his attorney.
      Miller, 110 M.S.P.R. 258, ¶ 12.
¶21        Here, the FDIC notified the appellant and his attorney via email on
      August 18 and 20, 2015, that it had not received the appellant’s discovery
      responses. RF, Tab 11 at 78-80. During the next 3 1/2 months, the appellant and
      his attorney received the FDIC’s motion to compel, the order compelling the
      appellant’s discovery responses, the FDIC’s motion for sanctions, the order to
      show cause why sanctions should not be imposed, and, finally, the order imposing
      sanctions.   RF, Tabs 4-8.    Because both the appellant and his attorney were
      registered e-filers, they are deemed to have received these electronically served
      documents on the date of electronic submission and were responsible for
      monitoring case activity to ensure that they received all case-related documents.
      RF, Tab 4 at 21, Tab 5 at 3, Tab 6 at 8, Tab 7 at 2, Tab 8 at 3; IAF, Tab 1 at 2,
      10; 5 C.F.R. § 1201.14(j)(3), (m)(2).
¶22        Despite repeated notifications that his attorney was not responding to the
      FDIC’s discovery and discovery-related motions and orders, the appellant waited
      until after the administrative judge imposed sanctions, 4 months after initially
                                                                                           10

      learning that his attorney had not responded to the FDIC’s discovery, to terminate
      his attorney and hire a new one.       RF, Tab 11 at 19.      On review, he has not
      claimed any special circumstances, such as a medical condition, that might excuse
      his failure to intervene once he learned that his attorney was not acting diligently.
      RPFR File, Tab 1 at 20-21.         Under these circumstances, we agree with the
      administrative judge that the appellant did not exercise basic due diligence in
      relying on his attorney. Because the appellant’s alleged evidence of disparate
      treatment was properly precluded by the administrative judge’s ordered sanctions,
      we affirm the administrative judge’s denial of the appellant’s disparate-treatment
      disability claim. 4 RID at 10-11; RF, Tab 13 at 2, 4; see Simon v. Department of
      Commerce, 111 M.S.P.R. 381, ¶¶ 11, 14-15 (2009) (discussing appropriate
      sanctions for failure to comply with an order); 5 C.F.R. § 1201.43(a) (listing
      possible sanctions for failure to comply with an order).
¶23         In addition, the appellant reargues on review that the minimum fitness
      regulations are contrary to both law and public policy. RPFR File, Tab 1 at 8-13,
      16-17; RF, Tab 15 at 7-11. The gravamen of the appellant’s claim is that the
      minimum fitness regulations discriminate against individuals whose debts are
      related to bankruptcy. RPFR File, Tab 1 at 9-13, 16-17; see 11 U.S.C. § 525(a)
      (generally prohibiting discrimination based solely on debts that are, or could be,
      discharged under the Bankruptcy Act). The administrative judge implicitly found

      4
        The appellant also argues that the administrative judge’s sanctions prevented him from
      conducting discovery regarding the FDIC’s “intentions in terminating” him. RPFR File,
      Tab 1 at 21. He does not allege that he timely propounded discovery. Id. Nor does he
      explain how the administrative judge’s two orders concerning sanctions, both of which
      were issued more than 4 months after the deadline she set for initiating discovery,
      prevented him from obtaining this information. RF, Tabs 3, 8, 13. Because he did not
      file a motion to compel below, his argument that he was denied discovery provides no
      basis for reversal of the initial decision. Szejner v. Office of Personnel Management,
      99 M.S.P.R. 275, ¶ 5 (2005) (finding that an appellant’s failure to file a motion to
      compel discovery precluded him from raising an agency’s failure to respond to
      discovery for the first time on petition for review), aff’d, 167 F. App’x 217 (Fed. Cir.
      2006).
                                                                                      11

      this argument was effectively precluded by her ordered sanctions. RID at 10;
      RF, Tab 15 at 7-11. We agree.
¶24        The administrative judge advised the parties that, as a sanction, she would
      draw an inference in favor of the FDIC regarding the information it sought in
      discovery, specifically including the appellant’s affirmative defenses. RF, Tab 8
      at 1, Tab 13 at 2. In discovery, the FDIC requested that the appellant identify the
      factual bases for his claims that the FDIC’s actions constituted harmful error and
      were not in accordance with law. RF, Tab 4 at 11. The FDIC also requested that
      he identify the factual and legal bases for his claims of discrimination. Id. The
      appellant’s response, which he did not provide, should have identified his
      bankruptcy discrimination defense. Therefore, because the FDIC was entitled to
      an inference regarding the appellant’s affirmative defenses, we find that the
      administrative judge acted within her discretion in denying this affirmative
      defense. See Simon, 111 M.S.P.R. 381, ¶ 14 (finding that an administrative judge
      went too far by striking an appellant’s affirmative defenses, but that she could
      have acted within her discretion by simply barring the appellant from presenting
      any evidence to support those defenses or drawing an inference in favor of the
      agency regarding the information sought).
¶25        Thus, we find that the administrative judge properly denied the appellant’s
      affirmative defenses.

                      NOTICE TO THE APPELLANT REGARDING
                         YOUR FURTHER REVIEW RIGHTS
            You have the right to request further review of this final decision.
      Discrimination Claims: Administrative Review
            You may request review of this final decision on your discrimination
      claims by the EEOC. See title 5 of the U.S. Code, section 7702(b)(1) (5 U.S.C.
      § 7702(b)(1)). If you submit your request by regular U.S. mail, the address of the
      EEOC is:
                                                                                12

                           Office of Federal Operations
                    Equal Employment Opportunity Commission
                                 P.O. Box 77960
                            Washington, D.C. 20013

If you submit your request via commercial delivery or by a method requiring a
signature, it must be addressed to:
                           Office of Federal Operations
                    Equal Employment Opportunity Commission
                                131 M Street, NE
                                  Suite 5SW12G
                            Washington, D.C. 20507

You should send your request to EEOC no later than 30 calendar days after your
receipt of this order. If you have a representative in this case, and your
representative receives this order before you do, then you must file with EEOC no
later than 30 calendar days after receipt by your representative. If you choose to
file, be very careful to file on time.
Discrimination and Other Claims: Judicial Action
        If you do not request EEOC to review this final decision on your
discrimination claims, you may file a civil action against the agency on both your
discrimination claims and your other claims in an appropriate U.S. district court.
See 5 U.S.C. § 7703(b)(2). You must file your civil action with the district court
no later than 30 calendar days after your receipt of this order. If you have a
representative in this case, and your representative receives this order before you
do, then you must file with the district court no later than 30 calendar days after
receipt by your representative. If you choose to file, be very careful to file on
time.    If the action involves a claim of discrimination based on race, color,
religion, sex, national origin, or a disabling condition, you may be entitled to
representation by a court‑appointed lawyer and to waiver of any requirement of
                                                                       13

prepayment of fees, costs, or other security.   See 42 U.S.C. § 2000e-5(f)
and 29 U.S.C. § 794a.

FOR THE BOARD:                       ______________________________
                                     Jennifer Everling
                                     Acting Clerk of the Board
Washington, D.C.