Court Opinion

ID: 9899797
Source: CourtListenerOpinion
Date Created: 2023-11-17 18:01:48.639726+00
Date Added: 2024-06-11T09:20:49.721385
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       NOV 17 2023
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

ROBERT MCLAFFERTY,                              No.    22-35068

                Petitioner-Appellant,           D.C. No. 3:20-cv-01487-MO

 v.
                                                MEMORANDUM*
DEPARTMENT OF VETERANS
AFFAIRS; et al.,

                Respondents-Appellees.

                  Appeal from the United States District Court
                           for the District of Oregon
                  Michael W. Mosman, District Judge, Presiding

                     Argued and Submitted October 18, 2023
                               Portland, Oregon

Before: KOH and SUNG, Circuit Judges, and EZRA,** District Judge.

      Dr. Robert McLafferty appeals the district court’s grant of summary

judgment in favor of the Department of Veterans Affairs (“the VA”) and the denial

of Dr. McLafferty’s motion for summary judgment. This court reviews the district

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable David A. Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
court’s summary judgment rulings de novo. See Native Ecosystems Council v.

Dombeck, 304 F.3d 886, 891 (9th Cir. 2002). We have jurisdiction under 28

U.S.C. § 1291. The district court properly granted summary judgment for the VA,

so we affirm.

      1. Procedural Irregularities. “[A] covered individual” who is removed

from a senior executive position is entitled to “a file containing all evidence in

support of the proposed action.” 38 U.S.C. § 713. The VA provided to Dr.

McLafferty the VA’s complete evidence file in support of Dr. McLafferty’s

termination and did not rely on evidence outside that file. A VA doctor stated that

the VA only possessed the final determination from the Equal Employment

Opportunity Commission, which the VA provided to Dr. McLafferty.

Additionally, the Chief of Employee Relations/Labor Relations stated that the VA

provided all the documents it received from the Office of the Special Counsel

(“OSC”) to Dr. McLafferty. The VA had even requested the entire evidence file

from OSC, but OSC rejected that request. Thus, the VA provided Dr. McLafferty

with all the evidence it relied on in support of the action.

      Additionally, the VA did not violate the termination and grievance

procedures outlined in the VA Handbook. This court may “set aside” the

termination if the termination was “obtained without procedures required by a

provision of law having been followed.” 38 U.S.C. § 713(b)(6)(B). VA

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employees who are subject to termination are entitled to “grieve the action in

accordance with an internal grievance process,” and the VA established the

internal grievance process in the VA Handbook. 38 U.S.C. § 713(b)(1)(C).

      Dr. McLafferty alleges the VA disregarded several provisions of the VA

Handbook. First, Dr. McLafferty alleges that the VA violated Section 7(e), which

states that grievances will be referred to an examiner for inquiry within ten days of

the decision official’s receipt of the formal grievance. Dr. McLafferty states that

he was notified later than ten days after the official’s receipt of his grievance. But

Section 7(e) only speaks to the timeline for referral, not notification to the grievant.

Therefore, the VA did not violate Section 7(e) by taking longer than ten days to

notify Dr. McLafferty.

      Dr. McLafferty also misinterprets the language of Section 12(e), which

states that the grievance examiner will prepare a report, submit that report to the

decision official, and furnish a copy of the report to the employee and the

employee's representative. The examiner did furnish the copy of the report to Dr.

McLafferty. Dr. McLafferty only complains that it was not delivered at the same

time that it was delivered to the decision official. Yet nothing in the language of

Section 12(e) requires that the furnishment be simultaneous. The VA therefore did

not violate Section 12(e).

      Dr. McLafferty next complains that the examiner and deciding official’s

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delays in issuing reports violated Sections 12(f) and 13(b), respectively. These

delays were permissible. Under Section 5(c) of the VA Handbook, delays are

allowed if they are explained to the employee. The VA explained the delays to Dr.

McLafferty. Dr. McLafferty also approved extensions at various points.

      Lastly, McLafferty’s notification of the appointment of an examiner via

email, rather than a copy of the request letter, as required by Section 12(a)(2)(d),

was harmless. Nat. Res. Def. Council v. U.S. Forest Serv., 421 F.3d 797, 807 (9th

Cir. 2005) (stating that an administrative body’s error is harmless when the mistake

“clearly had no bearing on the procedure used or the substance of [the] decision

reached”).

      2. Conflict of Interest Finding. A court may set aside a VA action that is

unsupported by substantial evidence. 38 U.S.C. § 713(b)(6)(C). This review is

deferential and requires only “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Magallanes v. Bowen, 881 F.2d 747,

750 (9th Cir. 1989) (internal quotation marks omitted). A prohibited conflict of

interest for a government employee occurs when the employee participates

“personally and substantially in an official capacity in any particular matter in

which, to his knowledge, he . . . has a financial interest, if the particular matter will

have a direct and predictable effect on that interest.” 5 C.F.R. § 2635.402(a). An

employee of an organization has an imputed financial interest in that organization.

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5 C.F.R. § 2635.402(b)(2)(iv). Section 8 of the VA Handbook’s chapter on

conflicts of interest also specifically states that “if the physician or clinician has a

faculty appointment and receives any compensation, or is under the direction of the

school, the physician or clinic has at least an imputed financial interest in VA

contracts with the school.” Therefore, Dr. McLafferty had a financial interest in a

VA contract with Oregon Health Sciences University (“OHSU”).

      Substantial evidence supports the finding that Dr. McLafferty personally and

substantially participated in the recommendation and negotiation of the OHSU

contract. “Personal and substantial participation may occur when . . . an employee

participates through . . . recommendation, investigation, or the rendering of advice

in a particular matter.” 5 C.F.R. § 2635.402(b)(4). Dr. McLafferty encouraged

another Portland VA doctor, Dr. Thomas Anderson, to contract with OHSU,

stating that he believed a contract with OHSU would be preferable. Additionally,

Dr. Wheatley testified that Dr. McLafferty thwarted Dr. Wheatley’s efforts to

maintain a call contract with anyone other than OHSU. In his expectations memo

to Dr. Wheatley, and in Dr. Wheatley’s review, Dr. McLafferty specifically

outlined the need for Dr. Wheatley to secure a call contract with OHSU. A

reasonable mind could accept these facts as adequate to establish that Dr.

McLafferty recommended OHSU to the VA, a prohibited practice.

      Substantial evidence also supports the finding that Dr. McLafferty

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negotiated with OHSU, a practice prohibited by the VA Handbook. Dr.

McLafferty conversed directly with OHSU personnel about the call contract,

telling one OHSU employee that he was “disappointed” that he could not “finagle”

a preferable contract option for OHSU. He discussed specific terms in this email

exchange. He also told OHSU that the contract could provide OHSU “some

income that is pretty low maintenance.”

      Even if Dr. McLafferty’s supervisors directed him to negotiate with OHSU,

as he alleges, the VA Handbook is clear that employees with an imputed financial

interest are prohibited from negotiating contracts. Dr. McLafferty could have

negotiated if he had waived his disqualification by following the procedures

outlined in 5 C.F.R. § 2635.402(d). However, Dr. McLafferty did not assert that

he followed any of the listed procedures to obtain an exemption. The Handbook

also states that the VA “requires a written opinion from Regional Counsel that an

‘affiliated’ physician or clinician may lawfully participate in the contract before

participation occurs.” Dr. McLafferty obtained no such opinion. As a result, there

is substantial evidence that Dr. McLafferty engaged in a prohibited conflict of

interest when he recommended and negotiated a contract in which he had an

imputed financial interest.

      3. Retaliation Finding. Substantial evidence also supports the VA’s finding

that Dr. McLafferty retaliated against Dr. Wheatley in a June 2014 Service Chief

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Evaluation. Section 2302 prohibits “any employee who has authority” from taking

any personnel action against an employee for exercising a grievance. 5 U.S.C. §

2302(b)(9). The June 2014 Service Chief Evaluation could qualify as a personnel

action. Mangano v. United States, 529 F.3d 1243, 1247 (9th Cir. 2008) (stating

that the “definition of ‘personnel action’ is, necessarily, broad.”); see also Babb v.

Wilkie, 140 S. Ct. 1168, 1173 (2020) (stating that Section 2302 covers

“performance reviews”).

      In Dr. McLafferty’s Service Chief Evaluation of Dr. Wheatley, Dr.

McLafferty reported Dr. Wheatley’s March 2014 suspension, despite knowing that

the suspension was not reportable for any purpose. Dr. McLafferty also issued the

evaluation one month after he found out that Dr. Wheatley had filed an EEO

complaint against him, an event that Dr. McLafferty said upset or bothered him.

These facts allow a reasonable mind to conclude that the June 2014 evaluation was

a prohibited, retaliatory action against Dr. Wheatley.

      4. Termination as a sanction. This court’s review of the choice of

sanction in an agency personnel decision is “extremely limited.” McClaskey v.

U.S. Dep’t of Energy, 720 F.2d 583, 586 (9th Cir. 1983). The court should defer to

the agency’s judgment unless the penalty is “so harsh or disproportionate to the

offense as to constitute an abuse of discretion.” Id. (citing Debose v. U.S. Dep’t of

Agric., 700 F.2d 1262, 1269 (9th Cir. 1983)). The penalty of dismissal should be

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disregarded only when the violation is “extremely minor.” Id. Dr. McLafferty’s

violations are not extremely minor, as termination is within the range of suggested

remedies in the VA Handbook for these violations. Therefore, the VA did not

abuse its discretion by terminating Dr. McLafferty.

      AFFIRMED.

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