Court Opinion

ID: 4227269
Source: CourtListenerOpinion
Date Created: 2017-12-08 22:00:24.654904+00
Date Added: 2024-06-11T14:15:56.454385
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 17-1257

                 PAUL D. JONSON; NOREEN A. JONSON,

                            Appellants,

                                 v.

               FEDERAL DEPOSIT INSURANCE CORPORATION,

                             Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Rya W. Zobel, U.S. District Judge]

                               Before

                     Barron, Selya, and Stahl,
                          Circuit Judges.

     Elizabeth S. Dillon and Brian D. Fishman, with whom Cetrulo
LLP was on brief, for appellants.
     John W. Guarisco, Counsel, Federal Deposit Insurance
Corporation, with whom Colleen J. Boles, Assistant General
Counsel, and Kathryn R. Norcross, Senior Counsel, were on brief,
for appellee.

                          December 8, 2017
            STAHL, Circuit Judge.

            Plaintiff-Appellant, Paul D. Jonson ("Jonson") commenced

two   different   actions   against   the   Federal   Deposit   Insurance

Corporation ("FDIC"), challenging its decision to terminate his

employment.1    When the case reached the district court, the court

dismissed    Jonson's   complaint     for   lack   of   subject    matter

jurisdiction.     Jonson appeals the district court's decision.

            First, Jonson disputes the district court's conclusion

that he waived his associational disability discrimination claim.

Second, Jonson requests that the Court transfer the case to the

Federal Circuit. Finding that both of Jonson's arguments on appeal

lack merit, we affirm.

            I. Procedural History

            Jonson worked at the FDIC for more than 20 years.         In

2010, Jonson and his wife both filed for bankruptcy, they said, as

a result of expenditures they incurred in caring for their sick

daughter.    In September 2011, both Jonson and his wife received a

bankruptcy discharge.

            In November 2011, Jonson applied for a special short-

term assignment through the FDIC with the United States Treasury.

As a part of the background check required for this position,

      1While Noreen A. Jonson is also a named party, the dispute
concerns the termination of Paul D Jonson. Therefore, this opinion
refers to the Plaintiff-Appellant, Paul D. Jonson, in the singular.

                                 - 2 -
Jonson disclosed the fact of his bankruptcy.       On January 29, 2013,

the FDIC terminated Jonson's employment with the agency because of

his failure to meet the minimum standards of fitness and integrity

established and required by 12 U.S.C. § 1822(f)(4).

          On   February   28,   2013,   Jonson   exercised   his   rights,

pursuant to the Civil Service Reform Act of 1978, 5 U.S.C. § 1101

et seq. ("CSRA"), by timely filing an appeal of his termination

with the Merit Systems Protection Board ("MSPB").        Jonson alleged

that (1) the basis proffered by the agency for his removal, the

minimum standards of fitness and integrity, were invalid; (2) the

termination violated the anti-discrimination provision of the

Bankruptcy Code, 11 U.S.C. § 525(a); and (3) the termination

constituted associational disability discrimination, in violation

of the Rehabilitation Act, 29 U.S.C. §§ 791, 794.

          On June 14, 2013, the administrative law judge ("ALJ")

issued a ruling in Jonson's favor.         The ALJ did not reach the

merits of Jonson's discrimination claims.         Rather she determined

that the FDIC exceeded its authority in promulgating the minimum

standards regulations, the basis by which the FDIC terminated

Jonson, because it failed to obtain the concurrence of the Office

of Government Ethics ("OGE").     From that ruling, the FDIC took an

interlocutory appeal.     The MSPB affirmed the ALJ's reversal of

                                 - 3 -
Jonson's removal and remanded the case to the ALJ to consider the

merits of Jonson's discrimination claims.2

           On June 27, 2014, Jonson's counsel, by letter, withdrew

Jonson's discrimination claims with prejudice.         The purpose of the

withdrawal was to enable Jonson to immediately return to employment

at the agency.    Subsequently, the ALJ issued an initial decision,

ordering, as interim relief, that the FDIC reinstate Jonson.

           The FDIC petitioned for review of the ALJ's initial

decision and the MSPB reversed its prior ruling, finding that the

minimum standards regulations had been properly promulgated.3          The

MSPB canceled the ALJ's order of interim relief and remanded the

matter to the ALJ and as part of that remand, required that Jonson

be given an opportunity to reinstate his discrimination claims.

           The ALJ reopened the matter and authorized the parties

to engage in discovery.       The FDIC propounded several discovery

requests   to   Jonson   including,   among   other   items,   information

related to his discrimination claims.         The ALJ ordered Jonson to

respond to the FDIC's discovery requests. Jonson failed to respond

     2 The MSPB explained that "the FDIC was authorized to
promulgate minimum standards of employment, but it was required to
obtain [the Office of Government Ethics'] concurrence, which it
failed to do."
     3 After the MSPB issued its original decision, the OGE
provided a declaration, explaining that the "FDIC was not required
to obtain [the OGE's] approval before promulgating the minimum
fitness regulations."

                                 - 4 -
to these requests and because of that failure, on October 8, 2015,

the FDIC moved for sanctions.

           On December 4, 2015, during the pendency of the MSPB

proceeding, Jonson initiated an adversary proceeding before the

bankruptcy court pursuant to 5 U.S.C. § 7702(e), raising the same

discrimination claims he had raised before the MSPB.

           Shortly thereafter, on December 7, 2015, the ALJ entered

an order imposing sanctions on Jonson for failure to comply with

her   orders   and   prohibited   Jonson   from,    among   other    things,

introducing evidence regarding his discrimination claims.            The ALJ

also entered an order to show cause, directing Jonson to explain

why his case should not be dismissed.              On December 22, 2015,

Jonson, with new counsel, filed a motion for reconsideration of

the December 7, 2015 order imposing sanctions and a response to

the order to show cause.    On February 25, 2016, the ALJ granted in

part and denied in part Jonson's motion.       The ALJ determined that

"all sanctions imposed     . . . [would] remain in effect.          However,

the appeal will not be dismissed."

           On February 23, 2016, the FDIC filed a motion requesting

that the bankruptcy court dismiss the adversary proceeding, or, in

the alternative, abstain.     The FDIC made several arguments in its

motion, most importantly that Jonson's case was no longer mixed

and the bankruptcy court lacked supplemental jurisdiction over his

claims.   See 29 C.F.R. 1614.302 ("A mixed case [] is a complaint

                                  - 5 -
of employment discrimination filed with a Federal agency based on

race, color, religion, sex, national origin, age, disability, or

genetic information related to or stemming from an action that can

be   appealed to the Merit Systems Protection Board (MSPB).").   On

the same day, the FDIC also filed a motion with the district court

requesting the withdrawal of the reference to the bankruptcy court.

Jonson agreed to the FDIC's request to withdraw the reference.   On

May 17, 2016, the district court withdrew the reference of the

adversary proceeding from the bankruptcy court.

           Before the district court addressed the FDIC's motion to

dismiss, the MSPB issued its final order, affirming the FDIC's

termination decision.   On October 20, 2016, Jonson filed a "Notice

of Appeal" with the district court in which he stated that he

"formally appeal[ed] the decision of the MSPB, pursuant to 5 U.S.C.

§ 7703."

           Thus, when the case came before the district court, it

had two procedural histories, one from the bankruptcy court and

one from the MSPB hearings.       The court requested additional

briefing from the parties regarding whether "the two proceedings

are identical in terms of the issues they present and the burdens

on either party."   Jonson requested that the case proceed in the

district court pursuant to 5 U.S.C. § 7702.4

      4See PLAINTIFF'S SUPP. TO OPP. TO FDIC MOTION TO DISMISS
("this action should proceed (as it had for the nine months between

                               - 6 -
          Subsequently, the court granted the FDIC's motion to

dismiss, finding that the court lacked subject matter jurisdiction

because the case was no longer "mixed," a requirement for the

district court's jurisdiction. See Jonson v. FDIC, No. CV 16-

10518-RWZ, 2016 WL 7493958, at *3 (D. Mass. Dec. 30, 2016).         In

addition, the court denied Jonson's subsequent motion to transfer

the case to the Federal Circuit.     On March 13, 2017, Jonson timely

filed his notice of appeal.

          II. Analysis

          The   CSRA   constitutes    "a   comprehensive   system   for

reviewing personnel action[s] taken against federal employees."

United States v. Fausto, 484 U.S. 439, 455 (1988).         CSRA claims

must first be presented to the agency-employer and, if pursued

further, reviewed by the MSPB.       See Kloeckner v. Solis, 568 U.S.

41, 44-45 (2012).   The MSPB initially refers an appeal to an ALJ,

who hears evidence and argument and issues an initial decision

after the record closes.    See 5 U.S.C. § 7701(b)(1); 5 C.F.R. §§

1201.59, 12.111.    That initial decision becomes a final order,

unless the employee petitions for review by the MSPB, which has

authority to review the initial decision and issue its own final

order.   5 C.F.R. §§ 1201.113, 1201.114, 1201.117.         An employee

aggrieved by an MSPB final order may obtain judicial review by

when Jonson initiated the instant action, and when Jonson appealed
the MSPB's Final Order), pursuant to Section 7702 of the CSRA.")

                               - 7 -
filing a petition in the United States Court of Appeals for the

Federal Circuit within 60 days.            5 U.S.C. § 7703(a)(1), (b)(1)(A).

             If, however, the aggrieved employee is pursuing a "mixed

case," -- i.e. alleging that the adverse employment action was

based   on     discrimination         in    violation    of     certain         anti-

discrimination      provisions,        such    as   Section      501       of    the

Rehabilitation Act -- the employee instead obtains judicial review

of an adverse MSPB order by filing suit within thirty days in a

United States District Court.              See 5 U.S.C. §§ 7702(a)(1)(B),

7703(b)(2); Kloeckner, 568 U.S. at 45-46, 50.                 Additionally, the

CSRA provides that for mixed cases, if the MSPB does not issue a

final order within 120 days after an MSPB appeal is filed, an

employee     may   file   suit   in    the    district   court.        5    U.S.C.

§ 7702(e)(1)(B).

                   1. The District Court's Subject Matter Jurisdiction

             We review "de novo a district court's dismissal for lack

of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1)."

United States v. Murphy, 45 F.3d 520, 522 (1st Cir. 1995).                        In

reviewing the district court's decision, the Court is "mindful

that the party invoking the jurisdiction of a federal court carries

the burden of proving its existence."            Taber Partners, I v. Merit

Builders, Inc., 987 F.2d 57, 60 (1st Cir. 1993).                  Both parties

agree that the district court's subject matter jurisdiction rests

                                      - 8 -
on whether Jonson's case is "mixed."5   The district court concluded

that Jonson did not have a mixed case because of his failure to

reinstate or prosecute his Rehabilitation Act defense before the

MSPB, despite being given the right to do so, after expressly

withdrawing the claim with prejudice.

          This Circuit has routinely held that an employee who

fails to exhaust available administrative remedies under the CSRA

is precluded from bringing a mixed case in federal district court.

See, e.g., Gonzalez v. Velez, 864 F.3d 45, 51-52 (1st Cir. 2017);

Rodriguez v. United States, 852 F.3d 67, 87 (1st Cir. 2017);

Irizarry v. United States, 427 F.3d 76, 78-79 (1st Cir. 2005).

This case presents a slightly nuanced version of the established

administrative   exhaustion   principle:     whether   a   party   who

withdraws a claim of discrimination in an MSPB proceeding, and

never reinstates the claim in that proceeding, may still have a

mixed case appropriate for judicial review before the district

court.   Other circuits faced with this question have determined

that a waived discrimination claim results in a non-mixed case.

     5  The district court also dismissed the claim for
discrimination under Section 525(a) of the Bankruptcy Code for the
independent reason that such claims are not cognizable in federal
court under the CSRA.    See Jonson v. FDIC, No. CV 16-10518-RWZ,
2016 WL 7493958, at *3 (D. Mass. Dec. 30, 2016) (citing 5 U.S.C.
§ 7702). The Section 525(a) claim is not germane to the issues
before us (as it cannot confer "mixed" case status) and going
forward the only discrimination claim/affirmative defense that is
discussed is the Rehabilitation Act claim.

                               - 9 -
See e.g., McAdams v. Reno, 64 F.3d 1137, 1144 (8th Cir. 1995) ("The

record indicates that McAdams abandoned her discrimination claims

at the MSPB.    The district court thus properly determined that it

lacked jurisdiction to consider them."); Blake v. Dep't of Air

Force, 794 F.2d 170, 173 (5th Cir. 1986) ("We find that in the

case before us any discrimination claim, to the extent one ever

existed, was eliminated from the case and thus there is no subject

matter jurisdiction."); Stephens v. Connley, 842 F. Supp. 1457,

1459   (M.D.   Ga.   1994),   aff'd   mem.,   48   F.3d   537   (11th   Cir.

1995)(unpublished table decision) ("If this court determines that

the discrimination claim has been eliminated, then the Court of

Appeals for the Federal Circuit would have exclusive jurisdiction

over plaintiff's case.").

           As the court explained in Connley, 842 F. Supp. at 1459,

"[i]t is clear that a discrimination claim may be abandoned during

MSPB proceedings."     While an explicit waiver is not required, see

id., in this case, Jonson's explicit withdrawal of his claim is

sufficient proof that his discrimination claim was abandoned.            See

McMillan v. Mass. Soc. for Prevention of Cruelty to Animals, 140

F.3d 288, 310 (1st Cir. 1998) (noting that a party's voluntary

withdrawal of a claim relinquishes the right to pursue it later).

Jonson was given opportunities to re-allege his discrimination

claim, but failed to do so on multiple occasions.               At no point

during the subsequent proceedings did Jonson present or attempt to

                                 - 10 -
present any evidence to support a discrimination claim.               We cannot

find that Jonson's original complaint, which alleged a claim of

discrimination that was later withdrawn, without anything more, is

sufficient to create a mixed case.          See Hill v. Dep't of Air Force,

796 F.2d 1469, 1471 (Fed. Cir. 1986) ("It was plainly not the

intent of Congress to enable manipulation of . . . jurisdiction by

the mere mention of discrimination in a petition for review.").

Finding   that     the     district    court      lacked     subject     matter

jurisdiction, we turn to Jonson's next challenge on appeal.

                  2. Transfer to the Federal Circuit

          "We     review     a   refusal     to   transfer    for     abuse   of

discretion."     Cimon v. Gaffney, 401 F.3d 1, 6 (1st Cir. 2005).

After the district court dismissed the case for want of subject

matter jurisdiction, Jonson filed a motion for reconsideration,

or, in the alternative, to transfer the case to the Court of

Appeals for the Federal Circuit.           Without issuing an opinion, the

district court denied Jonson's motion.

          In     making    the   transfer    request   before   the    district

court, Jonson's counsel argued that transfer was proper pursuant

to 28 U.S.C. § 1404(a), which provides for change of venue "[f]or

the convenience of parties and witnesses, in the interest of

justice" and "where it might have been brought or to any district

or division to which all parties have consented."                   On appeal,

Jonson's counsel concedes that the transfer request should have

                                    - 11 -
been pursued under 28 U.S.C. § 1631, but nonetheless, the district

court should have transferred the case in the interest of justice.

           Jonson's   failure   to   raise     section    1631   before    the

district court constitutes a waiver of the issue on appeal.               See

Albion v. YMCA Camp Letts, 171 F.3d 1, 2 n.3 (1st Cir. 1999)

(deciding that where a party only raised 28 U.S.C. § 1404 and

§ 1406 as grounds for transfer, the court would not address the

applicability of 28 U.S.C. § 1631); see also Me. Green Party v.

Me., Sec'y of State, 173 F.3d 1, 4 (1st Cir. 1999) (finding waiver

when "the argument plaintiff presse[d] on appeal was not timely

asserted in the district court").

           Further, even if the Court were to overlook Jonson's

waiver, the denial of transfer was nonetheless proper.               Section

1631 provides that:

           the court shall, if it is in the interest of
           justice, transfer such action or appeal to any
           other such court in which the action or appeal
           could have been brought at the time it was
           filed or noticed, and the action or appeal
           shall proceed as if it had been filed in or
           noticed for the court to which it is
           transferred on the date upon which it was
           actually filed in or noticed for the court
           from which it is transferred.

(emphasis added).

     Jonson's   counsel   contends    that   the   transfer      serves   "the

interest of justice," namely because Jonson filed the instant

action   with   the   "good-faith    belief"    that     his   associational

                                - 12 -
disability discrimination claims were valid.                       While Section 1631

creates     a    presumption          in   favor     of       transfer,       transfer    is

inappropriate if it would not cure a want of jurisdiction.                               See

Lightfoot v. Cendant Mortg. Corp., 137 S. Ct. 553, 560 (2017) ("A

court of competent jurisdiction is a court with the power to

adjudicate the case before it.").

     Regardless of the interest of justice argument, a transfer of

the case would not cure the want of jurisdiction.                         Jonson's claim

before    the        district    court     was   filed        pursuant     to    5   U.S.C.

§ 7702(e)(1)(B).            Unlike an appeal from a final MSPB order, which

may be brought before a district court or the Federal Circuit

depending       on    its    mixed    status,    see      5   U.S.C.     §§    7702(a)(1),

7703(b)(1)(A) and (2), a section 7702(e)(1)(B) claim is only for

mixed cases and can only be brought in the district court.                                It

could never have been brought before the Federal Circuit. Further,

the Federal Circuit only has jurisdiction over final orders or

decisions of the MSPB.               See 28 U.S.C. § 1295(a)(9); Weed v. Soc.

Sec. Admin., 571 F.3d 1359, 1361-62 (Fed. Cir. 2009).                           But, at the

time Jonson's section 7702 action was filed, his case was still

pending before the MSPB.                There was no final order.                 As such,

Jonson's section 7702 claim could not have been filed in the

Federal Circuit at the time it was filed in the district court

because it was not a final order.                   Although Jonson may have been

led astray by his prior counsel, the Court cannot transfer a case

                                           - 13 -
in the interest of justice if the transfer fails to cure the

jurisdictional defect.

            For   these   reasons,   we   affirm   the   district   court's

decision.

                                 - 14 -