Court Opinion

ID: 9488224
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:39:39.323516+00
Date Added: 2024-06-11T17:52:46.066203
License: Public Domain

PLAGER, Circuit Judge,
concurring.
The issue presented by the parties in this case is a narrow factual one: did the VA breach the “neutral reference” settlement agreement. I agree that the Board’s decision does not reflect consideration of the conflicting evidentiary record, and join the opinion of the court in its remand for the limited purpose of that determination.
In footnote five, the court points out the broader difficulties raised by “neutral reference” settlement agreements. These agreements arise when an agency is unhappy about an employee’s performance or conduct, and takes steps to discharge the employee. (The statute governing such steps calls it a “removal.”) The employee resists. The dispute is settled by an agreement under which the employee agrees to resign rather than be fired, and the agency agrees not to reveal why it wished to remove the employee.
Such an agreement contains an inherent moral hazard. From the viewpoint of an employee, faced with the threat of such an adverse personnel action, a settlement agreement with a neutral reference requirement provides the opportunity for the employee to misrepresent to prospective employers his previous employment record. From the viewpoint of the current employer, the agreement requires the employer, when information about the employee’s conduct on the job is sought, to deliberately withhold material *634information which it knows is necessary to an informed decision by a prospective employer, and thus to misrepresent the employee’s employment record in important respects.
However denominated, a “neutral” reference under these circumstances is not an honest reference. It may serve as a subtle signal to knowledgeable prospective employers that there is some undisclosed problem, in which case the employee has been misled into believing he is getting something he is not. A less knowledgeable prospective employer, on the other hand, not privy to the subtle signal, will receive a deliberately misleading statement which, if relied upon, may cause the prospective employer to be misled to its detriment. Moreover, as the court’s opinion notes in footnote five, an honest official of the current employer, called upon for a reference, and recognizing that possibility, is placed in an impossible position.
This situation is different from that in which an agency simply agrees not to volunteer information for which it is not asked. These neutral reference agreements require that, when asked, material information be withheld, and in many cases that the agency report fully satisfactory ratings. Whatever the legal implications may be for such agreements, based as they are on an agreement to engage in deliberate misrepresentation, their ethical status is highly questionable. Furthermore, the practice of one government agency palming off an unacceptable employee on another government agency by withholding material evidence concerning the employee’s conduct hardly serves the public interest.
Reasonable settlement of legitimate disputes is to be encouraged. There no doubt are personnel disputes in which an amicable resolution will require some degree of forgiveness. But honest compromise does not mean that fraudulent concealment to the detriment of third parties should be condoned. One need not condemn all settlement agreements that contain a neutral reference provision in order to have serious reservations about its use in cases in which what is contemplated is deliberate misrepresentation of the employee’s record. In my view, agencies contemplating such agreements, and in particular their participating legal counsel, should consider carefully the implications of their conduct.1

. In addition to the applicability of relevant provisions of the Codes of Professional Responsibility, counsel may wish to consider Anthony T. Kronman, The Lost Lawyer: Failing Ideals of the Legal Profession (Harvard Univ. Press 1993); Mary Ann Glendon, A Nation Under Lawyers (Farrar 1994).