The Federal Circuit Court of Appeals has vacated and remanded a decision of the Merit Systems Protection Board (MSPB). It remanded the case because the court concluded the Board erroneously required a showing of material breach of a settlement agreement as a condition of reinstating an appeal from an employee removal action. (Gillespie v. Department of the Navy, U.S.C.A.F.C. No. 05-3193 (non precedent), 2/15/06)
Before her removal in 2000, Ms. Gillespie worked as a Navy contract specialist.
She appealed that removal and the parties ended up signing a settlement agreement. Under its terms, she withdrew her appeal and resigned her position.
In return, Navy agreed to cancel the removal action, purge the official personnel folder, remove all other documents involving the personnel action from agency files, delete all references to a performance improvement plan, and issue performance appraisals for two years indicating that Ms. Gillespie had passed. Should either party fail to carry out its obligations, then the agreement provided that Merit Systems Protection Board, on petition of the aggrieved party, shall reinstate the appeal. (Opinion, p. 2)
Not surprisingly, Ms. Gillespie inspected her official personnel folder some time following the agreement. She found a copy of the SF-50 evidencing her removal, the settlement agreement, and the MSPB decision dismissing her appeal as settled.
She did not find the revised performance appraisals for two years that the agency had agreed to prepare and put in her file. She therefore petitioned the Board to reinstate the appeal. The AJ found that the agency had breached the settlement agreement with regard to documents involving the cancelled removal action.
However, the AJ concluded that the agency’s breach of the agreement was not material and therefore the agreement would not be rescinded and the appeal reinstated. He dismissed her petition to enforce the agreement as moot. The logic was that the agency had since complied with the disputed provisions, and that Ms. Gillespie had been employed elsewhere in the agency after the settlement was reached, which tended “to show that the agency’s breach did no harm to the vital interest in question, i.e., the appellant’s employment prospects.” (Opinion p. 3)
The appeals court did not agree with the Board.
A settlement agreement is a contract and is viewed with regard to the intent of the parties. Here, the parties had expressly included in the terms of the agreement that in the event of any breach, the prior appeal would be subject to reinstatement. “Because the agreement specifically provided for reinstatement of the appeal as a remedy for any breach by the agency, the administrative judge should not have inquired into the materiality of the breach as a prerequisite for granting the remedy of reinstatement of the appeal….in this case the agency’s noncompliance was not trivial.” (p. 4)
The court vacated the order of the Board and remanded with instructions to reinstate the earlier removal action appeal.
