Misuse of Government Property Can Be a Firing Offense

A Treasury Department employee who accessed agency personnel data to try to find support for a claim against the agency found himself in trouble.

The case is Coy v Department of the Treasury (CAFC No. 2021-2098, 8/9/2022).

Mr. Coy worked as Director of Compensation and Benefits in Treasury’s Comptroller of the Currency (COC) office. Shortly after assuming this position, Mr.Coy appealed to the Merit Systems Protection Board (MSPB), contending that Treasury had engaged in compensation discrimination under USERRA (Uniformed Services Employment and Reemployment Rights Act of 1994). In the process of pulling together evidence to support this appeal, Coy downloaded confidential agency employee data from two COC databases to which he had access due to his position. He transferred the data to his personal computer at home with the goal of comparing other employees’ compensation to his so that he could prove the disparity in his compensation. When the agency made a discovery request in the MSPB appeal, Coy provided these personnel files for other agency employees as part of production in his case. He also testified in a deposition indicating that he had downloaded employee personal information from the two COC databases. (Opinion p. 3)

Treasury removed Mr. Coy on the single charge of Misuse of Government Property. Coy appealed to MSPB where he successfully convinced the Board to reverse his removal based on the harmful procedural error that the deciding official had considered factors not included in the notice of proposed removal. The Administrative Judge (AJ) indicated that without this harmful error, she would have sustained Treasury’s charge against Coy and would have upheld his removal. Nevertheless, based on her findings, she ordered Treasury to provide Coy with interim relief. (P. 3) Both Coy and the agency appealed the AJ’s decision to the full MSPB. Because the Board did not have a quorum, his appeal simply sat.

While Coy’s administrative removal appeal was pending, Treasury instituted a second removal action based on the exact charge and specifications of this first removal. This time the agency avoided the procedural error and the deciding official considered only what was contained in the notice of proposed removal. Once again, the decision was to sustain the charge and to remove Coy. (The specific charge and specifications can be found at page 4 of the court’s decision.)

Deja vu all over again. A different AJ heard Coy’s second appeal—in which there was no harmless error contention—found that Treasury had proved its case, and upheld Coy’s removal.

Coy took this second removal appeal to federal court where he argued that because the AJ in his first removal appeal—which was still pending before the full MSPB—had ordered interim relief, the agency was precluded from taking a second removal action against him based on the exact same fact situation and charge. (P. 6)

The appeals court does not buy Mr. Coy’s argument, stating “Our court has rejected an interpretation of the interim relief statute that would bar all subsequent disciplinary actions until a decision is final….Board precedent, while not binding on this court, also appears to allow duplicate removal actions that cure procedural deficiencies in a first removal action even while the final action is still pending before the Board.” (Pp. 9-10)

This decision is significant for practitioners in that it makes clear that an agency can (and arguably should expeditiously) correct a flawed removal decision even while the first action is up on appeal before the Board rather than wait until final disposition of the first appeal. As practitioners know, the longer the agency waits to take a curative second action, the more the back pay damages accrue.

As set out clearly in the court’s opinion: “The interim relief statute does not preclude a second removal action while a first removal action is still pending when the second action cures a procedural deficiency in the first action.” (P. 12)

In short, Mr. Coy’s second removal is upheld.

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.