Federal Circuit: For the Third Time, No Retroactive VA “Accountability”
This case law update was written by Conor D. Dirks, an attorney at the law firm of Shaw Bransford & Roth, where since 2013 he has represented federal officials and employees in all aspects of federal personnel employment law. In addition to his work on behalf of government employees, Mr. Dirks has successfully defended small and medium-sized government agencies against EEO complaints and MSPB appeals of agency disciplinary actions.
In 2017, Congress enacted the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017 (“the Act”), which provided “a singular expedited procedure for all VA employees to respond and appeal to proposed removals, demotions, and suspensions for performance or misconduct,” and according to the United States Court of Appeals for the Federal Circuit, “provides less rigorous standards and expedited procedures” to discipline, and even terminate, employees. On March 9, 2021, for the third time since the law’s enactment, the appeals court ruled in Brenner v. Department of Veterans Affairs that the VA could not use the law to discipline an employee for acts that occurred prior to the law’s enactment.
In Sayers v. Dep’t of Veterans Affairs, 954 F.3d 1370, 1378-79 (Fed. Cir. 2020), the appeals court held that VA’s termination of an employee under the Act (specifically under 38 U.S.C. § 714) for misconduct was unlawful because the alleged misconduct took place prior to the law’s enactment. In that case, the appeals court also held that the MSPB erred in relying on the Act’s prohibition against penalty mitigation to not consider whether the penalty imposed was justified. After ruling on these two issues, the appeals court vacated the employee’s removal.
In Harrington v. Dep’t of Veterans Affairs, 981 F.3d 1356, 1358 (Fed. Cir. 2020), the VA argued that even though the alleged misconduct took place prior to the law’s enactment, the appeals court should affirm the termination because the employee did not raise the issue of retroactive application below, and therefore “waived” the argument. In response, the appeals court reiterated its holdings on retroactivity and penalty consideration in Sayers, and held for several reasons that waiver was not a bar to ruling on the issue of retroactivity. Specifically, the appeals court held that retroactivity was a pure question of law, the proper resolution was beyond any doubt, the issue would have been difficult to anticipate for even an experienced attorney, and the employee had a right to the substantive civil service protections from improper or unjustified removal in effect at the time of the alleged misconduct. Thus, the appeals court ruled in favor of the employee, and vacated the removal.
This recent history brings us to the current case. After Sayers and Harrington, the VA did not cancel this employee’s termination, even though it was undisputed that some of the conduct in question occurred prior to the enactment of the law. Because it did not, the appeals court was forced to rule again on the issue.
In Brenner, the VA attempted to distinguish their case from Sayers. First, the government argued that Sayers should not apply because the employee’s removal “resulted from a pattern of [allegedly] poor performance that began before the Act was passed” but “became worse” after the Act was passed. The appeals court held that if the VA sought to “remove [the employee] for conduct prior to the effective date of the Act, it must proceed in accordance with Chapter 75 or Chapter 43,” rather than under the provisions of the new law.
Second, the government argued that Sayers should not apply to this case because it was a “performance-based” case rather than a misconduct case like Sayers. The VA argued that because both Chapter 43 (the chapter of Title 5 governing performance-based terminations) and 38 U.S.C. § 714 contained the “substantial evidence test and do not allow for mitigation of the penalty,” differences between the two laws were merely “procedural rules” that do not preclude retroactive application of the law under the Supreme Court’s decision Landgraf v. USI Film Prods., 511 U.S. 244, 275 (1994).
The appeals court disagreed, finding the employee had a property interest in his continued employment, and that Landgraf explained that the “presumption against statutory retroactivity” applies to “new provisions affecting…property rights”). And the appeals court also noted that the agency was incorrect in describing the differences between the laws as merely procedural because employees enjoy much greater pre-termination due process protections under Chapter 43 than under 38 U.S.C. § 714. According to the appeals court, “[t]hese protections are not merely procedural. They are the ‘quid pro quo’ for the agency’s greater discretion under Chapter 43.” Thus, the appeals court held that removal under the “expedited, less rigorous” procedures of 38 U.S.C. § 714 rather than Chapter 43’s “specific procedures” attached “new legal consequences” to employee conduct that gave the Act impermissible retroactive effect.
In addition to the retroactivity issue, the appeals court also reinforced its holdings in Sayers and Harrington that MSPB administrative judges must consider whether penalties imposed on employees are reasonable, and must reverse the decision if they are not given that the Act strips the MSPB of any authority to mitigate the penalty. The appeals court warned that if this were not the case, the VA could terminate an employee for an extremely trivial offense, such as theft of a paperclip, “so long as substantial evidence supports that the employee stole a paperclip.”
For the above stated reasons, the United States Court of Appeals for the Federal Circuit vacated the MSPB’s decision affirming the termination and remanded the case to the MSPB for further proceedings to consider whether the termination decision, including the penalty, is supported by substantial evidence using only the evidence that post-dates the Act.
Read the full case: Brenner v. Department of Veterans Affairs.
For over thirty years, Shaw Bransford & Roth P.C. has provided superior representation on a wide range of federal employment law issues, from representing federal employees nationwide in administrative investigations, disciplinary and performance actions, and Bivens lawsuits, to handling security clearance adjudications and employment discrimination cases.