Federal Circuit: Settlement Adherence for Sixteen Years Was Reasonable Enough
In 2001, a Department of Veterans Affairs employee reached a settlement agreement with the Agency after filing a whistleblower reprisal appeal (called an Individual Right of Action) at the Merit Systems Protection Board. One term of that settlement agreement was the Agency’s agreement to allow the employee to work a compressed work schedule of 10 hour days, four days per week, including three hours per workday of travel.
In 2017, the Agency unilaterally changed his schedule to a normal work schedule. The employee petitioned the MSPB for enforcement of the settlement, alleging the Agency breached the agreement when it changed his schedule. The MSPB administrative judge denied the petition. The employee appealed to the United States Court of Appeals for the Federal Circuit. On February 10, 2020, the Federal Circuit sustained the MSPB administrative judge’s decision.
The Federal Circuit found that sixteen years of adherence to the settlement was reasonable, and that the employee failed to prove a breach of the agreement despite the Agency’s clear departure from a key settlement term. In doing so, it relied on Supreme Court precedent on the law of contracts. The appeals court cited M & G Polymers USA, LLC v. Tackett, 574 U.S. 427, 441 (2015) in holding that when “a contract is silent on the time limit of its term, it is established that the term is ordinarily effective for a ‘reasonable time.’” In other words, terms without time limits are not “operative in perpetuity” but instead “operative for a reasonable time.” Because the compressed work schedule provision of the settlement agreement did not have a time limit, the Agency’s unilateral abandonment of the provision would only be a breach if it was unreasonable.
The appeals court observed that “what constitutes a reasonable time is determined based on the circumstances.” Here, the appeals court noted that “an unlimited duration [was not] necessary to satisfy the contractual purpose” because the purpose of the settlement agreement was to protect the employee from animosity and retaliation at his previous duty station. He was, as part of the settlement, relocated to another clinic. That relocation increased his commute substantially, and therefore made the compressed work schedule necessary in order to accommodate the increased commute. But according to the court, this provision was reasonable only for so long as the employee’s relocation was necessary to avoid the “hostile environment” at his old duty station.
The appeals court found that sixteen years was a “reasonable time” for the “alleged hostilities against [the employee] to dissipate.” It found that the employee did not meet his burden of proof to show that animosity persisted after the sixteen-year period and that the continuation of the settlement provision was necessary under the circumstances.
For the above stated reasons, the United States Court of Appeals for the Federal Circuit concluded that the agency did not breach the settlement agreement when it changed the employee’s work schedule, and affirmed the MSPB administrative judge’s denial of the employee’s petition for enforcement.
Read the full case: Sanchez v. Department of Veterans Affairs.
This case law update was written by Conor D. Dirks, Associate Attorney, Shaw Bransford & Roth, PC.
For 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.