Federal Circuit vacates order upholding firing of federal whistleblower

by Ben Vernia | November 30th, 2011

On November 7, the Court of Appeals for the Federal Circuit, in Berman v. Department of the Interior vacated and remanded a decision of the Merit Systems Protection Board, which had upheld Interior’s firing of an economist for receiving $383,600 from a watchdog group that had filed a qui tam suit based on his assistance.

The case is yet another decision in a long-fought battle involving the Project on Government Oversight (POGO), a Washington, D.C.-based non-profit. Over the course of several years, Berman, then an economist at Interior, discussed oil royalty issues with POGO’s director, and provided information on documents to request through FOIA. Those requests and information led POGO to file qui tam suits in Texas, which netted $440 million in settlements after the government intervened. POGO had asked Berman if he was interested in serving as co-relator in the case, but he declined. After receiving its whistleblower share, POGO issued the check to Berman as an award for public service.

The Department of Justice then sued Berman, alleging that he had accepted an unlawful gratuity; a jury in D.C. agreed with the government, and Berman appealed. While that appeal was pending, Interior fired him, citing his receipt of the award – despite 26 years of service and high performance ratings. He appealed the decision through the administrative process, but the MSPB affirmed his firing. The D.C. Circuit ultimately reversed the jury verdict in the gratuity case and remanded for a new trial.

The Federal Circuit first reviewed Interior’s misconduct charge that formed the basis for his termination, and agreed with the MPSB that Berman’s violation of the gratuity statute was an element of the misconduct charge against him. The court concluded, however, that because the D.C. Circuit had vacated the District Court’s judgment (because of an error instructing the jury regarding intent), the prior judgment was not now entitled to the preclusive effect the MPSB had given it. Rejecting the government’s argument that the MPSB had made an independent determination that Berman had violated the statute, and that the existing record was inadequate to establish those grounds (in part, because Berman had been denied discovery), the Federal Circuit vacated the final decision and remanded for further proceedings.

The Court likewise agreed with Berman that the MPSB’s finding of intent could not stand. The MPSB had conflated Berman’s commission of the underlying act, the Court reasoned, with the issue of his intent in doing so, and record evidence indicated that POGO and Berman believed their conduct was lawful – evidence that the MPSB did not address in its decision.

Finally, the Court concurred with the District of Columbia’s admonition in another case that, although lower courts are not precedentially required to suspend issuing a judgment based on the preclusive effect of a judgment under appeal, as a prudential matter it should consider staying its proceeding or otherwise avoid applying collateral estoppel until the underlying issue is resolved.

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