shaw bransford & roth case law update

Fifth Circuit: Protection Not Available for Disclosures of Purely Private Wrongdoing

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An International Examiner at the Internal Revenue Service (“IRS”) received a proposed removal on September 2010 and was removed in November 2010. In 2013, the employee filed an individual right of action (“IRA”) appeal with the Merit Systems Protection Board (“MSPB”), citing his Office of Special Counsel (“OSC”) complaint claiming that he had been retaliated against after making protected whistleblower disclosures to his supervisor and the Commissioner of the IRS in February 2010 regarding an alleged $500 million tax fraud perpetrated by ExxonMobil.

The MSPB administrative judge found that 5 U.S.C. § 2302(b)(8) only safeguarded “whistleblowers against retaliation for the disclosure of governmental wrongdoing,” and dismissed the employee’s IRA appeal because his disclosures concerned tax fraud by ExxonMobil, a private entity. Although the administrative judge observed that allegations that government officials facilitated such a fraud may be protected, the administrative judge found that the employee’s assertions of governmental involvement were too “vague” and “speculative” to constitute a nonfrivolous allegation of whistleblowing activity, and dismissed the employee’s claim. On appeal to the full Board, Vice Chairman Wagner of the MSPB wrote a dissenting opinion, concluding that when the Whistleblower Protection Enhancement Act was enacted in 2012, “Congress contemplated that its protection would extend to disclosures of wrongdoing by private entities made by federal employees in the normal course of duties,” and that this Congressional contemplation was made clear by § 2302(f) of the whistleblower statute. The employee petitioned for review of the MSPB’s decision directly to the United States Court of Appeals for the Fifth Circuit. On August 24, 2015, the Fifth Circuit Court of Appeals denied the employee’s petition for review.

In an initial discussion of jurisdiction, the court of appeals agreed with the employee that only the MSPB threshold jurisdictional determination of whether an allegation is nonfrivolous applies to IRA appeals such as this, and the employee need not establish jurisdiction by a preponderance of the evidence as argued by the Department of the Treasury, an intervenor in this matter. In order to determine whether the employee made a nonfrivolous allegation under the Whistleblower Protection Act, the appeals court turned to the employee’s two major contentions: that “the Whistleblower Protection Enhancement Act expanded the scope of protected disclosures to include disclosures of purely private wrongdoing,” and that “even if only disclosures of government misconduct are protected,” the employee made a nonfrivolous allegation that IRS officials “were complicit in Exxon’s alleged tax fraud.”

The employee cited the dissent of the MSPB Vice Chairman on the Board’s decision, which read that “as a matter of plain logic,” “when the federal employee’s normal course of duties includes regulating, monitoring, or investigating private entities, a disclosure about alleged wrongdoing by the private entity falls squarely within the WPEA’s coverage.” The appeals court observed also that the employee cited the Senate Committee Report for the 2012 WPEA amendment, which stated that § 2302(f) “overturns…court decisions that narrowed the scope of protected disclosures.” However, the appeals court, applying “traditional principles of statutory interpretation,” agreed with the Treasury and with the majority of the MSPB that Congress did not intend to protect disclosures of purely private wrongdoing when the WPEA was enacted. According to the appeals court, the text of the statute indicates that the focus of the statute is “government wrongdoing,” and that the WPEA was absent any extension to additional categories of disclosures. Moreover, the appeals court found that the “course of normal duties” language cited by the Vice Chairman and the employee was merely a clarification that otherwise-covered disclosures are not excluded due to the fact that they were made during an employee’s normal duties.

Turning to the employee’s second argument, the appeals court cited Coons v. Secretary of the U.S. Department of the Treasury, 383 F.3d 879 (9th Cir. 2004), a case in which an employee alleged that “IRS agents illegally shared confidential information with a taxpayer’s lawyer and that IRS agents knowingly manually processed a large fraudulent refund for that taxpayer.” In Coons, the Ninth Circuit reversed the Board’s dismissal of the whistleblower claim, holding that Coons’ claim was that IRS officials engaged in either gross mismanagement, gross waste of funds, or an abuse of authority when they improperly processed a fraudulent refund, and therefore had made a nonfrivolous allegation under the statute.

But the employee in this matter, the appeals court found, had not reached the level of specificity in implicating government officials that was required to make a nonfrivolous allegation and which was present in Coons and other cases. The appeals court stated that the employee “made no specific allegations of wrongdoing by government officials and “does not explain in his brief to this Court the necessary ‘who, what, when, where, and how’ of government involvement in the alleged cover-up of Exxon’s tax fraud.”

For the above stated reasons, the United States Court of Appeals for the Fifth Circuit denied the employee’s petition for review.

Read the full case: Aviles v. Merit Systems Protection Board

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.

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