U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

James E. Foreman v. Department of the Army, No. 00-3195 (Fed. Cir., February 23, 2001).

A settlement agreement may not impose obligations upon a third party without its consent.

The appellant was employed by the Department of Army, which proposed to remove him for misconduct and delinquency in his supervisory responsibilities. The appellant appealed the removal action to the Board and the parties negotiated a settlement agreement. The settlement included rescission of the removal decision, removal of all related documents from his file, and registration with the DOD priority placement program. The Army complied with all the provisions of the settlement agreement except the provision that it shall register the appellant for worldwide consideration under the Department of Defense Priority Placement Program.

The administrative judge found that the Army was excused from registering the appellant in the priority placement program under the doctrine of impossibility because DOD regulations preclude registration of employees whose performance or conduct is less than fully successful. Because the appellant's relevant annual performance evaluation rated his overall performance as "needs improvement," which fell below the level of "successful," the AJ determined that the appellant was ineligible for registration in the priority placement program and that the mandatory nature of the regulations made it impossible for the Army to register the appellant. The AJ concluded that the Board did not have the authority to direct the DOD to register the appellant in its priority placement program. Finally, the AJ denied the appellant's enforcement petition because he did not elect to rescind the settlement agreement for breach and thus had to accept its terms absent the unenforceable provision. The appellant appealed the AJ's decision to the full Board. The Board denied his petition for review. The appellant appealed to the Federal Circuit for a review of the Board's decision denying his petition for enforcement of the settlement agreement provision requiring the Army to register him in the DOD priority placement program.

On appeal to the court, the appellant argued that internal agency regulations are an insufficient basis on which to preclude his registration in the priority placement program. He contended that the Board's decision improperly allows a DOD regulation to trump the Board's own enforcement powers to compel Federal agencies to comply with its orders under 5 U.S.C. § 1204(a)(2). He also argued that the Army and the Board erroneously relied on a negative performance rating that should have been removed from his record as part of the settlement agreement.

The court agreed with MSPB that Army's failure to register the appellant with the priority placement was excusable on the ground of impossibility. A settlement agreement may not impose obligations upon a third party, in this case the DOD, without its consent. The appellant signed a settlement agreement with the Army requiring an action on the part of the DOD, which is established by statute as a separate legal entity from the Army. The Army tried in good faith to register the appellant in the priority placement program, but the DOD refused to register the appellant upon discovering that his performance evaluation was less than that required for entry into the program. The Court rejected the appellant's argument that the Board's decision improperly puts an agency regulation above the Board's enforcement powers. Although the Board can "order any Federal agency or employee to comply with an order or decision issued by the Board" under its authority in 5 U.S.C. § 1204(A)(1), the Board does not have the power to enforce an agreement between the Army and the appellant upon the DOD, which was not a party to that agreement. Moreover, it stands to reason that the Board should not be able to enforce on the DOD an obligation undertaken by a subordinate entity that had no authority to carry out that obligation.

The court also agreed that the Board did not err by allowing the DOD to rely on the appellant's performance evaluation for its determination that he was ineligible for the priority placement program. The settlement agreement provided that the agency shall purge from its files all documentation associated with this removal. Thus, the Army had to purge all documents relating to removal, but it was not required to purge prior performance appraisals, which are routine documents that the Army must maintain pursuant to 5 CFR § 293.404(a)(1)(I), requiring agencies to retain performance ratings of record for four years. DOD regulations require that employees who have job performances that are less than fully successful under the registering activity performance evaluation system are "not eligible to register or, if registered must be removed." The court found no basis for concluding that the Board erred in its determination that the regulation is a mandate for the DOD to evaluate performance appraisals and reject employees form its priority placement program who do not meet its standards.

Finally, the court concluded that the Board's decision was not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Accordingly the court affirmed the MSPB decision.