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News from the Federal Circuit: Delay Leaves Settlement Unenforced

News from the Federal Circuit: On December 27, 2016, the U.S. Court of Appeals issued its decision in Gallegos v. Dept. of Health and Human Services, Case No. 2016-2120.  A divided panel refused to enforce a breached clean record settlement agreement provision because of the delay in seeking enforcement.

Mr. Gallegos appealed his removal in 2001 to the Merit Systems Protection Board (MSPB), resulting in a settlement agreement.  The settlement provided that the removal paperwork Mr. Gallegos' Official Personnel Folder (OPF) would be replaced with an SF-50 showing "a voluntary resignation", which the Agency provided to Mr. Gallegos prior to placement in his OPF.  The replacement SF-50 indicated "Resignation ILIA".  The Agency did not explain that "ILIA" stood for "in lieu of involuntary action"--resigning before an adverse action could be imposed--and Mr. Gallegos did not object at the time.  Almost fourteen years later, Mr. Gallegos discovered the meaning of the "ILIA" notation.  Mr. Gallegos filed a petition for the MSPB to enforce the settlement agreement, in order to force the Agency to correct the SF-50.  The administrative judge found the petition for enforcement untimely, as filed 6 months after Mr. Gallegos first discovered the meaning of "ILIA,"  caused in part by Mr. Gallegos having to procure a new copy of the settlement agreement after losing his copy.  The full Board, in its decision, found that Mr. Gallegos should have discovered the Agency's breach in 2001 when he received the copy of the SF-50, and that his failure to keep a copy of the settlement agreement did not excuse untimely filing.  Mr. Gallegos then appealed to the Federal Circuit.

For the majority, Judge Dyk affirmed the MSPB's analysis of failure to "promptly" petition to enforce the settlement agreement.  Judge Dyk noted that the Agency had no obligation to explain the "ILIA" notation, and the burden was on Mr. Gallegos to catch the "ILIA" notation and demand an explanation. 

In dissent, Judge Newman criticized refusal to enfore the breached settlement agreement as an "unconscionable" result.  Judge Newman criticized the Agency for litigating rather than simply fixing the SF-50 consistent with the settlement agreement.  Judge Newman also rejected the majority's assumption that Mr. Gallegos was presumed to know the meaning of "ILIA" or should have been suspicious that the Agency would immediately undermine the settlement agreement it just signed.  Judge Newman also found that Mr. Gallegos' petition to enforce was promptly filed.

Gallegos warns settling employees to scrutinize settlement agreement implementation--including careful review of technical personnel documentation--to ensure that their settlement agreements have been properly implemented, and to swiftly challenge breaches.

If you are a federal employee who needs legal representation before the MSPB, consider requesting an initial consultation with one of Passman & Kaplan's attorneys.

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