Marshall v. Department of Health and Human Services

United States Court of Appeals for the Federal Circuit

2009-3086

RAYMOND MARSHALL,

Petitioner,

v.

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

Respondent.

Andrew J. Dhuey, of Berkeley, California, argued for petitioner.

Christopher A. Bowen, Trial Attorney, Commercial Litigation Branch, Civil
Division, United States Department of Justice, of Washington, DC, argued for
respondent. With him on the brief were Michael F. Hertz, Deputy Assistant Attorney
General, Jeanne E. Davidson, Director, and Brian M. Simkin, Assistant Director.

Michael J. Kator, Kator, Parks & Weiser, P.L.L.C., of Washington, DC, for amici
curiae Military Officers Association of America, et al. With him on the brief was
Jeremy D. Wright, of Austin, Texas.

Appealed from: Merit Systems Protection Board
 United States Court of Appeals for the Federal Circuit
2009-3086

RAYMOND MARSHALL,

Petitioner,

v.

DEPARTMENT OF HEALTH AND HUMAN SERVICES,

Respondent.

Petition for review of the Merit Systems Protection Board in AT3443060811-X-1.

___________________________

DECIDED: December 1, 2009
___________________________

Before MICHEL, Chief Judge, NEWMAN and MOORE, Circuit Judges.

MOORE, Circuit Judge.

Raymond Marshall appeals from a final decision of the Merit Systems Protection

Board (MSPB), which dismissed his petition for enforcement of a prior MSPB order

requiring that the Department of Health and Human Services (HHS) reconstruct a

selection process for a position in the competitive service. See Marshall v. Dep’t of

Health & Human Servs., 111 M.S.P.R. 1 (2008) (Marshall V). For the reasons set forth

below, we reverse and remand.

BACKGROUND

Despite the lengthy, tortured procedure due to disagreements between HHS and

the MSPB over how to remedy the government’s error, this is a simple case. HHS

violated the Veterans Employment Opportunities Act (VEOA) of 1998 when HHS

selected a non-veteran over Mr. Marshall without obtaining approval from the Office of
Personnel Management (OPM). HHS conceded that it would have selected Mr.

Marshall for the position had it not erroneously removed his name from the list of

candidates. Another applicant, Ms. Roberta Beach, was hired and worked in this

position for several years. There was no dispute that HHS violated Mr. Marshall’s

VEOA preference rights, but there was considerable disagreement between the agency,

the administrative judge (AJ), and the MSPB over how this violation ought to be

remedied. The MSPB ultimately ordered HHS to reconstruct the selection process and

subsequently held that HHS properly remedied the VEOA violation by cancelling Ms.

Beach’s appointment (it moved her to another job) and deciding not to make any

selection from the certificate (not hiring anyone for the position). We conclude that the

MSPB erred in this case by failing to award the proper remedies pursuant to 5 U.S.C.

§ 3330c.

I

In 2004, Mr. Marshall, a veteran rated 20% disabled, applied for a Budget

Analyst GS-560-13 position with the Centers for Disease Control (CDC), an operating

division of HHS. CDC interviewed Mr. Marshall for the position and considered him a

“strong candidate,” but CDC was unable to make a selection at that time, purportedly

because of a hiring freeze. J.A. 74, 78. While selection for this position was pending,

Mr. Marshall contacted CDC to explain that the U.S. Coast Guard had offered him a

lower-grade position that he would accept if CDC could not offer him the higher-grade,

Budget Analyst position. Because CDC still could not proceed with the selection

process, Mr. Marshall accepted the lower-grade position with the U.S. Coast Guard.

Mr. Marshall remained interested in the higher-grade CDC position though, and as the

2009-3086 2
MSPB later found, Mr. Marshall’s acceptance of the lower-grade position did not

constitute a withdrawal from consideration for the higher-grade position. Nevertheless,

CDC removed Mr. Marshall’s name from consideration and, in June 2004, selected Ms.

Roberta Beach, who was listed below Mr. Marshall on the certificate of eligibles, for the

Budget Analyst position.

An OPM audit later revealed that CDC improperly removed Mr. Marshall’s name

from consideration. To remedy its error, CDC subsequently offered Mr. Marshall a GS-

13 Budget Analyst position on May 24, 2006 that the CDC contact person described as

“somewhere in Budget Execution . . . at some division . . . that could be anywhere

across [Atlanta].” J.A. 60. On May 31, 2006, Mr. Marshall declined CDC’s offer.

II

On June 25, 2006, Mr. Marshall filed an appeal with the MSPB, alleging that his

veterans’ preference rights had been violated. HHS agreed that it had considered Mr.

Marshall qualified for the position and that its failure to seek and obtain OPM approval

for passing over Mr. Marshall violated 5 U.S.C. § 3318(b)(1). See Marshall v. Dep’t of

Health & Human Servs., No. AT-3443-06-0811-X-1, slip op. at 6 (M.S.P.B. May 10,

2007) (Marshall I). As for the appropriate remedy, the AJ noted in an initial decision that

the VEOA requires only a selection process consistent with law—not automatic

retroactive reinstatement. Id. at 7. Importantly, however, the AJ explained that “[HHS]

has not claimed that it would have not selected [Mr. Marshall] for the position at issue.”

Id. at 8. Thus the AJ ordered Mr. Marshall’s retroactive reinstatement with the payment

of compensation for lost wages or benefits up until May 31, 2006—i.e., when Mr.

Marshall declined the subsequent offer of a new position. Id.

2009-3086 3
 On November 14, 2007, the MSPB granted HHS’s petition for review. Marshall

v. Dep’t of Health & Human Servs., 107 M.S.P.R. 241 (2007) (Marshall II). HHS argued

that the AJ erred by ordering reinstatement. Id. at 244. Specifically, HHS maintained

that it already provided the appropriate remedy when it offered a position to Mr.

Marshall on May 24, 2006. Id. at 245 n.4. The MSPB concluded that the appropriate

remedy was reconstruction of the selection process—not reinstatement. Id. at 244–45

& n.4. The MSPB reasoned that when an agency violates a statute or regulation

relating to veterans’ preference, the proper remedy is to “order the agency to comply

with such provisions.” Id. at 244–45 (citing 5 U.S.C. § 3330c; 5 C.F.R. § 1208.25; Dean

v. Dep’t of Agric., 99 M.S.P.R. 533 (2005)). Accordingly, the MSPB ordered HHS to

reconstruct the selection process for the original Budget Analyst position no later than

30 days after the date of the decision. Id. at 245. The MSPB also ordered HHS to

notify Mr. Marshall when it believed that it had complied with the MSPB’s reconstruction

order and to describe the actions HHS took to do so. Id. If Mr. Marshall believed that

HHS had failed to comply with the MSPB’s order, the MSPB stated that Mr. Marshall

would have 30 days to petition for enforcement. Id.

By letter dated December 14, 2007, HHS informed Mr. Marshall that it complied

with the MSPB’s reconstruction order. J.A. 102. HHS stated that governing regulations

required HHS to reconstruct a corrected certificate and to provide documentation to

OPM. Id. According to HHS, because OPM treated this requirement as having been

satisfied when HHS offered an equivalent position to Mr. Marshall on May 24, 2006, this

subsequent offer “should be found adequate for the purposes of this appeal as well.” Id.

2009-3086 4
With respect to the MSPB’s suggestion that this subsequent offer was inadequate, HHS

was “at a loss to understand what” more could be done. Id.

Mr. Marshall filed a petition for enforcement on January 10, 2008. J.A. 97–108.

He alleged that HHS had failed to comply with the MSPB’s reconstruction order. J.A.

100–01. Referencing the MSPB’s November 14, 2007 order, Mr. Marshall also noted

that if HHS’s violation was found willful, the MSPB could order HHS to pay an amount

equal to backpay as liquidated damages. J.A. 100. HHS filed a response, expressing

confusion as to what else it could do to reconstruct the selection process and how it

could compensate Mr. Marshall for lost wages “without violating the law against dual

appointments” arising from his employment with the U.S. Coast Guard. J.A. 111–14. In

a written reply, Mr. Marshall argued, among other things, that “in view of [HHS’s] refusal

to provide the reconstructed files and the information necessary for [Mr. Marshall] to

prove an intentional and willful violation of the VEOA law, that an additional liquidated

damages award be entered in an amount of the awarded wage.” J.A. 118.

On March 17, 2008, the AJ recommended that Mr. Marshall’s petition for

enforcement be granted. Marshall v. Dep’t of Health & Human Servs., No. AT-3443-06-

0811-X-1 (M.S.P.B. Mar. 17, 2008) (Marshall III). Responding that it still did not know

what more it could do to comply with the MSPB’s reconstruction order, HHS stated as

follows:

It is the agency’s understanding that the appellant does not seek to
actually be placed with this agency, nor can the agency (as pointed out in
its original appeal) “reinstate” him for the purposes of awarding him back
pay when he has at all times held another federal appointment. However,
if the Board has in mind some other specific action which the agency
could perform to be in compliance, the agency respectfully requests the
Board’s assistance in providing the agency with guidance as to what that
action would be.

2009-3086 5
J.A. 125–26.

On September 19, 2008, the MSPB held that HHS was not in compliance with

the earlier MSPB order because HHS had not reconstructed the selection process.

Marshall v. Dep’t of Health & Human Servs., 110 M.S.P.R. 114 (2008) (Marshall IV).

More specifically, the MSPB ordered HHS to comply with the following instructions:

(1) Ms. Roberta Beach must be removed as the selectee for the GS-13
Budget Analyst position in question, because her placement in that
position is contrary to 5 U.S.C. § 3318; (2) the reconstructed certificate of
eligibles must contain at least three names for appointment in order for the
appointing authority to validly make a selection for the GS-13 Budget
Analyst position under 5 U.S.C. §§ 3317 and 3318; and (3) if the agency
wishes to select an applicant who is a non-preference eligible over the
appellant for the GS-13 Budget Analyst position, the agency must obtain
evidence of OPM’s approval under 5 U.S.C. § 3318(b)(1).

Id. at 118.

HHS submitted a statement of compliance on October 1, 2008. J.A. 136–39.

HHS attached a copy of the SF-50 canceling Ms. Beach’s selection and appointment

under the relevant vacancy announcement for the Budget Analyst position. J.A. 138.

HHS also attached a reconstructed certificate of eligibles with Mr. Marshall rated the

highest of four people. J.A. 139. Nevertheless, HHS decided not to make any selection

from the certificate, “thereby closing out the case with no selection made.” J.A. 136.

In the MSPB decision now on appeal, the MSPB determined that HHS complied

with the MSPB’s reconstruction order and, accordingly, dismissed Mr. Marshall’s

petition for enforcement. Marshall V, 111 M.S.P.R. 1. The MSPB explained that HHS

was in compliance with both the VEOA and the MSPB’s reconstruction order because

“[t]he fact that [HHS] decided not to fill the position did not deny [Mr. Marshall] his

opportunity to compete for the position, or otherwise violate his VEOA rights.” Id. at 3-4.

2009-3086 6
The MSPB therefore dismissed Mr. Marshall’s petition for enforcement. Id. at 4. Mr.

Marshall appeals.

DISCUSSION

We have jurisdiction under 28 U.S.C. § 1295(a)(9). We must affirm the MSPB’s

decision unless it is “(1) arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law; (2) obtained without procedures required by law, rule, or

regulation having been followed; or (3) unsupported by substantial evidence.” 5 U.S.C.

§ 7703(c). “Statutory construction is a question of law that we review de novo.” Abell v.

Dep’t of the Navy, 343 F.3d 1378, 1383 (Fed. Cir. 2003).

I

Before turning to the merits of Mr. Marshall’s appeal, we first address HHS’s

argument regarding waiver. According to HHS, Mr. Marshall waived his challenge to

the MSPB’s reconstruction order for three reasons: (1) he did not challenge HHS’s last

statement of compliance; (2) he did not appeal the MSPB’s first reconstruction order on

November 14, 2007; and (3) he filed a petition for enforcement of the MSPB

reconstruction order. For the following reasons, we conclude that Mr. Marshall has not

waived his challenge.

First, HHS points out that Mr. Marshall failed to challenge HHS’s last statement

of compliance. We agree with Mr. Marshall that this argument is without merit. The

MSPB’s decision did not inform Mr. Marshall, then proceeding pro se, that he could file

a response. See Marshall IV, 110 M.S.P.R. at 118–19. In addition, the regulation

pertaining to the procedures for processing a petition for enforcement mentions a

response in the context of initial processing, see 5 C.F.R. § 1201.183(a)(1), but not in

2009-3086 7
the context of consideration by the MSPB, see id. § 1201.183(b). Even the former

states merely that “[t]he party that filed the petition may respond to [a statement of

compliance].” Id. § 1201.183(a)(1) (emphasis added).

Second, Mr. Marshall could not have appealed the MSPB’s first reconstruction

order. Our review of MSPB decisions is limited to final orders or final decisions. See

Weed v. Soc. Sec. Admin., 571 F.3d 1359, 1361–63 (Fed. Cir. 2009); see also 28

U.S.C. § 1295(a)(9). In Cabot Corp. v. United States, 788 F.2d 1539, 1542 (Fed. Cir.

1986), we stated the uncontroversial rule that “an order remanding a matter to an

administrative agency for further findings and proceedings is not final.” See also

Patterson v. Office of Pers. Mgmt., 111 F. App’x 590 (Fed. Cir. 2004) (request for

retroactive appointment and backpay is not ripe for appellate review when the MSPB

has remanded to the agency for reconstruction because these items may still be

granted on remand). Like these cases, Mr. Marshall’s claim would not have been ripe

at the time of the MSPB’s first reconstruction order, which remanded to HHS to

reconstruct the selection process. As this remand could have resulted in a decision to

hire Mr. Marshall and award him lost wages and benefits, his appeal at that time would

have been premature.

Third, Mr. Marshall’s filing of a petition for enforcement of the MSPB’s

reconstruction order does not judicially estop him from now challenging that order.

Judicial estoppel “generally prevents a party from prevailing in one phase of a case on

an argument and then relying on a contradictory argument to prevail in another phase.”

New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting Pegram v. Herdrich, 530

U.S. 211, 227 n.8 (2000)). It would be a stretch to conclude that Mr. Marshall

2009-3086 8
“prevailed” on his petition for enforcement. He was awarded neither the job for which

he applied nor the lost wages, lost benefits, and backpay that he sought. The Supreme

Court articulated three nonexclusive factors that should inform a decision of whether to

apply the doctrine of judicial estoppel: (1) “a party’s later position must be ‘clearly

inconsistent’ with its earlier position”; (2) whether judicial acceptance of the party’s later,

inconsistent position “would create ‘the perception that either the first or the second

court was misled’”; and (3) whether the party asserting an inconsistent position “would

derive an unfair advantage or impose an unfair detriment on the opposing party if not

estopped.” Id. at 750–51 (citations omitted). Mr. Marshall has at all times contended

that he is entitled to compensation for lost wages or benefits, and it would be unfair to

penalize him for continuing to pursue this award. There is no inconsistency in Mr.

Marshall’s position in this case.

We conclude that Mr. Marshall has not waived his challenge to the MSPB’s

reconstruction order. Under the circumstances of Mr. Marshall’s case, the

government’s waiver arguments are entirely without merit.

II

The issue in this case is whether reconstruction is the proper remedy under 5

U.S.C. § 3330c when (1) an agency violates a veteran’s preference rights during

selection in the competitive service and (2) it is undisputed that the agency would have

selected the veteran. Title 5 of the United States Code sets forth a statutory remedy for

when an agency has violated a preference eligible’s veterans’ preference rights:

If the [MSPB] (in a proceeding under section 3330a) or a court (in a
proceeding under section 3330b) determines that an agency has violated
a right described in section 3330a, the Board or court (as the case may
be) shall order the agency to comply with such provisions and award

2009-3086 9
 compensation for any loss of wages or benefits suffered by the individual
by reason of the violation involved. If the Board or court determines that
such violation was willful, it shall award an amount equal to backpay as
liquidated damages.

5 U.S.C. § 3330c (2006). The applicable regulation—5 C.F.R. § 1208.25(a)—restates

the statutory language using substantially the same words.

The MSPB interpreted the statutory mandate that it “shall order the agency to

comply with such provisions” to require reconstruction of the selection process.

Marshall II, 107 M.S.P.R. at 244–45 (citing Dean v. Dep’t of Agric., 99 M.S.P.R. 533

(2005)). In Dean, the MSPB granted an agency’s petition to review an initial decision

ordering retroactive appointment as a remedy for the agency’s VEOA violation. Id. at

536. The MSPB determined that the agency violated the veteran’s preference rights.

Id. at 550. But with respect to an appropriate remedy, the MSPB explained that it was

“aware of no provisions within VEOA stating that an individual whose rights have been

violated is automatically entitled to the position sought. Rather, 5 U.S.C. § 3330c

reflects that such an individual is entitled to a selection process consistent with law.” Id.

at 551. Furthermore, according to the MSPB, “it is unclear whether the appellant is

entitled to an award of compensation because it is unknown whether he would have

been selected for the position if the proper procedures had been followed.” Id. at 552.

Relying on Dean, the MSPB, in this case, concluded that § 3330c required HHS

to reconstruct the selection process. The MSPB rejected the agency’s argument that it

satisfied § 3330c when it offered Mr. Marshall an alternative position. It likewise

rejected the AJ’s determination that § 3330c required retroactive reinstatement with the

payment of compensation and lost wages and benefits. Mr. Marshall contends that

because HHS conceded (1) that it violated his veterans’ preference rights and (2) that it

2009-3086 10
would have selected him for the Budget Analyst position but for this violation, the MSPB

should have awarded compensation for any loss of wages or benefits suffered by Mr.

Marshall. We agree.

A

Section 3330c states that the MSPB “shall order the agency to comply with [the

violated] provisions.” 5 U.S.C. § 3330c. The MSPB interpreted this language as

requiring HHS to reconstruct the selection process. Although reconstruction may be an

appropriate way to comply in situations where it is unknown whether a veteran would

have been selected for a position, the record here is clear regarding what would have

occurred absent the violation. HHS would have selected Mr. Marshall for the Budget

Analyst position. Thus, there is no need for a manufactured reconstruction process.

In this case, HHS’s purported reconstruction of the selection process resulted in

a determination that HHS would have made no selection from the reconstructed

certificate of eligibles and would have cancelled the vacancy announcement. This

manufactured result has no basis in reality. Reconstruction seeks to determine whether

the agency would have selected the veteran at the time of the original selection

process; reconstruction does not allow an agency to conduct a new selection process

under new circumstances. The agency admitted that it would have hired Mr. Marshall

and that it did, in fact, fill the Budget Analyst position. If the agency complied with the

statutory provisions in this case, Mr. Marshall would have been awarded this job. The

offer of a different position “somewhere in Budget Execution . . . at some

division . . . that could be anywhere across [Atlanta]” cannot adequately remedy Mr.

2009-3086 11
Marshall. We therefore hold that the appropriate remedy is for Mr. Marshall to be

placed in the job for which he applied.

We recognize that in some cases appointment to the position at issue may not be

possible because the particular position may have substantially changed or may no

longer exist. On this point, our decision in Kerr v. National Endowment for the Arts, 726

F.2d 730 (Fed. Cir. 1984), is instructive. See also Wainwright v. Dep’t of Health &

Human Servs., 28 F. App’x 952 (Fed. Cir. Jan. 10, 2002) (per curiam) (unpublished)

(applying Kerr). In Kerr, following an MSPB reinstatement order, Mr. Kerr alleged that

the agency reinstated him to a “sham position” because the agency “shifted all the

duties and responsibilities of his previously held position to another position.” Id. at

731–32. The MSPB held that the agency complied with the reinstatement order

because “[a]bsent a reduction in grade or pay, a reassignment of positions or duties is

not an action appealable to the Board.” Id. at 732 (alteration in original). We vacated

this portion of the MSPB’s decision and instructed the MSPB to “make a substantive

assessment of whether the actual duties and responsibilities to which the employee was

returned are either the same as or substantially equivalent in scope and status to the

duties and responsibilities held prior to the wrongful discharge.” Id. at 733. In doing so,

we explained that the injured party should be placed “as near[] as possible in the status

quo ante.” Id.

Given the facts of this case, § 3330c requires that Mr. Marshall be offered the

Budget Analyst position for which he applied. The government has acknowledged that

the position continues to exist (Ms. Beach was doing the job); hence the appropriate

remedy is for Mr. Marshall to be awarded this position. The fact that the agency filled

2009-3086 12
the position with another employee in violation of the VEOA preferences is not an

adequate reason to force the aggrieved veteran into a different position.

B

Mr. Marshall is entitled to compensation for any loss of wages or benefits that he

suffered by reason of HHS’s VEOA violation. 5 U.S.C. § 3330c. Compliance with

veterans’ preference rights in this case would have resulted in Mr. Marshall’s selection

for this Budget Analyst job. Mr. Marshall accepted a lower-grade position with the U.S.

Coast Guard. The mere fact that he was employed by the federal government during

the relevant time period does not prevent him from obtaining the lost wages or benefits

to which he is entitled. It is undisputed that the position Mr. Marshall accepted with the

U.S. Coast Guard was a lower-grade position. Mr. Marshall is therefore entitled to the

difference between the pay and benefits he would have been earning in the Budget

Analyst job and those he received in the U.S. Coast Guard job. Mr. Marshall is not to

be penalized for mitigating the government’s damages by maintaining employment

during the relevant time period. Mr. Marshall is entitled to the lost wages or benefits

pursuant to § 3330c from the June 2004 selection date that violated his veterans’

preference rights until such time as he is placed in the position at issue or declines the

position at issue.

C

Finally, HHS argues that Mr. Marshall has waived any argument regarding

whether its VEOA violation was willful, which would entitle Mr. Marshall to liquidated

damages under 5 U.S.C. § 3330c. Notably, HHS cites the following language from the

AJ’s May 10, 2007 initial decision ordering reinstatement:

2009-3086 13
 If the appellant believes he is entitled to liquidated damages, he may
petition for damages in accordance with the instructions below. However,
the appellant has not shown that the failure to afford the appellant his
preference rights was willful. Indeed, it appears that the only reason that
the appellant was passed over for the position was because the agency
mistakenly believed that he was no longer interested in the position.

Marshall I, slip op. at 8. According to HHS, Mr. Marshall waived any argument

regarding willfulness when he “failed to appeal the Board’s May 2007 decision finding

that he had not shown that the agency’s failure to afford him his VEOA rights was

willful.” Mr. Marshall responds that, among other things, (1) the MSPB vacated the

damages portion of the initial decision when it ordered reconstruction rather than

reinstatement and (2) the MSPB explicitly contemplated that liquidated damages might

be available. See Marshall II, 107 M.S.P.R. at 246.

Mr. Marshall continually raised the issue of willfulness throughout this case.

Without commenting on the merits of his claim, we conclude that Mr. Marshall is not

precluded on remand from renewing his claim that HHS’s VEOA violation—i.e., the

initial passover—was willful. Under 5 U.S.C. § 3330c, “[i]f the [MSPB] determines that

such violation was willful, it shall award an amount equal to backpay as liquidated

damages.” Id.

CONCLUSION

We conclude that the MSPB abused its discretion in dismissing Mr. Marshall’s

petition for enforcement because the MSPB’s decision was based on an erroneous

interpretation of 5 U.S.C. § 3330c. When an agency violates a veteran’s preference

rights during selection in the competitive service and when it is undisputed that the

agency would have selected the veteran for the position sought but for the violation,

§ 3330c requires the agency to offer the same—or, as near as possible, a substantially

2009-3086 14
equivalent—position to the veteran. Under § 3330c, the veteran is also entitled to

receive compensation for any loss of wages or benefits suffered by reason of the

veterans’ preference rights violation involved. Accordingly, the final decision of the

MSPB is

REVERSED and REMANDED.

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