Paulette Charles v. John McHugh

Case: 14-50909 Document: 00513065849 Page: 1 Date Filed: 06/03/2015

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

No. 14-50909
FILED
June 3, 2015
Lyle W. Cayce
PAULETTE M. CHARLES, Clerk

Plaintiff–Appellant,
v.

JOHN M. MCHUGH, Secretary of the United States Army,

Defendant–Appellee.

Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:13-CV-807

Before CLEMENT, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
Paulette M. Charles entered into a settlement agreement with the
United States Army after she brought claims of employment discrimination. 1
Charles subsequently brought suit in the federal district court to rescind the
Agreement because, among other reasons, she alleged that the Army coerced

* Pursuant to Fifth Cir. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in Fifth
Cir. R. 47.5.4.
1 Charles’s complaint names John M. McHugh as the defendant. McHugh is being
sued in his official capacity as the Secretary of the Army for the United States Department
of the Army. See Ynclan v. Dep’t. of Air Force, 943 F.2d 1388, 1390–91 (5th Cir. 1991) (stating
that in Title VII claims against government employers, the action must be taken against the
“head” of the department).
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No. 14-50909
her into signing the Agreement. The district court concluded that it lacked
subject matter jurisdiction because Congress has not waived sovereign
immunity, and it dismissed the case. Because the district court correctly
concluded that it lacked jurisdiction, the judgment of the district court is
AFFIRMED.
I.
Charles is an Information Technology Specialist for the Department of
the Army at the United States Army Medical Information Technology Center
in San Antonio, Texas. She alleges that she suffered employment
discrimination on the basis of her race and sex, in violation of Title VII.
Charles filed a complaint with the United States Equal Employment
Opportunity Commission (EEOC), after which the parties met with a mediator
and entered into the Agreement, resolving all of Charles’s discrimination
claims. At the mediation, Charles was represented by counsel and both she
and her counsel signed the Agreement. Pursuant to the Agreement, Charles
agreed to cease pursuing all of her employment discrimination claims against
the Army. In exchange, the Army agreed to pay Charles’s attorney’s fees and
grant her certain other monetary benefits and non-monetary benefits,
including additional pay and paid leave.
Shortly thereafter, Charles filed an appeal with the EEOC seeking to
rescind the Agreement. Charles alleged that at the time she signed the
Agreement she was under the influence of prescription medicine and unable to
make an informed and voluntary decision, and that she was coerced into
signing the Agreement by implied threats that she would lose her job if she did
not sign it. The EEOC denied her request to rescind the Agreement. Charles
filed a request for reconsideration, which the EEOC also denied. Both EEOC
decisions included language informing Charles that she had “the right to file a

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No. 14-50909
civil action in an appropriate United States District Court within ninety (90)
calendar days from the date that [she] receive[d] th[e] decision.”
Charles then timely filed this case in the United States District Court
for the Western District of Texas, invoking the jurisdiction of the district court
under Title VII. The Army moved to dismiss the case on the merits under
Federal Rule of Civil Procedure 12(b)(6). Charles then filed an amended
complaint and the Army again moved to dismiss under Rule 12(b)(6), or
alternatively, for summary judgment under Rule 56(a). While those motions
were pending, the Army moved to dismiss under Rule 12(b)(1) for lack of
subject matter jurisdiction. The district court granted the motion to dismiss
for lack of jurisdiction and Charles filed this appeal.
II.
We review the district court’s dismissal for lack of subject matter
jurisdiction de novo, using the same standard applied by the district court.
Gulf Petro Trading Co. v. Nigerian Nat’l Petroleum Corp., 512 F.3d 742, 746
(5th Cir. 2008). We will uphold a dismissal for lack of jurisdiction where “it
appears certain that the plaintiff cannot prove any set of facts in support of his
claims entitling him to relief.” In re FEMA Trailer Formaldehyde Prods. Liab.
Litig. (Miss. Plaintiffs), 668 F.3d 281, 287 (5th Cir. 2012).
III.
Federal courts have jurisdiction over suits against the United States and
its agencies only to the extent that sovereign immunity has been waived. See
FDIC v. Meyer, 510 U.S. 471, 475 (1994) (“Absent a waiver, sovereign immunity
shields the Federal Government and its agencies from suit.”); United States v.
Mitchell, 463 U.S. 206, 212 (1983) (“It is axiomatic that the United States may
not be sued without its consent and that the existence of consent is a
prerequisite for jurisdiction.”). “Federal courts have jurisdiction to hear suits
against the government only with ‘a clear statement from the United States
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waiving sovereign immunity, together with a claim falling within the terms of
the waiver.’” Young v. United States, 727 F.3d 444, 447 (5th Cir. 2013) (quoting
United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003)). “The
terms of consent to be sued may not be inferred, but must be unequivocally
expressed.” White Mountain Apache Tribe, 537 U.S. at 472 (internal quotation
marks omitted).
Charles contends that Congress’s waiver of sovereign immunity in Title
VII cases pursuant to 42 U.S.C. § 2000e-16(c) creates jurisdiction in this case. 2
Section 2000e-16(c) waives sovereign immunity in civil actions challenging a
decision of the EEOC “on a complaint of discrimination based on race, color,
religion, sex or national origin.” § 2000e-16(c). When evaluating a waiver of
sovereign immunity, “[we] must strictly construe all waivers of the federal
government’s sovereign immunity, and must resolve all ambiguities in favor of
the sovereign.” Linkous v. United States, 142 F.3d 271, 275 (5th Cir. 1998).
In this case, Charles’s complaint in the district court does not allege that
she was discriminated against on one of the bases articulated in § 2000e-16(c).
She argues that she should be able to rescind the Agreement both because she
was mentally incapable of voluntary agreement and because she was coerced
by the Army, but she does not allege that she was coerced because of her race,
color, religion, sex, or national origin. Instead, Charles argues that because
rescinding the Agreement is a prerequisite to her further pursuit of her
discrimination claims, we should view her rescission claims as Title VII claims
themselves.

2 Charles argues exclusively that the district court has jurisdiction over her claims
pursuant to Title VII, and does not contend that the district court has subject matter
jurisdiction under the Little Tucker Act, 28 U.S.C. § 1346(a)(2), as a contract claim against
the government seeking less than $10,000.
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Charles’s claims are not Title VII claims. Properly construed, they are
contract claims. “‘A settlement agreement is a contract.’” Alford v. Kuhlman
Elec. Corp., 716 F.3d 909, 912 (5th Cir. 2013) (quoting Guidry v. Halliburton
Geophysical Servs., Inc., 976 F.2d 938, 940 (5th Cir. 1992)); see also Sellers v.
Wollman, 510 F.2d 119, 122 (5th Cir. 1975) (considering a contract rescission
claim “under traditional contract analysis”). Because Charles does not actually
bring employment discrimination claims in this case, it falls outside of the
plain terms of § 2000e-16(c). We may not interpret Title VII’s waiver of
sovereign immunity so broadly as to capture Charles’s rescission claims simply
because the underlying Agreement resolved Title VII claims.
We addressed a similar issue in Patterson v. Spellings, 249 F. App’x 993
(5th Cir. 2007) (unpublished). In Patterson, a federal employee brought a civil
action in the federal district court alleging that the Department of Education
breached the terms of a settlement agreement reached between the parties to
resolve the employee’s Title VII claims. Id. at 995. We held that because her
claim was a contract claim for breach of the settlement agreement, not a Title
VII claim, the district court lacked jurisdiction. Id. at 996 (“[The employee’s]
damages claim for breach of the settlement agreement is a breach of contract
claim against the United States . . . .”).
Charles attempts to distinguish Patterson because she does not seek
monetary damages, so the Court of Federal Claims is not open to her as an
alternative venue. See id. (stating that Patterson’s claim “should have been
brought in the Court of Claims under the Tucker Act”). Charles argues that
because the plaintiff in Patterson could pursue her claims elsewhere, whereas
Charles cannot, we should hold that there is jurisdiction in the district court
because otherwise Charles will be unable to pursue her claims. Charles is
mistaken. Whether Charles is able to pursue her claims elsewhere is
irrelevant. Subject matter jurisdiction either exists or does not exist; we may
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No. 14-50909
not create it where there is no basis for doing so simply because another forum
does not exist. 3
Other circuits have similarly concluded that the government’s waiver of
sovereign immunity for Title VII claims does not extend to contract claims
regarding settlement agreements. See, e.g., Geithner, 703 F.3d at 335 (holding
that Title VII’s sovereign immunity waiver does not extend to breach-of-
settlement-agreement claims); Frahm v. United States, 492 F.3d 258, 262 (4th
Cir. 2007) (holding that the government’s waiver of sovereign immunity did
not extend to monetary claims against the government for breach of a
settlement agreement that resolved a Title VII claim); Lindstrom v. United
States, 510 F.3d 1191, 1195 (10th Cir. 2007) (“Congress did not consent to being
sued by federal employees to enforce settlement agreements reached as a
result of Title VII discrimination claims, and thus a district court does not have
subject matter jurisdiction over the suit.”).
Charles argues that her claims are distinguishable from breach-of-
settlement-agreement cases because she seeks rescission, not monetary
damages or specific performance. Though she seeks different relief, she
nevertheless asserts contract claims—not Title VII claims—and therefore the
outcome is the same. The Eleventh Circuit addressed this issue in Thompson
v. McHugh, 388 F. App’x 870 (11th Cir. 2010) (unpublished). In Thompson,

3 Charles also argues that subject matter jurisdiction exists here because it would
further Congress’s goal of eradicating workplace discrimination and effectuating the
remedial purpose of Title VII. Whatever Congress’s intent regarding Title VII litigation, it
does not mitigate the longstanding principle of narrowly construing waivers of sovereign
immunity. At least one other circuit has considered and rejected a similar argument
regarding congressional intent. See, e.g., Taylor v. Geithner, 703 F.3d 328, 334 (6th Cir. 2013)
(“Although [the employee] raises understandable concerns with . . . an interpretation [that
does not encourage voluntary compliance as the primary method of resolving Title VII
claims], we find [the government’s] arguments to be more persuasive given the specificity
with which Congress must waive sovereign immunity and the lack of such an express waiver
in the plain language of the statute and regulation.”).
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after reaching a settlement agreement with the Army resolving her Title VII
claims, Thompson sought to rescind the agreement on the grounds that she
was coerced and under duress when she signed it. Id. at 871–72. The Eleventh
Circuit held that “[h]er claim is for contract rescission, a claim that is founded
on general principles of contract law,” and the fact “[t]hat the contract in
question resolved Title VII complaints is incidental to Thompson’s rescission
claim.” Id. at 872. The court concluded that 42 U.S.C. § 2000e-16(c) “applies
only to civil suits initiated after . . . an EEOC determination on a complaint of
discrimination” and Thompson’s “claim [was] for contract rescission, not
unlawful employment discrimination.” Id. at 873 (internal quotation marks
omitted). Therefore, “[b]ecause Thompson’s contract rescission claim [was] not
a claim falling with[in] the scope of Title VII’s waiver of sovereign immunity,
Title VII does not provide a basis for exercising jurisdiction.” Id.
We agree with the Eleventh Circuit’s reasoning. Charles’s claim is based
on two arguments: (1) her alleged incompetence to voluntarily sign the
Agreement and (2) the alleged coercion. These are both arguments seeking
rescission based entirely upon contract law principles. That the contract was
a settlement agreement for Title VII claims is tangential. Charles does not
allege that she was discriminated against during settlement negotiations on
any of the prohibited grounds, nor that the alleged coercion was because of her
“race, color, religion, sex or national origin.” § 2000e-16(c). Therefore, she does
not assert a claim for which Congress has waived sovereign immunity.
Charles next argues that the district court has jurisdiction because the
EEOC decisions refusing to rescind the Agreement and refusing
reconsideration both state that Charles may bring a civil action in the district
court. According to Charles, this is the EEOC’s interpretation of Title VII and
we should defer to this view under Chevron, U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984). Charles is incorrect. As the district
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court explained, this language is boilerplate language attached to every EEOC
decision and Charles cites no case holding that the EEOC has interpreted
§ 2000e-16(c) to waive sovereign immunity for claims based upon settlement
agreements. The only relevant EEOC regulation that contemplates civil action
in the district court is 29 C.F.R. § 1614.407, but this section does not
independently authorize any civil action in federal court—it only sets deadlines
for those civil actions already permitted by statute. See Thompson, 388 F.
App’x at 873 (“Section 1614.407 does not purport to authorize civil actions
other than those already authorized by the various statutes.”).
Moreover, the EEOC does not have the authority to waive sovereign
immunity through its regulations. “A waiver of the Federal Government’s
sovereign immunity must be unequivocally expressed in statutory text . . . .”
Lane v. Pena, 518 U.S. 187, 192 (1996). “The right to sue the United States
. . . can be acquired only by the specific consent of Congress . . . .” United States
v. Transocean Air Lines, Inc., 386 F.2d 79, 81 (5th Cir. 1967) (holding that
neither state law nor contractual relationships with third parties can grant the
right to sue the United States); see also Heller v. United States, 776 F.2d 92,
98 n.7 (3d Cir. 1985) (“[G]overnment regulations alone, without the express
intent of Congress, cannot waive sovereign immunity.”). Because Congress has
not explicitly and unambiguously waived sovereign immunity for claims based
on settlement agreements, the EEOC may not do so.
IV.
Because Charles’s claims are contract claims, not Title VII claims, and
because Congress has not explicitly waived sovereign immunity for such
claims, we hold that the district court correctly determined that it did not have
subject matter jurisdiction over this case. AFFIRMED.

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