Board Opinion and Order

UNITED STATES OF AMERICA

MERIT SYSTEMS PROTECTION BOARD

2009 MSPB 74

Docket No. DC-0731-08-0563-I-1

Wayne Upshaw,

Appellant,

Consumer Product Safety Commission,

Agency.

April 24, 2009

Brian C. Plitt, Esquire, Washington, D.C., for the appellant.

Margaret H. Plank

, Esquire, Bethesda, Maryland, for the agency.

BEFORE

Neil A. G. McPhie, Chairman

Mary M. Rose, Vice Chairman

OPINION AND ORDER

¶1 The appellant has filed a petition for review (PFR) of the initial decision,

issued on July 21, 2008, that dismissed the appeal for lack of jurisdiction. For

the reasons set forth below, we GRANT the petition, VACATE the initial

decision, and REMAND the appeal for a jurisdictional hearing.

BACKGROUND

¶2 The appellant filed an appeal on June 10, 2008, in which he alleged that the

agency made a negative suitability determination and removed him from the

Senior Executive Service (SES) position of Chief Financial Officer, ES-0505-05.

Initial Appeal File (IAF), Tab 1. The agency filed a response asserting that it

made no determination regarding the appellant’s suitability for federal

employment, but that instead, the agency withdrew the job offer before the

appellant was officially appointed to the position. IAF, Tab 6, Subtab 1.

¶3 The record shows that, in a letter dated May 6, 2008, the agency confirmed

its tentative offer and the appellant’s acceptance of the Chief Financial Officer

position. IAF, Tab 6, Subtab 4E. The agency’s letter advised the appellant that

he was required to complete an electronic questionnaire for investigations

processing and Optional Form 306, Declaration of Federal Employment. Id. On

May 20, 2008, prior to the agency’s receipt of the appellant’s completed forms,

the agency received the appellant’s Official Personnel File (OPF) from the

Library of Congress where the appellant was most recently employed. IAF, Tab

6, Subtabs, 4B at 2, 4D. The OPF contained the appellant’s most recent standard

form (SF)-50, notification of personnel action, which documented his October 12,

2007 termination during his probationary/trial period from the position of Social

Science Analyst in the Library of Congress, and which he had not provided to the

agency as required by the vacancy announcement. IAF, Tab 6, Subtabs 4A at 2-3,

11, 4D at 1. The agency contacted the appellant on May 21, 2008, and rescinded

the offer of employment. IAF, Tab 6, Subtabs 4A at 4, 4B at 3.

¶4 Because there appeared to be a jurisdictional issue, the administrative

judge (AJ) ordered the appellant to provide evidence and argument showing that

the Board has jurisdiction over this appeal as either a negative suitability

determination or a removal. IAF, Tab 3. After considering the responses from

both parties, including the declarations submitted by agency employees, the AJ

dismissed the appeal upon finding that the agency withdrew its tentative offer of

employment to the appellant after receiving his OPF and learning that he had

been terminated from a prior position with the Library of Congress, which the

appellant had concealed from the agency by failing to submit his most recent SF-

50 as required by the vacancy announcement. IAF, Tab 7, Initial Decision (ID) at

4, 6. The AJ found further that, because the agency’s determination to withdraw

the offer was based on the appellant’s concealment of the fact that he had been

terminated from his last position, the agency made a suitability determination

involving a material, intentional false statement or deception or fraud in

examination or appointment, a determination that was outside the scope of its

delegated authority and beyond the Board’s jurisdiction. Id. at 4. To the extent

the appellant argued that he was removed from the position, the AJ found no

evidence showing that the appellant was ever appointed by the authorizing

authority or that the appellant had effectively entered on duty, since he had not

even submitted the required security forms at the time that the agency rescinded

its job offer. Id. at 5. Thus, the AJ found that the appellant failed to make a

nonfrivolous allegation that the agency “canceled his appointment after it actually

occurred.” Id.

¶5 On PFR,

the appellant asserts that the AJ erred in finding, without

holding a hearing, that the agency withdrew the job offer because he had

concealed his termination from his last position, given that the agency

specifically stated that it withdrew the offer “because it received documentation

of termination of prior employment for cause and because [the appellant] failed to

complete the necessary paperwork in a timely manner.” Petition for Review File

(PFRF), Tab 1 at 8; see IAF, Tab 6, Subtab 1 at 8. In addition, the appellant

contends that the agency made an appealable suitability determination based upon

his “character or conduct,” which it gleaned from information in the SF-50

concerning his termination from the Library of Congress. PFRF, Tab 1 at 9. The

agency likewise asserts in its response to the PFR that the AJ’s reasoning for

dismissing the appeal was erroneous. The agency contends that, because the offer

We note that the appellant does not challenge the AJ’s determination that he was not

removed from the Chief Financial Officer position because the agency never appointed

him to that position. We therefore need not address that issue further. See 5 C.F.R.

§ 1201.114(b) (the Board normally will consider only issues raised in a timely filed

PFR or cross-PFR).

was withdrawn before the initiation of a background investigation, it never made

a determination as to the appellant’s suitability for federal employment. PFRF,

Tab 3 at 8-9.

ANALYSIS

¶6 The Board's jurisdiction is not plenary; it is limited to those matters over

which it has been given jurisdiction by law, rule or regulation. Maddox v. Merit

Systems Protection Board, 759 F.2d 9

, 10 (Fed. Cir. 1985). The appellant has the

burden of proof on the issue of jurisdiction. 5 C.F.R. § 1201.56

(a)(2)(i).

¶7 In determining whether the Board has jurisdiction over this appeal, we note

that in general, an unsuccessful candidate for a federal civil service job has no

right to appeal his non-selection. See Tines v. Department of the Air Force,

56 M.S.P.R. 90

, 93 (1992). Nevertheless, pursuant to regulations promulgated by

the Office of Personnel Management (OPM) and revised as of January 1, 2008,

the Board has jurisdiction over certain matters involving suitability for

employment in positions in the competitive service and career appointments to

positions in the SES. See 5 C.F.R. §§ 731.101

, 731.501. A suitability

determination is directed toward whether the “character or conduct” of a

candidate or current employee is such that employing or continuing to employ

him would adversely affect the integrity or efficiency of the service. 5 C.F.R.

§§ 731.101(a), 731.201. The many factors that might be relied upon in rendering

a negative suitability determination include falsification, deception or fraud in the

examination process, and misconduct or negligence in employment. 5 C.F.R.

§ 731.202(b). Thus, under 5 C.F.R. § 731.501(a), “[a]n individual who has been

found unsuitable for employment may appeal the determination to the Merit

Systems Protection Board.” Similarly, under 5 C.F.R. § 731.103

(g), “[a]ny

applicant or appointee who is found unsuitable by any agency acting under

delegated authority from OPM under this part may appeal the adverse suitability

decision to the Merit Systems Protection Board . . . .” Further, under 5 C.F.R.

§ 731.203

(a)(2), a “[d]enial of appointment” is listed as an “action” that could be

taken by OPM or the agency and challenged before the Board. See 5 C.F.R.

§ 731.501(a) (“[i]f the Board sustains fewer than all of the charges, the Board

shall remand the case to OPM or the agency to determine whether the action

taken is still appropriate”). The Board has previously held that, based on the

above regulations, if the evidence shows that the candidate was actually found

qualified for the position at issue, and the agency later removed him from

consideration based on one of the reasons set forth under OPM’s suitability

guidelines involving the “character or conduct” of the candidate, then the Board

may conclude that the candidate was subjected to an appealable “constructive

suitability determination.” See Saleem v. Department of the Treasury, 88

M.S.P.R. 151, ¶¶ 7, 11 (2001); Edwards v. Department of Justice, 87 M.S.P.R.

518, ¶ 9 (2001); Edwards v. Department of Justice, 86 M.S.P.R. 365, ¶¶ 11-14

(2000). The Board has further held that, in deciding whether an action is a

nonappealable non-selection or an appealable suitability determination, what

matters is the substance, not the form, of the action. Saleem, 88 M.S.P.R. 151

¶ 7.

¶8 However, in April 2008, OPM issued revised suitability regulations,

“effective June 16, 2008,” 73 Fed. Reg. 20,149 (Apr. 15, 2008). Under the new 5

C.F.R. § 731.501(a), only a “suitability action” may be appealed to the Board. A

“suitability action” is defined as a “[c]ancellation of eligibility,” a removal, a

cancellation of reinstatement eligibility, and a debarment. 5 C.F.R. § 731.203

(a).

Thus, OPM removed from § 731.203(a) a “[d]enial of appointment” as an

“action.” In addition, the new regulations specify that a non-selection for a

specific position is not a suitability action even if it is based on reasons set forth

at 5 C.F.R. § 731.202. See 5 C.F.R. § 731.203(b). Moreover, the new 5 C.F.R.

§ 731.103(g) includes no language that refers to appeals to the Board. Finally,

the new regulations include a savings provision which states the following:

No provision of the regulations in this part is to be applied in such a

way as to affect any administrative proceeding pending on June 16,

2008. An administrative proceeding is deemed to be pending from

the date of the agency or OPM “notice of proposed action” described

in §§ 731.302 and 731.402.

5 C.F.R. § 731.601

. OPM explained that its new regulations were issued, in part,

to correct Board case law which had held that “what matters is the substance of

the action, not the form,” which OPM determined to be erroneous and beyond the

intent of Congress. 73 Fed. Reg. at 20,152. OPM concluded that “when

adjudicating an appeal of an agency action, the Board must assess the agency’s

action under the procedures elected by the agency and may not hold the agency to

standards relating to a legal authority that the agency did not invoke.” Id.

¶9 In determining whether the new regulations retroactively apply in this case,

we have considered the Supreme Court’s decision in Landgraf v. USI Film

Products, 511 U.S. 244

(1994). See Rodriguez v. Peake, 511 F.3d 1147, 1152-56

(Fed. Cir. 2008) (applying Landgraf in deciding whether to retroactively apply an

amended regulation); Goodyear Tire & Rubber Co. v. Department of Energy, 118

F.3d 1531, 1536 (Fed. Cir. 1997) (applying Landgraf, by analogy, to determine

whether an agency may lawfully apply a newly-issued rule to disputes that are

pending before it); Terrell v. Department of the Treasury, 73 M.S.P.R. 689

, 692

(1997) (applying Landgraf in determining whether to retroactively apply a change

in the Board’s regulations). In Landgraf, 511 U.S. at 280, the Court held that

“[w]hen a case implicates a federal statute enacted after the events in the suit, the

court’s first task is to determine whether Congress has expressly prescribed the

statute’s proper reach.” When the statute contains no express command, a court

must determine whether the statute would have retroactive effect, i.e., whether it

would “impair rights a party possessed when he acted, increase a party’s liability

for past conduct, or impose new duties with respect to transactions already

completed.” Landgraf, 511 U.S. at 280. If the statute would “operate

retroactively,” the court must apply a presumption that the statute “does not

govern absent clear congressional intent favoring such a result.” Id.

¶10 Here, because OPM’s new regulations, if applied to pending cases, would

have the effect of destroying Board jurisdiction, for example, over an appellant’s

pending claim that his denial of appointment is a suitability action, the new

regulations impair an appeal right to the Board an appellant possessed at the time

of his non-selection. Thus, we find that, under Landgraf and its progeny, the new

suitability regulations would have a retroactive effect if applied to pending cases.

¶11 Moreover, we are guided by the Supreme Court’s decision in Bowen v.

Georgetown University Hospital, 488 U.S. 204

(1988). In Bowen, the Court held

that an agency may not promulgate retroactive regulations unless the power to do

so has been conveyed by Congress in express terms. Id. at 208; see also Princess

Cruises, Inc. v. U.S., 397 F.3d 1358

, 1362 (Fed. Cir. 2005) (citing Bowen).

“Even where some substantial justification for retroactive rulemaking is

presented, courts should be reluctant to find such authority absent an express

statutory grant.” Bowen, 488 U.S. at 208.

¶12 The right to appeal a suitability action is found in 5 C.F.R part 731. Zufan

v. Department of Transportation, 91 M.S.P.R. 258

, ¶ 9 (2002). However, as the

Board recognized in Zufan, the authority for the regulations at 5 C.F.R. part 731

derives from statutes, specifically 5 U.S.C. §§ 1302

, 3301, and 7701. See Zufan,

91 M.S.P.R. 258

, ¶ 10. In none of these statutes does Congress expressly grant

OPM the authority to issue retroactive regulations relating to suitability or any

other topic. Accordingly, we find that, because Congress has not granted OPM

the authority to issue a retroactive regulation relating to suitability, the new

suitability regulations cannot be given retroactive effect, regardless of OPM’s

intent. Thus, the suitability regulations in effect at the time of the appellant’s

non-selection will govern in this matter.

¶13 Where an appellant makes a nonfrivolous allegation that the Board has

jurisdiction over an appeal, the appellant is entitled to a hearing on the

jurisdictional question, Yiying Liu v. Department of Agriculture, 106 M.S.P.R.

178, ¶ 8 (2007); Ferdon v. U.S. Postal Service, 60 M.S.P.R. 325, 329 (1994).

Nonfrivolous allegations of Board jurisdiction are allegations of fact, which if

proven, could establish a prima facie case that the Board has jurisdiction over the

matter at issue. Ferdon, 60 M.S.P.R. at 329. To meet the nonfrivolous standard,

an appellant need only plead allegations of fact which, if proven, could show

jurisdiction, though mere pro forma allegations are insufficient to satisfy the

nonfrivolous standard. Yiying Liu, 106 M.S.P.R. 178

, ¶ 8. In determining

whether the appellant has made a nonfrivolous allegation of jurisdiction entitling

him to a hearing, the AJ may consider the agency’s documentary submissions;

however, to the extent that the agency’s evidence constitutes mere factual

contradiction of the appellant’s otherwise adequate prima facie showing of

jurisdiction, the AJ may not weigh evidence and resolve conflicting assertions of

the parties, and the agency’s evidence may not be dispositive. Yiying Liu, 106

M.S.P.R. 178, ¶ 8; Ferdon, 60 M.S.P.R. at 329.

¶14 Here, because it appeared that the Board may not have jurisdiction over the

appeal, the AJ ordered the parties to provide evidence and argument concerning

the appellant’s claims that the agency made a negative suitability determination

and removed him from the SES position of Chief Financial Officer. IAF, Tab 3.

This order specifically advised the appellant that he had to show that the agency

has been delegated the authority by OPM to make suitability determinations, that

the determination was within the delegated authority, and that the determination

was based on suitability factors listed in 5 C.F.R. part 731. Id.

¶15 The agency responded by submitting evidence showing that on May 20,

2008, it received the appellant’s OPF from the Library of Congress, which

indicated that it had terminated the appellant during his probationary period.

IAF, Tab 6, Subtabs 4B at 2, 4D at 1. In a declaration, sworn under penalty of

perjury, Beth Schwab, Deputy Director, Office of Human Resources Management

(EXRM), stated that she contacted the Human Resources Office at the Library of

Congress, which confirmed that the authority code cited on the appellant’s

termination SF-50 was based on “conduct or delinquency after entrance on duty.”

IAF, Tab 6, Subtab 4B at 2. Ms. Schwab stated further that she advised Donna

Simpson, Director, EXRM, and Patsy Semple, Executive Director for the agency,

to consider the following facts:

(1) the Appellant had a break in federal service over 30 days; (2) the

Agency had not received Appellant’s completed security forms; (3)

the fingerprint chart of the Appellant submitted by the Agency was

returned unclassifiable by the FBI and a second set of fingerprints

had to be taken and resubmitted; (4) the incorrect SF-50 was

submitted by Appellant with his application for employment; and

[sic] (5) the Termination SF-50 in the Appellant’s OPF made it

necessary for the Appellant to favorably complete the background

investigation prior to appointment; and (6) upon receipt of forms

from the Appellant and submission to OPM, the processing time for

the required investigation conducted by OPM would have been 120-

days.

Id. at 2-3. Ms. Schwab stated that, because the agency had a “critical need to fill

the high-profile Senior Executive position quickly,” Ms. Simpson directed her to

notify the appellant that the agency had decided to withdraw its tentative offer of

employment. Id. at 3. In addition, Ms. Schwab stated that she contacted the

appellant at approximately 11:00 a.m. on May 21, 2008, to advise him that the

agency was withdrawing the tentative offer of employment, and she also stated

that the agency did not receive the appellant’s preliminary paperwork necessary

to initiate the background investigation until after she had notified him that the

job offer was rescinded. Id. Ms. Schwab further stated that the agency “did not

complete a background investigation on Appellant, and did not make a

determination regarding his suitability for federal government.” Id.

¶16 Supporting Ms. Schwab’s declaration is a second declaration, signed under

penalty of perjury, from Ms. Simpson, in which she states that, after the agency

received the appellant’s OPF from the Library of Congress, she consulted with

Ms. Schwab and Ms. Semple to consider the impact the factors set forth by Ms.

Schwab would have on the agency’s ability to fill the position quickly. IAF,

Tab 6, Subtab 4A at 2-3. Ms. Simpson stated that, based on the projected delay

in filling the position, she directed Ms. Schwab to notify the appellant that the

agency’s tentative offer of employment was withdrawn. Id. Ms. Simpson also

stated that the agency did not complete a background investigation on the

appellant, that the agency made no determination regarding the appellant’s

suitability for federal employment, and that the agency did not receive the

appellant’s preliminary paperwork until after Ms. Schwab had notified him that

the offer of employment was rescinded. Id.

¶17 The AJ subsequently considered all of the evidence described above and

found that the appellant made no nonfrivolous allegations of facts which, if true,

would establish Board jurisdiction over this appeal, and issued an initial decision

based on the written record. ID at 1-6. Specifically, the AJ found, inter alia, that

“the agency withdrew its tentative offer of employment to the appellant after

receiving his OPF and learning that he had been terminated from a prior position,

a fact that he had concealed from the agency by failing to submit his most recent

SF-50 as required by the vacancy announcement.” ID at 4. The AJ then found

that the appellant “continued to conceal this fact by denying it on OP 306 and

stating on the electronic questionnaire that he left the position under favorable

circumstances when his ‘conditional appointment [was] not converted to

permanent status.’” Id. The AJ found further that the agency made a

determination to withdraw the position offer “based on the appellant’s

concealment of the fact that he had been terminated from his last position,” and

thus, “the agency made a suitability determination involving a material,

intentional false statement or deception or fraud in examination or appointment, a

determination that was outside the scope of its delegated authority.” Id. Thus,

the AJ dismissed the appeal for lack of jurisdiction without a hearing.

¶18 However, taking the appellant’s allegations as true, we find that the

appellant met the requisite nonfrivolous standard under Ferdon when he alleged

that the agency made a constructive negative suitability determination, which

OPM authorized it to do within its delegated authority, when it rescinded the

offer of employment after receiving his OPF from the Library of Congress, which

indicated that it had terminated him during his probationary period. IAF, Tab 4

at 3-4. Because the appellant’s claim that the employment offer was rescinded

after the agency received his OPF from the Library of Congress is supported by

documentary evidence, including the appellant’s declaration signed under penalty

of perjury, IAF, Tab 4 at 6-8, the Board can infer from the written record that the

rescission of the offer of employment possibly could have been a constructive

suitability determination. See Edwards, 87 M.S.P.R. 518

, ¶ 9 (if evidence shows

a candidate had actually been found qualified for the position and the agency later

removed him from consideration based on one of the reasons set forth under

OPM’s guidelines at 5 C.F.R. § 731.202

, the Board may conclude the appellant

was subjected to a constructive suitability determination); 5 C.F.R. § 731.202

(among the reasons in OPM’s guidelines are misconduct or negligence in

employment, and material, intentional false statement, or deception or fraud in

examination or appointment).

¶19 Because the record supports the appellant’s contention that the agency’s

rescission of the offer of employment could have constituted a constructive

suitability determination within the agency’s delegated authority, see 5 C.F.R.

§ 731.103 (Jan. 1, 2008), the appellant has stated an adequate prima facie case of

jurisdiction and the AJ should not have accepted the agency’s evidence as

dispositive. Therefore, we find that the AJ erred when, without holding a

jurisdictional hearing,

she credited the agency’s evidence to find that the agency

We note that the AJ’s characterization of the agency’s argument in this regard is not

accurate. Specifically, there is nothing in the record to support the AJ’s finding that the

agency made a determination to withdraw the position offer “based on the appellant’s

concealment of the fact that he had been terminated from his last position.” Rather, the

agency explicitly argued, and provided declarations in support, that this was not the

basis for the rescission of the employment offer. See IAF, Tab 6, subtabs 1 at 6, 4A,

made a suitability determination that was outside of its scope of delegated

authority. Saleem, 88 M.S.P.R. 151

, ¶¶ 8-11, 13; Ferdon, 60 M.S.P.R. at 329-30.

Accordingly, we find it necessary to remand this case for a jurisdictional hearing

on the issue of whether the rescission of the agency’s offer of employment

constituted a constructive suitability determination within the agency’s delegated

authority.

ORDER

¶20 Accordingly, we find that the appellant has made a nonfrivolous allegation

of jurisdiction entitling him to a hearing. On remand, the AJ shall hold a hearing

to allow the presentation of evidence and argument on whether the Board has

jurisdiction over this appeal. Ferdon, 60 M.S.P.R. at 329. Further, in making a

jurisdictional determination, the AJ shall apply Board law under Edwards, 87

M.S.P.R. 518

, to determine whether the agency made a “constructive suitability”

determination when it rescinded the offer of employment that it had extended to

the appellant. The AJ shall then issue a new initial decision.

FOR THE BOARD:

______________________________

William D. Spencer

Clerk of the Board

Washington, D.C.

4B. Nevertheless, we have made no findings concerning the AJ’s error in this regard

because it would require us to weigh evidence and resolve conflicting assertions of the

parties, which we cannot do prior to a jurisdictional hearing being held. Ferdon, 60

M.S.P.R. at 329.