Do v. Hud , 913 F.3d 1089 ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
HANH DO,
Petitioner
v.
DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT,
Respondent
______________________
2018-1147
______________________
Petition for review of the Merit Systems Protection
Board in No. DC-0752-17-0149-I-1.
______________________
Decided: January 14, 2019
______________________
TAMARA LOUISE MILLER, MillerMasciola, Washington,
DC, argued for petitioner.
SONIA W. MURPHY, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for respondent. Also represent-
ed by RETA EMMA BEZAK, REGINALD THOMAS B LADES, JR .,
ROBERT EDWARD KIRSCHMAN, JR., JOSEPH H. HUNT.
______________________
Before DYK, REYNA, and CHEN, Circuit Judges.
2 DO v. HUD
DYK, Circuit Judge.
Hanh Do petitions for review of a decision of the Merit
Systems Protection Board (“Board”). The Board sustained
the Department of Housing and Urban Development’s
(“HUD’s” or “agency’s”) action demoting and suspending
Do. In its notice of proposed action, HUD charged Do
with “negligence of duty” for hiring and later promoting
an employee when Do knew that the employee did not
have a college degree, which the agency viewed as a
requirement. On appeal, the Board agreed with Do that a
college degree was not required and that the employee
could alternatively qualify for the positions by having a
combination of education and experience. The Board,
nonetheless, sustained the charge, concluding that Do
was negligent because she failed to ensure that the em-
ployee met the alternative qualification requirements.
We hold that Do’s due process rights were violated be-
cause the Board exceeded the scope of the agency’s
charge, relying on a new ground to sustain the discipline.
We reverse and remand.
BACKGROUND
Do has been a government employee since 1990.
From 1990 to 1998, Do worked as an auditor for the
Internal Revenue Service. In 1998, HUD Office of Inspec-
tor General (“OIG”) hired Do as auditor in the Infor-
mation Systems Audit Division. She was promoted to
Assistant Director of that division and then to Director in
2003 and 2005, respectively. She held the position of
Director until she was demoted on November 27, 2016.
In November 2006, Do was responsible for selecting
candidates for auditor positions in her division. Uyen
Asuncion applied for a GS-11 auditor position in Do’s
division. At the time she applied, Asuncion was working
as a GS-11 auditor at the Department of Justice (“DOJ”).
DO v. HUD 3
Both on her resume and Questionnaire for Public Trust
Positions, Asuncion claimed she had a college degree in
accounting.
In December 2006, a pre-employment background in-
vestigation revealed that Asuncion did not have a degree
in accounting. Do was informed of this discrepancy and
questioned Asuncion about it. It turned out that Asun-
cion was never awarded her degree because, even though
she had completed the required coursework, her grade
point average was not high enough for the university to
confer the degree. Apparently, Asuncion needed to take
one additional course to raise her grade point average to
meet the minimum and obtain the degree.
Asuncion told Do that she had made an honest mis-
take and believed that she had completed the require-
ments for her degree when she applied. Asuncion
promised to complete an additional college course to
secure her degree. After conferring with her supervisor,
Do approved Asuncion’s selection for the auditor position.
At the same time, Do urged Asuncion to complete her
degree.
Over the next few years, Asuncion was promoted to a
GS-12 auditor position and then to a GS-13 auditor posi-
tion. In 2009, Do posted two GS-14 auditor positions (one
of which was created with Asuncion in mind). Asuncion
applied for one of the positions, and human resources
flagged Asuncion “as a qualified candidate” and included
her on a list of “eligible candidates” for the position. J.A.
3. Do selected Asuncion for one of the positions. At that
time, Do knew that Asuncion still did not have an ac-
counting degree.
In 2013 or 2014, Do consulted with her supervisor re-
garding Asuncion’s lack of degree. After consulting with
human resources, Do’s supervisor advised Do that Asun-
4 DO v. HUD
cion could continue as an auditor but must obtain her
degree. Asuncion resigned in March 2016.
On July 20, 2016, HUD issued a notice of proposal to
demote Do from the position of Director (GS-15) to Non-
supervisory Senior Auditor (GS-14) and to suspend her for
fourteen days for negligence of duty. The notice alleged
that Do was negligent in hiring Asuncion in 2006 and
promoting her in 2009 because a college degree was
“required for the position[s],” and “Asuncion . . . admitted
to [Do] that she did not have her degree.” J.A. 367. Do
responded both in writing and orally to the agency. On
November 9, 2016, after considering Do’s submitted
replies, the HUD deciding official issued a formal written
decision, concluding that “demotion and suspension [we]re
warranted and serve to promote the efficiency of the
service.” J.A. 355. Do was demoted and suspended
effective November 27, 2016.
Do timely appealed to the Board. After a hearing, the
administrative judge sustained the agency’s action. Do
did not appeal to the full Board (which then lacked a
quorum), and the administrative judge’s decision became
the final decision of the Board.
Do petitioned for review in our court. We have juris-
diction under 5 U.S.C. § 7703(b)(1) and 28 U.S.C.
§ 1295(a)(9). In reviewing the Board’s decision, we must
affirm the 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); Ward v. U.S. Postal Serv., 634 F.3d 1274, 1278
(Fed. Cir. 2011). “We ‘must reverse a decision of the
Board if it . . . is not in accordance with the requirements
of the Due Process Clause of the Fifth Amendment.’”
Ward, 634 F.3d at 1278 (alteration in original) (quoting
DO v. HUD 5
Blank v. Dep’t of the Army, 247 F.3d 1225, 1228 (Fed. Cir.
2001)).
DISCUSSION
I
In general, public employees possess a constitutional-
ly protected property right in their employment and are
entitled to pre-deprivation due process. See Cleveland Bd.
of Educ. v. Loudermill, 470 U.S. 532, 538 (1985); Stone v.
Fed. Deposit Ins. Corp., 179 F.3d 1368, 1374–76 (Fed. Cir.
1999) (“An employee is entitled to a certain amount of due
process rights at each stage and, when these rights are
undermined, the employee is entitled to relief regardless
of the stage of the proceedings.”). “The essential require-
ments of due process . . . are notice and an opportunity to
be heard.” Loudermill, 470 U.S. at 546. As the Supreme
Court stated in Loudermill, due process “requires some
kind of hearing prior to the discharge of an employee.” Id.
at 542 (quotation marks and citations omitted). Pre-
termination due process is important because “[e]ven
where the facts are clear, the appropriateness or necessity
of the discharge may not be; in such cases, the only mean-
ingful opportunity to invoke the discretion of the deci-
sionmaker is likely to be before the termination takes
effect.” Id. at 543; see also Young v. Dep’t of Housing &
Urban Devel., 706 F.3d 1372, 1377 (Fed. Cir. 2013) (“[A]n
employee is entitled to notice of the charges against him,
an explanation of the employer’s evidence, and an oppor-
tunity to present his side of the story before termination.”
(citing Stone, 179 F.3d at 1376)); see also 2 Richard J.
Pierce, Jr., Admin. Law Treatise § 9.5, p. 823 (5th ed.
2010) (“Notice is one of the most important procedural
safeguards.”).
To be sure, not every disciplinary action requires pre-
deprivation notice and opportunity to be heard. For
example, in Gilbert v. Homar, 520 U.S. 924, 933 (1997),
6 DO v. HUD
the Supreme Court held that a pre-disciplinary hearing
was not required where the disciplinary action—
suspension—was only temporary, and “the State ha[d] a
significant interest in immediately suspending” an em-
ployee who had been arrested and charged with a felony.
Although Do’s case does not involve a termination, the
government does not argue that demotions should be
treated differently than terminations or that there was a
need to take action quickly without advance notice and
opportunity to be heard. In the past, this court has as-
sumed in demotion cases that there is a right to pre-
demotion notice and an opportunity to be heard. See, e.g.,
Nguyen v. Dep’t of Homeland Sec., 737 F.3d 711, 718 (Fed.
Cir. 2013); Pope v. U.S. Postal Serv., 114 F.3d 1144, 1148–
49 (Fed. Cir. 1997); see also Ciambriello v. Cty. of Nassau,
292 F.3d 307, 321 (2d Cir. 2002) (holding “that the process
due [to the employee] was notice of the charges against
him and the opportunity to be heard before demotion”).
It is well-established that, in the civil service system,
“[o]nly the charge and specifications set out in the Notice
may be used to justify punishment because due process
requires that an employee be given notice of the charges
against him in sufficient detail to allow the employee to
make an informed reply.” O’Keefe v. U.S. Postal Serv.,
318 F.3d 1310, 1315 (Fed. Cir. 2002); see Lachance v.
Merit Sys. Prot. Bd., 147 F.3d 1367, 1371–72 (Fed. Cir.
1998); Brook v. Corrado, 999 F.2d 523, 526–27 (Fed. Cir.
1993). When an agency relies on a charge not included in
the notice, due process is violated because the notice does
not fully inform the employee of the grounds for the
proposed removal and deprives the employee of an oppor-
tunity to make an informed response before the agency
takes disciplinary action. See Brook, 999 F.2d at 527;
Pope, 114 F.3d at 1148–49.
DO v. HUD 7
Likewise, the Board is limited to reviewing the
grounds invoked by the agency and may not “substitute
what it considers to be a better basis for removal than
what was identified by the agency.” O’Keefe, 318 F.3d at
1315 (citations omitted); see James v. Dale, 355 F.3d 1375,
1378–79 (Fed. Cir. 2004); Licausi v. Office of Pers. Mgmt.,
350 F.3d 1359, 1363 n.1 (Fed. Cir. 2003); see also Horne v.
Merit Sys. Prot. Bd., 684 F.2d 155, 157–58 (D.C. Cir.
1982) (cited with approval in Licausi, 350 F.3d at 1363).
“Simply put, the Board should not be in the business of
affirming administrative decisions based upon how an
agency might have acted if it had followed proper proce-
dures.” Horne, 684 F.2d at 157–58.
For example, in O’Keefe, we held that the Board vio-
lated an employee’s due process rights when it sustained
a removal based on alleged misconduct that appeared
nowhere in the notice of proposed removal. 318 F.3d at
1315. “By accusing [the employee] of specific misdeeds
that were not within the scope of the Notice of Proposed
Removal, the Board . . . exceeded the scope of its review of
the agency’s decision.” Id.
Thus, as a general matter, when an agency disciplines
an employee, it may do so based only on the charges in
the notice of proposed action, and the Board, in turn, can
affirm the disciplinary action based only on the charges
actually noticed and relied on by the agency. The gov-
ernment does not dispute these general principles estab-
lished by a long line of this court’s cases.
II
These due process requirements were violated here.
Do was issued a notice of proposal to demote and suspend.
The notice alleged a single charge of “negligence of duty”
and stated as follows:
8 DO v. HUD
Charge: Negligence of Duty
Specification #1: In 2006 you were
made aware by security personnel at the
Bureau of the Fiscal Service (formerly the
Bureau of the Public Debt) that during a
pre-employment background investigation
for Uyen Asuncion attendance at the Uni-
versity of Colorado – Boulder was con-
firmed but there was no record that Ms.
Asuncion had received her Bachelor of
Science degree which was required for the
position for which she was being consid-
ered. Ms. Asuncion also admitted to you
that she did not have her degree; regard-
less she was hired for the position.
Specification #2: In 2009, you created a
GS-14 auditor position within your divi-
sion for Ms. Asuncion knowing that she
did not possess a Bachelor of Science de-
gree as required for auditor positions with
HUD OIG.
J.A. 367 (emphases added). The notice further character-
ized the offense as “serious” because “[t]he fact Ms. Asun-
cion did not have a [college] degree calls into question all
of the work Ms. Asuncion has completed on behalf of HUD
OIG.” J.A. 368.
The Office of Personnel Management (“OPM”) sets
forth minimum qualification requirements for positions in
the federal competitive service. Contrary to the notice, a
college degree was not required for these positions in 2006
or 2009. Under the OPM standard, there were two ways
an individual could qualify for a GS-11 or GS-14 auditor
position: (1) by having a degree in accounting or related
field, or (2) by having a specified combination of education
and experience.
DO v. HUD 9
A. THE AGENCY PROCEEDINGS
As HUD contends, Do argued in her responses to the
agency that a degree was not required for the auditor
positions; that there was an alternative way to qualify;
and that she believed Asuncion qualified for the positions
under this alternative. But Do was not on notice that she
needed to defend against a charge of negligence for alleg-
edly failing to investigate whether Asuncion was qualified
based on a combination of education and experience. The
central issue was not Do’s belief but whether her actions
were negligent.
Do did not have a meaningful opportunity to address
the unstated charge of negligence of duty in this respect
(i.e., whether Do should have taken other actions to verify
compliance under the alternative standard). The deciding
official appeared not to have addressed the issue of negli-
gence in failing to investigate the alternative qualifica-
tions. In her formal decision, the deciding official
appeared to instead address Do’s contention that she
believed that Asuncion was qualified under the education
and experience standard, ultimately concluding that
demotion and suspension were warranted because Do
believed a degree was required and knew that Asuncion
did not have a degree. The deciding official stated:
In conclusion, the information in the case file
shows you repeatedly emphasized Ms. Asuncion’s
need to obtain a college degree, beginning with
your obtaining a promise from Ms. Asuncion
around the time of her hire to complete that de-
gree. Your emphasis on obtaining the degree
demonstrates that you believed, on some level, Ms.
Asuncion needed to possess a college degree to
qualify for the auditor position, yet you allowed
her to continue working in that position and even
promoted her to a higher level auditor position
knowing she did not possess the degree. You
10 DO v. HUD
demonstrated poor judgment, which continued
over a number of years, with regard to the hiring
and subsequent promotion of Ms. Asuncion. Your
actions directly led to Ms. Asuncion working and
supervising audits for nearly a decade without
possessing a college degree.
J.A. 337 (emphases added).
B. THE BOARD PROCEEDINGS
Although agreeing that a college degree was not re-
quired, the Board sustained the charge on a different
ground than the ground relied on by the agency. The
Board found that Asuncion did not meet OPM’s require-
ments in 2006 or 2009 because she did not possess the
requisite combination of education and experience that
was an alternative basis for qualifying. The education
and experience standard at issue here required that the
applicant have (1) “at least 4 years of experience in ac-
counting or an equivalent combination of accounting
experience, college-level education, and training that
provided professional accounting knowledge” and (2)
“[t]wenty-four semester hours in accounting or auditing
courses of appropriate type and quality[,] [which] can
include up to 6 hours of business law.” J.A. 421. With
respect to the 2006 hiring, the Board found that Asuncion
did not have at least four years of accounting experience
or the equivalent when she transferred from the DOJ to
HUD OIG. 1 Even if this requirement were met, the
1 Do had argued that Asuncion worked as a student
trainee at HUD OIG’s Denver, Colorado, office from
March 2003 through January 2005, as an auditor at HUD
OIG’s Baltimore, Maryland, office from January 2005
through April 2006, and as an auditor at the DOJ from
April 2006 until March 2007. Do argued that Asuncion’s
DO v. HUD 11
Board further found that Asuncion did not have twenty-
four semester hours in accounting because her transcript
reflected only twenty-one semester hours in accounting. 2
With respect to the 2009 promotion, the Board simi-
larly rejected Do’s arguments and found that Asuncion
did not meet OPM’s requirements in 2009 because, “while
she had more years of experience at the time of her pro-
motion, she still lacked a college degree and it was not
established that she completed 24 hours of coursework as
required by OPM’s qualifications.” J.A. 12. Both for 2006
and 2009, the Board concluded that Do was guilty of
“negligence of duty” because she did not determine that
Asuncion met the required qualifications, and she could
not rely on human resources or her supervisors without
making an independent investigation.
The Board’s decision is inconsistent with the agency’s
charge and supporting specifications. On appeal, the
Board was required to limit its review to the grounds
specified in the notice and relied on by the deciding offi-
cial, namely, that a degree was required and that Do
almost two years of experience working as a student
trainee and her nearly two years of experience working as
an auditor met the “at least 4 years of experience in
accounting or an equivalent combination of accounting
experience, college-level education, and training.”
2 Do had argued that a course titled “Accounting
and Financial Analysis,” which was worth four credits,
was an accounting course on its face, and thus Asuncion
had twenty-four semester hours in accounting courses.
The Board acknowledged that, “[i]f the course was appli-
cable, Ms. Asuncion would have had 25 hours of applica-
ble coursework.” J.A. 7.
12 DO v. HUD
hired and later promoted Asuncion, knowing that Asun-
cion did not have a degree. See O’Keefe, 318 F.3d at 1315;
Lachance, 147 F.3d at 1371–72 (Where an agency “use[s]
general charge labels such as ‘unacceptable and inappro-
priate behavior’ or ‘misconduct,’” it “would be inconsistent
with due process” to allow “an agency . . . to prove any
conduct generally relating to the conduct described in the
specification, as long as that conduct could be character-
ized as ‘inappropriate’ or ‘misconduct.’”). But the Board
sustained the disciplinary action because it concluded
that Do negligently failed to investigate whether Asun-
cion met OPM’s alternative requirements. The alterna-
tive theory relied on by the Board appears nowhere in the
notice or in the deciding official’s decision, and HUD
conceded as much at oral argument.
Of course, the magnitude of the procedural error is
relevant to determining whether there has been a due
process violation. As we have stated, not every “proce-
dural defect [is] so substantial and so likely to cause
prejudice that it undermines the due process guarantee
and entitles the claimant to an entirely new administra-
tive proceeding.” Stone, 179 F.3d at 1376–77. 3 But this is
3 The Mathews v. Eldridge, 424 U.S. 319 (1976),
balancing test takes account of the substantiality of the
deprivation in determining whether an individual has
been afforded procedural due process. 424 U.S. at 335,
340–42; Fed. Deposit Ins. Corp. v. Mallen, 486 U.S. 230,
242 (1988) (examining the “importance of the private
interest and the harm to this interest occasioned by
[agency] delay” in determining “how long a delay is justi-
fied in affording a post-suspension hearing and decision”);
Loudermill, 470 U.S. at 546–47 (holding that a 9-month
delay in final decision was not “unconstitutionally lengthy
per se”).
DO v. HUD 13
not a case where the departures are minor. 4 Rather, Do
did not have the opportunity to meaningfully address
negligence at the agency under the alternative standard
for qualifying, and the Board’s departure from the agen-
cy’s decision was significant. Procedural due process
guarantees are not met when the agency fails to give
notice of and fails to consider the proper standard, and
the Board, as it did here, departs significantly from the
grounds relied on by the agency and substitutes its own
alternative theory.
III
HUD argues that, if there was a due process violation,
it was at most harmless error. Even if we applied a
harmless error test here, we are convinced that the error
4 See, e.g., Pope, 114 F.3d at 1148–49 (rejecting pe-
titioner’s argument “that his due process rights were
violated because the charges lacked specificity regarding
dates, times, and places” because “[t]he notice given to
Mr. Pope [wa]s quite detailed and clearly informed him of
the charges as well as the evidence the Postal Service had
in support”); Brook, 999 F.2d at 526–27 (rejecting due
process challenge where the notice did not explicitly state
the nexus between the employee’s misconduct and the
proposed disciplinary action, but “the notice fully in-
formed Mr. Corrado of the grounds for the proposed
removal [and] . . . clearly identified the details of Mr.
Corrado’s arrest and conviction”); Hayes v. Dep’t of the
Navy, 727 F.2d 1535, 1538 (Fed. Cir. 1984) (rejecting
petitioner’s due process challenge because, even though
“[t]he specific date of the offense charged appear[ed] to
have been a little off target,” the notice said “on or about
22 January 1982” and “it [wa]s clear to us that petitioner
knew what charge he had to defend”).
14 DO v. HUD
is harmful. We fail to see how the Board’s error could
have been harmless. There is certainly no showing that
the Board would have reached the same result if it had
considered only the agency’s original charge since the
Board agreed that a college degree was not required.
With respect to the agency, the government argues that
the deciding official testified that she would have reached
the same result absent the error. HUD, however, has not
proven by a preponderance of evidence that the deciding
official would have reached the same result if Do had been
charged with negligence in determining Asuncion’s quali-
fications under the correct standard. The deciding offi-
cial’s testimony that she believes she would have arrived
at the same conclusion and imposed the same penalty
under proper procedures is not sufficient to show that the
due process violation in this case was harmless because
the test for harmlessness is an objective one, not a subjec-
tive one.
In Ryder v. United States, the government argued
that the decision should be affirmed despite the procedur-
al defect in the employee’s firing because he would have
been removed on the merits in the absence of the proce-
dural defect. 585 F.2d 482, 487–88 (Ct. Cl. 1978), super-
seded by statute as recognized in Adams v. Dep’t of
Transp., F.A.A., 735 F.2d 488, 496 (Fed. Cir. 1984) (Nies,
J., concurring). The Court of Claims rejected this reason-
ing, stating:
[W]here a serious procedural curtailment mars an
adverse personnel action which deprives the em-
ployee of pay, the court has regularly taken the po-
sition that the defect divests the removal (or
demotion) of legality . . . . In that situation, the
merits of the adverse action are wholly disregard-
ed.
Id. at 487–488. Similarly, in Sullivan, we rejected the
government’s argument that the due process violation
DO v. HUD 15
“was harmless error” and “made absolutely no difference
in the case because . . . the petitioner would have been
removed in any event because of the evidence against
him” and held that the violation there “tainted the inves-
tigation, voided the entire proceeding, and rendered [the]
removal decision a nullity.” 720 F.2d at 1273–74 (citing
Ryder, 585 F.2d 482). We also rejected as irrelevant a
similar argument in Stone, where the deciding official
stated that he would have concluded that the employee
should be removed “whether or not” the due process
violation occurred. 179 F.3d at 1373.
Thus, there is no basis to conclude that the errors
here were harmless.
CONCLUSION
Because the Board violated Do’s due process rights in
sustaining her demotion and suspension, we reverse and
remand.
REVERSED AND REMANDED
COSTS
Costs to the petitioner.