Penalties Mitigated in Arbitration, after an Agency Decision, Do Not Establish Disparate Treatment
This case law update was written by Michael J. Sgarlat, an attorney at the law firm of Shaw Bransford & Roth, where he has practiced federal personnel and employment law since 2015. Mr. Sgarlat works with federal employees to respond to proposed disciplinary and adverse actions, and has experience litigating cases before the U.S. Merit Systems Protection Board.
McKenzie Holmes was a U.S. Postal Service (“USPS”) employee from 1989, until his removal in 2018. At the time of his removal, he worked as a city carrier at the Fort Dearborn Station in Chicago.
Holmes was removed after a USPS Office of Inspector General (“OIG”) investigation revealed another letter carrier, Christopher Baxter, was selling marijuana from a postal vehicle. Surveillance video of Baxter’s vehicle showed that Holmes and several other USPS employees engaged in alleged narcotics transactions with Baxter while on duty.
The surveillance video showed two interactions between Baxter and Holmes. Holmes was in uniform and on duty in both. The first occurred on June 6, 2017. In that video, Baxter placed an item in the cup holder of the vehicle, and Holmes entered the vehicle and took money from his pocket, handed it to Baxter, and removed from the cup holder a small plastic bag. The second interaction occurred on June 9, 2017. The video showed Holmes and Baxter inside the postal vehicle, smoking what appeared to be a rolled cigar.
OIG issued a report of its investigation, which summarized Baxter’s interactions with several USPS employees, including Holmes. In October 2017, after the report of investigation issued, USPS conducted two pre-disciplinary interviews of Holmes. Holmes invoked his Fifth Amendment right to remain silent in them, declining to answer any questions on the video or OIG report.
In December 2017, Holmes received a proposed removal. The proposal charged Holmes with unacceptable conduct, related to his interactions with Baxter in the postal vehicle. After receipt of the proposal, Holmes met with the Deciding Official, and told her he was “so embarrassed,” “really wanted to apologize to [her],” and “made this little mistake.” In February 2018, the Deciding Official issued her decision on the proposal. She sustained the unacceptable conduct charge and removed Holmes from the federal service.
Seven other employees, who admitted to purchasing marijuana from Baxter, were also removed from the federal service. Five of them grieved their removals through grievance arbitrations. In separate decisions, the arbitrators mitigated the removals to lengthy suspensions.
Holmes did not appeal the removal through a grievance arbitration. Instead, he appealed his removal to the Merit Systems Protection Board (“Board”). On appeal, he argued that USPS had insufficient evidence to find that he purchased marijuana from Baxter.
On April 16, 2019, the administrative judge (“AJ”) issued an initial decision, and determined USPS proved by preponderant evidence that Holmes purchased marijuana on duty, found a nexus between the misconduct and Holmes’s job responsibilities, and determined that removal was an appropriate penalty. The AJ’s decision became the final decision of the Board on June 21, 2019.
Holmes filed a petition for review with the U.S. Court of Appeals for the Federal Circuit. He made two arguments. First, he argued that USPS failed to prove by a preponderance of the evidence that he purchased marijuana while on duty and in uniform as a mail carrier. Second, he argued that his removal was inconsistent with the arbitrators’ decisions to mitigate the penalties imposed on other USPS employees who purchased marijuana from Baxter.
The court of appeals began by addressing Holmes’s argument that the surveillance video was blurry and failed to clearly disclose any purchase of contraband, and his argument that USPS did not recover or submit into evidence contraband he obtained. He cited cases concerning the evidence necessary to prove charges of criminal possession of a controlled substance.
The court explained that in removal proceedings before the Board, unlike criminal proceedings, the legal standard of proof is not proof beyond a reasonable doubt and agencies are only required to prove by a preponderance of the evidence that the charged conduct occurred. As such, the court stated that USPS did not need to produce evidence sufficient for a criminal conviction. The court of appeals found that the Board thoroughly evaluated the record and determined that USPS met its burden of proof. It found no reversible error in the Board’s determination.
The court then addressed Holmes’s argument that the court should mitigate USPS’s penalty because other USPS employees were reinstated following grievance arbitration. Holmes’s contention narrowed in on the sixth factor listed in Douglas v. Veterans Administration, 5 M.S.P.R. 280 (1981). That factor considers whether the penalty is consistent with the penalty “imposed upon other employees for the same or similar offenses.”
The court acknowledged that the outcome of Holmes’s case was facially different from that of the five employees who pursued grievance arbitration. However, the court found that Holmes did not make a disparate treatment argument before the Board, even though the arbitration decisions occurred before the initial decision in this case. Because Holmes could have, and did not raise this issue before the Board, the court said he was precluded from raising it here.
Nonetheless, the court stated that USPS issued removal penalties to all the employees charged with purchasing marijuana from Baxter at the time of Holmes’s removal decision. The court found that because each of the employees were treated equally at the agency level, there was no disparate treatment. The court explained the fact that the removal penalty issued to these employees was later mitigated by arbitrators does not reflect any disparate treatment by USPS itself.
In addition, the court noted that the arbitration decisions were not binding on the Board, and that even if they were, there is a rationale for treating Holmes differently. Specifically, each of the employees whose removals were mitigated admitted to purchasing marijuana from Baxter. Holmes did not admit to the conduct.
The court further explained that Holmes’s failure to take responsibility for his actions was not premised on his decision to exercise his Fifth Amendment rights. The court stated that Holmes denied certain facts proven false at hearing and characterized his conduct as a “little mistake” when meeting with the Deciding Official. The court said these facts establish Holmes’s failure to take responsibility. Thus, as for the penalty determination, the court did not find reversible error.
As such, the Federal Circuit affirmed the decision of the Board.
Read the full case: Holmes v. U.S. Postal Service
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