Delgado v. U.S. Dep't of Justice

979 F.3d 550

Adam DELGADO, Petitioner,

v.UNITED STATES DEPARTMENT OF JUSTICE, Bureau of Alcohol, Tobacco, Firearms, and Explosives, Respondent.

No. 19-2239

United States Court of Appeals, Seventh Circuit.

Argued April 7, 2020

Decided July 16, 2020

Amended on Petition for Rehearing, October 29, 2020

Brian James Paul, Attorney, Faegre Drinker Biddle & Reath LLP, Indianapolis, IN, Jeffrey P. Justman, Attorney, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, for Petitioner

Adam Delgado, Pro Se

David R. Pehlke, Attorney, Department of Justice, Civil Division, Commercial Litigation Branch, Washington, DC, for Respondent

Before Rovner and Hamilton, Circuit Judges.^*

Hamilton, Circuit Judge.

Petitioner Adam Delgado is a special agent with the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Since 2014, he has sought relief under the federal Whistleblower Protection Act for retaliation he believes he suffered after reporting his suspicions that another ATF agent may have committed perjury during a federal criminal trial. See 5 U.S.C. §§ 1214(a)(1)(A), 2302(b)(8).

This is Delgado's second trip to this court. Two years ago, we held that the Merit Systems Protection Board had acted arbitrarily and capriciously in dismissing his administrative appeal under the Act. Delgado v. Merit Systems Protection Bd. , 880 F.3d 913 (7th Cir. 2018) (" Delgado I "). We held that Delgado had properly alleged "a protected disclosure" and had exhausted his administrative remedies so that the Board had jurisdiction to evaluate the merits of his claim. See id. at 916, 920. We remanded the case to the Board for further proceedings consistent with our opinion.

On remand, the Board denied relief. (The Board acted only through an Administrative Judge; since early 2017 the Board itself has lacked a quorum.) Delgado again seeks judicial review. Again, we must find the Board has acted arbitrarily, capriciously, and contrary to law. The Administrative Judge (or AJ) paid only lip-service to our decision, ignoring critical holdings and reasoning. Delgado proved that he made a disclosure that was in fact protected under the Act. He also proved retaliation for his protected disclosure, which affected decisions to deny him several promotions. "After concluding that an administrative decision is flawed, a court of appeals normally must remand to the agency." Baez-Sanchez v. Barr , 947 F.3d 1033, 1036 (7th Cir. 2020), citing Negusie v. Holder , 555 U.S. 511, 129 S.Ct. 1159, 173 L.Ed.2d 20 (2009), Gonzales v. Thomas , 547 U.S. 183, 126 S.Ct. 1613, 164 L.Ed.2d 358 (2006), and INS v. Orlando Ventura , 537 U.S. 12, 123 S.Ct. 353, 154 L.Ed.2d 272 (2002). As in Baez-Sanchez , however, "we have already remanded, only to be met by obduracy." Id.

We remand once more, but only on the extent of relief for Delgado. The government had the opportunity to offer evidence to support its affirmative defense, that it would have made the same decisions anyway. The government's showing on its defense fails as a matter of law, at least as to one March 2014 promotion denial and another in 2016 where Delgado was the only candidate on the "best qualified" list. Delgado is entitled at least to pay and benefits as if he had been promoted to GS-14 effective March 4, 2014. Possible further relief will need to be considered on remand.

I. The Whistleblower Protection Act

We first provide an overview of the Whistleblower Protection Act and how it frames the issues on this petition for judicial review. Covering most federal civil servants, the Act offers relief for employees who have suffered adverse personnel actions as a result of making protected disclosures of wrongdoing within their agencies. See 5 U.S.C. § 2302(a)(2)(B) and (b)(8). The disclosure at issue in this appeal falls under § 2302(b)(8)(A)(i), which protects "any disclosure of information by an employee or applicant which the employee or applicant reasonably believes evidences any violation of any law, rule, or regulation...."

The Act establishes a procedural obstacle course for employees who invoke its protections. A covered employee who believes he has suffered a prohibited personnel practice under the Act must first "seek corrective action from the Special Counsel before seeking corrective action from the [Merit Systems Protection] Board." § 1214(a)(3). The Special Counsel must investigate any allegation received "to the extent necessary to determine whether there are reasonable grounds to believe that a prohibited personnel practice has occurred, exists, or is to be taken." § 1214(a)(1)(A). If the Special Counsel "determines that there are reasonable grounds to believe that a prohibited personnel practice has occurred, exists, or is to be taken which requires corrective action, the Special Counsel shall report the determination together with any findings or recommendations to the [Merit Systems Protection] Board, the agency involved and to the Office of Personnel Management, and may report such determination, findings and recommendations to the President." § 1214(b)(2)(B).

After the Office of Special Counsel has finished with the case, an employee may seek corrective action from the Merit Systems Protection Board. § 1221(a). The Board must order appropriate corrective action if the employee demonstrates that a protected disclosure "was a contributing factor in the personnel action which was taken or is to be taken against such employee...." § 1221(e)(1). The employee may do so by means of "circumstantial evidence, such as evidence that—(A) the official taking the personnel action knew of the disclosure or protected activity; and (B) the personnel action occurred within a period of time such that a reasonable person could conclude that the disclosure or protected activity was a contributing factor in the personnel action." Id. (This "knowledge/timing test" plays a key role in this case. See, e.g., Powers v. Dep't of the Navy , 97 M.S.P.R. 554, 561 (2004) ; Grubb v. Dep't of the Interior , 96 M.S.P.R. 377, 395 (2004) ; Redschlag v. Dep't of the Army , 89 M.S.P.R. 589, 634–35 (2001).) If the employee shows that a protected disclosure was a contributing factor in the personnel action, the agency may still avoid relief to the whistleblower by "demonstrat[ing] by clear and convincing evidence that it would have taken the same personnel action in the absence of such disclosure." 5 U.S.C. § 1221(e)(2).¹

These statutes frame four key issues here. First, did Delgado properly exhaust remedies available with the Office of Special Counsel? We held in Delgado I that he did. 880 F.3d at 920–21. The Administrative Judge was not happy with that holding, but because she did not base her new decisions on this issue, we say no more about it.

Second, did Delgado make a protected disclosure within the meaning of the statute? We held in Delgado I that he alleged a protected disclosure in 2014, id. at 921–22, and the evidence at the hearing shows that he in fact made a protected disclosure. We explained that the AJ and Board had applied the wrong standard in their original decision. Id. Our same reasoning applies to Delgado's later disclosures on the same subject in 2015 and 2016. To our amazement, though, after our remand the AJ rejected our reasoning and holding and found, for the second time, that none of Delgado's disclosures were protected. Her theory was that Delgado had not reported an objectively reasonable belief of wrongdoing because his account did not foreclose the possibility of an innocent explanation for the differences in testimony, and the circumstances were such that his colleague Chris Labno had probably been telling the truth. That was arbitrary, capricious, and contrary to law.

Third, did Delgado demonstrate that his disclosure was a contributing factor in his failure to be promoted on numerous occasions? The AJ found on remand that he did, at least for two promotions denied in 2014. And fourth, has the agency shown by clear and convincing evidence that it would not have promoted Delgado regardless of these disclosures? The AJ took evidence on this question but did not answer it. We find that the agency had the opportunity to make its case and failed to do so; there is no need for a further hearing on it.

II. Delgado's Protected Disclosures

The first contested issue is whether Delgado made a protected disclosure. We held in Delgado I that he had properly alleged a protected disclosure in his filings with the Office of Special Counsel and before the Board. Delgado alleged that he met with two supervisors on February 4, 2014 and reported to them his belief that a fellow agent (Labno) had committed perjury in a federal criminal trial where Delgado, Labno, and other agents had testified. The testimony concerned an attempted undercover drug buy in which Labno was robbed by the suspected drug dealers. Labno fired shots at the fleeing robbers, and whether his shots were justified was disputed in the trial of one suspected (then convicted) dealer. The Administrative Judge and Board had held that Delgado had not alleged a protected disclosure because he had not told his supervisors that he definitely believed Labno had acted with the mens rea necessary for perjury, and his disclosure left open the possibility that Labno had been honestly mistaken on some key details in his testimony relevant to whether the shooting was justified. 880 F.3d at 921.

As we explained in Delgado I , the relevant language of the Act does not require a disclosure to assert a violation of law as definitively as the Board had required of Delgado. The Act protects a disclosure that the employee "reasonably believes evidences" a violation of the law. 5 U.S.C. § 2302(b)(8). Our decision squarely rejected the Board's rationale for finding that Delgado's disclosure was not protected. Under paragraph (b)(8), a whistleblower need not assert that he has definitive proof of a violation of law, such that he is confident that all innocent explanations can be refuted. 880...