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Case number 22-5150 et al.

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Maria Isparraguera, appellant, versus Department of the Army et al.

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Mr. Walker for the appellant, Mr. Hinshaw Wood for the appellees.

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Mr. Walker, good morning.

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Thank you, good morning.

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May it please the court.

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Lucas Walker for appellant Maria Isparraguera.

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The Civil Service Reform Act says that career senior executives may not be removed from the senior executive service except for the grounds stated in specific statutes, such as performance under section 35 and misconduct under section 75.

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That guarantee makes career senior executives, like Mrs. Sparraguera, removable from the SES only for cause, not at will.

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It gives them a legitimate expectation of remaining in the SES unless they do something warranting removal under one of those statutes.

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In other words, it gives career executives a protected property interest in their career SES appointment.

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As a result, Ms.

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Asparagara could be deprived of that property interest.

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Her career SES appointment could be taken away from her only through constitutionally adequate procedures, including meaningful notice and opportunity to respond before being removed from the SES.

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But she did not receive anything like that.

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The OSC report that supposedly justified her removal was deliberately withheld.

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So were the results of the department's own investigation, which cleared her of the prohibited personnel practice that OSCE had accused her of.

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It wasn't afforded an opportunity to defend herself, where the decision makers rated her unsatisfactory in order for removal, and her supervisors, who were supposed to be consulted and continued to think that she was one of the best senior executives that they had ever encountered.

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were also cut out of the process that decided her fate and destroyed her 35-year career as a highly respected government attorney.

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Is there any source of criteria as to what constitutes acceptable performance?

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Yes, yes.

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So the term here in section 3592 is less than fully successful executive performance as determined under subchapter two of title 43.

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So it leads back to the systematic appraisal system under section 4312 through 4314.

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And it refers specifically to, so it's a five level rating system.

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What is the top level?

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The top rating, the top level is five.

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So five is outstanding, which is what she was originally rated.

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One is unsatisfactory.

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And those different levels are rigorously defined through OPM and Department of the Army regulations.

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So, what would constitute fully successful performance?

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So, fully successful is level three.

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It meets expectations, essentially.

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And this is you can see this meeting expectations is fully successful.

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Then what is then what's four and five?

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So four and five is basically exceeds expectations and five is outstanding, which is what she was originally rated at level five.

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And those different levels, they're not just a general feeling about how someone feels about how she's doing.

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It's a systematic appraisal system that it has to be defined, what each one of those means.

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And so- What was the last rating, if you will, that's the right term, before it went to the head of the agency?

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I'm sorry, I didn't catch that.

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What was her last rating before, or recommended rating before

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the head of the agency issues rendered a decision.

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So her initial rating official rated her five.

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And then there was the performance review board, especially convened review board that we didn't know about until after it made us recommendation.

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It recommended level one unsatisfactory.

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And that is what the recommended was unsatisfactory unsatisfactory.

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Yeah.

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And so that was based on documents we didn't have.

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We didn't even know that they had been convened at the time that will be that as it may.

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It is unsatisfactory.

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which is obviously less than fully successful.

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It is, yes.

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And, but that standard, that's a performance standard.

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Performance standards are regularly viewed as being for cause standards.

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And here, if you look at the regulations in addendum 25 and 26 of our opening brief, you can see how they actually define what each one of those levels

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And in J8 49 or appraisal for the year in question, it also provides definitions of what each of those levels mean.

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So it's it's the sort of standard that you could invoke in a hearing.

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That's the kind of understanding that gives rise to a legitimate expectation of remaining in your position under cases like Perry versus.

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And I would say it is much more rigorous and more carefully defined than performance standards that have been found to establish property interests in other cases.

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So can I just direct you to.

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Griffin seems like that's probably the best, if not one of the best cases for the government here.

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And I appreciate that that involved what was effectively a promotion rather than a demotion.

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But apart from that, do you think there's a meaningful difference in the legal schemes in terms of whether they actually constrained the agency's decision making?

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Yes.

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So I do think that the promotion versus motion standard is very important.

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But in addition to that, Berkeley was very clear that the acceptable assessment that could lead to a pay raise there was not tied to the systematic appraisal system that generally was used to evaluate employees, that five-level system that we have here.

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And it's a very similar system for SES employees there.

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And I would just... I can point you to the...

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To the provisions that talk about that so 5 CFR section or 30 dot 305 a six it describes that five level rating system, the department regulations that are in the end of the opening brief.

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and as well as JA-49 all have rigorous definitions there.

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And it's extremely close to the performance standards that govern non-SES employees.

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So those are in 5 CFR 430.206 and 207.

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And so you can actually compare a lot of the characteristics that have been found to create a property interest, because performance is a 4-plus standard for non-SES employees, apply essentially on the same terms to SES employees.

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I take it that the reason for referring any matter for getting this one, that the path to discharge running through the head of the agency is so that the head of the agency may make a determination other than the one recommended by the next level.

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Yes.

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Yes.

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That is certainly part of it.

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But what matters is the process that leads up to it.

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And whether we had a meaningful opportunity to have notice of the proposed action.

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Wait a minute.

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You're assuming there's a due process in time.

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Yes.

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Yes.

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So let's not assume that.

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Let's talk about whether there is.

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He's contested here.

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In view of this structure and this scheme in which the agency head exercises the final judgment, if you will,

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notwithstanding anything recommended to the head.

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Now in this case, he accepted, he or she, I don't know what was accepted, the last recommendation unsatisfactory.

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But could equally have rejected it, correct?

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It could, but I think there's 2 important things there.

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So one is the entire appraisal system is designed to.

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The entire appraisal system is defined to provide objectiveness and consistency throughout.

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This is why it's defined.

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standards and criteria.

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It's why it's not the head of the agency.

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It's not to say the head of the agency makes the determination.

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It can be a lower official.

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So that's another reason it's different.

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But even apart from that, has to listen to the recommendations of the performance review board who is supposed to have heard from the person.

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Is there any case in which under these various personnel schemes that have been reviewed in which a

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decision that was allocated to the head of the agency was found and held nonetheless to create a entitlement.

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So I think the Federal Circuit's decision in Brenner is actually pretty on point there.

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So that involved that was a state system.

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Sorry?

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Was that a state personnel system?

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No, it involved the VA, the Department of Veterans Affairs.

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And 990F cleared at 1322 and 1329 are kind of the key points there.

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And the Federal Circuit recognized that there was a property interest and therefore due process rights where a VA employee could be removed if the secretary

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of the VA determines that the performance of that employee warrants removal, suspension, or demotion.

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So that was a pretty general standard.

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It was vested in the head of the agency.

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And there was no question there that that supported a property.

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And that was federal circuit consent?

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That's a federal circuit decision.

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So the last case of this court, as I recall it, I understand to deal with the question was Griffith.

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So Griffith did involve a related question.

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I think there are the three categories, there are three characteristics.

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In fact, the three main things that Griffith relied on, they're all different here.

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So one is the appointing authority is not necessarily the agency head.

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Here it wasn't the agency head that made the final decision.

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The statute doesn't require that it be the secretary of the army or the secretary.

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As determined by the head of the agency.

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So it's the appointing authority, and that can be someone lower under the statute here.

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So that's one of the differences.

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Griffith also said that the standard is pretty vague because it's not tied in the existing performance review standards.

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Whereas here, this is directly tied into that five-level system, where those levels are defined by the regulations.

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And it also involved a pay raise, basically a promotion, which is trying to get something more than you already have.

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And here, we're talking about a demotion.

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for interest in retaining for career SES.

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I wouldn't do process supply if a person had a expectation.

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of promotion based on the system?

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It is certainly potentially.

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And that's not a relevant distinction.

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Well, it is.

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The court actually made clear that it was distinguishing cases that involved removals and taking away the positions that people already had.

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And the courts had rarely, if ever, found a property interest in a promotion, which essentially found the pay.

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Well, actually, isn't your claim in part that she was deprived of future

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pay increases or future benefits, which are not vested and maybe never would.

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So it's the guarantee of higher pay.

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So if you're in the SES, you're guaranteed to have 120% of what the GS 15 rate is.

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And she lost that.

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She lost the higher leave.

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She lost the right to non-competitive reinstatement.

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That's all assuming that her performance would have been sufficiently, well, high rated in the future.

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It is contingent on that, but I think that's true in any employment case.

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There are always things that could happen in the future that might warrant removal, but it doesn't change the fact that here, her career SES appointment could be taken away.

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She could be removed from the SES only for performance or other causes as defined by those regulations and policies.

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And so that's kind of the four-cause standard that creates a legitimate expectation.

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All right, we'll give you a couple of minutes in.

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Mr. Henshaw, good morning.

[00:12:24] Speaker 03:
Good morning, your honor, and may it please the court, Brett Hinchwood for the government.

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I'd like to begin with this court's decision in Griffith, where this court addressed a scheme that stated that an employee was entitled to a within-grade pay increase if their performance was of an acceptable level of competence as determined by the head of the agency.

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That that statute did not create a property interest.

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That statute is, in material respects, indistinguishable from the one here.

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You have a situation where there is a generally worded, quite broad performance standard, less than fully successful executive performance, tied to a set of performance review criteria that ultimately lead to a decision by the head of the agency applying those broad criteria that is vested in his unreviewable discretion about how that employee's performance will be rated.

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that sort of scheme does not create property interest.

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And I think Griffith really, and it's, you know, just- Well, council, I think the biggest distinction is that footnote five of Griffith says that they were assuming that the performance rating system was not tied in at all.

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And so what we have to do here is look at the performance rating system.

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And it's specifically, I think the most important thing here is the regulations.

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As your friend said, level three is pretty specifically defined as meeting all critical elements, whereas level two, which is less than fully successful.

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requires a specific finding that rating official has to find that the person did not meet at least one critical element.

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And that seems to go far beyond what the court thought was happening in Griffith.

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Your Honor, two points.

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First of all, what this court said in Griffith, the footnote in Griffith my colleague is referring to, the court simply noted that there had been new regulations promulgated, and it wasn't taking a view on whether those constrained discretion.

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And I will say,

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What I've heard from my colleague today at the podium is somewhat different from what we have gotten in the briefs in this case.

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Can you just address the regulations?

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Absolutely.

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Address the regulations because putting that aside, the Griffith Court very clearly thought the regulations in that case were essentially circular.

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Said acceptable performance is acceptable performance.

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And my question to you is how are the much more detailed regulations here analogous?

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Your honor, a few different points about that.

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So I think starting from the statute and then working down to the regulation.

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4313 spells out criteria for performance proposals.

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That's the statutory.

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It's a non-exhaustive list of a few different criteria, which are themselves quite broad.

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Improvements in efficiency or productivity, timeliness of performance, other indications of the effectiveness, productivity, and performance quality of the employees that individual supervises.

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So very broad criteria.

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So are you disputing that to give a less than fully successful

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Rating the regulations seem to say you there must be a finding that on one of the defined critical elements of the job They did not meet Expectation as to SES employees your honor I don't know of any provision that requires that and I'm not sure frankly which provision you're referring to that might be of a regulation appendix D of the army regulation your honor says first of all again not an argument the district court addressed because it's not one that's been raised at this point and

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But what appendix D the army regulation says it defines the categories quite broadly and, you know, the same category, you know,

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Fully successful is defined as performance in relation to performance requirements of such quality to be expected only of a proven competent executive.

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Of course, that person must at least meet requirements for all critical elements, but it doesn't say that simply meeting those elements automatically meets the fully successful standard.

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And then, Your Honor, I would direct you to the provision at the bottom, D3, use of judgment in the rating process.

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Of course,

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Supervisors, performance review boards, and appointing authorities have substantial discretion determining which rating levels to recommend or approve.

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And it's recognized that the rating level definitions will not cover every situation in citing a rating.

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For that reason, supervisors, BRBs, and appointing authorities will be required to exercise judgment when such circumstances arise.

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It's very difficult for me to derive any

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on great objective standards out of that.

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Right.

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So you think so to compare that to a statute that says this employee can only be dismissed for cause.

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Obviously that statute to envisions a lot of discretion.

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But it's discretion in identifying whether a standard has been met.

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And I think the point is that in this appendix, the difference between level three and level two is fairly well defined in terms of providing the type of, as Griffith puts it, I think some meaningful limit on the discretion to be exercised.

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I just don't, I'm not sure what, let me ask this.

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Is there another case apart from Griffith that you think is sort of, finds analogous language

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not create a property interest.

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I'm not aware of specific cases that have addressed

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circumstances quite like that aside from Griffith.

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I mean, what I will say is the fact that an agency creates or the statute creates sort of broad guideposts to try to guide the discretion of the decision maker while expressly reserving and recognizing that these guideposts are not exhaustive, are not going to cover every situation, and that they are not ultimately restricting the decision maker's discretion.

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isn't the kind of thing that would create a property.

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I think you're back to the same analysis this court undertook in Griffith.

[00:18:04] Speaker 03:
Now, and again, I would just emphasize the district court didn't address whether these regulations separately create a property interest that the statute does not, precisely because it's not an argument that had been raised to the district court.

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Now, I'm happy to, you know, again, but I don't think it matters insofar as, I mean, even just from the face of this particular

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regulation that we've just been discussing.

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I mean, the discretion is given.

[00:18:26] Speaker 02:
I appreciate those points.

[00:18:28] Speaker 02:
So what about, I'm not sure we have in mind the same test.

[00:18:32] Speaker 02:
So Perry V. Senderman says a property interest is created by a provision that says you'll continue in your job so long as you do satisfactory work.

[00:18:43] Speaker 02:
Ashton V. Civiletti is very similar.

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How is that?

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How would that?

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If less than fully successful is so vague, wouldn't those be insufficient as well?

[00:18:55] Speaker 03:
I think it depends also on the other context that goes into assessing whether there's a legitimate expectation of continued employment based on the particular source of law that's at issue there.

[00:19:07] Speaker 03:
So the district court here and

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quite appropriately looked at other provisions of the CSRA that do clearly create a property interest unlike this one.

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It looked at the purposes of this program as its court did in Griffith, recognizing that Congress created this system to govern the employment of executives at the highest levels of government service and wanted that system to be modeled on private sector executive recruitment and retention systems and to have

[00:19:38] Speaker 03:
removals be, as the Senate report put it, legally unencumbered when it comes to these sort of performance-based removals, precisely because of the importance of replacing.

[00:19:47] Speaker 02:
So you don't think there's a meaningful difference in sort of the text if all we had in front of us was less than fully successful compared to inefficiency or the satisfactory work.

[00:19:59] Speaker 02:
And instead, it's about the specific context of this statute.

[00:20:02] Speaker 03:
I mean, I don't think you can abstract it from the context.

[00:20:04] Speaker 03:
I certainly think this standard is quite different from something like misconduct or inefficiency or neglect.

[00:20:10] Speaker 03:
I mean, clearly it's a higher, sorry, this is a lower standard in that respect.

[00:20:14] Speaker 03:
You don't have to demonstrate neglect to include someone who's less than fully successful.

[00:20:19] Speaker 03:
So I certainly think that there are gradations here.

[00:20:23] Speaker 02:
Yeah.

[00:20:23] Speaker 02:
But one thing I'm wondering about is inefficiency.

[00:20:26] Speaker 02:
Is that inefficiency versus less than fully successful?

[00:20:31] Speaker 02:
Those seem roughly analogous, right?

[00:20:34] Speaker 03:
I think you can be less than fully successful for lots of reasons that have nothing to do with inefficiency, right?

[00:20:38] Speaker 03:
That your performance is not up to snuff.

[00:20:41] Speaker 03:
Or I mean, here, Your Honor, you have a somewhat unusual situation where, frankly, what the appointing authority determines is they have lost confidence in this particular employee based on their conduct, particularly to serve in the position that that individual had, namely as chief personnel attorney for the army, given their conduct in the earlier division chief hiring process.

[00:21:01] Speaker 03:
So, you know, I think that is an illustration of the kinds of things that can legitimately lead one to conclude that performance is less than fully successful and that performance is, you know, legitimate to rate an individual, you know, at that satisfactory or unsuccessful level.

[00:21:25] Speaker 06:
If there are no further questions.

[00:21:27] Speaker 06:
All right.

[00:21:28] Speaker 06:
Thank you.

[00:21:28] Speaker 06:
Thank you.

[00:21:30] Speaker 06:
Mr. Hinchel, why don't you take two minutes?

[00:21:34] Speaker 06:
I'm sorry, Mr. Walker.

[00:21:40] Speaker 06:
Thank you.

[00:21:42] Speaker 05:
The question here is whether there are rules or standards or the sort that you could invoke in a hearing and argue that that standard has not met and doesn't justify room.

[00:21:50] Speaker 05:
That's Perry versus syndrome.

[00:21:52] Speaker 05:
In Ashton, in Hall, this court found satisfactory performance was enough when it was in the removal context.

[00:21:59] Speaker 05:
In Brenner, performance warrants demotion.

[00:22:01] Speaker 01:
That was not.

[00:22:02] Speaker 01:
Sorry?

[00:22:03] Speaker 01:
I want to ask you about Brenner, I guess, because you mentioned it earlier as well.

[00:22:10] Speaker 01:
There was an APA.

[00:22:12] Speaker 04:
claim in that case, right?

[00:22:15] Speaker 01:
And it seemed that the statute in question there provided that there must be, that the decision removal, demotion or suspension under 714 must be supported with specific reasons.

[00:22:34] Speaker 01:
Absent to the articulation of specific reasons, agency action is ineffective as it does not comply with statutory requirements.

[00:22:42] Speaker 01:
Anything like that here?

[00:22:44] Speaker 05:
So I do think that here, if you look at section 4312 through 14 of the statute and the regulations, you do find those standards have to be articulated.

[00:22:54] Speaker 05:
The process that is supposed to be followed is supposed to, if you look at JAA 49 onward, you'll see the extensive explanations that are supposed to be part of that process and that she's supposed to be able to respond to along the way.

[00:23:07] Speaker 05:
But I also think that that's really about process.

[00:23:10] Speaker 05:
Process is you get a decision that it's civic reasons.

[00:23:13] Speaker 05:
It doesn't say what those reasons have to be or how the good they have to.

[00:23:16] Speaker 05:
So that's kind of the process that you're entitled.

[00:23:19] Speaker 01:
That doesn't matter whether there's a review.

[00:23:21] Speaker 05:
They're going to be held to that standard.

[00:23:24] Speaker 05:
Yes, but that's the reasonable.

[00:23:25] Speaker 05:
That's really the quality of the reasoning or the process that you're getting.

[00:23:28] Speaker 05:
The substantive standard was just the secretary thinks your performance warrants emotion or removal.

[00:23:34] Speaker 05:
And so it was a much less rigorously defined standard than we have here.

[00:23:39] Speaker 05:
And it might require judgment, as the government recognized, but every kind of evaluation requires judgment.

[00:23:44] Speaker 05:
It doesn't make it fully subjective.

[00:23:47] Speaker 01:
Specifically points that out, right?

[00:23:53] Speaker 01:
Where was it?

[00:23:54] Speaker 01:
Day 26.

[00:23:55] Speaker 01:
after going through the level of descriptions, performance rating levels and all of that.

[00:24:05] Speaker 01:
Supervisory performance review boards and appointing authorities have substantial discretion in determining which rating levels to recommend or improve.

[00:24:13] Speaker 01:
Authorities will be required to exercise judgment when such circumstances arise.

[00:24:17] Speaker 01:
I'm going to surely suggest that there is intended to be here a level of discretion

[00:24:24] Speaker 01:
different from what would ordinarily imply.

[00:24:27] Speaker 05:
Well, there may be a level of discretion, and it might mean that the kind of review that you end up being entitled to ends up being perhaps more deferential in some ways, because the standard could be a little bit more capacious.

[00:24:38] Speaker 05:
But it's still a standard that could invoke unsatisfactory performance.

[00:24:43] Speaker 05:
is defined as repeated instances of falling down on the job and failing to lead people and being counterproductive.

[00:24:49] Speaker 05:
Those are the sorts of things that you can tell the person who's evaluating you.

[00:24:52] Speaker 05:
If you're given the chance to defend yourself, that you haven't met that standard.

[00:24:57] Speaker 05:
And in fact, you know, her supervisors who actually saw her work day to day, but none of that was true.

[00:25:02] Speaker 05:
So she'd been able to be given the notice, the opportunity to respond.

[00:25:05] Speaker 05:
She could have invoked that standard.

[00:25:07] Speaker 05:
She could have persuaded someone to make a different decision.

[00:25:10] Speaker 05:
And that's all that Laudermill looks to.

[00:25:12] Speaker 05:
You know, were there arguments to be made a standard that would justify removal is not satisfied.

[00:25:17] Speaker 02:
What do you think is the best case from this court or the Supreme Court finding a similarly phrased statute to give rise to a property interest?

[00:25:25] Speaker 05:
I would say Ashton versus Siboletti probably is the closest one.

[00:25:29] Speaker 05:
It says if you continue to do satisfactory work, that was found to be

[00:25:35] Speaker 05:
performance standard.

[00:25:36] Speaker 05:
I also point to the Ninth Circuit.

[00:25:37] Speaker 05:
Is that determined by the agency head?

[00:25:38] Speaker 05:
Do you remember?

[00:25:40] Speaker 05:
I do not recall.

[00:25:41] Speaker 05:
It would certainly have been a superior.

[00:25:43] Speaker 05:
Yeah, so I don't recall in that one.

[00:25:46] Speaker 05:
In fact, it was by the secretary of the VA.

[00:25:48] Speaker 05:
It was the agency that specifically made that call.

[00:25:50] Speaker 05:
And the Ninth Circuit's Wheaton decision also had a very similarly worded standard in terms of performance and satisfaction.

[00:25:57] Speaker 06:
All right.