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MSPB Studies Flash

Breaching Clean Record Agreements:  The Consequences Can Go Beyond Rescinding the Agreement

As explained in our 2013 report, Clean Record Settlement Agreements and the Law, negotiated settlement agreements (NSAs) are contracts and contract law is applied to their interpretation and enforcement.  When one party materially breaches a Board-enforceable NSA, the other party is entitled either to: (1) enforce the settlement agreement; or (2) rescind it and reinstate the underlying action.  If a breach of an NSA results in a lost job opportunity, the Board lacks the authority to grant damages for wages the appellant may have earned with the prospective employer.  However, this does not mean that a different adjudicatory body cannot grant those damages.

A recent case decided by the U.S. Court of Appeals for the Federal Circuit, Cunningham v. United States, 748 F.3d 1172 (2014), serves as an illustration of this point.  In Cunningham v. Office of Personnel Management, 110 M.S.P.R. 389 (2009), discussed in our 2013 report, OPM and the appellant entered into a clean record NSA with a confidentiality provision.  The appellant later applied for a position with a private sector contractor.  When an investigation was performed for the private sector position, OPM disclosed to the investigator “that the appellant was separated from the agency, he filed an MSPB appeal, a settlement agreement was reached, and the appellant’s record now shows that he resigned.”   Because the agency materially breached the NSA, the appellant was offered the option to rescind the agreement and reinstate his appeal. 

When the appellant declined that remedy, the Board dismissed the appellant’s petition.  However, the appellant then filed a lawsuit in the Court of Federal Claims seeking monetary damages for the agency’s breach of the NSA.  (The damages in question involved compensation for lost salary that he alleged he would have received from the contractor if not for OPM’s disclosures.)  

While the Board lacks the authority to grant damages for lost wages, under the Tucker Act, the Court of Claims can grant monetary damages for the breach of a contract to which the Government is a party.  The Federal Circuit has repeatedly held that NSA’s are contracts to which the Tucker Act can, potentially, apply.  However, for the Tucker Act to apply to a breach of an NSA, the plaintiff must demonstrate that the NSA “could fairly be interpreted as contemplating money damages in the event of a breach.”

The court held that Cunningham’s NSA met this criterion and that the Court of Federal Claims had jurisdiction under the Tucker Act.  It also held that because MSPB could not award money damages for the breach of contract, the doctrine of res judicata (preventing re-litigation of issues) did not preclude the Court of Federal Claims from having jurisdiction over the issue of monetary damages for breach of contract.  The Federal Circuit then remanded the case back to the Court of Federal Claims for further proceedings.

Cunningham serves as a reminder of one more reason why parties must be careful to ensure that their NSAs are clear, unambiguous, and do not contain express or implied promises that are too hard to keep.  Breaches can be costly, in many different ways.


1 Cunningham v. Office of Personnel Management, 110 M.S.P.R. 389, ¶ 18 (2009).
2 See also Bobula v. U.S. Dept. of Justice, 970 F.2d 854, 858-59 (Fed. Cir. 1992).  In Bobula, the court explained that under the Tucker Act, the jurisdiction of a district court is generally limited to actions for monetary judgments and any equitable relief must be “incidental to and collateral to a claim for money damages.”  Equitable relief means ordering a party to take a particular action or refrain from taking a particular action, such as a transfer, promotion, demotion, removal, or reinstatement.  This is sometimes referred to as “specific performance.”  (While the Board cannot award monetary damages for a breach of an NSA, it does have the authority to order specific performance required by the NSA.  See, e.g., Young v. U.S. Postal Service, 117 M.S.P.R. 211, ¶ 1 (2012)).
3 Cunningham v. Office of Personnel Management, 748 F.3d 1172, 1176 (2014).
4 Cunningham v. Office of Personnel Management, 110 M.S.P.R. 389, ¶ 18 (2009).
5 See also Bobula v. U.S. Dept. of Justice, 970 F.2d 854, 858-59 (Fed. Cir. 1992).  In Bobula, the court explained that under the Tucker Act, the jurisdiction of a district court is generally limited to actions for monetary judgments and any equitable relief must be “incidental to and collateral to a claim for money damages.”  Equitable relief means ordering a party to take a particular action or refrain from taking a particular action, such as a transfer, promotion, demotion, removal, or reinstatement.  This is sometimes referred to as “specific performance.”  (While the Board cannot award monetary damages for a breach of an NSA, it does have the authority to order specific performance required by the NSA.  See, e.g., Young v. U.S. Postal Service, 117 M.S.P.R. 211, ¶ 1 (2012)).
6 Cunningham v. Office of Personnel Management, 748 F.3d 1172, 1176 (2014).