Disclosing "Purely Private" Wrongdoing Not Protected under Federal Sector's Whistleblower Protection Act: Fifth Circuit

Practical Law Legal Update 3-618-3978 (Approx. 5 pages)

Disclosing "Purely Private" Wrongdoing Not Protected under Federal Sector's Whistleblower Protection Act: Fifth Circuit

by Practical Law Labor & Employment

Background

Jorge Aviles worked as an International Examiner for the IRS. In November 2010, the IRS removed Aviles for excessive absence, failure to follow a managerial directive to report to work, and making misleading statements on official matters. In 2013, Aviles filed an individual right of action (IRA) appeal with the MSPB, claiming that:

He uncovered Exxon's tax fraud in February 2010 while auditing Exxon's international tax filings.
IRS officials covered up the fraud.
The IRS removed him in retaliation for disclosing to his supervisor that Exxon had committed tax fraud.

The WPA prohibits federal agencies from retaliating against a federal employee for disclosing conduct that the employee reasonably believes to:

Violate any law, rule or regulation.
Constitute:
- gross mismanagement;
- gross waste of funds;
- abuse of authority; or
- substantial and specific danger to public health or safety.

(5 U.S.C. § 2302(b)(8).)

A federal employee establishes MSPB jurisdiction over an IRA appeal by making a nonfrivolous allegation that he has engaged in protected whistleblowing activity. Nonfrivolous allegations must be:

More than conclusory.
Plausible on their face.
Material to the legal issues in the appeal.

(5 C.F.R. § 1201.57(b).)

The WPEA, enacted in 2012, amended the WPA with a new subsection providing that disclosures made by a federal employee during the normal course of the employee's duties were not excluded from protection under subsection 2302(b)(8) (5 U.S.C. § 2302(f)(2)). The WPEA also extended jurisdiction of federal sector whistleblower cases to all circuit courts of appeal when previously only the Federal Circuit exercised jurisdiction over those matters and the All-Circuit Review Extension Act increased the all-circuit review to five years after the WPEA's enactment (5 U.S.C. § 7703(b)(1)(B)).

In a 2-1 decision, the MSPB affirmed an administrative judge's dismissal of Aviles's claim based on a lack of MSPB jurisdiction over Aviles's claim. The MPSB found that Aviles had failed to make a nonfrivolous allegation of protected whistleblowing activity because Aviles:

Disclosed a private entity's wrongdoing which is not protected under the WPA.
Made only speculative, unspecified allegations that unidentified IRS officials were involved in Exxon's fraud.

MSPB Vice Chairman Wagner dissented, arguing that the 2012 WPEA amendments to the WPA extended the WPA's protections to federal employees who, in the normal course of their duties, disclosed wrongdoing by private entities. Aviles appealed to the Fifth Circuit, relying heavily on the arguments in Vice Chairman Wagner's dissent.

Outcome

The Fifth Circuit affirmed the MSPB's dismissal of Aviles's claim based on lack of MSPB jurisdiction, holding that:

The WPA and the 2012 WPEA amendments do not protect disclosures by federal employees that purely involve wrongdoing by private entities.
Aviles failed to make a nonfrivolous allegation of protected whistleblower activity because his:
- disclosure of Exxon's alleged tax fraud was not protected under the WPA; and
- allegations that IRS officials were involved in Exxon's alleged tax fraud were vague and conclusory.

The Fifth Circuit determined, contrary to Vice Chairman Wagner's dissent, that the 2012 WPEA amendments were not intended to extend whistleblower protection under the WPA to federal employees' disclosures of wrongdoing by private entities, finding that:

The text of subsection 2302(b)(8) referencing categories of disclosures such as gross mismanagement, gross waste of funds and abuse of authority reflected the WPA's focus on government wrongdoing.
Nothing in the WPEA indicated that it sought to add new categories of protected disclosures to the WPA, only that the WPEA sought to clarify that the already-existing categories of protected disclosures are not excluded from protection simply because they are made in the course of an employee's normal work duties.
Extending whistleblower protection to disclosures involving conduct by private entities would likely turn ordinary enforcement disagreements between employers and supervisors at the IRS and within other federal agencies into potential whistleblower claims, a result that does not conform with the WPA's purpose.

Practical Implications

The Fifth Circuit's decision in Aviles takes a clear position that the WPA does not encompass disclosures of purely private wrongdoing. As the Fifth Circuit noted in the opinion, the WPEA and All-Circuit Review Extension Act extending review of MSPB decisions to all circuit courts of appeals seeks to encourage circuit splits and may ultimately facilitate US Supreme Court review on key federal whistleblower issues. Conceivably, other circuits may:

Take the position that a federal employee's disclosure of conduct by private entities warrants WPA protection.
Distinguish Aviles in cases involving a federal employee's disclosures of private wrongdoing coupled with nonfrivolous allegations by the employee that a government agency took part in or covered up the private entity's wrongdoing.

Disclosing "Purely Private" Wrongdoing Not Protected under Federal Sector's Whistleblower Protection Act: Fifth Circuit | Practical Law