In Cunningham v. United States, No. 2013-5055 (Fed. Cir. 4/9/14), the U.S. Court of Appeals for the Federal Circuit agreed with the Court of Federal Claims that it had subject matter jurisdiction over a breach of a settlement agreement claim and held that the lower court can award monetary damages to the claimant.

Cunningham worked for OPM as a criminal investigator until his termination during his probationary period. He appealed to MSPB and during the hearing OPM and Cunningham entered into a settlement agreement that provided that Cunningham would withdraw his appeal and that OPM would pay him $50,000. The agreement also contained a confidentiality provision that prohibited both parties from disclosing the terms of the agreement; required OPM to remove his termination letter from his personnel file; and designated the HR director as the contact point for reference inquiries.

Subsequently, Cunningham obtained employment as an investigator with a government contractor. He passed the background investigation for the position and was informed when he reported to work in the fall of 2007, thatthe company had been awarded a contract with OPM, and that OPM would conduct its own background investigation. Less than one week later, Cunningham was suspended, at the direction of OPM’s security office, and was terminated by the company in February 2008.

Upon learning that his OPM file contained a document which revealed that two OPM employees, neither of whom was the human resources director, had disclosed Cunningham’s termination and MSPB appeal to the OPM background investigator, he filed a petition to enforce the settlement agreement with the MSPB. In July 2008, the MSPB administrative judge found OPM had materially breached the settlement agreement. The MSPB, however, held that although it can enforce compliance with the terms of a settlement agreement, it does not possess authority to award monetary damages for a breach.

Cunningham, therefore, filed a breach of contract action in the Court of Federal Claims, seeking monetary damages to compensate him for the income he would have earned from the contractor had OPM not breached the agreement. That court found that it possessed subject matter jurisdiction, but dismissed the suit on the principle of “res judicata”–that the matter had already been decided, by MSPB. Cunningham appealed to the Federal Circuit.

The Federal Circuit agreed that the Court of Claims had subject matter jurisdiction over the action. The Federal Circuit explained that a settlement agreement is a contract within the meaning of the Tucker Act and since the Court of Claims possesses subject matter jurisdiction to hear breach of contract claims, it had jurisdiction over Cunningham’s claim for damages.

The Federal Circuit held that the doctrine of res judicata did not bar Cunningham’s breach of contract claim because he was seeking a form of relief that was not available to him at the MSPB. The court stated that he was not barred from pursuing a second claim, against OPM, based on the same set of facts, in a court that has the authority to grant relief that was unavailable to him in the first action.

* This information is provided by the attorneys at Passman& Kaplan, P.C., a law firm dedicated to the representation of federal employees worldwide. For more information on Passman& Kaplan, P.C., go to http://www.passmanandkaplan.com.

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