FEDweek

MSPB Defines Consequential Damages

The Merit Systems Protection Board recently issued a precedential decision reducing an administrative judge’s award of consequential damages for an appellant, whom the MSPB found was subjected to whistleblower reprisal when she was demoted.King v. Department of the Air Force, 2015 MSPB 41 (June 10, 2015).

As the prevailing party in an MSPB appeal in which the administrative judge orders corrective action based upon the finding of whistleblower reprisal, the appellant is entitled to an award of “back pay and related benefits, medical costs incurred, travel expenses, and any other reasonable and foreseeable consequential damages.”5 U.S.C. § 1221(g)(1)(A)(ii). The administrative judge awarded as consequential damages moving expenses, job search expenses, the restoration of 280 hours of sick leave and the amount of a compromise of a Veterans Affairs loan resulting in the sale of the appellant’s home at a loss.

In support of the award, the administrative judge found that the appellant could not meet her financial obligations following her demotion.Toward this end, the appellant relocated from Texas to California after being selected for an agency position there.She sold her house in Texas at a loss through a short sale and entered into a compromise with the VA for the outstanding balance of approximately $65,000 on her mortgage.The appellant was not obligated to repay this amount unless she were to obtain another VA loan.

In limiting the administrative judge’s award of consequential damages, the MSBP applied the Federal Circuit’s conclusions that such damages under § 1221(g) do not include nonpecuniary damages and that the general phrase “any other reasonably and foreseeable consequential [damages]” should be read to cover only items similar in nature to the specific items in the statute, i.e., back pay and related benefits, medical costs incurred and travel expenses, which are causally related to the agency’s prohibited practice.

According to the MSPB, the appellant here failed to show that the compromised VA loan amount was a reasonable and foreseeable consequential damage causally related to the agency’s reprisal.The MSPB found that several intervening events broke the causal link needed to establish an entitlement to consequential damages.It posited that the appellant could have applied for and received a position closer to where she resided, eliminating the need to sell her house.It further suggested that the appellant could have kept her house or might not have had to sell her loss at a loss had she negotiated a different price or had the housing market been stronger.It also held that the appellant did not suffer an actual, compensable pecuniary loss since she did not have to repay the outstanding amount of her VA loan unless and until she wished to be eligible for another VA loan.

The MSPB affirmed the administrative judge’s remaining consequential damages award, including the award of sick leave, which the MSPB found was recoverable as a medical cost.

* This information is provided by the attorneys at Passman & Kaplan, P.C.