Review of Confidentiality Provision Disallowed

In Higbie v. US, No. 2014-5042 (Fed. Cir. Jan 14, 2015) the United States Court of Appeals for the Federal Circuit was asked to decide whether the United States Court of Federal Claims had jurisdiction over a breach of contract claim arising out of an allegation that an agency violated its agreement to keep confidential matters raised in mediation of an EEO complaint. Because the Tucker Act confers jurisdiction on the Court of Federal Claims only in claims for money damages, the Court of Appeals had to decide whether a breach of a confidentiality provision in an agreement to mediate is the type of agreement that contemplates money damages as a remedy. In a 2 to 1 decision, the Court of Appeals decided that the breach of the mediation agreement at issue did not contemplate money damages and therefore the Court of Federal Claims did not have jurisdiction over this case.

Specifically, Higbie filed an EEO complaint against his agency, the State Department, and agreed to enter into mediation as part of the EEO alternative dispute resolution (ADR) process. The mediation agreement contained a provision that any documents submitted, or statements made, during mediation were for settlement purposes only. After mediation failed, Higbie filed a formal complaint of discrimination. In the investigation of his EEO claim, two of the agency’s managers involved in mediation provided affidavits to the EEO investigator which discussed the nature and content of Higbie’s statements made in the mediation proceedings. Higbie subsequently filed suit in United States District Court in which he alleged a violation of the mediation agreement. That claim was, under the Tucker Act, transferred to the United States Court of Federal Claims.

The Tucker Act confers jurisdiction on the Court of Federal Claims over claims against United States founded upon a breach of an express or implied contract. In such a case, a plaintiff must identify a separate source of substantive law creating a right to monetary damages. Typically, a breach of contract is such an independent source of substantive law. The default rule is that a damages remedy, i.e. a monetary award, will be available for breach of contract.

In this case, the government argued that the appropriate remedy is a nonmonetary remedy which would exclude any improper disclosures from judicial proceedings. The government pointed out that the confidentiality agreement at issue here did not provide specifically for a monetary remedy.The Court of Federal Claims found that the mediation agreement did not contemplate monetary damages and dismissed Higbie’s claim.

On appeal, the Federal Circuit agreed with the lower court.The Federal Circuit found that the mediation agreement could not fairly be interpreted as mandating compensation from the government for its breach. The appellate court agreed that the mediation agreement itself provided for a remedy for breach: the exclusion of statements made during mediation from further proceedings unrelated to the mediation. The court found that under the terms of the mediation agreement, the challenged affidavits could be excluded from the EEO investigation.

The dissenting judge argued that the default rule in contract cases is that there is always money damages for a breach, and that nothing in this case argued a variance from that general rule.

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