Stone v. Federal Deposit Insurance Corporation
179 F.3d 1368 (1999)
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Rule of Law:
The introduction of new and material information to a deciding official through ex parte communications during a federal employee's pre-termination proceeding violates the employee's Fifth Amendment due process right to notice and an opportunity to respond. Such a procedural violation is not subject to a harmless error analysis.
Facts:
- Milton R. Stone was employed as a GS-12 bank examiner for the Federal Deposit Insurance Corporation (FDIC).
- On four separate occasions, Stone submitted applications for approved leave using Standard Form 71s.
- Stone admitted that he signed these forms with the names of doctors to excuse his requested absences.
- The FDIC initiated removal proceedings against Stone for the submission of these false leave requests.
- The official tasked with deciding Stone's removal (the "deciding official") was instructed to base the decision solely on the notice of charges and supporting documentation in the file.
- After his removal, Stone discovered that the deciding official had received two ex parte memoranda prior to making the decision.
- One memorandum was from the official who proposed Stone's dismissal, and the second was from another FDIC official; both urged his removal.
Procedural Posture:
- The FDIC terminated Milton R. Stone's employment.
- Stone (appellant) appealed the FDIC's decision to the Merit Systems Protection Board ("Board").
- An Administrative Judge ("AJ") for the Board issued an initial decision affirming the FDIC's removal action.
- The full Board affirmed the AJ's initial decision.
- Stone (petitioner) sought review of the Board's final decision in the U.S. Court of Appeals for the Federal Circuit, with the Board as the respondent.
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Issue:
Does an ex parte communication that introduces new and material information to the deciding official in a federal employee removal proceeding violate the employee's Fifth Amendment due process rights?
Opinions:
Majority - Gajarsa, Circuit Judge.
Yes, an ex parte communication that introduces new and material information to the deciding official violates the employee's due process rights. Federal civil service employees have a constitutionally protected property interest in their continued employment, which cannot be deprived without due process of law. Citing Cleveland Bd. of Educ. v. Loudermill, the court affirmed that the essential requirements of pre-termination due process are notice of the charges, an explanation of the employer's evidence, and a meaningful opportunity to respond. When a deciding official receives new and material information through ex parte communications, the employee is denied notice of that evidence and the opportunity to rebut it, thereby undermining the fairness of the entire proceeding. This type of procedural due process violation is not subject to a harmless error test; it cannot be cured by the deciding official's attestation that the communication did not influence the outcome. The proper remedy is to void the proceeding and provide the employee with a new, constitutionally correct removal procedure.
Analysis:
This decision solidifies the procedural due process protections for federal employees facing adverse employment actions. It establishes a clear rule that ex parte communications containing new and material information are a per se due process violation, rejecting a subjective harmless error standard that would depend on the decision-maker's self-assessment of their impartiality. This precedent significantly strengthens an employee's right to a decision based solely on the official record, ensuring they can see and respond to all evidence considered. Future cases involving claims of improper influence or secret evidence in agency proceedings will look to this case's objective test for determining whether a due process violation occurred.
