Fellhoelter v. Department of Agriculture

568 F.3d 965, 2009 U.S. App. LEXIS 12666, 2009 WL 1651449
CourtCourt of Appeals for the Federal Circuit
DecidedJune 15, 2009
Docket2008-3244
StatusPublished
Cited by19 cases

This text of 568 F.3d 965 (Fellhoelter v. Department of Agriculture) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fellhoelter v. Department of Agriculture, 568 F.3d 965, 2009 U.S. App. LEXIS 12666, 2009 WL 1651449 (Fed. Cir. 2009).

Opinion

BRYSON, Circuit Judge.

Kyle S. Fellhoelter petitions for review of a decision of the Merit Systems Protection Board affirming his removal from a supervisory position with the United States Department of Agriculture (“USDA”). We affirm.

I

Mr. Fellhoelter was an audit manager in a USDA office in Knoxville, Tennessee. He worked in the Federal Milk Marketing program, a USDA program designed to stabilize conditions in the market for dairy products and to prevent regional shortages in the supply of milk. Mr. Fellhoelter was charged with supervising a small staff of field auditors who periodically examined the sales, production, and inventory of milk handlers in a region encompassing Tennessee and seven nearby states.

*969 In 2002, Mr. Fellhoelter grew concerned that two regulated entities — Valley Milk Products LLC (“Valley Milk”) and Maryland & Virginia Milk Producers Cooperative Association, Inc. (“MD-VA Milk”)— were misrepresenting the grade of milk they had processed, paying less than the regulated purchase price for raw milk, and claiming credit for milk supplied by other companies. Mr. Fellhoelter reported his suspicions to Harold Friedly, Market Administrator for the Appalachian Region, and William Newell, Chief of the Order Operations Branch in the Dairy Programs Division of the USDA. Messrs. Friedly and Newell acknowledged that “little [was] wrong with most of the basic facts” alleged by Mr. Fellhoelter, but they drew a different conclusion from those facts. They determined that the practices identified by Mr. Fellhoelter were consistent with federal milk marketing regulations and that any remedial action, if appropriate, was outside the scope of the USDA’s limited regulatory authority in the area. Mr. Friedly urged Mr. Fellhoelter not to take any further action, particularly since many of the documents that formed the basis for Mr. Fellhoelter’s allegations contained confidential and proprietary information protected by statute.

Dissatisfied with management’s response, Mr. Fellhoelter began pursuing other avenues to address what he perceived to be fraudulent conduct. In May 2003, Mr. Fellhoelter filed a report with the USDA’s Office of Inspector General. In that report, he described the allegedly fraudulent practices of Valley Milk and MD-VA Milk, and he also alleged fraud and mismanagement by Mr. Friedly. The Office of Inspector General subsequently declined to initiate an enforcement proceeding, finding that Mr. Newell had “adequately addressed” Mr. Fellhoelter’s allegations. On July 8, 2005, Mr. Fellhoelter brought a qui tam action against Valley Milk, MD-VA Milk, and the USDA in the United States District Court for the Eastern District of Tennessee. The complaint incorporated much of the substance of Mr. Fellhoelter’s earlier report to the Office of Inspector General. In addition, it included a claim of unlawful retaliation under the Whistleblower Protection Act (“WPA”). The qui tam action was later dismissed for violations of the sealing provisions of the False Claims Act and for failure to allege a claim involving the payment of government funds.

In mid-2006, while the qui tam action was pending before the district court, Mr. Friedly recommended closing the Knoxville office and consolidating the regional auditing group in the regional headquarters in Louisville, Kentucky. Mr. Friedly explained to his superiors that the dairy industry was in the process of eliminating regional production facilities and that “[t]he work performed by the Audit Group in the Knoxville field office [had] changed with the work moving away from Knoxville.” On December 28, 2006, the Secretary of Agriculture approved the recommendation to close the Knoxville office. Rather than implementing a reduction in force, Mr. Friedly offered many of the Knoxville employees, including Mr. Fellhoelter, reassignment to the Louisville office on the same terms and conditions as their current employment. Mr. Fellhoelter declined the reassignment and was therefore removed from his position as of April 14, 2007.

Mr. Fellhoelter appealed the removal action to the Merit Systems Protection Board, claiming that the USDA had closed the Knoxville office in retaliation for his whistleblowing activities. The administrative judge who was assigned to the case directed the parties to conduct discovery in accordance with the procedures set forth at 5 C.F.R. §§ 1201.71-1201.85. Two weeks *970 after receiving the government’s responses to his initial discovery requests, Mr. Fellhoelter moved for an order compelling the production of documents that pertained to his supervisors’ alleged threats of reprisal against him. The administrative judge denied that motion as untimely and, in the alternative, as “lacking merit.” Following discovery, the administrative judge decided to reverse the normal order of proof in whistleblowing cases by holding a hearing on the USDA’s affirmative defense that the Knoxville office would have been closed (and Mr. Fellhoelter reassigned) even in the absence of any protected disclosures.

At the conclusion of that hearing, the administrative judge found that the Knoxville office would have been closed regardless of Mr. Fellhoelter’s whistleblowing activity and therefore upheld the USDA’s removal decision. The administrative judge found that the agency had a “strong basis” for its decision to close the Knoxville office. The evidence, the administrative judge concluded, showed that office closures in the Dairy Program were “relatively frequent and dependent to a great extent on the financial resources and expenditures available in a given location.” The administrative judge found that the agency had shown “the existence of a deteriorating financial situation that was solved by a reduction in expenditures” through the consolidation of offices, and that at the centralized location in Louisville the agency had access to more support facilities and better office space, which would “facilitate more efficient audit work.”

The full Board denied review of the administrative judge’s decision. Mr. Fellhoelter now petitions for review by this court.

II

Mr. Fellhoelter does not disagree that substantial evidence in the record supports the administrative judge’s ultimate conclusion that the USDA would have directed his reassignment from Knoxville to Louisville even in the absence of his whistle-blowing activity. Rather, Mr. Fellhoelter’s principal contention is that the record for decision was incomplete because the administrative judge erroneously precluded the admission of evidence pertaining to Mr. Friedl/s motive to retaliate against him because of his protected disclosures. Mr. Fellhoelter challenges approximately 50 evidentiary rulings, all of which he characterizes as precluding evidence of Mr. Friedly’s motive to retaliate. The collective effect of those evidentiary rulings, Mr. Fellhoelter argues, was to deprive him of a meaningful opportunity to present his claim that the Knoxville office was closed in retaliation for his disclosures. Mr. Fellhoelter therefore seeks a new hearing at which he can complete the record with evidence excluded by the administrative judge.

A

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Bluebook (online)
568 F.3d 965, 2009 U.S. App. LEXIS 12666, 2009 WL 1651449, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fellhoelter-v-department-of-agriculture-cafc-2009.