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 Title Koszola v. FDIC

 Argued November 16, 2004          Decided January 7, 2005

 Subject Employment Law

                                                                                                                                                                                                                

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  United States Court of Appeals

            FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 16, 2004                 Decided January 7, 2005

                         No. 03-5313

                    MICHAEL J. KOSZOLA,

                          APPELLANT

                                V.

          FEDERAL DEPOSIT INSURANCE CORPORATION,

                           APPELLEE

           Appeal from the United States District Court

                  for the District of Columbia

                       (No. 96cv00174)

     Mitchell J. Rotbert argued the cause and filed the briefs for

appellant.

     Jaclyn  C.  Taner,  Counsel,  Federal Deposit Insurance

Corporation, argued the cause for appellee.  With her on the

brief was  Colleen  J.  Boles,  Senior  Counsel.     Kathryn  R.

Norcross, Counsel, entered an appearance.

     Before:  GINSBURG,  Chief  Judge, and GARLAND  and

ROBERTS, Circuit Judges.

 

                                   2

     Opinion for the Court filed by Circuit Judge ROBERTS.

     ROBERTS,  Circuit  Judge:  A  former  employee of the

Resolution Trust Corporation (RTC) sued its statutory successor,

the Federal Deposit Insurance Corporation (FDIC), alleging that

the  RTC  violated  his  rights  by  disciplining and firing him in

retaliation for disclosures protected under the RTC Whistle-

blower Act, 12 U.S.C. § 1441a(q), and the First Amendment.

After a bench trial, the district court entered judgment for the

defendant  on  the  ground  that  the  RTC  would  have  taken  the

same  employment  actions  regardless of any protected disclo-

sures.  The plaintiff appeals, but we affirm.

                                   I.

     The RTC's Office of Inspector General (OIG) was responsi-

ble for investigating waste, fraud, and illegal activity within the

RTC.  In December 1991, OIG hired plaintiff-appellant Michael

Koszola  as  an  agent  assigned  to  its  Chicago  office.  Initially,

Koszola's supervisors were stationed  in Kansas City.  Trouble

began in June 1992, however, when OIG hired a new Supervi-

sory  Agent stationed in Chicago, George Sullivan, to whom

Koszola was to report.  The introductory meeting between the

two  did  not  go well: Sullivan advised David Sherry, the Re-

gional Inspector General back in Kansas City, that Koszola had

been "verbally abusive and insubordinate."  Mem. Op. at 2.  For

his part, Koszola told Sherry that Sullivan "lacked investigative

skills and management ability."  Id.

     It was downhill after that: Koszola was "openly resentful"

of Sullivan's authority and "frequently complained to Sherry

about  Sullivan's  decision  making  and  management  skills."  Id.

The resulting tension was exacerbated by incidents of insubordi-

nation  by  Koszola,  such  as  submitting  an  investigative  report

almost  two  months  late  and  ignoring  instructions to attend

training  and  to  serve  a  subpoena  in  a  particular manner.

 

                                   3

Sullivan  also  became  concerned that Koszola was submitting

questionable overtime claims.

     Initially,  Sherry  counseled  Sullivan to respond with the

carrot rather than the stick, instructing him in December 1992 to

give  Koszola  a  favorable  performance  appraisal in hopes that

Koszola  would  respond positively to praise.         Sullivan duly

issued  a  sunny  performance  report that did not mention his

dissatisfaction with Koszola's behavior or attitude.  Soon after,

however,  Sullivan  received  an  angry  complaint  from  the  FBI

alleging  that  Koszola,  in  connection  with a joint RTC/FBI

investigation in California, had falsely presented himself to a

suspect  as  an  FBI  agent,  questioning the suspect without

advising  him  of  his  Miranda  rights.       Sullivan immediately

removed Koszola from the case.   Despite this action, an FBI

agent  and  an  Assistant  U.S.  Attorney  later  complained  that

Koszola  had  contacted witnesses and may have disclosed

information about the operation after he had been taken off the

case.  The OIG opened a formal investigation of the matter.

     In January 1993, Koszola wrote Sullivan a brief memoran-

dum  concerning RTC contract employees assigned to the

copyroom who were allowed to "sit and read" when there was

no copying work to be performed.  Sullivan determined that the

matter  was  better  handled by referring it to RTC contracting

officials  rather  than  by launching an OIG investigation. The

following  month,  Jack  Anderson's  syndicated  newspaper

column detailed alleged incidents of waste and fraud at the RTC,

and the column included charges that some contract employees

were paid to "sit and read."  The RTC ordered an investigation

into  possible sources for the column; because of the similar

phrasing in Koszola's January memorandum, Sullivan suspected

Koszola.  At the direction of his superiors, Sullivan retrieved a

copy  of  the  memorandum  from  Koszola's  desk  while  he  was

away and forwarded it to Sherry.  

 

                                  4

     While  retrieving  the  January  memorandum,  Sullivan  came

upon another memorandum addressed to him -- one he testified

he never received -- concerning anonymous allegations that the

Chairman of the RTC had been buying RTC properties through

straw purchasers.       Sullivan forwarded this memorandum to

Sherry as well.  See Tr. Exh. 1-J-2 at 1, 8.  A subsequent RTC

investigation  determined  that  Koszola  discussed the allegations

against the Chairman in a May 1993 telephone call to a former

RTC employee at her home.  See Mem. of Proposed Removal at

11­13.

     Soon after retrieving the memoranda from Koszola's office,

Sullivan became aware of yet another problem.  In the course of

an  investigation  of  employees  suspected  of  fraudulent  billing

and  attendance  reporting,  Koszola  prepared an investigative

report  noting  that the employees' timekeeper had found no

evidence of improper activity.  The timekeeper advised Sullivan,

however, that Koszola's report was incorrect -- she had told

Koszola that she believed the employees' records indicated

misconduct.  After this incident, Sherry testified, he decided to

fire Koszola.  He placed Koszola on paid administrative leave

on April 19, 1993, pending preparation of a formal memoran-

dum proposing Koszola's discharge.

     Less than two weeks later, the first investigation of Koszola

-- concerning his activities in connection with the FBI -- was

completed.     Due to conflicting evidence, the report of the

investigation  reached no conclusion on the accusation of

impersonating an FBI agent, but it did detail how Koszola had

not  followed  proper  procedures  with  respect  to  reporting his

activities,  had  filed  questionable overtime claims, and had

disobeyed direct orders.  See RTC Report of Investigation at

16­27.  On September 23, 1993 -- five months after Koszola

had  been  placed  on  administrative  leave  --  he  testified  with

other  RTC  employees  before  the  Senate  Banking  Committee

about, as described in Koszola's complaint, "waste, fraud and

 

                                   5

abuse  within  RTC  operations, ensuing retaliation by the RTC

against whistleblowers for speaking out, and the failure of RTC

to hold culpable managers accountable."  Compl. ¶ 22.

     On December 2, 1993, Koszola received a formal memoran-

dum of proposed removal based on charges that he had failed to

follow  instructions  and  proper  investigative  procedures.    The

memorandum  also  charged  that  he  had twice improperly

released confidential information.  It first alleged that he was a

source  for  the  February  1993  Jack  Anderson column. The

memorandum also charged that Koszola breached confidential-

ity during the May 1993 call to the former RTC employee, when

he discussed the allegations about the improper straw purchases.

See Mem. of Proposed Removal at 11­13.

     After  Koszola  was  given  an  opportunity  to  reply  to  the

charges, the Deputy Inspector General completed his investiga-

tion.  On February 2, 1994, the Deputy concluded that charges

about failure to follow instructions and correct procedures were

supported by the evidence, but found the allegation that Koszola

had leaked the "sit and read" memorandum unsupported.  The

Deputy did conclude, however, that the charge of unauthorized

release  of  confidential  information  regarding the straw pur-

chases was supported by a preponderance of the evidence.  On

the basis of the entirety of the record, the Deputy concluded that

Koszola's termination was warranted.  Koszola filed an appeal

with  the  Merits  Systems  Protection Board (MSPB), but later

withdrew it.

     On February 1, 1996, Koszola filed this civil action against

the  FDIC, the successor to the RTC.  He sought legal and

equitable relief under the theory that he was fired in retaliation

for  disclosing  "possible  violations  of  law  or  regulation; gross

mismanagement; gross waste of funds; or abuse of authority by

the  RTC." Compl. ¶ 31.           The complaint details numerous

disclosures -- including the memoranda to his supervisor about

contract  employees  "sitting and reading" and alleged straw

 

                                    6

purchases by the RTC Chairman, id. ¶¶ 12, 14 -- and contends

that  they  contributed  to  his  termination  and  other  disciplinary

measures against him.  Consequently, the complaint concludes,

these personnel decisions violated the RTC Whistleblower Act,

12 U.S.C. § 1441a(q), and the First Amendment.  Compl. ¶¶ 34,

39.  

     On November 8, 2001, the district court concluded a four-

day  bench trial, after hearing the testimony of nine witnesses,

including  Koszola,  Sullivan,  Sherry,  and  the Deputy Inspector

General  who  conducted  the  final  investigation  and  recom-

mended  Koszola's  termination.        The district court concluded

that even assuming that Koszola had established a prima facie

case  of  retaliation, the FDIC had demonstrated by clear and

convincing evidence that the RTC would have fired him

regardless of any protected disclosures.  Mem. Op. at 9­10.  The

district court credited the trial testimony of the Deputy Inspector

General,  who  explained  that  Koszola  had been dismissed

because he was neither credible nor reliable, and that his poor

performance was a product of "his contempt for the organization

and for authority" rather than a lack of training.  Id. at 11.  The

district  court  further  concluded  that, " i n light of Plaintiff's

testimony on cross-examination," the Deputy's "skepticism was

readily  understandable, and the Court is convinced that the

agency  was  determined to fire Plaintiff without regard to any

allegedly protected disclosures."  Id.

     The court similarly disposed of Koszola's First Amendment

claim.  Without disputing that a public employee like Koszola

enjoys  substantial  protection  from  retaliation for exercising his

right  to  free speech, the court observed that the government

could defeat such a prima facie claim by showing by a prepon-

derance of the evidence that it would have taken the same action

regardless of the protected speech.  Id. at 14.   The district court

concluded that because the FDIC had already adduced clear and

convincing  evidence  that  the  RTC  would  have  fired  Koszola

 

                                   7

regardless of any protected disclosures, the defendant easily

carried its lighter burden under the First Amendment.

     Koszola appeals.

                                   II.

     Koszola  first  challenges  the  district  court's  interpretation

and application of the RTC Whistleblower Act.  Although this

court has addressed the threshold requirements for establishing

a prima facie case under the Act, see Taylor v. FDIC, 132 F.3d

753, 763­66 (D.C. Cir. 1997), we have never addressed whether

and how the government may rebut such a showing.  As the

district court explained, 12 U.S.C. § 1441a(q)(5) provides that

the "legal burdens of proof that prevail" under 5 U.S.C. § 1221

also  apply  under  the  RTC  Act.          Pursuant to 5 U.S.C.

§ 1221(e)(2), the government is not liable if it "demonstrates by

clear and convincing evidence that it would have taken the same

personnel action in the absence of a protected  disclosure."

     Koszola does not challenge any of this.  He argues instead

that,  in  making  its  "clear  and convincing evidence" evaluation,

the  district  court  should  have  followed  a  three-prong test

adopted by the MSPB and the Federal Circuit in the context of

§ 1221 actions.  Under this test, the reviewing body considers

"the strength of the agency's evidence in support of its personnel

action; the existence and strength of any motive to retaliate on

the  part  of  the  agency  officials  who  were involved in the

decision; and any evidence that the agency takes similar actions

against  employees  who  are  not  whistleblowers but who are

otherwise similarly situated."  Carr v. Soc. Sec. Admin., 185

F.3d 1318, 1323 (Fed. Cir. 1999).  Koszola contends that this

three-factor test is in fact the legal burden that "prevail s " under

§ 1221, and so should  govern under § 1441a(q)(5).  He also

contends that Congress reenacted the RTC Whistleblower Act

on December 17, 1993, without any changes to the burden of

proof provision, thereby incorporating the test into the statute.

 

                                  8

See Reply Br. at 2 (citing  Lorillard v. Pons, 434 U.S. 575,

580­81 (1978)).  Koszola concludes that, because the district

court  "evaluated  none  of  these  factors,"  Koszola Br. at 9, it

committed an error of law.

     Nothing in the text of 5 U.S.C. § 1221, however, requires

the district court to undertake the "clear and convincing" inquiry

in terms of any particular legal "test," multi-factor or otherwise.

"Clear  and  convincing  evidence"  is  a  common legal standard.

See  generally  9  WIGMORE  ON  EVIDENCE  §  2498, at 424

(Chadbourn rev. 1981) (standard of clear and convincing proof

"commonly  applied");  id.  at  424­31  (cataloging  instances  in

which  standard  is  applied).   Given the familiarity trial judges

have with this standard, we do not think it grounds for reversal

that the district court did not explicate its ruling according to a

particular gloss.  

     Koszola's  "reenactment" argument does not shake our

confidence  in  this  conclusion.   His contention that Congress

reenacted  the  RTC  Whistleblower Act without change to the

burden of proof provision in December 1993 is inaccurate; the

1993 amendments instead introduced the reference to the legal

burden of proof under § 1221 for the first time.  See Pub. L. No.

103-204, § 21(b)(2), 107 Stat. 2369, 2406 (Dec. 17, 1993).  In

any event, we do not think Congress incorporated the three-part

test  Koszola  insists  the district court must apply.   The very

factor upon which Koszola now claims the FDIC's evidence was

lacking  --  treatment of otherwise similarly situated non-

whistleblowers -- was not even adopted by the MSPB until the

year after the 1993 amendments.  See Smith v. Dep't of Agricul-

ture, 64 M.S.P.R. 46, 66 (1994).  Although the MSPB had

adopted the other two factors by the time of the 1993 amend-

ments, it did so only in the previous year, see Braga v. Dep't of

the Army, 54 M.S.P.R. 392, 399 (1992), and Koszola has given

us no indication that Congress considered -- let alone endorsed

-- the two-part test when passing the 1993 amendments.  See

 

                                     9

Lorillard, 434 U.S. at 581­85 (detailing record of Congress's

intention  to  incorporate  a  contemporaneous  construction  of  a

statute); cf. Am. Fed'n of Labor & Cong. of Indus. Org. v. Brock,

835 F.2d 912, 915 (D.C. Cir. 1987) (we give weight to a

contemporaneous construction of a reenacted statute only when

there is indication Congress considered the interpretation).1

     Koszola also charges that the district court erred by giving

dispositive weight to the agency's removal memorandum, rather

than  engaging  in  an  independent  inquiry  into  the  reasons for

Koszola's  removal.       The record does not support any such

challenge.  The trial took four days and involved nine witnesses,

including the principal actors.  As is clear from the discussion of

the court's factual findings below, see Part III, infra, the district

court  explicitly  relied  on  trial  testimony  in  drawing  its  factual

conclusions -- not just the removal memorandum.

     Nor is there merit to Koszola's argument that the district

court erroneously treated his decision not to appeal his termina-

tion through the MSPB as a "waiver" of his rights under the

RTC Act.  The district court merely -- and correctly -- con-

     1 We are particularly reluctant to reverse the district court on the

ground that it failed to follow a particular three-part test when it was

never asked to do so.  Before the district court, Koszola raised neither

the  three-part test for "clear and convincing evidence" nor his

argument  for  its  incorporation  into  the  statute.    See  Plaintiff's

Proposed Findings of Fact and Conclusions of Law at 37­40.  "For

decades, we have emphasized that an argument not made in the lower

tribunal  is  deemed  forfeited  and  will  not  be  entertained  absent

exceptional circumstances."  United States v. Hylton, 294 F.3d 130,

135­36  (D.C.  Cir.  2002)  (citations  and  internal  quotation  marks

omitted).  Because the FDIC did not object to Koszola's presentation

of this argument for the first time on appeal, it may have forfeited

Koszola's forfeiture, see Belton v. Washington Metro. Area Transit

Auth., 20 F.3d 1197, 1202 (D.C. Cir. 1994), but the argument is

unavailing in any event.

 

                                  10

cluded  that  it  could  evaluate the merits of the decision to

terminate Koszola only to the extent relevant to the retaliation

inquiry.  The merits of the decision to fire an employee may

play a role in evaluating whether retaliation was a motive; a

frivolous  reason  for  firing  would  support an inference that

retaliation was the real reason.  That does not mean, however,

that a district court may step into the shoes of the MSPB and

weigh whether, on balance, an employee should have been fired

for  the  reasons  given.    The scope of the RTC Act, which

addresses only retaliatory action, undermines any such sugges-

tion.  See 12 U.S.C. § 1441a(q)(1).  Cf. Marren v. Dept. of

Justice, 51 M.S.P.R. 632, 638 (1991) (5 U.S.C. § 1221 provides

appellate jurisdiction over the merits of an employment decision

only to the extent they are material to an allegation of retalia-

tion), aff'd, 980 F.2d 745 (Fed. Cir. 1992).

                                 III.

     Koszola  also  disputes  the  district  court's finding by clear

and  convincing  evidence  that the RTC would have fired him

regardless of any alleged protected activity.  We review findings

of fact for clear error.  See Fed. R. Civ. P. 52(a) ("Findings of

fact . . . shall not be set aside unless clearly erroneous, and due

regard shall be given to the opportunity of the trial court to judge

of the credibility of the witnesses."); Massachusetts v. Microsoft

Corp., 373 F.3d 1199, 1207 (D.C. Cir. 2004).  We consider a

finding of fact to be "clearly erroneous" only if we are "left with

a firm conviction that a mistake has been committed."  Anderson

v. City of Bessemer, 470 U.S. 564, 572 (1985).  Thus, we will

upset  the district court's finding of "clear and convincing

evidence" in this case only if we are firmly convinced that it was

merely  probable  or unlikely that the RTC would have fired

Koszola regardless of any protected disclosures.  Cf. Addington

v. Texas, 441 U.S. 418, 425 (1979) (the burden of "clear and

convincing  evidence"  falls  between  preponderance  of  the

evidence and proof beyond a reasonable doubt); MCCORMICK

 

                                  11

ON  EVIDENCE  §  340  (5th  ed.)  (approving the suggestion that

"clear and convincing evidence" be interpreted as meaning

"highly probable").

     After referencing the detailed set of charges put forward by

the RTC in its memorandum proposing Koszola's removal, the

district  court  concluded  that  the  RTC  "based  its  decision to

remove  Plaintiff  on  numerous  grounds  having nothing to do

with Plaintiff's disclosures."  Mem. Op. at 12.  The court based

this  conclusion  on  the  testimony of the Deputy Inspector

General who recommended            termination "because Koszola

could  not be trusted to do his job" and that further training,

rehabilitation,  or  lesser punishment would not remedy the

problem.  Id. at 11.  Having witnessed Koszola's testimony and

cross-examination, the district court observed that the "skepti-

cism" about Koszola's reliability and prospects for improvement

"was readily understandable."  Id.  

     We  give substantial deference to the district court's

evaluation of witness credibility.  See Anderson, 470 U.S. at 575

(" w hen  findings  are based on determinations regarding the

credibility of witnesses, Rule 52(a) demands even greater

deference  to  the  trial  court's  findings").  Such deference is

particularly appropriate in this case, for the disputed question

turns on the employer's motivation and subjective assessment of

the employee, as well as the parties' interpretations and explana-

tions  of  events.   A trial judge "aware of the variations in

demeanor and tone of voice that bear so heavily on the listener's

understanding of and belief in what is said," id., is in a far better

position than this court to make such evaluations.

     In an attempt to show that the RTC's decision to fire him

was pretextual, Koszola argues that in light of past practice the

RTC's  response  to  the  incident  triggering his termination was

suspiciously  disproportionate.  He observes that prior alleged

infractions -- such as impersonating an FBI agent and improp-

erly contacting witnesses -- did not cause the RTC to initiate

 

                                  12

termination proceedings against him.  Shortly after an allegedly

protected disclosure, however, the RTC moved to fire him for

the less grievous error of inaccurately reporting the results of an

investigative  interview.    This disparity, he contends, indicates

that retaliation for the disclosure was the reason for his termina-

tion.  

     This reasoning fails to take into account the cumulative

effect of Koszola's misconduct.  The adage about the straw

breaking  the  camel's  back  is  familiar  because  of  the  truth  it

conveys.  Koszola was fired not simply because of the misre-

porting episode, which in any event was no mere straw.  That

episode  was  simply  the  latest  in  an  accumulation of incidents

that exhausted the patience of Koszola's supervisors and left

them with no confidence in him.  Indeed, the sworn testimony

of  the  Deputy  Inspector  General  --  the  officer  who  recom-

mended Koszola's termination -- confirms this conclusion.  See

Trial Tr. (Nov. 7, 2001) at 49 ("The things that had occurred

were so serious and occurred in the three areas of charges . . .

and had somewhat of a pattern . . . of contempt for the organiza-

tion, contempt for authority . . . that I didn't really see being

corrected through a lesser penalty.").

     Koszola also challenges the sufficiency of the evidence of

his misconduct.  He attempts to undermine the foundation of the

charge  of  inaccurate  investigative  reporting, hypothesizing that

it could have been the result of confusion and contending that

the Deputy Inspector General admitted as much.  The record

does not support this interpretation.  It indicates that although

the Deputy Inspector General observed "there  may  be  some

confusion" about the matter, he concluded that he found "persua-

sive" the timekeeper's testimony that Koszola had inaccurately

recorded her interview.  Handwritten Notes of Deputy Inspector

General at J.A. 628 (emphasis added).  It is unclear where the

investigating  officer thought the confusion might lie,  but  it  is

clear  that  he  found  the  timekeeper's  testimony more credible

 

                                    13

than Koszola's, in part because the timekeeper was "outside" the

area  of  dispute.  Id.  We have no basis for questioning that

conclusion.

     Koszola  also  dismisses  one  incident  of  insubordination as

trivial.  See  id.  at  13­14  (characterizing  as  minor  Koszola's

decision not to wait to serve an attorney a subpoena).  Had the

RTC placed dispositive weight on that incident, this character-

ization might give us pause.  But the subpoena spat was plainly

just one episode of many in the unhappy saga culminating in

Koszola's  dismissal.  Overall, Koszola describes the removal

memorandum as documenting only that he "had been less than

slavish  in  his  attention  to  the  details  of  some  of  his  duties,"

Koszola Br. at 10, but this simply gives euphemism a bad name.

The  removal  memorandum  stated  that  Koszola's  "misconduct

created  extreme  embarrassment for both an Assistant U.S.

Attorney   and  the  RTC,"  that  his  failure  to  follow  proper

investigative procedure meant he "cannot be trusted to conduct

future  investigations  without the RTC  risking ultimate

compromise of the case," and that his "serious misrepresenta-

tions"  in  a  Report  of  Investigative  Activity  undermined  the

Regional Inspector General's confidence that Koszola could

"discharge this essential function of his  position with integ-

rity."  Mem. of Proposed Removal at 2, 7, 10.  Like the district

court, we need not decide whether Koszola should have been

terminated.  We need only affirm that the district court did not

clearly err in deciding that the RTC showed, by clear and

convincing  evidence,  that  it did not fire Koszola in retribution

for any protected disclosures.

                                   IV.

     Our  determination  that  the  district  court's  factual  conclu-

sions are not clearly erroneous is fatal to Koszola's contention

that the court erred by not inquiring into whether he had stated

a  First  Amendment  claim.  He correctly contends that courts

conduct a multifactor inquiry to decide whether a public

 

                                  14

employee  has  established  a  cause of action under the First

Amendment.  See Connick v. Myers, 461 U.S. 138, 142 (1983);

Hall v. Ford, 856 F.2d 255, 258 (D.C. Cir. 1988).  The govern-

ment, however, can rebut any such claim by showing by a

preponderance of the evidence that it would have taken the same

action regardless of any protected speech by the employee.  See

Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,

287  (1977).  The  statutory  and  First  Amendment  counts  in

Koszola's complaint refer to identical disclosures.  See Compl.

9­10.  The district court correctly reasoned that, because the

RTC had already adduced clear and convincing evidence that it

would  have  terminated  Koszola  regardless  of  any  protected

activity, a fortiori it would prevail under the First Amendment's

less  demanding  rebuttal  standard.  As we do not disturb the

district  court's finding of clear and convincing evidence, its

ruling on Koszola's First Amendment claim stands.

     In light of our disposition, we have no occasion to reach the

FDIC's arguments that Koszola's disclosures were not protected

under the RTC Whistleblower Act or the First Amendment.

     The judgment of the district court is affirmed.

 

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