Norris v. Sec. & Exch. Comm'n

• Decision Date: 10 April 2012
• Docket Number: No. 2011–3129.,2011–3129.
• Citation: 675 F.3d 1349
• Parties: Jeffrey B. NORRIS, Petitioner, v. SECURITIES AND EXCHANGE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Federal Circuit

675 F.3d 1349

Jeffrey B. NORRIS, Petitioner,

v.SECURITIES AND EXCHANGE COMMISSION, Respondent.

No. 2011–3129.

United States Court of Appeals, Federal Circuit.

April 10, 2012.

Michael J. Kator, Kator, Parks & Weiser, P.L.L.C., of Washington, DC, argued for petitioner. With him on the brief was Adam J. Casner, of Austin, Texas.

Tara K. Hogan, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for respondent. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Todd M. Hughes, Deputy Director. Of counsel on the brief was Juanita C. Hernandez, Senior Counsel, Securities & Exchange Commission, of Washington, DC.

Before DYK, MOORE, and O'MALLEY, Circuit Judges.

DYK, Circuit Judge.

Jeffrey B. Norris (“Norris”) petitions for review of an arbitrator's decision affirming his removal from his position as a Trial Attorney with the Securities and Exchange Commission (“SEC”). U.S. Sec. & Exch. Comm'n v. Nat'l Treasury Emps. Union Chapter 293, No. SEC–AR–09–005 (Apr. 19, 2011) (Winograd, Arb.) (“ Arbitration Decision ”). Because we hold that the arbitrator erroneously failed to consider new evidence bearing upon the reasonableness of Norris's removal, we vacate and remand.

Background

Norris served as a Trial Attorney with the SEC from February 23, 1992, until he was removed on August 28, 2009. Before the events leading to his removal, discipline was initiated against Norris for exercising poor judgment and misuse of government email on two separate occasions. In 2007, Norris was suspended from service without pay for one day for exercising poor judgment in emailing an attorney who represented a witness in an ongoing SEC case, and expressing his opinion about the merits of the case. Thereafter, from March to May 2007, Norris exchanged a series of antagonistic emails from his SEC email account, and in which he identified himself as SEC trial counsel, with businessman Mark Cuban, owner of the Dallas Mavericks professional basketball team. Based on this exchange, Norris was suspended without pay for fourteen calendar days due to his misuse of government email.

The removal here was based on three additional emails sent in 2008. On September 11, 2008, Norris sent an email to the Washington Post from his SEC email account in which he identified himself as Senior Trial Counsel and expressed certain political views. On October 19, 2008, Norris sent an email to two supervisors and three members of the support staff in which he demeaned the support staff and implied that they were incompetent at performing their job duties. Finally, on October 23, 2008, Norris emailed a confidential suspicious activity report (“SAR”) to an appointed receiver and his counsel in violation of SEC policies.¹

On May 22, 2009, the SEC sent Norris a notice of proposed removal which proposed to remove him based on the three emails sent in 2008, and recounted the prior emails which had led to the previous disciplinary actions against him. Norris responded, urging that his actions in connection with the 2008 emails were influenced by several personal circumstances, including his wife's becoming fully disabled, his daughter's suffering from Asperger's Disorder, and Norris's adult Attention Deficit Hyperactivity Disorder (“AD/HD”). On August 19, 2009, the deciding official, Rose Romero (“Romero”), informed Norris that she had decided to remove him effective August 28, 2009, for misuse of government equipment by sending unauthorized or inappropriate emails. In the decision, Romero stated that “because of [Norris's] continued inappropriate and/or unauthorized emails [she had] lost confidence that [he could] effectively perform [his] assigned duties.” J.A. 118. Romero also noted that she had considered Norris's explanation that his behavior stemmed from his AD/HD and the effect of the medical conditions of his wife and daughter, but nevertheless concluded that Norris did “not have the potential for rehabilitation because prior disciplinary actions have not prevented [his] impulsive and improper e-mails.” Id.

The union submitted Norris's removal to arbitration pursuant to the terms of the collective bargaining agreement with the SEC. A hearing was held before an arbitrator on November 18–19, 2010. There was no dispute that Norris had engaged in the behavior that led to his removal or that his actions constituted improper conduct. The focus was primarily on whether removal was a reasonable penalty. During the hearing, the arbitrator received testimony from six witnesses, including Romero and Norris. Although the incident was not mentioned in the notice of proposed removal, Romero testified in response to questioning from the agency's counsel that sometime before the termination proceeding, she had learned that Norris had a confrontation with agency commissioners in 2007 and that he was therefore barred from presenting cases to commissioners in the future.² Romero also testified that Norris's conduct in connection with this incident and the subsequent presentations bar had “a direct impact on how that attorney ... is able to perform his duties.” J.A. 139. In mitigation of the charges against him, Norris presented evidence that his personal circumstances had improved in early 2009, so that the improper conduct was unlikely to recur in the future. Norris testified that his daughter was placed in a special program to cater to her needs due to her Asperger's Disorder and had begun taking a new medication that caused her to show significant improvement, and that his wife's condition had also improved. Norris's psychiatrist testified that Norris began taking medication for his AD/HD in June of 2009, and also had begun attending adult AD/HD support groups. Norris's psychiatrist expressed his opinion that in the future, Norris was unlikely to send emails such as those that had formed the basis of his removal, due in part to his treatment and also to the fact that his primary “stressors” (the medical conditions of his wife and daughter) had been alleviated.

On April 19, 2011, the arbitrator issued a decision affirming Norris's removal and concluding that “Romero did not abuse her discretion as a manager in making the decision to remove [Norris] from the service.” Arbitration Decision, slip op. at 59. In reaching this conclusion, the arbitrator considered each of the twelve “ Douglas factors” to assess whether Norris's removal was an appropriate penalty. See Douglas v. Veterans Admin., 5 MSPB 313, 331–32, 5 M.S.P.R. 280 (1981) (setting forth the factors relevant in determining the appropriateness of a penalty). In considering “the effect of the offense upon the employee's ability to perform at a satisfactory level and its effect upon supervisors' confidence in the employee's ability to perform assigned duties” ( Douglas factor 5), id. at 332, 5 M.S.P.R. 280, the arbitrator concluded that this factor was “neutral,” Arbitration Decision, slip op. at 52. The arbitrator relied on Romero's testimony that Norris's aggressive behavior had caused him to be barred from presenting cases to commissioners and that she had lost confidence in Norris's ability to maintain confidential information or good working relationships with other staff members. Id.

In assessing the “potential for the employee's rehabilitation” ( Douglas factor 10), Douglas, 5 MSPB at 332, 5 M.S.P.R. 280, the arbitrator noted that this factor was one of “the most difficult considerations,” Arbitration Decision, slip op. at 55. The arbitrator stated that “[i]f sympathy were the sole deciding factor in this case, the arbitrator would conclude that grievant should be reinstated to his former position.” Id. at 57. The arbitrator also recounted that Norris's psychiatrist had testified that Norris's course of treatment had “improved [Norris's] impulse control” and would “prevent[ ] further transgressions,” and noted that the medical conditions of Norris's wife and daughter had improved, alleviating much of the stress from which he had previously suffered. Id. at 56–57. Nonetheless, the arbitrator found that “[t]he issue before the arbitrator is ... whether Romero's decision, based upon the facts and circumstances known to her at the time, was within ‘tolerable limits of reasonableness,’ ” and thus declined to consider these post-removal events in rendering a decision. Id. at 57–58 & n. 17 (emphasis added).

Norris timely appealed to this court. We have jurisdiction pursuant to 5 U.S.C. §§ 7121(f) and 7703.

Discussion

Under 5 U.S.C. § 7121(f), we review a decision by an arbitrator “in the same manner and under the same conditions as if the matter had been decided by the [Merit Systems Protection] Board”; and our review of Merit Systems Protection Board (“Board”) decisions is limited. We may only set aside agency actions, findings, or conclusions that we find to be “(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) obtained without procedures required by law, rule, or regulation having been followed; or (3) unsupported by substantial evidence.” 5 U.S.C. § 7703(c); see also Bennett v. Merit Sys. Prot. Bd., 635 F.3d 1215, 1218 (Fed.Cir.2011). We review questions of law de novo. Chambers v. Dep't of the Interior, 602 F.3d 1370, 1375 (Fed.Cir.2010).

I

Relying on this court's recent decision in Ward v. U.S. Postal Service, 634 F.3d 1274 (Fed.Cir.2011), Norris first argues that both Romero and the arbitrator improperly considered ex parte information that Norris had engaged in a confrontation that led to his being barred from presenting cases before the commissioners. This alleged confrontation and resulting bar had not been included in Norris's notice of proposed removal.

The pertinent regulation provides that “[i]n arriving at its decision, the agency will consider only the reasons specified in the notice of proposed action and any answer of the...