118 Fed. Cl. 289
Fed. Cl.2014Background
- Jay Dobyns, an ATF special agent who conducted an undercover operation (Operation Black Biscuit), sued the United States after entering a September 20, 2007 settlement with ATF resolving prior employment grievances; the settlement provided promotion/back pay, a lump-sum payment, and required ATF to comply with laws affecting his employment.
- After the settlement, ATF officials withdrew covert identity “backstopping” and mishandled threats to Dobyns and his family; in August 2008 Dobyns’ home was set on fire and ATF’s response and investigation were delayed and mismanaged.
- ATF internal investigations (DOJ OIG 2008; ATF IAD 2012 and 2013) found serious mismanagement: failures in threat assessments, improper removal of fictitious IDs, withholding/obstructing investigative files, unauthorized recordings, and targeting Dobyns as a suspect.
- Dobyns claimed (1) breach of the settlement contract and (2) breach of the covenant of good faith and fair dealing; the United States counterclaimed that Dobyns breached his employment obligations (e.g., publishing a book and selling movie rights) and sought relief under Snepp-type principles.
- The court found no express breach of the settlement terms (it declined to read ATF internal orders into the settlement), but concluded ATF’s collective conduct grossly breached the implied covenant of good faith and fair dealing and awarded $173,000 for emotional distress and pain and suffering; the counterclaim was rejected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ATF breached the Settlement Agreement by violating “laws regarding or otherwise affecting” Dobyns’ employment (i.e., incorporating ATF Orders) | "Dobyns": the phrase includes ATF Orders and thus ATF breached by failing to follow those Orders (e.g., backstopping procedures). | "United States": "laws" means statutes/regulations; the settlement did not incorporate ATF Orders, so no express contractual breach. | Held: No express breach — the court will not read broad incorporation of ATF Orders into the settlement. |
| Whether ATF breached the implied covenant of good faith and fair dealing associated with the settlement | "Dobyns": ATF officials' removal of protections, obstructive conduct and mishandling of the arson investigation defeated the settlement’s protective purpose. | "United States": agency actions did not amount to a covenant breach; disparities reflect management choices, not deliberate deprivation. | Held: Covenant breached — ATF employees’ aggregate conduct frustrated the settlement's purpose and deprived Dobyns of expected benefits. |
| Whether emotional-distress and pain-and-suffering damages are recoverable for the covenant breach in this court | "Dobyns": the settlement addressed mental-distress harms; Restatement §353 exception applies because the contract’s purpose made emotional harm foreseeable. | "United States": such damages sound in tort and fall outside this court’s Tucker Act jurisdiction. | Held: Recoverable — Court applies Restatement §353 exception and awards non-economic damages ($173,000) using a jury‑verdict–style approximation. |
| Whether ATF can recover profits or other relief from Dobyns for publishing (Snepp-style relief) | N/A (Dobyns opposed counterclaim) | "United States": Dobyns violated prepublication obligations and his employment duties by publishing and licensing his story; seeks disgorgement/relief. | Held: Counterclaim dismissed — settlement (and facts showing ATF knew of preexisting book/movie deals) bars the claim; Snepp not controlling here. |
Key Cases Cited
- Metcalf Constr. Co. v. United States, 742 F.3d 984 (Fed. Cir. 2014) (the implied duty of good faith and fair dealing can be breached even absent an express contractual violation; limited by the contract’s bargain)
- Precision Pine & Timber Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (discusses government liability under implied covenant; context for ‘‘bait-and-switch’’ theory)
- Snepp v. United States, 444 U.S. 507 (1980) (agency may impose prepublication review obligations and, in that case, constructive remedies like disgorgement may follow for breach)
- Bohac v. Department of Agriculture, 239 F.3d 1334 (Fed. Cir. 2001) (survey of contract‑law rule that emotional‑distress damages are generally excluded, and acknowledgement of Restatement §353 exceptions)
- Bell/Heery v. United States, 739 F.3d 1324 (Fed. Cir. 2014) (elements and proof standards for breach of contract against the government)