Young v. United States, 133 Fed. Cl. 471

Background

Eric J. Young, an SEC attorney, disputed a Notice of Proposed 14-day suspension based on alleged misconduct; parties instead executed a July 17, 2014 Settlement Agreement.
Under the settlement Young accepted a voluntary 10-day suspension (to be placed in his personnel folder), a nine-month detail to the U.S. Attorney’s Office, a waiver of challenges to the voluntariness of the suspension, and a general release; the SEC agreed to rescind the Notice, effect the 10‑day suspension, remove the suspension from his Official Personnel Folder upon resignation/transfer/retirement, and approve the detail.
The SEC rescinded the Notice and Young served the 10‑day voluntary suspension; two SF‑50s initially recorded the suspension reason as “conduct unbecoming a federal employee” but were later corrected to cite the settlement.
The SEC later created a Pay Transition Program that excluded employees who had been “formally disciplined” (defined to include suspension). The SEC denied Young’s application based on his 10‑day suspension.
Young sued in the Court of Federal Claims alleging (1) breach of the Settlement Agreement (rescission not effective; voluntary suspension should not count as disciplinary) and (2) breach of the implied covenant of good faith and fair dealing (frustration of expectation of a clean record / concealment of the Pay Transition Program).
The court heard cross-motions for summary judgment and granted the Government’s motion, denying Young’s motion in full.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the SEC breached the Settlement Agreement by treating Young’s voluntary 10‑day suspension as disciplinary	Young: rescission of the Notice and settlement language show the suspension was intended to be non‑disciplinary and thus could not be treated as "formal discipline"	SEC: "suspension" has its plain statutory/ordinary meaning (disciplinary); rescinding the Notice removed only that document, not the underlying conduct; settlement itself served as notice	Court: Held for SEC — "suspension" is disciplinary; rescission of the Notice did not prevent the voluntary suspension from being treated as disciplinary
Whether issuance of incorrect SF‑50s (listing misconduct) breached the Agreement or proved Notice was not rescinded	Young: the SF‑50s show the Notice remained in effect and the SEC continued to treat him as discipline subject	SEC: the SF‑50 entries were clerical errors corrected once raised; documents and internal communications show the Notice was rescinded	Court: Held for SEC — SF‑50s were clerical errors, not evidence of breach; Notice was rescinded as required
Whether SEC breached the implied covenant by treating the suspension as disciplinary	Young: SEC frustrated his reasonable expectation of no disciplinary record and withheld existence of Pay Transition Program in bad faith	SEC: implied covenant cannot be used to rewrite the contract; Young had no contractual right to a clean record or to undisclosed future programs; no evidence of concealment or bad faith	Court: Held for SEC — no breach of implied covenant; Young had no right to benefits not in the settlement and no evidence SEC concealed the program
Whether summary judgment was appropriate	Young: factual disputes (intent, treatment, clerical errors) preclude summary judgment	SEC: record establishes rescission, correction of SF‑50s, and proper interpretation of settlement; no genuine material fact	Court: Granted Government’s summary judgment; denied Young’s motion

Key Cases Cited

Gould, Inc. v. United States, 953 F.2d 1271 (Fed. Cir. 1991) (contract interpretation begins with plain language)
McAbee Constr., Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996) (give effect to unambiguous contractual terms)
HRE, Inc. v. United States, 142 F.3d 1274 (Fed. Cir. 1998) (no reliance on extrinsic evidence absent ambiguity)
United States v. Seckinger, 397 U.S. 203 (1970) (contract terms must be construed to give significance to all clauses)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment standard; materiality of facts)
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party’s initial summary judgment burden)
Thomas v. General Services Admin., 756 F.2d 86 (Fed. Cir. 1985) (discipline defined as punishment for improper conduct)
Century Exploration New Orleans, LLC v. United States, 745 F.3d 1168 (Fed. Cir. 2014) (implied covenant cannot create new contractual rights)
Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (scope of implied covenant and reappropriation of contract benefits)