                     NOTE: This disposition is nonprecedential.


 United States Court of Appeals for the Federal Circuit

                                      2006-3238



                                 DONALD L. CRANE,

                                                            Petitioner,

                                          v.


                        DEPARTMENT OF THE AIR FORCE,


                                                            Respondent.


      Kristina S. Holman, of Las Vegas, Nevada, argued for petitioner.

      Captain Amina Q. Diehl, Attorney, General Litigation Division, Air Force Legal
Operations Agency, of Arlington, Virginia, argued for respondent. Of counsel was Major
Carey A. Merrill. Also of counsel were William F. Ryan, Assistant Director, and Kent G.
Huntington, Attorney, Commercial Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC.

Appealed from: United States Merit Systems Protection Board
                      NOTE: This disposition is nonprecedential.

United States Court of Appeals for the Federal Circuit


                                       2006-3238



                                 DONALD L. CRANE,

                                                             Plaintiff-Appellant,

                                           v.

                         DEPARTMENT OF THE AIR FORCE,

                                                             Defendant-Appellee.



                           __________________________

                           DECIDED: July 6, 2007
                           __________________________



Before NEWMAN, Circuit Judge, LOURIE, Circuit Judge, and PROST, Circuit Judge.

Opinion for the court filed by Circuit Judge, NEWMAN. Dissenting opinion filed by Circuit
Judge PROST.

NEWMAN, Circuit Judge.



      Mr. Donald Crane appeals the decision of the Merit Systems Protection Board,

Docket No. SF0752050105-I-1, affirming his removal from employment as a mason at

Nellis Air Force Base, Utah. For the reasons set forth, we reverse the removal action and

remand to the Board for determination of any appropriate disciplinary action.
                                     BACKGROUND

       Mr. Crane began employment with the 99th Civil Engineering Squadron at Nellis Air

Force Base in 1990, in the position of Masonry Worker, WG-9. He had previously been

employed as a mason at another Air Force base until its closure, and had served in the

Marine Corps. During his employment at Nellis Air Force Base, Mr. Crane performed

private masonry activities as a side business. This side business was conducted with the

knowledge of his Air Force supervisors.

       The events leading to Mr. Crane's removal began in 2003 when a representative of

the Las Vegas Motor Speedway, Mr. David Stetzer, met with Air Force officials to discuss a

welcome-home celebration for returning troops. Mr. Stetzer observed the concrete barriers

on the base, and inquired of Master Sergeant Richard Huibregtse as to whether he could

obtain similar barriers for use at the Speedway. MSgt Huibregtse, Mr. Crane's direct

supervisor, asked Mr. Crane to contact Mr. Stetzer. MSgt Huibregtse testified that he

understood that Mr. Crane would make this contact in his personal capacity in connection

with his side business.

       Mr. Crane contacted Mr. Stetzer, and on June 23, 2003 sent him a written proposal

with photographs of a prototype of a proposed concrete barrier with "LVMS" stamped on

the barrier. The Air Force stated, and repeats on this appeal, that the construction of this

prototype, which used a less expensive pouring process, was approved by MSgt

Huibregtse. MSgt Huibregtse testified that he informed his "wing leadership" of this

development, and that they responded that they probably would not change the existing

concrete barriers but that "they could pour one and 'see what they say.'" Air Force Br. at 7.



2006-3238                                    2
The prototype was built by Mr. Crane on Air Force premises using surplus government

material. No orders were placed with Mr. Crane as a result of the Speedway proposal.

       In September 2003 the Air Force initiated investigation of Mr. Crane based on

reports of "unauthorized work." Apparently nothing further ensued until Lt. Col. Anthony

Foti became the Commander of the 99th Civil Engineering Squadron in June 2004. On

July 12, 2004 Col. Foti issued a Notice of Proposed Removal of Mr. Crane. Mr. Crane

responded in writing on July 19 and 20, 2004. The Air Force states that Mr. Crane was not

given the Report of the investigation until he was given a redacted copy on July 23, 2004.

Gov't Br. at 13. Removal occurred in September 2004, on the charge of misuse of

government property. Mr. Crane appealed to the MSPB.

       At the hearing the testimony of the issue of unauthorized work related solely to the

prototype barrier and its marking "LVMS." MSgt Huibregtse testified that he knew that Mr.

Crane "has a business on the outside" and that he told Mr. Crane about the Speedway

inquiry concerning concrete barriers, knew of and approved the construction by Mr. Crane

of the prototype barrier, and told Air Force officials about the new process developed by Mr.

Crane. Mr. Crane had designed the barriers then in use, which were known as "DC

barriers."

       There was also testimony concerning Mr. Crane's several awards and

commendations, and that Mr. Crane consistently received highly favorable performance

ratings. For example, a Civilian Rating of Record includes the following in connection with

a monetary performance award:

              Led 7-man crew in the design and construction of 500 concrete, rebar,
       and cinder block traffic barriers.


2006-3238                                    3
               Increased base force protection measures; being sought as
       benchmark by DoD . . . barriers are in demand at bases nationwide.
               Assisted VOTECH block team in the layout/construction of 600 feet of
       block wall at cryogenics compound; secured assets.
               Hand-picked to assist Horizontal section in forming/pouring 150 feet of
       sidewalk at Red Flag facility; improved accessibility.
               Mr. Crane is the masonry systems "go-to-guy" for advice; always
       sought by shop leadership . . . skill knowledge has aided immensely.
               Displayed stellar skills while led 7 federal inmates in construction of
       800 ft. block wall -- Child Development Center.
               Led construction of 480 feet of block wall/personnel gate at 415 AGE
       compound; secured assets and improved base appearance.
               Don displayed his talents assisting VOTECH; laid first course of block
       at F-22 project . . . stayed one step ahead of block crew.
               Dedication to duty and teamwork are a few of his finest attributes;
       excelled at all assigned taskings . . . major asset to section.

Rating Record with three (illegible) signatures in April and May 2004.

       The Administrative Judge found that Mr. Crane "used government concrete to build

a barrier that was marked with the initials 'LVMS' to solicit personal, private business from

the Speedway," and sustained the removal, stating that "though the penalty of removal may

seem harsh at first glance, the agency-imposed penalty is within the bounds of

reasonableness." The full Board affirmed without review, and this appeal followed.

                                       DISCUSSION

       Mr. Crane states that the Air Force had always known of his private masonry

business, and had allowed and even encouraged this private business. Government

counsel conceded, at the argument of this appeal, that the record shows that there was no

objection by the Air Force to Mr. Crane's outside masonry business, and that the Air Force

had not warned Mr. Crane concerning disapproval of these activities including the

Speedway proposal:

       Court: "Was there a warning?"


2006-3238                                    4
       Gov't counsel: "No, there is no warning, no, Ma'am."

                                            ****

       Court: But you do know that he was never disciplined or removed or told to
       cut it out?

       Gov't counsel: There is no evidence in the record as to that, Ma'am. So I
       don't know, but there is no evidence in the record, so yes. . . . He was fired,
       in this case, he was fired for, specifically, placing the initials, pouring
       government concrete.

Mr. Crane stresses that the Air Force was aware of his side business and did not warn him

that any aspect of what he was doing was deemed improper activity that could lead to

termination of his employment. It was conceded at oral argument that there is no evidence

of any objection to or criticism of this activity. The government stated that it does not know

"based on the facts in this record, whether [Mr. Crane's side business] was a business that

he conducted on Nellis Air Force Base itself or whether it was in his garage."

       The government acknowledged that Mr. Crane's supervisor authorized the prototype

barrier that led to Mr. Crane's removal. The record shows that the preparation of the barrier

using a new process was known to Mr. Crane's supervisor and the "wing leadership." It

was undisputed that the submission to the Speedway was enabled by supervisor MSgt

Huibregtse, who also testified that he was not aware of the "LVMS" stamp on the barrier.

The government stresses that Mr. Crane destroyed the prototype after he learned of the

investigation. Colonel Foti testified that the removal was based on the construction of the

prototype and that the placement of the LVMS stamp "led me to believe that there was an

ulterior motive to use government property for some other financial gain." Transcript, App.

at 115.



2006-3238                                     5
       The government argues that Mr. Crane's removal is supported because the

placement of "LVMS" on the prototype barrier shows his intention to use the prototype to

solicit business from Speedway. Whether or not this activity was appropriate, it came to

Mr. Crane through persons at the Air Force. The lengthy period of condonation of the

outside business, and the conceded lack of warning that it was disapproved, leave the

penalty of "firing" without support by substantial evidence. Precedent generally requires

notice to an employee when previously condoned activity is no longer condoned, giving the

employee the opportunity to conform to any new rules. For example, in VanFossen v. Dep't

of Housing & Urban Dev., 748 F.2d 1579 (Fed. Cir. 1984) the agency removed Mr.

VanFossen for engaging in outside employment without authorization; this court vacated

the removal because Mr. VanFossen had received authorization from his area manager

and had not been warned about the possible invalidity of the authorization or told to

discontinue the conduct; this court stated: "In determining an appropriate penalty . . . failure

to consider a significant mitigating circumstance constitutes an abuse of discretion." Id. at

1581. There is MSPB precedent as to military employees, see, e.g., Davis v. Dep't of the

Army, 33 M.S.P.R. 223, 230 (1987) (on charges including unauthorized possession and

misuse of government property, the Board found that "the use of government property for

which he was charged was initially authorized by his supervisor" and therefore that the

maximum reasonable penalty was a demotion and a sixty-day suspension); Tallis v. Dep't

of Navy, 20 M.S.P.R. 108, 111 (1984) (factors such as the express permission from the

employee's supervisor for the charged misuse of government computer facilities and the




2006-3238                                      6
employee's twenty-five years of satisfactory service mitigate the penalty to a two-day

suspension).

       In determining a penalty, all relevant factors must be weighed in the context of the

infraction, as explained in Douglas v. Veterans Admin., 5 M.S.P.R. 280, 303 (1981)

("Before it can properly be concluded that a particular penalty will promote the efficiency of

the service, it must appear that the penalty takes reasonable account of the factors relevant

to promotion of service efficiency in the individual case."). Of particular relevance to the

reasonableness of the agency penalty here imposed is "[t]he clarity with which the

employee was on notice of any rules that were violated in committing the offense, or had

been warned about the conduct in question." Douglas, 5 M.S.P.R. at 305.

       Mr. Crane directs attention to other Douglas factors that also weigh in his favor,

including his commendations and awards and lengthy government service, and that the AJ

found that "Mr. Crane had no documented disciplinary actions." On the record before us,

where Mr. Crane's supervisors knew of and authorized the charged conduct (except for the

placement of the initials), and Mr. Crane was not instructed or warned that he had violated

various rules, the penalty of separation from service was not reasonably within the Douglas

parameters. Douglas states that "the Board's review of an agency-imposed penalty is

essentially to assure that the agency did conscientiously consider the relevant factors and

did strike a responsible balance within tolerable limits of reasonableness." In determining

Mr. Crane's penalty, the agency as well as the Board failed to consider the relevant factor

of Mr. Crane's supervisor's involvement in informing Mr. Crane of the LVMS business

opportunity and approving the prototype. Thus, the agency did not give meaningful



2006-3238                                     7
consideration to a key relevant factor. The removal is reversed; we remand to the Board

for reinstatement of Mr. Crane to his position, and determination of any appropriate

disciplinary action upon consideration of all of the Douglas factors.




2006-3238                                    8
                      NOTE: This disposition is nonprecedential.

 United States Court of Appeals for the Federal Circuit

                                      2006-3238


                                 DONALD L. CRANE,

                                                      Petitioner,


                                           v.


                         DEPARTMENT OF THE AIR FORCE,

                                                      Respondent.


PROST, Circuit Judge, dissenting.

      According to the majority, “[t]he lengthy period of condonation of [Mr. Crane’s]

outside business, and the conceded lack of warning that it was disapproved, leave the

penalty of ‘firing’ without support by substantial evidence.” Maj. Op. at 6. Mr. Crane,

however, was not terminated for operating an outside business; Mr. Crane was

terminated for misusing government resources. As such, the fact that the Air Force

condoned Mr. Crane’s outside business is irrelevant to this appeal. What is relevant is

that the record is devoid of any evidence the Air Force ever condoned Mr. Crane’s use

of government resources in his outside business. Accordingly, I respectfully dissent.

      What the record does show is that Mr. Crane constructed a prototype concrete

barrier using government equipment and materials and that he used the prototype in a

proposal to the Las Vegas Motor Speedway. To the extent Mr. Crane’s supervisor

approved the construction of the prototype, it was to see if the “wing leadership” would
“buy off” on the new design.      However, Mr. Crane failed to submit the appropriate

documentation to the Air Force. Instead, he went ahead and constructed his prototype

using government equipment and materials, stamped it with the letters “LVMS,” used it

in a proposal to the Las Vegas Motor Speedway (which just so happens to have the

initials “LVMS”), never submitted the completed prototype to the anyone in his chain-of-

command, and then had it destroyed once he learned the Air Force was investigating

him for misusing government property. Under these circumstances, a warning that this

type of activity was inappropriate is not necessary.       Mr. Crane should have known

better. Moreover, his unauthorized destruction of the barrier, initial refusal to explain the

meaning of the initials “LVMS” to his superior, and dubious subsequent explanation of

their meaning demonstrate that Mr. Crane did know better.           This court reviews an

agency’s decision as to the appropriateness of a penalty with great deference, deferring

to the agency unless the penalty amounts to an abuse of discretion. Brook v. Corrado,

999 F.2d 523, 528 (Fed. Cir. 1993). The circumstances of this case clearly do not

warrant withholding that deference. Simply put, the conclusion that Mr. Crane misused

government equipment, materials, and premises was supported by substantial

evidence, and his termination was not an abuse of discretion. Accordingly, the decision

of the Merit Systems Protection Board should be affirmed in its entirety.




06-3238                                      2
