                      NOTE: This disposition is nonprecedential.


 United States Court of Appeals for the Federal Circuit

                                   2008-3012, -3015

                                 JEFFREY R. HOLST,

                                                      Petitioner,

                                           v.

                      DEPARTMENT OF VETERANS AFFAIRS,

                                                      Respondent.


        Thomas D. Hobart, Meardon, Sueppel & Downer P.L.C., of Iowa City, Iowa, for
petitioner.

       David A. Harrington, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for respondent. With him on
the brief were Gregory G. Katsas, Assistant Attorney General, Jeanne E. Davidson,
Director, and Donald E. Kinner, Assistant Director.

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                     NOTE: This disposition is nonprecedential.



 United States Court of Appeals for the Federal Circuit

                                  2008-3012, -3015

                                JEFFREY R. HOLST,

                                                             Petitioner,

                                         v.

                     DEPARTMENT OF VETERANS AFFAIRS,

                                                            Respondent.


Petitions for review of the Merit Systems Protection Board in CH0752050603-C-1 and
CH0752060678-I-1.

                         __________________________

                          DECIDED: November 7, 2008
                          __________________________


Before MICHEL, Chief Judge, CLEVENGER and MOORE, Circuit Judges.

PER CURIAM.

      Jeffrey R. Holst appeals a final decision of the Merit Systems Protection Board

(MSPB or the Board) affirming his demotion. See MSPB Docket Nos. CH0752060678-

I-1 and CH0752050603-C-1. We affirm.

                                   BACKGROUND

      Mr. Holst was a police officer for the Iowa City Veterans Affairs Health Care

System.   In December 2003, Mr. Holst placed a confidential telephone call to the

Veterans Affairs (VA or the agency) Inspector General detailing widespread misconduct

in the Iowa City VA Medical Center Police Department. As a result of the call, several
officers—including Mr. Holst—were disciplined. Despite the presumed confidentiality of

the call, it is undisputed that other officers became aware that Mr. Holst reported the

misconduct.

       In early January 2005, Mr. Holst’s supervisor, Lt. Christopher Duncan, instructed

Mr. Holst to report to a meeting on January 6, 2005 to discuss a round of ammunition

assigned to Mr. Holst that was temporarily unaccounted for. Mr. Holst did not report to

the meeting at the scheduled time. He then ignored an order from the Chief of Police,

Paul George, to report to the meeting. When he later realized that Mr. Holst had not

followed his order, Chief George escorted Mr. Holst to the meeting. At the meeting, Mr.

Holst refused to sit down or to answer any of Lt. Duncan’s questions, which prompted

Mr. Holst’s union representative to request a delay to allow Mr. Holst to speak with the

union president. When the union president arrived, Mr. Holst left without speaking to

him.

       When Mr. Holst did not return to the meeting, Lt. Duncan contacted him three

times on his radio and ordered him to return. Mr. Holst ignored the first order. He

responded to the second order by telling Lt. Duncan: “I heard you.”            Mr. Holst

responded to the third order by telling Lt. Duncan that he was waiting to talk to someone

who was currently in another meeting. When Mr. Holst finally returned with another

agency employee, Lt. Duncan ordered Mr. Holst to secure his firearm in a gun locker.

Mr. Holst refused the order and instead aggressively questioned why he should do so.

At that point, Chief George ordered Mr. Holst to secure his firearm. Mr. Holst complied

with the Chief’s order and then answered Lt. Duncan’s questions regarding the missing

round of ammunition. Following the meeting, Mr. Holst was placed on leave for the rest




2008-3012, -3015                           2
of the day and ordered to write a report detailing the facts surrounding the missing

round of ammunition. As of January 14, 2005, following several orders to turn in the

report, Mr. Holst still had not done so.

       As a result of Mr. Holst’s erratic conduct at the meeting, a VA human resources

officer requested a fitness for duty evaluation of Mr. Holst. Based upon a series of

evaluations, Chief George proposed Mr. Holst’s removal on February 17, 2005. The

removal was approved by the director of the VA medical center. Mr. Holst appealed the

VA's removal decision to the Board, which conducted a hearing and evaluated various

psychiatric opinions without addressing any charges of misconduct.           The Board

concluded that the psychiatric evidence submitted by the VA failed to establish that Mr.

Holst was unfit to perform his duties as a police officer, and ordered the VA to vacate

Mr. Holst's removal, to retroactively restore Mr. Holst to his position, and to pay Mr.

Holst the "appropriate amount of back pay." The agency did not appeal this decision.

       On May 1, 2006, Mr. Holst reported for duty and requested leave, which was

granted. When Mr. Holst returned from leave, Chief George proposed his removal

based upon eight disciplinary charges stemming from Mr. Holst’s behavior surrounding

the January 6 meeting as well as his use of his position as a VA police officer to obtain

a permit to carry a pistol.      Peter Henry, the new acting medical center director,

sustained five of the charges—three charges involving insubordination or disrespectful

conduct and two charges involving violation of agency standards of conduct—and

reduced the penalty from removal to demotion.

       Mr. Holst appealed the demotion to the Board, which affirmed the demotion. The

Board also determined that the VA had complied with the Board's previous order to




2008-3012, -3015                            3
reinstate Mr. Holst. Mr. Holst appeals the Board’s decision, and asserts that the Board

erred in: (1) allowing the agency to bring the demotion action that (a) constituted

noncompliance with the Board’s previous order to reinstate Mr. Holst and (b) should

have been barred under the principle of res judicata; (2) failing to properly apply the

Douglas factors; and (3) finding that the demotion was not in retaliation for

whistleblowing. We have jurisdiction under 28 U.S.C. § 1295(a).

                                     DISCUSSION

      Our review of a decision by the MSPB is governed by 5 U.S.C. § 7703(c), which

directs us to set aside MSPB actions, findings, or conclusion found 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.”

      The VA was not precluded from bringing the demotion action. First, the demotion

action did not violate the Board’s previous order to reinstate Mr. Holst. The record

shows that Mr. Holst was reinstated on May 1, 2006, when he reported for duty and

requested leave, which was granted. The Board’s previous order to reinstate Mr. Holst

because he was not mentally unfit does not address whether the agency is permitted to

punish the underlying insubordinate conduct.

      Second, the principal of res judicata did not preclude the agency from demoting

Mr. Holst. "Under the doctrine of res judicata, a judgment on the merits in a prior suit

bars a second suit involving the same parties or their privies based on the same cause

of action. '' Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n.5 (1979). "Two suits

are based on the same cause of action [only] if they arise out of the same nucleus of




2008-3012, -3015                            4
operative facts." Transclean Corp. v. Jiffy Lube Int'l, Inc., 474 F.3d 1298, 1304-05 (Fed.

Cir. 2007). Accordingly, the demotion action is not barred unless it arose out of the

same nucleus of operative facts as the previous removal appeal. It did not.

         The initial removal action was based on a determination that Mr. Holst was

mentally unfit to carry a firearm. The Board considered factual allegations that were

limited to the psychiatric reports and testimony related to Mr. Holst’s mental stability and

did not include the misconduct or insubordination during the meeting.          The factual

allegations in the current demotion action—i.e., allegations regarding Mr. Holst’s

insubordination—are therefore distinct from the factual allegations of the previous

removal action—i.e., allegations regarding Mr. Holst’s mental fitness. The agency was

not prohibited from bringing the demotion action which is based on distinct factual

allegations.

         The administrative judge (AJ) properly considered the Douglas factors in

determining that Mr. Holst’s demotion was appropriate.                In determining the

reasonableness of a penalty imposed by an agency, the Board applies the twelve

Douglas factors. Douglas v. Veterans Admin., 5 M.S.P.R. 280, 305-06 (1981). We give

deference to the agency's judgment unless a penalty violates a statute or regulation or

is “so harsh and unconscionably disproportionate to the offense that it amounts to an

abuse of discretion.” Villela v. Dep't of the Air Force, 727 F.2d 1574, 1576 (Fed. Cir.

1984).

         The AJ affirmed the agency’s determinations that Mr. Holst’s repeated failures to

obey direct orders from his supervisors—particularly his failure to obey Lt. Duncan’s

orders to disarm—constituted insubordination and that Mr. Holst used his position with




2008-3012, -3015                             5
the VA for private gain in obtaining a carry permit. The AJ then acknowledged the

importance of the Douglas factors and analyzed the demotion action in light thereof. In

weighing these factors, the AJ noted that the deciding officer, Mr. Henry, testified that a

failure to follow orders is “intolerable in a police setting and would support a removal

action,” and that the penalty for a first insubordination offense according to the VA

handbook may range from reprimand to removal. It was not an abuse of discretion for

the Board to sustain the demotion action.

       Finally, the AJ correctly found that Mr. Holst was not demoted in retaliation for his

whistleblowing. This court has:

       interpreted the [Whistleblower Protection Act] to require proof of four
       elements to establish a violation of section 2302(b)(8): “(1) the acting
       official has the authority to take, recommend, or approve any personnel
       action; (2) the aggrieved employee made a disclosure protected under
       section 2302(b)(8); (3) the acting official used his authority to take, or
       refuse to take, a personnel action against the aggrieved employee; (4) the
       acting official took, or failed to take, the personnel action against the
       aggrieved employee because of the protected disclosure.”

Lachance v. White, 174 F.3d 1378, 1380 (Fed. Cir. 1999) (citations omitted). “After an

employee establishes that a protected disclosure was a contributing factor, the agency

must prove by clear and convincing evidence that it would have taken the action to

remove the employee, even in the absence of the protected disclosure.” Kewley v.

Dep’t of Health & Human Servs., 153 F.3d 1357, 1364 (Fed. Cir. 1998).

       The Board found that Mr. Holst had made a protected disclosure and that the

“protected disclosure was a contributing factor to this demotion action.” However, the

Board then found that the agency established by clear and convincing evidence that Mr.

Holst’s misconduct was so severe that he had to be demoted from his position as a

police officer, and that the agency would have demoted Mr. Holst absent his protected



2008-3012, -3015                             6
disclosure.   Upon review of the full record in this case, we conclude there was

substantial evidence to support the Board’s conclusion that the agency would have

taken the demotion action against Mr. Holst even if he had not engaged in

whistleblowing. There was testimony from Chief George that he would have taken the

same action absent the whistleblowing.        Trial Tr. 87:6-8 (Q: “If he had not been a

whistleblower, would you still have proposed the same discipline?”           A: “Oh, yes.”).

There was also testimony from Mr. Henry that he actually reduced the penalty from

removal to demotion because of Mr. Holst’s status as a whistleblower. Id. 128:20-23

(Q: “So you would have made the same decision if he hadn’t been a whistleblower?” A:

“I’m not sure I’d say that. I might have just let the removal go through. . . .”). In light of

this evidence, we conclude there was substantial evidence to support the Board’s

conclusions in this case.

       For the foregoing reasons, we affirm the final decision of the Board.

                                              COSTS

       No costs.




2008-3012, -3015                              7
