 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued May 10, 2011                    Decided July 8, 2011

                       No. 10-5244

                    RICHARD AMERICA,
                       APPELLANT

                             v.

    KAREN G. MILLS, ADMINISTRATOR, SMALL BUSINESS
                   ADMINISTRATION,
                      APPELLEE


        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:03-cv-01807)



       Richard A. Salzman argued the cause for appellant.
With him on the briefs was Douglas B. Huron. Elizabeth A.
Grdina entered an appearance.

       Alan Burch, Assistant U.S. Attorney, argued the cause
for appellee. With him on the brief were Ronald C. Machen,
Jr., U.S. Attorney, and R. Craig Lawrence, Assistant U.S.
Attorney.

        Before: HENDERSON, BROWN, and KAVANAUGH,
Circuit Judges.
                              2
   Opinion for the Court filed by Circuit Judge
KAVANAUGH, with whom Circuit Judge HENDERSON joins.

    Dissenting opinion filed by Circuit Judge BROWN.

     KAVANAUGH, Circuit Judge: Richard America charged
his former employer, the Small Business Administration, with
discrimination. America and the SBA then settled. Under the
settlement agreement, America received $92,500 from the
SBA. The settlement agreement also required the SBA to
provide neutral references when potential employers inquired
about America. America claims that the SBA materially
breached that requirement of the settlement agreement.
America sued the SBA in the United States District Court.
After a bench trial, the District Court found no material
breach and granted judgment for the SBA. We affirm.

                            ***

     Richard America worked in Rural Affairs for the Small
Business Administration. In 1995, the SBA decided to re-
assign his position from Washington, D.C., to Kansas City,
Missouri. America resisted the transfer and eventually
accepted an early retirement in 1997, three days before he
would have been fired for failing to report to Kansas City.

     America then filed several administrative complaints
alleging that the SBA engaged in race, sex, and age
discrimination with respect to the attempted transfer. In 1998,
America and the SBA settled their dispute. America dropped
his claims in return for $92,500. As part of the settlement
agreement, the SBA expunged references to America’s
retirement from his personnel file. The SBA also agreed to
refer all inquiries about America from prospective employers
to Human Resources; the purpose of that requirement was “to
                              3
ensure that the SBA provided only neutral references about
him.” America v. Mills, 714 F. Supp. 2d 88, 101 (D.D.C.
2010).

    After signing the settlement agreement, America
expected to find quick success on the job market. He didn’t.
He came to suspect the SBA was saying negative things about
him to potential employers, in violation of the settlement
agreement.

     In 2000 and 2002, America hired a reference-checking
company known as Documented Reference Check to contact
three individuals at the SBA and pretend to be a potential
employer asking about America. America believed that the
subsequent reports of Documented Reference Check’s
conversations with those SBA employees showed a material
breach of the settlement agreement. America therefore sued
the SBA in District Court.

     After a bench trial, the District Court found that America
failed to prove that the reports from Documented Reference
Check were “a totally accurate transcription of [the] phone
calls.” Id. at 99. The District Court reached that conclusion
in part because Documented Reference Check’s chief service
officer gave testimony that the court found “completely
incredible.” According to the District Court, this key witness
was “evasive and belligerent.” He “made unreasonable
assertions of privacy and trade secrets regarding such
straightforward facts as the company’s size and corporate
structure.” He was “in a position to change a report without
the knowledge of the person who created the report” and may
have had an incentive to satisfy clients by altering reports to
contain negative references. Id. at 98.
                                4
     There was only one relevant exception to the District
Court’s broad factual conclusion that SBA employees did not
make the allegedly negative statements. The District Court
found that SBA employee Arnold Rosenthal told Documented
Reference Check that there was “an internal battle going on
with [America’s] transfer.” See id. at 97, 99. But the District
Court concluded that this one statement did not constitute a
material breach of the settlement agreement. We agree. It is
undisputed on appeal that Rosenthal made numerous
unequivocally positive statements to Documented Reference
Check. Rosenthal’s overall description of America was quite
positive, and at worst neutral. Rosenthal’s (at worst) neutral
reference about America thus does not constitute a material
breach of the settlement agreement, the purpose of which was
to ensure neutral references about America. Even under the
materiality standard proposed by America, a breach is
material only if it “relates to a matter of vital importance.”
Thomas v. HUD, 124 F.3d 1439, 1442 (Fed. Cir. 1997).
America has not met that standard.

    In short, although Rosenthal’s comments may have
constituted a breach because he did not simply refer the caller
to Human Resources, we agree with the District Court that the
breach was not material because Rosenthal’s description of
America was positive or, at worst, neutral. 1




     1
       In proceedings before the Equal Employment Opportunity
Commission, the SBA conceded breach but retracted that
concession about three weeks later. America argues that the SBA
should be bound to that original concession. But the SBA’s
withdrawal is reasonable even under the standard proposed by
America because the concession was withdrawn within “weeks, not
years.” Mazaleski v. Treusdell, 562 F.2d 701, 720 (D.C. Cir. 1977).
                         5
                       ***

We affirm the judgment of the District Court.

                                                So ordered.
     BROWN, J., dissenting. The district court’s unchallenged
findings of fact are incompatible with its conclusion that the
Small Business Administration did not materially breach its
settlement agreement with Richard America. Therefore, I
respectfully dissent.

     To get America to drop his discrimination and retaliation
claims, SBA agreed to refer “all inquiries from prospective
employers” to Human Resources. The purpose of this
agreement was, the district court found, “to ensure that the
SBA provided only neutral references.” America v. Mills, 714
F. Supp. 2d 88, 101 (D.D.C. 2010). An SBA employee
therefore materially breaches the agreement when he
responds to a reference inquiry in a way that casts America in
a negative light. As the district court put it, SBA’s breach was
material if it “led to the provision of reference information
that was not neutral and prejudiced [America] in his search
for employment.” Id.

     The district court made a series of findings that lead
inevitably to the conclusion that SBA’s breach was material.
First, the district court explicitly credited a reference
checker’s transcription of SBA comments concerning “the
circumstances surrounding Mr. America’s proposed transfer
to Kansas City, the fact that he did not report there, [and] the
internal battle over Mr. America’s proposed transfer.” Id. at
99. Among other comments to that effect were those of SBA
executive Arnold Rosenthal. Rosenthal told the caller that
“[t]here was an internal battle going on with [America’s]
transfer” and that this “was a difficult experience for him.”
The district court found such comments “had to have
occurred,” because they involve “significant details about the
SBA and Mr. America’s employment there that no one at [the
reference-checking company] could have known without
speaking to people at SBA.” Id. The district court further
                               2

found these specific comments by Rosenthal to be “negative
statements.” Id. at 97. America had been forced to retire when
he refused to accept the transfer, so he had good reason to
keep that information from prospective employers.

     These findings of fact are irreconcilable with the district
court’s conclusion that SBA’s breach was immaterial. The
district court tried to make sense of that conclusion by
holding, “Rosenthal’s reference to the ‘difficult experience’
that [sic—should read “of”?] the ‘internal battle’ over Mr.
America’s possible transfer to Kansas City was not a matter
of ‘vital importance,’ and did not ‘frustrate substantially’ the
purpose of the contract.” Id. at 102 (citation and alteration
omitted). This reasoning is flawed. Given the district court’s
own findings that these statements were negative, id. at 97,
and that the purpose of the contract was to prevent negative
references, id. at 101, SBA’s breach necessarily “[went] to the
essence and frustrate[d] substantially the purpose for which
the [settlement] was agreed to.” Draim v. Virtual Geosatellite
Holdings, Inc., 522 F.3d 452, 454–55 (D.C. Cir. 2008).

     My colleagues agree with the district court that SBA’s
breach was immaterial, because they find Rosenthal’s positive
statements were more “numerous” than his negative ones.
Maj. Op. at 4. This reasoning undermines the purpose of the
settlement agreement. The requirement that a former
employer refer all employment inquiries to Human Resources
is a dead letter if he may avoid material breach by simply
pairing every negative statement he utters with a positive one.
As anyone with hiring experience can attest, employment
references—especially references for the management-level
positions America sought—are more art than science. Just a
hint of negativity may be all it takes to warn a savvy
employer away from a prospective employee. America
reasonably hoped to avoid the risk of such value judgments
                                3

by insisting that all inquiries be directed to Human Resources,
which could make only objective statements about his
employment history. “The judicial task in construing a
contract is to give effect to the mutual intentions of the
parties.” Mesa Air Group v. DOT, 87 F.3d 498, 503 (D.C. Cir.
1996); see Lankford v. Platte Iron Works Co., 235 U.S. 461,
488 (1915). The court’s interpretation violates this principle
and renders SBA’s agreement with America practically
unenforceable.

     This case illustrates the pitfalls of including a non-
disparagement clause in a settlement agreement between a
government agency and its former employee. Memories fade,
and the difficulty of ensuring the agency’s personnel abide by
the agreement grows with every passing year. There are good
reasons not to enter into such contracts in the first place. But a
deal’s a deal. Because I believe SBA materially breached its
settlement agreement with America, I would reverse the
judgment of the district court with instructions to reinstate
America’s Title VII suit.
