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KRAUTHAMER v. BLOCK

May 4, 1984

JULES KRAUTHAMER, Plaintiff, against JOHN R. BLOCK et ano. Defendants.


The opinion of the court was delivered by: SWEET

SWEET, D.J.

Plaintiff Jules Krauthamer (Krauthamer") has brought suit alleging discrimination against him on the basis of his stuttering handicap in violation of the Rehabilitation Act of 1973, 29 U.S.C. § 701 et seq., and seeking reversal of a decision of the Merit Systems Protection Board ("Board") under 5 U.S.C. § 7703(c). Krauthamer and defendant John R. Block, Secretary of Agriculture ("Secretary"), have both moved for partial summary judgment on the review of the Board's decision. For the reasons given below, Krauthamer's motion is denied and the Secretary's is granted.

 The facts relevant to this motion are not in dispute. Krauthamer has been employed as an auditor with the United States Department of Agriculture since 1962. Krauthamer's main duty was to review monthly reports submitted to the agency for the New York-New Jersey Milk Marketing Area ("Agency") by regulated milk handlers, in order to verify the reports for accuracy and to ensure compliance with the terms of the Agency's milk marketing orders. In 1967, Krauthamer became a senior auditor. As a senior auditor, Krauthamer was expected to perform his own audits without supervision and to train other auditors. A junior auditor is not expected to handle high volume plants or more complex audits without supervision.

 Krauthamer received unsatisfactory performance ratings as senior auditor from 1971 through 1978. He did not receive a within-grade salary increase after 1970. during this period, he met with his supervisors, who advised him that his salary increase was being withheld because of various problems with his job performance, including his need for assistance in completing simple audits, multiple errors in audit statements, lack of rapport with handlers and slowness in preparing audits. In 1973, he entered a special training program, but in 1978 he was told by his supervisor that his performance was deficient, and his 1977 and 1978 performance appraisals stated that he needed improvement or was unsatisfactory in 13 of 15 categories.

 On March 16, 1979, a notice of proposed demotion from senior auditor to junior auditor, with a salary cut from $26,000/year to $22,600/year, was issued to Krauthamer. The notice cited two reasons for the action, (1) Krauthamer's unsatisfactory 1977 and 1978 performance appraisals and (2) his unsatisfactory audit work.Under the latter ground, 23 instances of unsatisfactory performance from 1971 through 1978 were cited, but the notice stated that the 23 were not meant to be exhaustive. The instances included numerous audit errors, slow work, inability to work without supervision and sloppy audit reports and schedules. After Krauthamer responded to the notice by a letter from counsel, he was demoted effective September 15, 1979.

 Krauthamer appealed the demotion to the Board claiming that the unsatisfactory performance appraisals were the result of discrimination because of his stutter, and that the instances of unsatisfactory work were unsupported by evidence and should be viewed in comparision with the performance of other auditors.

 On May 16, 1980, the Board presiding official ("Official"), without a hearing, dismissed the first ground of the notice, stating that "the mere recitation of the fact that an unsatisfactory performance rating has been given to an employee without specification of the reasons behind the rating, is insufficient to [support] an agency adverse action." As to the second ground, he dismissed 22 of the 23 instances as stale and prejudicial to Krauthamer and therefore barred by laches, concluding that the remaining instance was insufficient to warrant demotion. The Official reversed the demotion.

 The Agency appealed to the full Board. The Board reversed and remanded the case on the ground that the Official had erroneously dismissed the charges through a strict application of the one-year time limit and should instead have employed a balancing approach. On remand, an evidentiary hearing was held from May 11, 1981 through May 13, 1981. The Agency presented the testimony of four persons who had worked with Krauthamer during his training sessions and of an auditor who compared Krauthamer's audit performance time with the average. Krauthamer testified in his own defense and called auditors to testify in support of his claim that the agency's action was disparate and that his performance was no worse than that of others who had not been demoted. He also presented other auditors' reports and schedules in support of this claim. After the hearing had ended, the Official admitted additional samples of Krauthamer's work during 1975 through 1977 submitted by the Agency, even though Krauthamer had objected to the admission of the evidence as beyond the scope of a stipulation concerning additional evidence, and beyond the scope of direct examination and the Agency's notice of adverse action. The latter evidence was admitted only in rebuttal of the disparate treatment claim.

 On June 17, 1981, the Official issued a decision sustaining three of the specified instances: 1) that one of Krauthamer's audit summaries was sloppy, contained erasures and written-over numbers and was difficult to read; 2) that a "schedule of differences" had been omitted from an audit; and 3) that a footnote in the text of an audit was not explained at the bottom of the page. The Official dismissed 20 of the instances as stale and prejudicial to Krauthamer and therefore barred by laches. The Official concluded that Krauthamer had made a prima facie showing of discrimination because of his stuttering, but that the Agency had rebutted the inference of discrimination with additional evidence of Krauthamer's errors. Finally, the Official modified the penalty to a letter of reprimand, finding that the testimony was in conflict and that the Agency "failed to establish the uniqueness of [Krauthamer's] errors or that he stands out above the rest in this matter by virtue of the reasons cited in the advance notice."

 Krauthamer and the Agency appealed. The Agency contested the mitigation of the penalty. Krauthamer contested the rejection of his handicap discrimination claim, contending that documentary evidence had been improperly considered in rebuttal. He also maintained that the three instances should not have been sustained.

 By opinion of April 6, 1982, the Board reversed the Official with respect to the mitigation of the penalty and affirmed the remainder of the decision.The Board rejected Krauthamer's contention that the additional evidence had been improperly admitted, finding that the receipt of the evidence was consistent with the parties' stipulation. In rejecting the mitigation, the Board held that the Official had erred in considering only the seriousness of the charges in determining the appropriateness of the penalty, and that, under Douglas v. Veterans Administration, MPSB Docket No. ATO 75299006 (April 10, 1981), he should also have considered such factors as (1) the nature and seriousness of the offense and its relation to Krauthamer's duties; (2) his job level and type of employment; (3) his past work record; (4) the effect of his conduct on the employer-employee relationship; and (5) the potential for his rehabilitation.

 In the present motion before this court, Krauthamer contends that his demotion was arbitrary and capricious and unsupported by substantial evidence because the evidence showed that he met the standard required for other auditors, and because the Agency's rebuttal evidence should not have been admitted. Krauthamer also contends that the penalty of demotion was disproportionate to the offense charged. The Secretary contends that the Board decision should not be overturned.

 The standard of review to be employed in this case, the parties agree, is given in 5 U.S.C. § 7703(c). Under that ...


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