Rose E. Jacobsohn, Appellant, v. Donna E. Shalala, Secretary, Department of Health and Human Services, (Social Security Administration), Agency. Request No. 05930689 Appeal No. 01922308 Agency No. SSA 452-89 Hearing No. 140-91-8033X June 02, 1994 GRANTING OF REQUEST TO RECONSIDER On April 28, 1993, the Department of Health and Human Services (hereinafter referred to as the agency) initiated a timely request to the Equal Employment Opportunity Commission (EEOC or Commission) to reconsider the decision in Rose E. Jacobsohn v. Donna E. Shalala, Secretary, Department of Health and Human Services (Social Security Administration), EEOC Appeal No. 01922308 (March 31, 1993), received April 2, 1993. Appellant likewise requested reconsideration.1 EEOC Regulations provide that the Commissioners may, in their discretion, reconsider any previous decision, pursuant to 29 C.F.R. §1614.407(a). The Commissioners may also reconsider any previous decision when the party requesting reconsideration submits written argument or evidence which tends to establish one or more of the three criteria prescribed by 29 C.F.R. §1614.407(c). For the reasons set forth herein, appellant's request is granted. As the previous decision did, but for different reasons, we find that the settlement agreement in this matter is enforceable at appellant's option, absent the liquidated damages provision, and that the agency has breached that agreement. At the time this dispute arose, appellant in this matter was an applicant for employment with the agency's Social Security Office, Charlotte, North Carolina. In a May 12, 1989 formal complaint, appellant alleged that the agency discriminated against her on the basis of age (over 40) when she was not selected for the position of Attorney Advisor, GS-12. Appellant also alleged discrimination based on sex (female) and age (over 40) when she was not selected for the position of Law Clerk, GS-09. The agency conducted an investigation and issued a proposed disposition on December 6, 1990 with a finding of no discrimination. Appellant requested a hearing before an EEOC administrative judge which took place on December 11, 1991.2 On February 5, 1992, appellant and the Regional Chief Law Judge, Social Security Administration, signed a formal, written document purporting to settle appellant's EEO complaint. This February 5, 1992 document provided for confidentiality, no admission of liability, no attorney's fees or costs, and that appellant receive the following to settle her EEO claims: In full and complete resolution of the matter cited herein, the undersigned parties agree: 6. In place of a 'make whole remedy' including back pay[,] the parties have agreed as follows: a. [Appellant] will receive the sum of $50,000 as liquidated damages in full and complete settlement of her Age Discrimination in Employment Act claims. No deductions will be made from this amount. [Appellant] will not receive back pay, nor is the above amount in lieu of back pay. b. The remainder of relief provided herein is in full settlement of her Title VII claims. Such relief will not include back pay. 1. The Office of Hearings and Appeals, [Social Security Administration], will place [appellant] in the position of Attorney Advisor, GS-905-12, Step 3, in the Charlotte, North Carolina Hyatt Center as of February 23, 1992, employment status permanent. 2. The Office of Hearings and Appeals, [Social Security Administration], will for all purposes save the serving of a 1-year probationary period credit and treat [appellant] as if hired on September 11, 1988. Settlement Document, at 1-2. Pursuant to the above agreement, appellant left her job working as a superior court law clerk in Mecklenburg County, North Carolina, and began working on February 23, 1992. Approximately one week after appellant started her new position, however, the agency cancelled appellant's appointment because it believed that the settlement agreement had been effected without proper authority. According to the agency, under agency regulations, additional officials were required to have signed the settlement agreement, and the Chief Law Judge, acting alone, did not have the authority to settle the EEO complaint. The agency thus removed appellant from her new position and began further processing appellant's EEO complaint. On April 17, 1992, the agency issued a final decision, rejecting the recommended decision's finding of discrimination. In the final decision, the agency noted that the February 5, 1992 document signed by appellant and the Chief Law Judge was not binding upon the agency. An appeal followed. The previous decision found that the February 5, 1992 document constituted a settlement agreement between the parties in this case, and held that the agency was in breach of that agreement. See Rose E. Jacobsohn v. Donna E. Shalala, Secretary, Department of Health and Human Services (Social Security Administration), EEOC Appeal No. 01922308, at 3 (March 31, 1993). The previous decision went on to find that a 'liquidated damages' provision within the agreement 'has rendered the entire agreement voidable at appellant's option.' Id. at 4. Relying on Thompson v. Department of Health and Human Services, EEOC Request No. 05910892 (March 11, 1992), the previous decision stated that 'an agency cannot incur a financial liability that it is not obligated to incur.' Id. at 3. The decision ordered that appellant be given the option of accepting the settlement agreement without the 'liquidated damages' or further proceeding with her EEO complaint. In its request for reconsideration, the agency argues that the Commission should reconsider this case pursuant to 29 C.F.R. §1614.407(c)(2), as a result of an erroneous interpretation of law, regulation or material fact, or misapplication of established policy in the previous decision; and pursuant to 29 C.F.R. §1614.407(c)(3), because this case is of such an exceptional nature as to have substantial precedential implications. Appellant requested reconsideration on any basis appropriate under 29 C.F.R. §1614.407(c), including her argument that there was legal error in the previous decision. We conclude, based on the following, that reconsideration is indeed justified under 29 C.F.R. §1614.407(c)(2), due to legal error in the previous decision, and we will thus grant appellant's request for reconsideration. Initially, the Commission determines that appellant has timely raised a breach of settlement agreement issue before us, based on the agency's repudiation of the terms of the agreement and reprocessing of the EEO complaint, including the issuance of the April 17, 1992 final agency decision. See 29 C.F.R. §1613.217(b).3 Next, we find that the previous decision erred when it held that there was a contract in this case due to the plain, unambiguous terms of the settlement agreement, regardless of whether the Regional Chief Law Judge possessed the authority to bind the agency. In fact, the initial, vital issue to be decided here is whether the written agreement, dated February 5, 1992, signed by appellant and the Regional Chief Law Judge, on behalf of the agency, was a valid contract or was otherwise enforceable, binding on the agency as a result of the Chief Law Judge's conduct and/or the conduct of various agency officials. Courts and this Commission have consistently recognized the importance of encouraging the voluntary settlement of employment discrimination disputes. See, e.g., United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826 (5th Cir. 1975), cert. denied, 425 U.S. 944 (1976); Shuman v. Department of the Navy, EEOC Request No. 05900744, at 9 (July 20, 1990). EEOC regulations provide that a settlement agreement, knowingly and voluntarily entered into by the parties, reached at any stage of the complaint process, shall be binding on both parties. See 29 C.F.R. §1614.217(b). Further, the Commission has previously held that a signed settlement agreement, in order to be valid and enforceable, must be executed by an authorized representative of the agency. See Soliz v. United States Postal Service, EEOC Request No. 05901010 (October 25, 1990). In Soliz, the Commission determined that the purported settlement document was not a valid contract because it was not signed by a designee of the agency, that signature line was left blank, and was only signed by the EEO counselor. According to that decision, the EEO counselor's signature, in the absence of the signature on the line for the 'Designee, United States Postal Service,' was insufficient to bind the agency. Id. at 4. The Commission also noted that the EEO counselor was 'not acting on behalf of the agency, but rather, was acting more as a witness. ' Id. at 5. In the case before us, in contrast, the settlement document included the signature block and the signature of only one designee of the agency, the Chief Regional Law Judge, Social Security Administration. We find that Soliz is therefore distinguishable.4 Furthermore, the agency has not cited the Commission to any agency regulation which demonstrates that the Regional Chief Law Judge did not have the authority to bind the agency in the settlement document at issue. Instead, the agency has simply included assorted pages from its Personnel Manual, without citation and out-of order and incomplete in places, in support of its claim here.5 The agency has not explained with precision or otherwise supported its claim that the settlement document in this case was absolutely subject to the approval of the Director of the EEO or a designee. Further, even if the settlement document was subject to such approval, the agency has not provided evidence showing that the Regional Chief Law Judge was not in fact the designee in this case. The agency has simply failed to meet its burden of demonstrating that reconsideration is justified because the Chief Regional Law Judge did not have the authority to settle appellant's discrimination complaint. Moreover, following the signing of the settlement agreement, the agency continued to take steps to facilitate appellant's employment, so that even if the Regional Chief Law Judge did not have the actual authority to settle appellant's EEO claim at the time the formal document was signed, subsequent conduct by agency officials ratified the agreement. In addition, appellant clearly acted to her detriment in reliance upon the settlement agreement and the agency's subsequent conduct and representations by leaving her job working as a superior court law clerk in Mecklenburg County, North Carolina, beginning work with the agency on February 23, 1992, and continuing to work for a week thereafter until the agency abruptly informed her that she had no job. Therefore, even in the absence of a contractual obligation based only on the settlement agreement, we find that ratification of the agreement subsequently occurred. See Editor's Press Inc. v. United States, 415 F. Supp. 407, 413 n.15 (D. Md. 1975); 1A A. Corbin, Contracts §229, at 340 (Supp. 1984). We also find that enforcement of the agreement at issue would be appropriate under a detrimental reliance theory. See Restatement Second on Contracts, Section 90 (1981); E. Farnsworth, Contracts, §219, at 89-98 (1982). As the court observed in Jablon v. United States, 657 F.2d 1064, 1069 n.9 (9th Cir. 1981), some cases have recognized a potential remedy against the federal government based on a promissory estoppel theory. See also Reamer v. United States, 532 F.2d 349 (4th Cir. 1976); Kaye v. United States, 467 F.2d 415 (D.C. Cir. 1972); Putnam Mills Corp. v. United States, 432 F.2d 553 (2d Cir. 1970). In so finding, we recognize the general proposition that principles of detrimental reliance, or promissory estoppel, apply less broadly against the federal government than they might in the private sector. See McCauley v. Thygerson, 732 F.2d 978 (D.C. Cir. 1984); Kizas v. Webster, 707 F.2d 524 (D.C. Cir. 1983); Shaw v. United States, 640 F.2d 1254 (Ct. Cl. 1981). Further, in cases involving the hiring of federal employees, courts have often refused to apply a detrimental reliance theory. As the court in Shaw declared: Federal officials who by act or word generate expectations in the persons they employ, and then disappoint them, do not ipso facto create a contract liability running from the federal government to the employee, as they might if the employer were not the government. 640 F.2d at 1260; See also Riplinger v. United States, 695 F.2d 1163 (9th Cir. 1983). These cases may be distinguished, however, based on the fact that they involve only the appointment to federal service where Title 5 of the U.S. Code and its implementing regulations detail the parameters of hiring. Such cases reject both contract and reliance theories upon which disgruntled federal applicants may bring suit. See Kizas, 707 F.2d at 535 (federal employees are appointed, and courts refuse to give effect to 'government-fostered expectations' that, had they arisen in the private sector, might well have formed the basis for a contract, reliance, or estoppel). In the case before us, however, appellant's status is primarily as a party settling an existing legal claim in the EEO administrative process where principles of contract law are well-recognized and routinely applied. Thus, in sum, we reject the agency's argument that the entire settlement agreement in this case is unenforceable. The agency has failed to demonstrate the Chief Regional Law Judge's lack of authority. In the alternative, we conclude that the doctrine of ratification and detrimental reliance should be applied to support enforcement of the agreement in this case. The second issue before us is whether the inclusion of the 'liquidated damages' provision within the February 5, 1992 settlement agreement renders the agreement voidable, at appellant's option, as the previous decision concluded.6 The relevant language provides, as follows: 6. In place of a 'make whole remedy' including back pay[,] the parties have agreed as follows: a. [Appellant] will receive the sum of $50,000 as liquidated damages in full and complete settlement of her Age Discrimination in Employment Act claims. No deductions will be made from this amount. [Appellant] will not receive back pay, nor is the above amount in lieu of back pay. b. The remainder of relief provided herein is in full settlement of her Title VII claims. Such relief will not include back pay. Settlement Agreement, at 1-2. The parties have used the language 'liquidated damages' loosely here, apparently in order to avoid characterization of the damages as back pay, with the resultant income tax implications. See Appellant's Brief in Support of Request to Reconsider, at 12 (June 1, 1993). Yet, while liquidated damages are available to litigants in the private sector for 'willful' violations of the Age Discrimination in Employment Act, such damages are not available to federal sector employees in the administrative process. See 29 U.S.C. §633a(b); Smith v. Office of Personnel Management, 778 F.2d 258 (5th Cir.), cert. denied, 476 U.S. 1105 (1985); Chambers v. Weinberger, 591 F. Supp. 1554 (N.D. Ga. 1984); Wilkes v. United States Postal Service, 548 F. Supp. 642 (N.D. Ill. 1982); Muth v. Marsh, 525 F. Supp. 604 (D.D.C. 1981). Thus the previous decision properly relied on Thompson v. Department of Health and Human Services, EEOC Request No. 05910892 (March 11, 1992), finding that the 'portion of the settlement agreement providing for payment of liquidated damages in the amount of $50,000 is a nullity.' Rose E. Jacobson v. Donna Shalala, Secretary, Department of Health and Human Services (Social Security Administration), EEOC Appeal No. 01922308, at 3 (March 31, 1993). In Thompson, the Commission held that in a settlement agreement, a federal agency is precluded from incurring a financial liability that it cannot legally incur, were a finding of discrimination to be made in the underlying case. EEOC Request No. 05910892, at 2-3.7 Following the precepts of Thompson, then, we will enforce the agreement between the parties without the $50,000 liquidated damages provision, unless appellant objects. Put another way, the agreement is enforceable absent the $50,000 liquidated damages provisions at part 6a; however, the agreement is voidable at appellant's option, and she may have her underlying EEO complaint reinstated if she so desires.8 Assuming appellant does not wish to have her EEO complaint reinstated, we note that the action the agency took in February 1992 and subsequently--abruptly removing appellant from her new position one week after she had begun--was a breach of the agreement between the parties for which the agency is liable. If appellant does not wish to have her EEO complaint reinstated, pursuant to 29 C.F.R. §1614.504(c), the Commission finds that the agency is currently in noncompliance, and will order the agency to reinstate appellant to the position of Attorney Advisor, GS-905-12, Step 3, effective September 11, 1988, with all the appropriate provisions contained within the settlement agreement. As a result of the breach, the agency is also responsible for back pay, including interest9, from the point at which the agency terminated her until her reinstatement to the position or her declining an offer of reinstatement, whichever comes first. CONCLUSION After a review of both requests to reconsider, the previous decision, and the entire record, the Commission finds that the criterion of 29 C.F.R. §1614.407(c)(2) has been met, and it is the decision of the Commission to GRANT appellant's request for reconsideration. The agency's request is DENIED. The agency's final decision is hereby VACATED. The decision in Rose E. Jacobsohn v. Donna E. Shalala, Secretary, Department of Health and Human Services (Social Security Administration), EEOC Appeal No. 01922308 (March 31, 1993) is MODIFIED as discussed herein. The Commission concludes that the settlement agreement entered into by the parties is enforceable absent the $50,000 liquidated damages provision, and that the agency thereafter breached that agreement. Unless appellant wishes to have her underlying EEO complaint reinstated, under the authority in Thompson, we will order the agency, pursuant to our authority in 29 C.F.R. §1614.504(c), to comply with the terms of the February 5, 1992 settlement agreement, with the exception of the payment of 'the sum of $50,000 as liquidated damages.' The agency will in addition provide appellant with back pay, with interest, as a result of the breach of the settlement agreement. There is no further right of administrative appeal on a decision of the Commission on this Request to Reconsider. ORDER The agency is hereby ORDERED to take the following action, and appellant is ADVISED to take note that: (1) Unless appellant informs the agency in writing, within thirty (30) calendar days of the date she receives this decision, that she wishes to have her underlying EEO complaint reinstated10, the agency shall comply in full with the terms of the February 5, 1992 settlement agreement, with the exception of the $50,000 liquidated damages provision, including reinstatement to the position of Attorney Advisor, GS-905-12, Step 3, effective September 11, 1988, with all the appropriate provisions within the settlement agreement. (2) The agency shall also provide appellant with backpay, including interest, and all other benefits, from the point at which the agency terminated her until her reinstatement to the position or her declining an offer of reinstatement, whichever comes first. The agency shall so comply, no later than thirty (30) calendar days from the date it receives the written notice from appellant. The agency is further directed to submit a report of compliance, with proof of all relevant actions taken, as provided in the Implementation paragraph, below. IMPLEMENTATION OF THE COMMISSION'S DECISION (K1092) Compliance with the Commission's corrective action is mandatory. The agency shall submit its compliance report within thirty (30) calendar days of the completion of all ordered corrective action. The report shall be submitted to the Compliance Officer, Office of Federal Operations, Equal Employment Opportunity Commission, P.O. Box 19848, Washington, D.C. 20036. The agency's report must contain supporting documentation, and the agency must send a copy of all submissions to the appellant. STATEMENT OF APPELLANT'S RIGHTS - ON REQUEST TO RECONSIDER RIGHT TO FILE A CIVIL ACTION (P0993) This decision of the Commission is final, and there is no further right of administrative appeal from the Commission's decision. You have the right to file a civil action in an appropriate United States District Court. It is the position of the Commission that you have the right to file a civil action in an appropriate United States District Court WITHIN NINETY (90) CALENDAR DAYS from the date that you receive this decision. You should be aware, however, that courts in some jurisdictions have interpreted the Civil Rights Act of 1991 in a manner suggesting that a civil action must be filed WITHIN THIRTY (30) CALENDAR DAYS from the date that you receive this decision. To ensure that your civil action is considered timely, you are advised to file it WITHIN THIRTY (30) CALENDAR DAYS from the date that you receive this decision or to consult an attorney concerning the applicable time period in the jurisdiction in which your action would be filed. If you file a civil action, YOU MUST NAME AS THE DEFENDANT IN THE COMPLAINT THE PERSON WHO IS THE OFFICIAL AGENCY HEAD OR DEPARTMENT HEAD, IDENTIFYING THAT PERSON BY HIS OR HER FULL NAME AND OFFICIAL TITLE. Failure to do so may result in the dismissal of your case in court. 'Agency' or 'department' means the national organization, and not the local office, facility or department in which you work. RIGHT TO REQUEST COUNSEL (Z1092) If you decide to file a civil action, and if you do not have or cannot afford the services of an attorney, you may request that the Court appoint an attorney to represent you and that the Court permit you to file the action without payment of fees, costs, or other security. See Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000e et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§791, 794(c). The grant or denial of the request is within the sole discretion of the Court. Filing a request for an attorney does not extend your time in which to file a civil action. Both the request and the civil action must be filed within the time limits as stated in the paragraph above ('Right to File A Civil Action'). FOR THE COMMISSION: Frances M. Hart Executive Officer Executive Secretariat Footnotes 1 The previous decision erred by not including rights of reconsideration within the decision. Appellant and her counsel's request for reconsideration, first sought in early May 1993 after appellant received the agency's request for reconsideration, has thus been found timely without further inquiry. 2 The administrative judge rendered a recommended decision with a finding of discrimination based on age and sex on February 29, 1992, however, the parties settled the EEO claim prior to this date. 3 The Part 1613 regulation was in effect at the time appellant challenged the agency's breach of settlement here. The current regulation is found at 29 C.F.R. §1614.504. 4 We note that the copy of the February 2, 1992 settlement document enclosed with the agency's request for reconsideration has pages numbered one to three and includes a third page with the unsigned signatory blocks for two agency officials, the Deputy Commissioner, Human Resources, and the Deputy Director, Equal Employment Opportunity. Other copies of the settlement document in the record are not so paginated and do not include the unsigned third page. Appellant's representative during the negotiations has submitted an affidavit stating that no such third page was ever submitted to appellant as part of the settlement agreement. 5 These 1984 regulations were also submitted for the first time on request for reconsideration, yet the agency has not shown that this evidence is new and previously not available under 29 C.F.R. §1614.407(c)(1). 6 The previous decision found that appellant was entitled to enforce the settlement agreement without the liquidated damages provision or to elect to proceed with the processing of her complaint. 7 In Thompson, a case arising solely under the Age Discrimination in Employment Act, the settlement agreement provision at issue merely stated that the agency would pay 'reasonable attorney['s] fees.' EEOC Request No. 05910892, at 2. Since attorney's fees were not available in the administrative process as a remedy under the Act, the Commission refused to enforce the attorney's fees provision of the settlement agreement. 8 As the Commission explained in Thompson, it is impossible to know whether appellant would have accepted the settlement agreement absent the provision at issue; thus, the agreement is voidable at appellant's option. EEOC Request No. 05910892, at 4. 9 Prejudgment interest in this case is available on the back pay award pursuant to Brown v. Secretary of the Army, 918 F.2d 214 (D.C. Cir. 1990), cert. denied, 112 S. Ct. 57 (1991); Norwood v. Department of the Air Force, EEOC Request No. 05920645 (January 19, 1993); Sullivan v. Department of Justice, EEOC Request No. 05901185 (March 2, 1992). 10 If appellant informs the agency that she wishes to have her underlying EEO complaint reinstated, the agency shall reinstate the complaint at the point processing ceased, reissuing a new final decision within thirty (30) calendar days of the date it receives the written notice from appellant. The agency shall then submit a report of compliance, with proof of all relevant actions taken, as provided in the Implementation paragraph, below.