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Fomby-Denson v. Department of the Army, 247 F.3d 1366, May 3, 2001 (Fed. Cir. May 3, 2001).

While there is no statutory requirement for an agency to report felonious conduct to the proper authorities, the settlement agreement reached by the appellant and agency did not preclude the agency's ability to report such conduct to the proper authorities, whether those authorities are domestic or international.

The Department of the Army (Army) presented the appellant with a Notice of Proposed Removal in June 1997 based on conduct that was incompatible with her position as Army Family Advocacy Program Coordinator in Germany. The appellant was terminated July 16, 1997, and proceeded to file an appeal with MSPB. The appellant and Army entered a settlement agreement on June 18, 1998.

On July 13, 1998, the Army referred some of the allegations that formed the basis of the removal charges and settlement agreement to the local German law enforcement authorities. The correspondence from the Army to German officials disclosed, in part, the formation of a settlement agreement between the appellant and the Army and several terms of the settlement agreement. Three days later, the Army referred the appellant's conduct in question to the German Immigration Authorities, stating that the appellant's conduct had potentially criminal consequences which could affect the appellant's residence. Appellant became aware of both referrals during a meeting with her German counsel and German law enforcement authorities. Appellant's counsel requested the Army to withdraw the referrals to the German authorities. The Army refused, stating the agency had an obligation to report suspected criminal violations of German law. The Army also stated that once allegations were referred, the Army no longer had authority over the investigation.

The appellant filed a petition for enforcement and a motion for sanctions against the Army with the Board. The AJ denied the appellant's petition for enforcement, ruling that nothing in the settlement agreement prohibited the Army from referring possible criminal conduct to the proper authorities, whether domestic or international. The Board upheld the AJ's decision.

Again alleging the Army had breached the settlement by referring her questionable conduct to German Authorities, the appellant filed a petition for review with the Federal Circuit. The court held that the settlement agreement was ambiguous on its face, but the disposition of the case did not hinge on the language of the settlement agreement. The primary issue turned on public policy of construing a settlement agreement to bar an agency from referring possible criminal conduct to the proper authorities, domestic or foreign.

The court found no Federal statute, treaty, or constitutional requirement mandating the referrals of possible criminal conduct to local officials. But based on the importance of the public policy, it found that the Army had not violated the settlement agreement because one may not contract to cover up a crime. See Lewkowicz v. El Paso Apparel Corp., 625 S.W.2d 301 (Tex. 1981) and Baker v. Citizens Bank of Guntersville, 208 So.2d 601 (Ala. 1968). Therefore, the Army properly referred and provided the details of the appellant's conduct to the German authorities.

The Federal Circuit limited its decision in this case. Fomby-Denson does not decide whether settlement agreements formed in the United States exclude referrals to local law enforcement authorities if the crime was committed in the United States or whether the settlement agreement would be breached if the wrongdoer were not properly subjected to the foreign jurisdiction.