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VOL. 126 | NO. 230 | Thursday, November 24, 2011

Vic Fleming

Peden Case Instructive, Frustrating

VIC FLEMING

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Peden v. U.S., 512 F.2d 1099 (1975) was a Court of Claims suit to review the Board of Appeals and Review’s (BAR) affirmance of the Civil Service Commission’s (CSC) upholding of the IRS’s discharge of Gerald Peden. For a three-judge panel, Judge Philip Nichols Jr. wrote a classic paragraph:

“[Peden] was a GS-12 special agent of the [IRS]. His function was to investigate criminal tax frauds. The special agent is the unobtrusive fellow casually introduced to you midway in the audit of your income tax return as the one who is now taking over. If you grasp the significance of his title, you gather your wits together and rush out to hire the ablest criminal lawyer you can obtain, at any cost. You know the prison doors are yawning for your reception.”

Go ahead and laugh. It doesn’t get funnier. But the facts are ironic. And instructive. And they were frustrating to Judge Nichols. Peden had been a special agent since 1961. On Jan. 26, 1970, Treasury agents questioned him about tax liabilities of certain individuals. Refusing to cooperate, he was arrested.

On Jan. 28, 1970, the IRS district director served Peden a discharge notice. On Jan. 30, Peden was suspended for 30 days. Per Judge Nichols, “The ensuing in-and-out minuet of criminal and civil proceedings … is the essence of this case … .”

The notice charged Peden with conspiring to bribe IRS employees, failure to report the conspiracy and refusal to answer questions posed by the T-Men. Three counts.

26 U.S.C. § 7214 – providing that a United States employee who, as to a revenue law, conspires to defraud the government shall be “discharged from employment and, upon conviction, … fined … or imprisoned … or both” – prompted Judge Nichols to opine that “immediately on the offense being known, not after conviction, the offender must be dismissed” and that counts one and two of the notice “seemingly require immediate removal.”

“Immediate removal” didn’t happen. Unless “immediate” means “a couple of years.” The timeline:

Feb. 4, 1970: Peden requests hearing. Feb. 5: Peden given “new” 30-day suspension. Feb. 17: “Oral reply” conference (per Judge Nichols, a “cat-and-mouse game” whose purpose – possible settlement – is not served when the employee is a criminal). Mar. 4: “Formal” removal of Peden. Mar. 6: Peden appeals to CSC. Apr. 10: IRS refuses to provide CSC info, cites criminal investigation. Apr. 21: Peden appeal suspended, pending criminal action.

April 5, 1971 (a year later): Peden requests hearing. May 6, June 2, June 9: Hearing request renewed. June 11: Peden appeals to BAR. June 24: Peden indicted; delay attributed to need for testimony not available until someone else was convicted. Sept. 9: Peden requests CSC hearing. Nov. 5: Peden sues CSC for hearing. Judge denies expedited hearing. Dec. 27: CSC lifts Peden’s suspension.

Jan. 14, 1972: IRS provides files to CSC. Feb. 9-10: CSC hearing. April 5: CSC upholds Peden’s discharge. April 21: Peden appeals to BAR. May 22-26: Peden’s criminal trial results in convictions. Oct. 17: BAR affirms Peden’s dismissal.

Then came the suit in the Court of Claims, which, after another two and a half years, was decided on summary judgment.

Vic Fleming is a district court judge in Little Rock, Ark., where he also teaches at the William H. Bowen School of Law. Contact him at vicfleming@att.net.

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