## Facts

- Milton R. Stone, an FDIC GS–12 bank examiner, submitted four sick-leave requests (SF–71) bearing physicians’ names that were not actually signed by the physicians.
- Stone admitted that he signed the doctors’ names on the forms.
- The FDIC issued a July 22, 1996 notice proposing removal for “submission of false requests for leave,” alleging Stone “forged four leave slips,” and stating that prior discipline would be considered.
- The notice advised Stone he could review the materials relied upon, was entitled to official time to prepare, and could submit a reply that would receive full consideration.
- The FDIC assigned a deciding official to determine whether the charges were sustained and, if so, the appropriate penalty.
- Despite written guidance that the decision should be based on the notice and supporting file, other FDIC officials sent ex parte communications to the deciding official.
- The ex parte submissions included a memorandum recommending removal, discussing Stone’s credibility and “lack of candor,” and urging removal to avoid sending “the wrong message,” along with other messages reinforcing removal and allegedly adding factual characterizations beyond the proposal materials.
- These communications were not disclosed to Stone before the removal decision; Stone learned of them during discovery in his Merit Systems Protection Board (MSPB) appeal.
- The MSPB affirmed the removal, treating Stone’s claim largely as a “harmful error” argument and relying in part on the deciding official’s affidavit that the outcome would have been the same without the ex parte information.

## Issues

1. Whether undisclosed ex parte communications to an agency deciding official in a federal employee removal action violate due process when they introduce new and material adverse information not provided to the employee for response.
2. What standard governs whether ex parte communications are sufficiently “new and material” to compromise the constitutional adequacy of the pre-termination notice-and-response process.

## Decision

- The Federal Circuit vacated the MSPB’s decision sustaining Stone’s removal and remanded.
- The court held that due process is violated when undisclosed ex parte communications introduce new and material information to the deciding official.
- The court directed the MSPB on remand to identify the ex parte communications received and determine whether they were “new and material” under the court’s standard.

## Legal Principles

- A tenured federal employee removable only for cause has a property interest in continued employment protected by the Fifth Amendment.
- Pre-termination due process requires notice of the charges, an explanation of the employer’s evidence, and a meaningful opportunity to respond.
- Ex parte communications are constitutionally problematic not because they are ex parte, but because they may introduce adverse information unknown to the employee and therefore not subject to rebuttal.
- Ex parte information is “new” if it is not contained in the proposal notice or in the materials made available to the employee before the decision.
- Ex parte information is “material” if it is likely to influence, or capable of influencing, the deciding official’s findings on the charges or choice of penalty.
- Constitutional due process analysis is a threshold inquiry distinct from statutory “harmful error”; an agency cannot avoid a due process problem solely by claiming the same result would have occurred absent the undisclosed submissions.

## Conclusion

The Federal Circuit required the MSPB to assess whether undisclosed ex parte communications provided the deciding official with new and material adverse information, holding that such undisclosed supplementation of the decisional record denies the employee a meaningful opportunity to respond and violates due process in federal removal proceedings.


Stone v. F.D.I.C., 179 F.3d 1368 (Fed. Cir. 1999)