Grover v. Office of Personnel Management , 828 F.3d 1378 ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
DANIEL A. GROVER,
Petitioner
v.
OFFICE OF PERSONNEL MANAGEMENT,
Respondent
______________________
2015-3160
______________________
Petition for review of the Merit Systems Protection
Board in No. CH-0831-13-2586-B-1.
______________________
Decided: July 15, 2016
______________________
NORMAN JACKMAN, Jackman & Roth, LLP, Cam-
bridge, MA, argued for petitioner.
ANTHONY F. SCHIAVETTI, Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, argued for respondent. Also
represented by BENJAMIN C. MIZER, ROBERT E.
KIRSCHMAN, JR., REGINALD T. BLADES, JR.
______________________
Before TARANTO, CLEVENGER, and CHEN, Circuit Judges.
TARANTO, Circuit Judge.
2 GROVER v. OPM
Daniel Grover applied for a retirement annuity under
the Civil Service Retirement System after he retired as a
customs officer. By statute, the annuity must reflect the
highest average annual pay based on three consecutive
years of specified service, and for a customs officer like
Mr. Grover in the years in question, the calculation must
include overtime pay up to $17,500. The Office of Person-
nel Management, in calculating Mr. Grover’s pay for the
years in question, did not include anything close to
$17,500 in overtime pay, although Mr. Grover asserted
that he received more than $17,500 in overtime pay in
those years. The Merit Systems Protection Board rejected
Mr. Grover’s challenge to OPM’s calculation.
OPM relied on a particular official record for its calcu-
lation. But neither OPM nor the Board recognized that
the record is internally contradictory about what overtime
pay Mr. Grover received. Accordingly, neither OPM nor
the Board sought further information—such as pay
stubs—that might definitively resolve the uncertainty and
determine what overtime pay Mr. Grover actually re-
ceived. Moreover, the Board and OPM relied on a legal
ground that seems to make the factual issue immaterial
even in the face of internally conflicting information in
the official record used by OPM for its calculation.
That ground, as OPM now agrees, is incorrect, and
the key official record, OPM also now agrees, is in fact
internally inconsistent. Although OPM points to a regu-
lation as independently supporting the result challenged
in this appeal, by authorizing it to rely on the official
record it used, that regulation does not address what to do
when the record is internally contradictory. In this case,
moreover, we have been shown no reason why objective
documentation (pay stubs) should not be available to
resolve the issue (the amount of overtime pay) definitive-
ly. At least in this circumstance, the regulation does not
permit the Board to affirm OPM’s calculation without
resolving the amount-of-overtime-pay factual issue. We
GROVER v. OPM 3
vacate the Board’s decision and remand for a determina-
tion of that issue.
BACKGROUND
Mr. Grover worked for many years as an officer with-
in the Customs and Border Protection service, now locat-
ed within the Department of Homeland Security. During
his tenure, he participated in the Civil Service Retirement
System (CSRS), which is defined in subchapter III of
chapter 83 (within Part III, subpart G) of Title 5, U.S.
Code. See 5 U.S.C. §§ 8331–8351. He retired in August
2008.
Mr. Grover applied to OPM for a retirement annuity.
The statute provides that OPM “shall administer [the
CSRS] subchapter.” 5 U.S.C. § 8347(a). It directs OPM to
“perform, or cause to be performed, such acts and pre-
scribe such regulations as are necessary and proper to
carry out this subchapter.” Id. As OPM stated in its
April 3, 2014 letter to Mr. Grover (April 2014 Letter),
“OPM is charged with the administration of the Civil
Service Retirement law and is expected to pay benefits as
provided by law.” J.A. 32.
Under 5 U.S.C. § 8339(a), Mr. Grover is entitled to an
annuity based on his length of service and on his “average
pay.” The statute defines “average pay” as “the largest
annual rate resulting from averaging an employ-
ee’s . . . rates of basic pay in effect over any 3 consecutive
years of creditable service.” 5 U.S.C. § 8331(4). That
amount has been referred to as the “high-three” average.
Critically for purposes of the dispute in this case, for a
customs officer like Mr. Grover, the “basic pay” used for
calculating the “average pay” includes overtime pay up to
a prescribed amount. Specifically, 5 U.S.C. § 8331(3)(G)
requires inclusion in “basic pay” of certain authorized
“compensation for overtime inspectional services” (over-
time pay), “not to exceed 50 percent of any statutory
4 GROVER v. OPM
maximum in overtime pay for customs officers which is in
effect for the year involved.” Mr. Grover was covered by
the Customs Officer Pay Reform Act of 1993 (COPRA), a
part of the Omnibus Budget Reconciliation Act of 1993,
Pub. L. No. 103-66, §§ 13811–13812, 107 Stat. 312, 668–
71, which provided for overtime pay for customs officers
like Mr. Grover up to a specified cap. See 19 U.S.C. § 267.
For the years in question, that cap was $35,000. J.A. 5
n.5 (citing Department of Homeland Security Appropria-
tions Bill, 2005, Pub. L. No. 108-334, 118 Stat. 1298
(2004)). Accordingly, Mr. Grover was entitled to have up
to $17,500 in overtime pay included in the calculation of
the high-three average pay—if he received that much.
When Mr. Grover retired, OPM turned for infor-
mation about his pay to the National Finance Center,
which “was the servicing payroll office for Customs and
Border Protection.” J.A. 32 (April 2014 Letter). It did so
in accord with its general practice under an OPM regula-
tion, 5 C.F.R. § 831.103, which states:
(a) Standard Form 2806 (Individual Retire-
ment Record) is the basic record for action on all
claims for annuity or refund, and those pertaining
to deceased employees, deceased Members, or de-
ceased annuitants.
(b) When the records of the department or
agency concerned are lost, destroyed, or incom-
plete, the department or agency shall request the
General Accounting Office, through OPM, to fur-
nish the data that it considers necessary for a
proper determination of the rights of the claimant.
When an official record cannot develop the re-
quired information, the department, agency, or
OPM should request inferior or secondary evi-
dence which is then admissible.
The National Finance Center prepared and certified
Mr. Grover’s Individual Retirement Record (IRR), Stand-
GROVER v. OPM 5
ard Form 2806, though—seemingly with some involve-
ment from OPM—it had to prepare more than one version
until it arrived at a final one. J.A. 3; J.A. 18 n.1; Oral
Arg. at 27:00–27:20. OPM, for its part, made calculations
of average pay, revised them, and revised them some
more before arriving—in Mr. Grover’s second Board
appeal—at a final calculation of average pay. J.A. 3–4.
The alterations involved details of the calculation that are
not the focus of the current dispute. Also not in dispute is
that the three years in question are Mr. Grover’s final
years on the job, from August 2005 to August 2008. OPM
provided its final explanation in its April 2014 Letter,
during Mr. Grover’s second Board appeal. J.A. 32–59
(letter and attachments).
The dispute here is whether Mr. Grover actually re-
ceived at least $17,500 in overtime pay in those years.
Mr. Grover has consistently urged that he did receive
such overtime pay throughout the relevant 2005–2008
period. But as is now undisputed, OPM did not include
anything close to that amount of overtime pay when
calculating the high-three average. The result was an
OPM-calculated high-three average significantly lower
than what it would be if $17,500 in overtime pay were
included for each of the three years at issue.
In making its calculations, OPM relied on the final
Form 2806. J.A. 49. But OPM has itself now described
that Form as containing “contradict[ory],” “inconsistent,”
and “conflicting” information on the issue of what amount
of overtime Mr. Grover earned. Dep’t of Justice Letter to
Federal Circuit, May 26, 2016, at 1, 3 (DOJ Letter). OPM
chose to use one side of the facial informational conflict
without any evident recognition there was such an inter-
nal contradiction.
Thus, one piece of information on Form 2806 (and on
earlier versions, see J.A. 39–41) consists of Remarks in
the right-hand column that strongly appear to indicate
6 GROVER v. OPM
that, for the years in question, Mr. Grover’s pay did
include $17,500 in overtime pay. On the other hand,
other information on the same Form reported the dollar
value of retirement deductions taken from pay during
employment and the rates that generated those deduc-
tions. OPM used that deduction-and-rate information for
its average-pay calculation. By dividing the deduction
amounts by rates, OPM found the amounts to which the
rates were applied, which OPM treated as the amount of
pay: it converted deductions to earnings. See J.A. 49–58. 1
It is arithmetically clear, and OPM now agrees, that
relying on the deduction information in that way produces
pay amounts that include nothing close to $17,500 in
overtime pay for the full period at issue. See Oral Arg. at
30:50–31:15.
In choosing to rely on the deduction information of
Form 2806 and not use the Remarks information, OPM
followed a general practice reflected in a sentence of
OPM’s CSRS and FERS Handbook for Personnel and
Payroll Offices at Chapter 81, Section 81A2.2-2, Para-
graph E (April 1998): “OPM computes Customs Service
cases using deductions to determine the average salary.”
In this case, OPM in its April 2014 Letter did not state
that the Remarks in Mr. Grover’s Form 2806 were inaccu-
rate, or otherwise explain them, and it did not even
1 To simplify: If D is the dollar amount of the de-
duction in a year, and R is the rate, then D/R is the
amount of pay (P) from which the deduction was taken (R
x P = D). The actual calculations include a few complica-
tions. For example, different portions of pay were subject
to different deduction rates, and separate deduction
amounts and deduction rates are given on the Form—
both of which must be converted to pay, with the results
then added together. But those details are unimportant
to the issue presented here.
GROVER v. OPM 7
recognize that there was a striking internal disparity
between the Remarks and deduction information on the
Form. Accordingly, it did not recognize that the disparity
might be addressed by seeking more information such as
the actual pay stubs.
OPM simply asserted that it was calculating earnings
by using the retirement deductions reported on Form
2806 and converting them to earnings. J.A. 33. OPM
said, “Only pay subject to retirement deductions can be
used to compute an average salary for an annuity,” id.,
seemingly as a legal rule, applicable without inquiry into
whether the deduction amounts stated on Form 2806
might be inaccurate. OPM told Mr. Grover: “We used
retirement deductions for every year to compute your
average salary.” J.A. 34.
On that basis, OPM calculated a high-three average
pay of $88,964. J.A. 35. In contrast, as early as February
4, 2011, Mr. Grover’s counsel had submitted a detailed
letter to OPM citing pay stubs as the basis for a detailed
calculation producing a high-three average of
$106,278.57.
Mr. Grover appealed to the Board, which had jurisdic-
tion to review OPM’s annuity determination under 5
U.S.C. § 8347(d)(1). The Board’s assigned administrative
judge affirmed OPM, and the Board affirmed the adminis-
trative judge. Neither the administrative judge nor the
Board, however, recognized the (now conceded) fact that
Form 2806 is internally contradictory about the amount of
overtime pay included in the annual pay counted for the
retirement annuity in the years in question. Neither
focused on what OPM or the Board may, could, or should
do in the face of such self-contradictory evidence.
The administrative judge said that the deductions re-
ported on Form 2806 “necessarily would have included
any allowable overtime pay” and added: “In fact, [Mr.
Grover’s] IRR states in the ‘Remarks’ column that the
8 GROVER v. OPM
deductions include the relevant yearly statutory maxi-
mums of $17,500 per year since 2005.” J.A. 21–22 (em-
phasis added). But it is now beyond dispute that the
$17,500 figure was not included in the reported deduc-
tions. And the “necessarily would have included” state-
ment disregards the possibility of error.
The Board, for its part, recognized that Mr. Grover
was “argu[ing] that, based on his pay stubs for the years
2005 through 2008, his high-three average pay should be
$106,278.57.” J.A. 5. But the Board made the same pair
of assertions that the administrative judge made: “retire-
ment deductions . . . would have necessarily included all
allowable overtime pay,” and Form 2806 “states that
overtime pay up to the statutory maximums was included
in [Mr. Grover’s] retirement deductions.” J.A. 6. The
Board then repeated OPM’s legal ground suggesting that
the deductions taken are dispositive of the high-three
average pay calculation even if the amount of the deduc-
tions taken was mistaken: “only pay subject to retirement
deductions may be used to compute average pay for
retirement purposes.” J.A. 6 n.7.
Mr. Grover appeals. We have jurisdiction under 28
U.S.C. § 1295(a)(9).
DISCUSSION
We review the Board’s decision to determine whether
it is “(1) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law; (2) obtained with-
out procedures required by law, rule, or regulation having
been followed; or (3) unsupported by substantial evi-
dence.” 5 U.S.C. § 7703(c); see Terban v. Dep’t of Energy,
216 F.3d 1021, 1024 (Fed. Cir. 2000). Applying those
standards, we must vacate the Board’s decision.
The Board’s decision, following OPM’s April 2014 Let-
ter, strongly appears to rely on an incorrect legal ground.
The Board asserted that “only pay subject to retirement
GROVER v. OPM 9
deductions may be used to compute average pay for
retirement purposes,” J.A. 6 n.7, just as OPM had stated
that “[o]nly pay subject to retirement deductions can be
used to compute an average salary for an annuity,” J.A.
33. The Board, like OPM, relied on that assertion as a
basis for using the Form 2806 deductions (converted to
earnings) without any inquiry into their accuracy, even
into their consistency with other information on Form
2806. We therefore read the Board’s statement, and
OPM’s, as a legal proposition that average-pay calculation
must be based on information about the deductions re-
ported on Form 2806 as having been taken. That proposi-
tion is incorrect, as OPM now recognizes. See DOJ Letter
at 3.
At most, OPM has a “long-standing, OPM-wide prac-
tice,” reflected in the Handbook. DOJ Letter at 2. That
“practice” does not and cannot override the clear statutory
annuity standard, which provides no room for “excluding
from the calculation of average salary for retirement
annuity purposes any pay, including overtime pay under
COPRA, that is actually received and is properly part of
the average salary computation.” Id. The deduction-
converted-to-earnings method used by OPM will generally
produce the statutorily required calculation “[p]rovided
that the employing agency deducts the correct retirement
contributions as required by law and properly certifies the
amount of those deductions to OPM.” Id. at 3. But in this
court OPM now correctly declines to defend the idea,
reflected in its April 2014 Letter and in the Board’s opin-
ion, that the reported-deduction method is automatically
legally correct, even when those assumptions do not hold
true. See Oral Arg. at 15:33–16:32, 23:20–23:40, 26:20–
26:30, 28:00–28:20.
The Board’s decision is also unsupported by substan-
tial evidence—evidence that a reasonable mind may take
as sufficient to establish a conclusion. See Dickinson v.
Zurko, 527 U.S. 150, 162 (1999); Consolo v. Fed. Mar.
10 GROVER v. OPM
Comm’n, 383 U.S. 607, 620 (1966). The Board (like the
administrative judge) read Form 2806 as establishing
that $17,500 was in fact included in the amounts from
which deductions had been taken. But OPM now recog-
nizes that the numbers on Form 2806 indicate the oppo-
site. Indeed, OPM now states in plain terms that the
information on Form 2806 is contradictory, inconsistent,
and conflicting. The Board, like OPM until recently,
failed to so recognize. Its contrary premise is conceded by
OPM to be incorrect.
We have no basis for saying that the errors made by
the Board, following OPM’s earlier presentations, were
harmless. They led the Board, like OPM, to see no need
for further inquiry into the amount of Mr. Grover’s over-
time pay. And this is hardly the kind of case in which
there is no reason to think that further inquiry is likely to
have been fruitless or unenlightening. Here, it is reason-
able to expect that pay stubs could be retrieved that
would objectively resolve the factual issue.
OPM makes one argument for nevertheless affirming.
It points to the regulation we have quoted above, 5 C.F.R.
§ 831.103, and notes that, in several non-precedential
decisions, this court has deferred to OPM’s interpretation
of the regulation as requiring OPM to follow an Individual
Retirement Record (Form 2806), rather than question its
accuracy. See Thomas v. Office of Pers. Mgmt., 350 F.
App’x 448, 451 (Fed. Cir. 2009); Lee v. Office of Pers.
Mgmt., 301 F. App’x 926, 928 (Fed. Cir. 2008); Rainone v.
Office of Pers. Mgmt., 249 F. App’x 823, 825 (Fed. Cir.
2007); see also O’Connell v. Office of Pers. Mgmt., 103
M.S.P.R. 579, 580–81 (2006). We have no occasion here to
question OPM’s general view of the regulation. But
neither the regulation nor any of our non-precedential
decisions tells OPM what to do when the Form 2806 is
internally contradictory on the matter in dispute. In such
a situation, “follow the Form” is not an answer-producing
directive. Further inquiry is required.
GROVER v. OPM 11
The case must be remanded to the Board. We do not
know whether the record before the Board already con-
tains the pay stubs that promise to be dispositive. At oral
argument before this court, Mr. Grover’s counsel—reading
from a paper he was holding that he said was such a pay
stub—stated that he believed the pay stubs were in the
record. Oral Arg. at 11:20–13:40. Regardless, as OPM
noted at oral argument before us, the record in the Board
was not developed with a focus on the apparent need for
pay stubs as clarification. Oral Arg. at 28:20–28:40. At
this stage, more than eight years after Mr. Grover retired,
we have been offered no reason why such pay stubs, if
authentic, should not, if necessary, be added to the record
to resolve this matter. Indeed, now that the focus has
been placed on the factual question, perhaps the answer
will prove sufficiently clear that the parties can quickly
agree, and no further adversarial proceedings will be
needed.
CONCLUSION
The decision of the Board is vacated and the matter
remanded for further proceedings.
Costs awarded to Mr. Grover.
VACATED AND REMANDED