Zoglio v. Mnuchin ( 2018 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
EUGENE ZOGLIO,
Plaintiff,
v.
Civil Action No. 17-1594 (TJK)
STEVEN T. MNUCHIN,
Defendant.
MEMORANDUM OPINION
In 2017, the Office of D.C. Pensions (“ODCP”), an office within the Department of
Treasury, denied Plaintiff Eugene Zoglio’s request to reestablish a decades-old disability
pension. He has brought suit against the Secretary of the Treasury (the “Secretary”) seeking
reversal of that denial. The parties have cross-moved for summary judgment. ECF Nos. 9, 11. 1
For the reasons set forth below, the Secretary’s motion will be granted and Zoglio’s motion will
be denied.
Statutory and Regulatory Background
As far back as 1916, Congress created retirement plans for police, firefighters, and other
employees of the District of Columbia (the “District”). See S. Rep. No. 96-237, at 2 (1979).
These plans “were funded on a ‘pay as you go’ basis,” and by the 1970s they had created a vast
“unfunded liability” for the District. D.C. Ret. Bd. v. United States, 657 F. Supp. 428, 430
(D.D.C. 1987). In 1979, Congress enacted the District of Columbia Retirement Reform Act,
Pub. L. No. 96-122, 93 Stat. 866 (1979), in the hopes of providing “adequate funding” to these
1
In considering the instant motions, the Court has relied on all relevant parts of the record,
including: ECF No. 9-1 (“Pl.’s Br.”); ECF No. 10 (“Def.’s Br.”); ECF No. 12 (“Pl.’s Reply”);
ECF No. 14 (“Def.’s Reply”); ECF No. 15 (“JA”).
“financially strapped” programs. McNeal v. PFRRB, 488 A.2d 931, 934 (D.C. 1985).
Nonetheless, by 1997, these unfunded liabilities had increased to $4.8 billion, and associated
payments constituted 10% of the District’s annual revenue. See Balanced Budget Act of 1997,
Pub. L. No. 105-33, tit. XI, subtit. A, District of Columbia Retirement Protection Act of 1997
§ 11002(a)(2), (6), 111 Stat. 251, 715-16.
Congress responded by passing the District of Columbia Retirement Protection Act of
1997 (“DCRPA”) (enacted as Title XI, Subtitle A of the Balanced Budget Act of 1997), which
transferred the obligation to pay for certain of these retirement programs to the federal
government. Id. § 11002(b)(2), 111 Stat. at 716.2 These programs were transferred “as in effect
on the day before” the statute’s “freeze date” of June 30, 1997. DCRPA § 11003(5), (9), 111
Stat. at 717. That is, the federal government took on the District’s liabilities that had accrued
under these programs on or before June 30, 1997, with the District continuing to be responsible
for liabilities arising from employee service rendered after that date. See id. § 11012(b), 111
Stat. at 718; Rivera v. Lew, 949 F. Supp. 2d 266, 267 (D.D.C. 2013); Federal Benefit Payments
under Certain District of Columbia Retirement Plans, 70 Fed. Reg. 60003, 60003 (Oct. 14,
2005).
Congress vested the administration of the DCRPA in the Secretary, see DCRPA
§ 11083, 111 Stat. at 730, who delegated that authority to the ODCP, see Def.’s Br. at 1-2. In
particular, the Secretary may promulgate procedures for handling claims. DCRPA § 11022(a),
111 Stat. at 720. The relevant regulations provide for the processing of claims by a “Benefits
Administrator,” 31 C.F.R. § 29.404(a), a role apparently filled by the District of Columbia
2
The DCRPA was subsequently amended by the District of Columbia Retirement Protection
Improvement Act of 2004, Pub L. No. 108-489, 118 Stat. 3966, which renumbered certain
sections of the DCRPA. This Opinion uses the original section numbers.
2
Retirement Board (“DCRB”) during the time period relevant to this case, see Def.’s Br. at 6. In
the event that a claim is denied, the decision must be accompanied by “adequate written notice of
such denial, setting forth the specific reasons for the denial in a manner calculated to be
understood by the average participant.” DCRPA § 11022(a)(1), 111 Stat. at 720. Applicants
may seek reconsideration before the Benefits Administrator, followed by an appeal to the
Department of the Treasury. 31 C.F.R. § 29.404(b)-(e). See generally Vincent v. Geithner, 890
F. Supp. 2d 8, 10 n.1 (D.D.C. 2012) (discussing review process).
The DCRPA gives this Court exclusive jurisdiction and venue to review benefits
decisions. DCRPA § 11072(a)(1), 111 Stat. at 728. It also sets out a standard of review. “Any
factual determination made by the [Secretary] shall be presumed correct unless rebutted by clear
and convincing evidence.” DCRPA § 11022(b), 111 Stat. at 721. Moreover, the Secretary’s
“interpretation and construction of the benefit provisions of the [transferred retirement programs]
and [the DCRPA] shall be entitled to great deference.” Id.
Factual and Procedural Background
In 1958, Zoglio became an officer in the District’s Metropolitan Police Department. JA
1. In 1970, he retired with a disability annuity. JA 1-2. Zoglio subsequently attended law
school and started his own practice. JA 2. In 1984, the Police and Firefighters’ Retirement and
Relief Board (“PFRRB”) terminated Zoglio’s pension, on the ground that his earning capacity
had been restored by his “lucrative” law practice. JA 269, 279. Of particular note, the PFRRB
concluded that Zoglio’s “earning capacity” included not just the personal “income” he had
actually drawn from his firm (which was incorporated as a professional corporation), but also his
“demonstrated capacity to earn” based on the firm’s revenues. JA 280-82
In 1991, Zoglio petitioned the PFRRB for reestablishment of his annuity. Zoglio v.
PFRRB (“Zoglio I”), 626 A.2d 904, 905 (D.C. 1993). He argued that, by virtue of having turned
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50, he was necessarily entitled to reestablishment. Id. The District of Columbia Court of
Appeals rejected this argument, holding that District law recognized only “two corresponding
conditions upon which the annuity, once terminated, can be ‘reestablished’: recurrence of the
disability and reduction of income below the statutory percentage ceiling.” Id. The Court of
Appeals also rejected Zoglio’s theory that the disability program discriminated against him based
on his age. See id. at 907-08.
In December 2014, Zoglio again sought reestablishment of his annuity, this time on the
ground that his earning capacity had declined to less than 80% of the position he held at his
retirement. JA 268. There followed a series of administrative decisions that both parties agree
were erroneous. See Pl.’s Br. at 6; Def.’s Br. at 6 n.7. The DCRB interpreted his request as one
for “deferred retirement benefits,” JA 267, and granted him such benefits in the amount of $631
per month, JA 261. This decision was incorrect because Zoglio had neither requested, nor was
he entitled to, deferred benefits. See Def.’s Br. at 27. The DCRB promptly reversed course and
voided the award, suggesting he instead seek relief from the PFRRB. JA 260. That suggestion
was also in error, because the PFRRB lacked jurisdiction over his case and promptly dismissed
it. JA 249, 254.
In September 2015, Zoglio returned to the DCRB with a renewed request for
reestablishment, explaining the previous errors. JA 252-53. On October 30, 2015, DCRB
denied the request. JA 248. It reasoned, first, that he had failed to show that his “earned income
for [calendar year] 2014 was below the statutory earnings threshold.” JA 249. It noted that
Zoglio continued to maintain the “lucrative law practice” that underlay the PFRRB’s 1984
decision to terminate his benefits. Id. It also concluded that Zoglio had misled the PFRRB about
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his income in the earlier proceedings, and that this “materially false information” had caused his
annuity to be “forfeited.” JA 249-50.
On November 24, 2015, Zoglio appealed the denial to ODCP. JA 101-02. He argued
that the “only relevant issue” was his “2014 earned income.” JA 106. While acknowledging that
“he and his wife had adjusted gross income of $162,820” in 2014, he explained that most of this
amount (including certain retirement benefits and payments from a purchased annuity) did not
count toward his “earned income.” JA 113. He also claimed that his tax return did “not show
any income from his ‘lucrative’ law firm in 2014 because his law firm did not make a profit in
2014 and he received no salary or other earned income from the firm in 2014.” JA 114. His
wife continued to work at the firm, but her salary had been reduced from $35,000 to $25,000. Id.
He also disputed the DCRB’s conclusion that he had previously misled the PFRRB. JA 96, 114-
15.
ODCP followed up with two requests for additional information. First, it requested
additional tax documents and a description of any “services performed in 2014 and 2015 by Mr.
Zoglio on behalf of” his firm. JA 94. Zoglio provided the tax documents, along with the
following explanation:
Mr. Zoglio did not actively engage in the practice of law in 2014
and 2015 for the firm he founded many years ago, Eugene M.
Zoglio, P.A. He is almost 80 years old. As to the services
performed by Mr. Zoglio in 2014 and 2015, they are as follows: He
occasionally writes checks for routine bills for the firm and the
attorneys will on occasion consult with him, for which he receives
no salary. All legal work and fees generated by the firm are done
by the other attorneys and paralegals. Mr. Zoglio’s wife has done
administrative work for the firm for the past 30 years as an
employee of the firm, for which she receives a salary of $25,000
per year. Mr. Zoglio’s income from investments, sales of real
estate, pensions, annuities, Social Security and rent from real
property does not disqualify him from restoration of the disability
pension to which he is entitled by law.
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JA 15.
Next, ODCP requested medical documentation showing that Zoglio “is currently
suffering from the disabling illness/injury he incurred while employed by the Metropolitan
Police Department prior to his disability retirement, and that this has caused a reduction in his
earnings capacity below the statutory threshold.” JA 11. Zoglio refused to provide this
information, which he argued was “not relevant to the legal issue to be decided regarding the
reinstatement of his annuity.” JA 9. He argued again that “[t]he only relevant issue regarding
restoration of [his] annuity is whether his earned income for 2014 fell below the 80% statutory
limitation.” Id. “Thus,” he argued, “ODCP has all the relevant information it needs to make a
decision.” Id.
On March 24, 2017, ODCP denied Zoglio’s appeal, on two grounds. JA 1-8. It
concluded that Zoglio was required to establish that he continued to suffer from his disability,
but had refused to do so. JA 4-6. It further concluded that Zoglio had failed to establish that his
“earning capacity” had declined below the threshold required to reestablish his annuity. JA 6-8.
ODCP’s conclusion about earning capacity rested, in turn, on two independent bases. ODCP
reasoned, first, that “earned income” is not necessarily identical to “earning capacity,” which is
the relevant standard under the statute. JA 6-7. 3 In particular, it reasoned that “an annuitant who
at one point was entitled to a disability annuity under the Plan but is now capable of gainful
employment cannot draw a disability annuity by simply choosing not to work.” JA 7. It
concluded that, “[b]y all indications, Mr. Zoglio’s reduction in earned income is the result of a
3
In its March 2017 decision, ODCP used the term “earned income” in place of the phrase
“income of the annuitant from wages or self-employment” used in D.C. Code § 5-714(a)(2). See
J.A. 6 n.3. In their briefing before the Court, the parties appear to have adopted this short-hand
as well. See, e.g., Pl.’s Br. at 9-10; Def.’s Br. at 19. For clarity, in its analysis below the Court
will likewise use “earned income” when referring to the above-mentioned phrase in the statute.
6
voluntary decision to retire.” Id. Zoglio admitted that he sometimes consulted with attorneys at
his firm, which in ODCP’s view suggested he had the ability to work. Id. And “nothing in the
documentation provided suggests Mr. Zoglio lacks such ability.” Id. As to its second basis,
ODCP also reasoned that “a reduction in ability to earn income for reasons unrelated to the
disability is not sufficient to show a lack of earning capacity.” Id. And ODCP concluded that
Zoglio had not shown that his disability had caused his decline in earning capacity. Id.
On August 8, 2017, Zoglio filed the instant lawsuit challenging ODCP’s decision. ECF
No. 1. He primarily attacks ODCP’s legal reasoning. As in his briefing to ODCP, Zoglio argues
that “[t]he only relevant issue is whether [his] earned income ‘from wages or self-employment or
both’ for 2014 fell below the 80% earned income limit imposed by D.C. Code § 4-620(a)(2)
(1981).” Pl.’s Br. at 2. Because the tax information he submitted to ODCP established this fact,
he was entitled to reestablishment of his disability annuity. Id. He also argues that the
government has acted in “bad faith,” as evidenced by its initial mishandling of his claim. Pl.’s
Reply at 21. Further, he argues that ODCP has discriminated against him based on his age, see
Pl.’s Br. at 19-21; Pl.’s Reply at 19-20, and that he is being “singled out for special negative
treatment” merely because he previously had a successful law practice, Pl.’s Reply at 2-3.
The Secretary argues that ODCP correctly denied Zoglio’s application. He argues that
Zoglio’s income was not adequate evidence of his “earning capacity” for the reasons set forth in
ODCP’s opinion, and that Zoglio’s annuity could not be reestablished absent evidence that he
was still disabled. Def.’s Br. at 13-25. The Secretary also urges the Court to reject Zoglio’s
arguments about bad faith and age discrimination. Id. at 26-27.
Legal Standard
A court must grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
7
Rawle Civ. P. 56(a). The Secretary has argued that the standard of review in this case is provided by
the Administrative Procedure Act (“APA”), 5 U.S.C. § 551 et seq. See Def.’s Br. at 7-10. He
notes that DCRPA provides its own standard of review, but suggests, citing Rivera v. Lew, 949
F. Supp. 2d 266 (D.D.C. 2013), that there is no meaningful difference between the APA standard
and the DCRPA’s standard under the facts of this case. See Def.’s Br. at 9 & n.10. Zoglio does
not argue for a different standard of review, and so the Court will apply the APA standard to this
case.
“[W]hen a party seeks review of agency action under the APA, the district judge sits as
an appellate tribunal.” Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001).
“The ‘entire case’ on review is a question of law.” Id. “Summary judgment thus serves as the
mechanism for deciding, as a matter of law, whether the agency action is supported by the
administrative record and otherwise consistent with the APA standard of review.” Alston v. Lew,
950 F. Supp. 2d 140, 143 (D.D.C. 2013).
Analysis
Both parties seem to agree that this case turns on an issue of statutory construction. See
Pl.’s Br. at 2; Def.’s Br. at 10-13. The relevant statute is D.C. Code § 4-620 (1981), which, as of
June 30, 1997 (the “freeze date” in the DCRPA), governed the termination and reestablishment
of disability annuities for District police and firefighters. That historical statute governs this case
because the retirement plans transferred to the Secretary were frozen in place as of June 1997.
See DCRPA § 11003(5), 111 Stat. at 717. Nonetheless, the parties appear to agree that the
current version of the statute, now found at D.C. Code § 5-714, is not materially different from
the one in effect in 1997. See Pl.’s Br. at 9; Def.’s Br. at 10 n.11. The Court will cite the current
version for the sake of convenience.
The relevant portion of the statute provides as follows:
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(a)(1) If any annuitant retired under § 5-709 or § 5-710, before
reaching the age of 50, recovers from his disability or is restored to
an earning capacity fairly comparable to the current rate of
compensation of the position occupied at the time of retirement,
payment of the annuity shall cease:
(A) Upon reemployment in the department from which he
was retired;
(B) Forty-five days from the date of the medical
examination showing such recovery; [or]
(C) Forty-five days from the date of the determination that
he is so restored . . . .
(2) Earning capacity shall be deemed restored if, in each of 2
succeeding calendar years in the case of an annuitant who was an
officer or member of the United States Park Police force, United
State Secret Service Uniformed Division, or the United States
Secret Service Division, or in any calendar year in the case of an
annuitant who was an officer or member of the Metropolitan Police
force or the Fire Department, the income of the annuitant from
wages or self-employment or both shall be equal to at least 80% of
the current rate of compensation of the position occupied
immediately prior to retirement. Nothing in this section shall
preclude such member from having an annuity reestablished if his
disability recurs, or when his earning capacity is less than 80% of
the rate of compensation of the position occupied immediately
prior to retirement for any full year thereafter; provided, that
whenever any member is reinstated with his respective department
it shall be at the same grade or rank held by the member at the time
of his retirement.
D.C. Code § 5-714(a) (emphasis added).
Zoglio argues that he is entitled to reestablishment of his benefits under the italicized text
because his income has fallen below the statutory threshold of “80% of the rate of compensation
of the position occupied immediately prior to retirement.” Id.; see Pl.’s Br. at 7. While the
statute refers to “earning capacity,” not “earned income,” he argues that they are one and the
same. Pl.’s Br. at 7. The Secretary has offered three independent reasons for rejecting Zoglio’s
interpretation. First, the Secretary argues that, regardless of Zoglio’s “earning capacity,” he was
9
required to show that he continued to be disabled to merit reestablishment. Def.’s Br. at 13-18.
Second, the Secretary asserts that “earning capacity” does not simply mean income, but the
ability to earn income, such that someone “capable of gainful employment cannot draw a
disability annuity by simply choosing not to work.” Id. at 22. And by relying solely on evidence
of his income, Zoglio did not meet his burden of showing that his “earning capacity” had fallen
below the statutory threshold. Third, the Secretary asserts that to be cognizable under the statute,
any decline in earning capacity must be the result of the annuitant’s disability. See id. at 23-25.
The Court will focus on the Secretary’s second theory, because if correct it offers a
sufficient basis for upholding ODCP’s decision to deny reestablishment of Zoglio’s annuity. As
explained below, the Court concludes that the Secretary reasonably interpreted the statute to
mean that Zoglio’s proffered evidence of his “earned income” was insufficient to establish a loss
of “earning capacity” in this case, since he may have made a voluntary choice to stop working.
Therefore, the Court need not address the Secretary’s first and third theories.
As an initial matter, the Court must determine whether the Secretary’s statutory
interpretation is entitled to deference. The Court notes that this case is somewhat unusual in that
the subject matter to be interpreted is not a federal statute, but a retirement plan governed by a
District statute that has been frozen in time as of June 1997. This raises the issue of whether
District law or federal law should control what, if any, deference to be afforded the Secretary’s
interpretation. The Court concludes it need not decide the issue, because both require sufficient
deference to easily justify the Secretary’s interpretation. See Chevron, U.S.A., Inc. v. Nat. Res.
Def. Council, Inc., 467 U.S. 837, 844 (1984) (noting that, when faced with ambiguity, “a court
may not substitute its own construction of a statutory provision for a reasonable interpretation
made by the administrator of an agency”); Zoglio I, 626 A.2d at 906 (“[C]ourts should give great
10
weight to any reasonable construction of a regulatory statute adopted by the agency charged with
the enforcement of that statute.” (quoting McMullen v. PFRRB, 465 A.2d 364, 366 (D.C. 1983)
(per curiam)).
The Court starts with the language of the statute. The statute authorizes reestablishment
“when [the annuitant’s] earning capacity is less than 80% of the rate of compensation of the
position occupied immediately prior to retirement for any full year thereafter.” D.C. Code § 5-
714(a)(2) (emphasis added). “Earning capacity” means a “person’s ability or power to earn
money, given the person’s talent, skills, training, and experience.” Earning Capacity, Black’s
Law Dictionary (10th ed. 2014). As the Secretary points out, the ability to earn money will not
always be equal to actual income. See Def.’s Br. at 19-20. That is most obviously true when
someone can work, but chooses not to. Thus, the plain language of the statute supports the
Secretary’s interpretation.
The text also contains another indication that “earning capacity” and “income” are not
always the same. It provides that:
Earning capacity shall be deemed restored if, . . . in any calendar
year . . . , the income of the annuitant from wages or self-
employment or both shall be equal to at least 80% of the current
rate of compensation of the position occupied immediately prior to
retirement.
D.C. Code § 5-714(a)(2) (emphasis added). That is, for purposes of terminating a disability
annuity, an increase in income may be “deemed” sufficient to establish restoration of earning
capacity. “Deem” means “[t]o treat (something) as if (1) it were really something else, or (2) it
has qualities that it does not have.” Deem, Black’s Law Dictionary (10th ed. 2014). The fact
that under the statute income is, in some contexts, “deemed” sufficient to establish earning
capacity strongly suggests that, in other contexts, income may not be the same as earning
capacity. Cf. Dwight v. Merritt, 140 U.S. 213, 218 (1891) (noting that the “phrase ‘nothing shall
11
be deemed scrap-iron except,’ etc., clearly shows that there might be other classes or kinds of
scrap-iron known to the trade than those mentioned . . . under that clause of the statute”).
Moreover, the “shall be deemed” provision is carefully cabined: it merely states that, if an
annuitant’s income rises above a certain threshold, then his “earning capacity” is “deemed
restored” and the annuity must be terminated. The statute does not provide that an income above
the threshold is necessary to terminate benefits, leaving open the possibility of showing by other
means that earning capacity has been restored. And the “shall be deemed” language has no
application whatsoever in the context of reestablishing benefits (the issue in this case), strongly
implying that earning capacity and income differ in that context, as well.
Prior administrative decisions of the PFRRB provide additional support for the principle
that “earned income” and “earning capacity” are not always the same. Indeed, the PFRRB
adopted this position in Zoglio’s case in 1984. There, the PFRRB considered whether Zoglio’s
annuity should be terminated because he had been “restored to an earning capacity fairly
comparable to the current rate of compensation of the position occupied at the time of
retirement.” D.C. Code § 5-714(a)(1); see JA 273. Zoglio argued that the PFRRB could
consider only his personal income, not the revenues of his law firm, in determining his “earning
capacity.” JA 286-89. The PFRRB noted that Zoglio was “the sole owner, director, officer and
shareholder” of the firm, and that a “substantial portion of the [firm’s] income . . . is generated
by and derived from [his] work product.” JA 273. It concluded that a portion of the firm’s
income could be attributed to Zoglio individually. See JA 281. The PFRRB also reasoned, “[i]n
the alternative,” that “comparable earning capacity is the ability to earn and engage in gainful
activity.” Id. (emphasis added). Thus, even if the law firm’s income was not strictly speaking
12
Zoglio’s income, it still contributed to his earning capacity because he had control over the assets
of the firm. See id. at 281-82.
Another PFRRB decision, from 2013, further supports the Secretary’s interpretation. In
that case, the PFRRB concluded that an annuitant was “ineligible to receive disability retirement
benefits if he reduced his income for reasons unrelated to his disability.” JA 299. To be clear,
the Court is not passing on the Secretary’s theory that disability must be the reason for any
cognizable decline in earning capacity. Nonetheless, this decision bolsters the general
proposition that “earning capacity” cannot be equated with “earned income.”
The Secretary’s interpretation also finds support in District cases interpreting other
workers’ compensation statutes. Those cases recognize the principle that “actual wage-loss is
significant as the best evidence of loss of earning capacity, but obviously some adjustment based
on what the worker is ‘able to earn’ must be made.” Dent v. D.C. Dep’t of Emp’t Servs., 158
A.3d 886, 902 (D.C. 2017) (quoting Arthur Larson, The Wage-Loss Principle in Workers'
Compensation, 6 Wm. Mitchell L. Rev. 501, 525 (1980)). In particular, lost wages may not be
good evidence of lost earning capacity when the “claimant has voluntarily limited his earnings.”
Larson, supra, at 525. For example, in Powers v. District of Columbia Department of
Employment Services, 566 A.2d 1068 (D.C. 1989), the petitioner had injured his back and
continued working on lighter duty at the same rate of pay. Id. at 1068. He then voluntarily left
for a new job with higher pay, but soon had to quit because his new duties “were too rough on
his injured back.” Id. He was unemployed for five months before he found another job, and
sought workers’ compensation benefits for that five-month period. See id. His request was
denied. Id. The District of Columbia Court of Appeals upheld that decision, reasoning in part
that his “departure from his [former] job . . . voluntarily entail[ed] a risk of wage diminution as a
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result of subsequent events.” Id. at 1069. Thus, if income declines due to a worker’s voluntary
decision to quit, his or her “earning capacity” may remain unchanged.
Based on all the above, the Court easily concludes that the Secretary’s interpretation of
D.C. Code § 5-714(a) was reasonable, to say the least.
Zoglio argues that this interpretation was incorrect and that “earning capacity” always
means “earned income” under the statute. But his arguments cannot carry the day.
First, Zoglio relies heavily on the “shall be deemed” provision in D.C. Code § 5-
714(a)(2), arguing that it “defines ‘earning capacity’ as ‘income of the annuitant from wages or
self-employment or both.’” Pl.’s Br. at 9. But as explained above, he is mistaken: this provision
in fact works against his interpretation of the statute. His interpretation is not even consistent
with a prior decision in his own case. In 1984, the PFRRB concluded that Zoglio’s “earning
capacity” had been restored even if his “relevant income” had not been. JA 281-82.
Next, Zoglio points to language in opinions of the District of Columbia Court of Appeals
that appear to equate “earning capacity” and “earned income.” Pl.’s Br. at 10-11. And in fact,
some of this language does seem to support his position at first blush. In Roberts v. PFRRB, 412
A.2d 47 (D.C. 1980), the court held that the statute “must be construed to allow an annuitant to
petition the Board for reestablishment of annuity as soon as his gross income has fallen below
the eighty percent level for any full year.” Id. at 51 (emphasis added). In McMullen v. PFRRB,
465 A.2d 364 (D.C. 1983) (per curiam), the court held “that there is one standard for determining
restoration to earning capacity,” namely when “earned income reaches or exceeds the 80%
limitation.” Id. at 366 (emphasis added). In Ridge v. PFRRB, 511 A.2d 418 (D.C. 1986), the
court held that the petitioner “was entitled to reestablishment of his disability annuity retroactive
to . . ., the first date of the year following that in which his income fell back below the 80%
14
eligibility limit.” Id. at 429 (emphasis added). And in Zoglio I, the court concluded that an
annuity can be reestablished upon “reduction of income below the statutory percentage ceiling.”
626 A.2d at 905 (emphasis added).
Nonetheless, the Court is persuaded by the Secretary’s argument that this language is
dictum insofar as it suggests that “earning capacity” is always the same as “earned income.”
Def.’s Br. at 21-22. “If a court in reaching a decision has not considered a particular point, then
the connection of the decision with that point is not a connection of effect and cause, but is
purely accidental, and as to that point the decision is no authority whatever.” Umana v. Swidler
& Berlin, Chartered, 669 A.2d 717, 720 (D.C. 1995) (quoting United States v. Kucik, 844 F.2d
493, 498 (7th Cir.1988)) (internal quotation marks omitted). None of the cases cited in the
previous paragraph considered an argument that earning capacity and income are always the
same. Three simply assumed that “earned income” and “earning capacity” were the same in
those cases, apparently because the parties made that assumption as well. See Zoglio I, 626 A.2d
at 905; Ridge, 511 A.2d at 420-21; Roberts, 412 A.2d at 48-50. That is hardly surprising:
income will typically be the “best evidence” of earning capacity. Dent, 158 A.3d at 902 (quoting
Larson, supra, at 525). McMullen comes somewhat closer, as it did address the meaning of
“earning capacity.” In that case, the petitioner argued that, even though his income had risen
above the statutory threshold for termination, the PFRRB had discretion not to terminate his
annuity by finding that his “earning capacity” was lower than his income. 465 A.2d at 366. The
court rejected that argument, which was obviously inconsistent with the text of the statute. See
id. Ultimately, however, McMullen merely stands for the obvious proposition that income above
the statutory threshold is sufficient to establish “earning capacity” for the purpose of terminating
15
benefits. McMullen says nothing about how to interpret “earning capacity” when considering an
application to reestablish benefits.
Zoglio also makes various policy arguments that, in his view, suggest that the Secretary’s
interpretation was unreasonable. See, e.g., Pl.’s Reply at 5-6. For example, he argues that a rule
separating “earning capacity” from “earned income” “is meaningless and incapable of practical
application.” Id. at 5. The Court disagrees. The Secretary’s approach is workable, at least in
cases where there is evidence that the applicant voluntarily chose not to work.
Zoglio makes two final points. First, he argues that the Secretary has acted in “bad
faith.” Id. at 21. However, he does not explain how this is relevant to the statutory construction
issue before the Court. While it is certainly regrettable that the DCRB initially mishandled his
case, Zoglio has not shown that he should therefore receive benefits to which he may not be
entitled. Second, he argues that the Secretary has unlawfully discriminated against him based on
his age. Id. at 20. Here, too, it is unclear how this is relevant; Zoglio has not asserted an equal-
protection claim in his complaint. See ECF No. 1. In any event, this theory is meritless. It is
true that D.C. Code § 5-714(a)(1) provides that, once an annuitant has reached the age of 50, his
benefits can no longer be terminated. But as the Zoglio I court explained, there are several
rational bases that could plausibly support this classification, meaning that it does not run afoul
of the Equal Protection Clause. See 626 A.2d at 907-08. And in any event, the termination
provision is irrelevant to this case. Zoglio’s benefits were terminated over 30 years ago. His real
complaint is that the reestablishment clause in the statute does not make special provision for
persons who have made it to retirement age. Zoglio is not so much complaining about age
discrimination as seeking more of it.
Thus, Zoglio’s challenge to the Secretary’s interpretation of the statute fails.
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As noted above, Zoglio appears to base his entire challenge to the Secretary’s decision to
deny reestablishing his annuity on this question of statutory interpretation. In other words,
nowhere does he argue that the Secretary’s decision was arbitrary and capricious (or otherwise
contrary to law) even if—as the Court has found—the Secretary reasonably determined that
“earning capacity” and “earned income” have different meanings under the statute. Certainly,
his motion papers do not clearly articulate any such challenge. And that is consistent with his
position before the agency, where he put all his “earning capacity” eggs in the “earned income”
basket. In every submission to ODCP, Zoglio rested his case solely on his earned income,
without addressing the possibility that it might not fully reflect his earning capacity. JA 9, 15,
96, 113. In fact, he expressly argued that ODCP, by virtue of having received his “income
information,” had “all the relevant information it need[ed] to make a decision.” JA 9.
Thus, the Court concludes that the Secretary acted reasonably in determining that
Zoglio’s income evidence was insufficient to demonstrate a loss of his “earning capacity.” The
record contains numerous indications that Zoglio’s income might understate his earning capacity.
First, the PFRRB had previously terminated Zoglio’s benefits based on the revenues of his law
firm, which were generated in substantial part by his own work as an attorney. JA 270-85.
Second, Zoglio’s submissions indicated that his law firm remained a going concern: attorneys at
the firm continued to generate “legal work and fees” and “on occasion consult[ed]” with him.
JA 15. His wife also earned a modest salary for “administrative work” there. Id. Based on this
unrebutted evidence, the Secretary reasonably could conclude, and did conclude, that Zoglio’s
demonstrated “earned income” was insufficient to establish “earning capacity,” because he could
well have continued working as an attorney. JA 1, 7. To be sure, Zoglio pointed out that “he
was almost 80 years old,” JA 15, and also asserted that “his law firm did not make a profit in
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2014,” JA 114. But Zoglio never argued that his advanced age had forced him to retire, or that
his law firm could not have generated profits for him had he continued to work.
The Court notes the narrowness of its decision. It concludes that, in this case, the
Secretary reasonably found that Zoglio did not establish that a reduced “earning capacity”
warranted reestablishment of his disability annuity under D.C. Code § 5-714(a)(2). The Court
does not reach the Secretary’s two other theories about how to interpret D.C. Code § 5-714: that
an applicant for reestablishment must also show that he remains disabled, and that the applicant’s
disability must be the cause for any loss in earning capacity.
Finally, the Court notes that its ruling does not necessarily mean that Zoglio will be
forever left without a disability annuity. It may well be that his advanced age and other facts
could support an argument that his earning capacity has declined. He simply has not made that
argument. The Secretary has represented that Zoglio “is not precluded from filing a claim in the
future should the necessary conditions arise.” Def.’s Br. at 6 n.7 (citing JA 1). The Court has no
reason to doubt that, if Zoglio re-applies for reestablishment of his annuity, the DCRB and
ODCP will fully and fairly evaluate his application.
Conclusion
For all of the above reasons, the Court will grant the Secretary’s motion, deny Zoglio’s
motion, and enter judgment in the Secretary’s favor, in a separate order.
/s/ Timothy J. Kelly
TIMOTHY J. KELLY
United States District Judge
Date: October 4, 2018
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