Matthew Walter Stephan v. United States

In the United States Court of Federal Claims
No. 12-481
(Filed July 17, 2013)
************************************
*
MATTHEW WALTER STEPHAN, * Overseas Differentials and
* Allowances Act of 1960, 5 U.S.C. §
Plaintiff, * 5921 et seq.; Living Quarters
* Allowance; Department of State
v. * Standardized Regulations; Civilian
* Personnel Management Instruction;
THE UNITED STATES, * RCFC 12(b)(1); subject matter
* jurisdiction.
Defendant. *
*
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OPINION AND ORDER
Plaintiff, Matthew Stephan (“Stephan”), pro se, brings this action alleging that he
is entitled to a Living Quarter Allowance (“LQA”), pursuant to 5 U.S.C. § 5923. The
case is now before the Court on the United States’ (the “Government”) motion to dismiss
for lack of subject matter jurisdiction. The Government questions whether the statute or
its implementing regulations are money-mandating. The Court concludes that
jurisdiction is proper, such that the Government’s motion to dismiss is DENIED.
I. Background
a. Legal Framework
The Overseas Differentials and Allowances Act of 1960 (“ODAA”) establishes,
inter alia, the statutory authority for Federal agencies to provide LQAs to employees
serving overseas. See 5 U.S.C. § 5921 et seq. The ODAA states in relevant part:
(a) When Government owned or rented quarters are not provided
without charge for an employee in a foreign area, one or more of
the following allowances may be granted when applicable:
(1) A temporary subsistence allowance…
(2) A living quarters allowance for rent, heat, light, fuel, gas,
electricity, and water…
(3) Under unusual circumstances, payment or reimbursement for
extraordinary, necessary, and reasonable expenses.
5. U.S.C. §5923(a) (emphasis added).
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Section 5922 (“General Provisions”) likewise states that such allowances “may be
granted to an employee officially stationed in a foreign area.” 5 U.S.C. §5922(a)
(emphasis added). These allowances, however, “shall be paid under regulations
prescribed by the President.” § 5922(c) (emphasis added). The ODAA also authorizes
the President to promulgate regulations governing “(1) payments of the allowance and
differentials and the respective rates at which the payments are made; (2) the foreign
areas, the groups of positions, and the categories of employees to which the rates apply;
and (3) other related matters.” Id. The President, in turn, has delegated his authority to
the Secretary of State. Exec. Order 10903, 26 Fed. Reg. 217 (Jan. 9, 1961).
Pursuant to the President’s delegation, the Secretary of State promulgated the
Department of State Standardized Regulations (“DSSR”). Mirroring the language of the
statute, the DSSR provides that the “[q]uarters allowances … may be granted to
employees recruited outside the United States” if those employees meet certain
conditions. DSSR § 031.12 (emphasis added). As applied to Stephan, the DSSR requires
that “prior to employment, the employee was recruited in the United States … by the
United States Government, including its Armed Forces; a United States firm,
organization, or interest … and had been in substantially continuous employment by such
employer under conditions which provided for his/her return transportation to the United
States[.]” Id. at § 031.12(b). The DSSR also grants limited authority to agencies to
develop their own regulatory scheme. Id. at § 013.
Pursuant to this second level delegation of authority, the Secretary of Defense
issued Volume 1250 of the Civilian Personnel Management Instruction (“CPMI”). The
CPMI states that “[a]ll of the allowances authorized by [the DSSR] may be authorized for
DoD civilian employees living in foreign areas[.]” CPMI § 4(b) (emphasis added). The
CPMI also states that “[o]verseas allowances and differentials are not automatic salary
supplements, nor are they entitlements.” Id. at § 4(c).
b. The Complaint1
Stephan was recruited from his Maryland home by Computer Sciences
Corporation (“CSC”), a U.S. firm. On July 23, 2008, CSC extended an offer of
employment to Stephan. Stephan accepted CSC’s offer for the full time position of
Information Security Engineer Senior Professional. This position was intended to
support a CDC contract with the U.S. Navy in Yokosuka, Japan under the US-Japan
Status of Forces Agreement (“SOFA”).
Stephan received an offer letter from CSC, but claims that the offer letter did not
touch on all of the benefits that he was to receive. Stephan claims that he was entitled to
transportation to and from Japan, LQA payments, cost of living allowance, full base
1
The facts are derived from the allegations in Stephan’s Complaint. This recitation is
provided only to give context to the issue before the Court, which is purely legal.
2
Commissary and Exchange privileges, and full military postal service privileges for the
duration of his employment with CSC.
In late 2009, Stephan learned that the Navy had decided to cut his position from
CSC’s 2010 contract extension. Instead, the Navy intended to hire a civil servant to
perform those duties. This position was advertized under identification number
P3S0095-798981. The Complaint states that the advertisement for the P3S0095-798981
position indicated that the job included LQA for eligible personnel. Compl. at ¶¶ 10-11.
Stephan responded to the advertisement. He was given a tentative job offer, at
which time the human resources office requested that he fill out paperwork in order to
determine his eligibility for an LQA. Stephan alleges that he was twice told that he was
approved for an LQA. Compl. at ¶ 13. On March 11, 2010, Stephan was shown an email
that indicated that he was determined eligible for an LQA. A copy of this email was
forwarded to him afterwards.
It was at this time—March of 2010—that CSC approached Stephan and asked
him to make a determination to either continue employment with CSC in a new role or to
begin the separation process. Based on his conversations with the Navy’s human
resources people, Stephan informed CSC that he would begin his employment with the
Navy on March 29, 2010.
After he began the separation process with CSC, Stephan was informed that he
had been found ineligible for the LQA. He was also told that his commanding officer at
his office, Naval Computer & Telecommunications Station Far East (“NCTS-FE”), has
requested a waiver in order to grant Stephan an LQA. On September 13, 2010, Stephan
submitted an LQA re-review request and, in case he was still found ineligible, a waiver
request. He was informed that the denial of his LQA waiver was final.
On June 23, 2011, Stephan received a copy of the LQA waiver request and
rejection letters from NCTS-FE. Upon review, he noted that his name was not among
those listed for waiver requests. Finally, on August 10, 2011, a final letter issued denying
Stephan’s LQA status.
Stephan pursued additional administrative routes in an effort to have his LQA
status changed. The Office of Personnel Management (“OPM”) stored his case under
OPM File Number 11-0027. This file stated that Stephan met all but one of the
requirements set forth under DSSR § 031.12(b), which speaks to the qualifications for
LQA. That exception was the provision of return transportation to the United States by
CSC.2
II. Legal Standard
2
This particular issue is the key to the merits portion of this case, but is largely irrelevant
to the instant motion to dismiss.
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a. Pro Se Pleadings
A pro se plaintiff’s pleadings are generally held to “less stringent standards” than
those of a professional lawyer. Haines v. Kerner, 404 U.S. 519, 520-21 (1972) (requiring
that allegations contained in a pro se complaint be held to “less stringent standards than
formal pleadings drafted by lawyers”); Forshey v. Principi, 284 F.3d 1335, 1357 (Fed.
Cir. 2002) (en banc) (“[T]he pleadings of pro se litigants should be held to a lesser
standard than those drafted by professional lawyers . . . .”), superseded by statute on
other grounds as stated in Morgan v. Principi, 327 F.3d 1357, 1359-60 (Fed. Cir. 2003).
However, “[w]hile a court should be receptive to pro se plaintiffs and assist them,
justice is ill-served when a jurist crosses the line from finder of fact to advocate.” Demes
v. United States, 52 Fed. Cl. 365, 369 (2002). Moreover, “the leniency afforded to a pro
se litigant with respect to mere formalities does not relieve the burden to meet
jurisdictional requirements.” Minehan v. United States, 75 Fed. Cl. 249, 253 (2007)
(citing Kelley v. Sec’y, U.S. Dep’t of Labor, 812 F.2d 1378, 1380 (Fed. Cir. 1987)).
b. Rule 12(b)(1)
A motion brought pursuant to Rule 12(b)(1) of the Rules of the Court of Federal
Claims (“RCFC”) challenges the Court’s subject matter jurisdiction. When faced with a
motion to dismiss for lack of subject matter jurisdiction, a court must assume that all
undisputed facts alleged in the complaint are true, and it must draw all reasonable
inferences in the plaintiff’s favor. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also
Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995).
III. Discussion
Pursuant to the Tucker Act, 28 U.S.C. § 1491, this Court maintains jurisdiction
over “any claim against the United States founded either upon the Constitution, or any
Act of Congress or any regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or unliquidated damages in
cases not sounding in tort.” 28 U.S.C. §1491(a)(1). The Tucker Act itself does not create
a substantive cause of action, which means that “a plaintiff must identify a separate
source of substantive law that creates the right to money damages.” Fisher v. United
States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc in part). “In the parlance of
Tucker Act cases, that source must be ‘money-mandating.’” Id. (citations omitted).
The Supreme Court has recently emphasized that a statute or regulation is
“money-mandating” if “it can fairly be interpreted as mandating compensation by the
Federal Government for the damage sustained.” United States v. White Mountain Apache
Tribe, 537 U.S. 465, 472 (2003) (internal quotation omitted). The Court went on to
explain that:
This “fair interpretation” rule demands a showing demonstrably lower
than the standard for the initial waiver of sovereign immunity. “Because
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the Tucker Act supplies a waiver of immunity for claims of this nature, the
separate statutes and regulations need not provide a second waiver of
sovereign immunity, nor need they be construed in the manner appropriate
to waivers of sovereign immunity.” It is enough, then, that a statute
creating a Tucker Act right be reasonably amenable to the reading that it
mandates a right of recovery in damages. While the premise to a Tucker
Act claim will not be “lightly inferred,” a fair inference will do.
White Mountain, 537 U.S at 472-73 (internal citations omitted, emphasis added). On the
other hand, “[a] statute is not money-mandating when it gives the government complete
discretion over the decision whether or not to pay an individual.” Doe v. United States,
463 F.3d 1314, 1324 (Fed. Cir. 2006). If the statute is not money mandating, the Court
must dismiss the case for lack of jurisdiction. Fisher, 402 F.3d at 1173.
The statute, DSSR and CPMI all use the word “may” in defining eligibility for an
LQA. See 5 U.S.C. § 5923(a) (“may be granted”); DSSR § 031.12 “may be granted”);
CPMI § 4(b) (“may be authorized”). The word “may” often carries with it an implication
of discretion. See United States v. Rogers, 461 U.S. 677, 706 (1983) (The “word ‘may,’
when used in a statute, usually implies some degree of discretion.”); McBryde v. United
States, 299 F.3d 1357, 1362 (Fed. Cir. 2002) (When the word “may” is used in a statute,
“we should use common sense and presume that the word conveys some degree of
discretion.”). Although the use of the word “may” creates a presumption of discretion,
the Federal Circuit has recognized that some statutes may still be money-mandating, even
when they contain discretionary language. A statute is money-mandating, despite the use
of discretionary language, in three situations: “(1) the statute has clear standards for
paying money to recipients, (2) the statute specifies precise amounts to be paid, or (3) the
statute compels payment once certain conditions are met.” Doe, 463 F.3d at 1324.
The Government’s motion is premised on the theory that § 5923 and its
implementing regulations are money-authorizing, not money-mandating. Its theory is
based in the language of the statute and regulations, each of which contains discretionary
terminology. Meanwhile, Stephan accepts that language but argues that the statutes and
regulations make the LQA mandatory. The Court agrees with Stephan and therefore
concludes that jurisdiction is proper here.
This case does not come before the Court in a vacuum. A number of cases have
already touched on this issue, but the results have been very inconsistent. A brief review
of some of these cases is useful.
The starting-off point of this analysis must necessarily be Trifunovich v. United
States, 196 Ct. Cl. 301 (1971), which, as a decision of the Court of Claims, is binding on
this Court. As a general proposition, the legal question in Trifunovich was whether the
plaintiff there satisfied the substantive requirements of the ODAA and DSSR § 031.12d
such that he qualified for LQA. Although that specific provision no longer exists in the
current version of the DSSR, the operative language remains the same: “Quarters
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allowances … may be granted to employees recruited outside the United States, provided
that” certain conditions are met. See DSSR § 031.12; Trifunovich, 196 Ct. Cl. at 305.
As an initial matter, the Court agrees with the Government’s assertion that
Trifunovich v. United States, 196 Ct. Cl. 301 (1971), did not directly decide the instant
issue. There was, as the Government argues, no express finding that either the ODAA or
the DSSR provided a basis for jurisdiction. See Gov’t Mot. at 16. But the court
examined the language of the statute and regulations and concluded—despite the
presence of some permissive language—that the plaintiff’s claim rested on deprivation of
statutory and regulatory rights and did not involve an inquiry into whether the Navy
Department had abused its discretion. In other words, the Navy Department was bound to
follow the language of the statute and regulations. If the Government is bound to do
something, then the statute is money-mandating, provided the requirements of the statute
and regulations are met.
This is the discussion in Trifunovich that is critical to the issue in this case:
Defendant further argues that, since both statute and regulation contain
permissive rather than mandatory language, denial of plaintiff's
application for a living quarters allowance cannot, in light of the discretion
thus vested in the Navy Department, be considered arbitrary or capricious.
The argument lacks merit. Plaintiff met the requirements of the
Standardized Regulations, and, but for its erroneous decisions to the
contrary, the Navy admittedly would have paid him a living quarters
allowance. Plaintiff's right to recover flows, not from a showing of any
abuse of discretion, arbitrariness or capriciousness, but from proof of
deprivation of statutory and regulatory rights on an invalid basis.
Id. at 311 (emphasis added). This passage informs the current analysis in a number of
ways. First, the Court of Claims acknowledged the permissive language in the statute
and regulation. Second, it recognized a set of requirements in the DSSR. Finally, the
Court of Claims combined those two points to conclude that the ODAA and DSSR
embody a legal scheme wherein the ODAA mandates payment of an LQA upon
satisfaction of the conditions specified in the DSSR. This conclusion makes perfect sense
in light of the statutory imperative that “[t]he allowances … authorized by this subchapter
shall be paid under regulations prescribed by the President…” 5 U.S.C. § 5922(c)
(emphasis added). Moreover, the conclusion is entirely in accord with the recent Doe
decision, discussed above. See Doe, 463 F.3d at 1324.
That third point is particularly compelling in light of the addition of the CPMI to
the calculus. The CPMI was created itself on the basis of a delegation of authority in the
DSSR. The DSSR’s delegating provision states, in relevant part, that such delegation is:
[S]ubject to the provisions of these regulations [the DSSR] and the
availability of funds. Within the scope of these regulations, the head of an
agency may issue such further implementing regulations as he/she may
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deem necessary for the guidance of his/her agency with regard to the
granting of and accounting for these payments.
DSSR § 013 (emphasis added).
The most reasonable way of reading that provision is that agencies may decide
exactly how to implement the DSSR, but it does not give them carte blanche to ignore it.
This means that the CPMI is nothing more than an instruction on how to implement the
DSSR within the context of the civilian component of the Department of Defense
(“DoD”). Read from this perspective, the simple statement within the CPMI that LQAs
“are not automatic salary supplements, nor are they entitlements,” does not remove the
CPMI from the ODAA’s money mandate. Instead, it emphasizes that an employee must
meet the criteria contained in the DSSR (and any that may be added by the DoD) before
qualifying for an LQA.
The compliment to that conclusion is that the delegated-to authority may not
simply remove the conditions for qualification under the DSSR. That would negate the
need for regulations under the ODAA in the first place: what is the point of the President
establishing regulations for payment of LQAs if those “regulations” effectively grant the
DoD complete and unfettered authority to arbitrarily award LQAs? That simply does not
make sense, and it is contrary to the conclusion in Trifunovich that the ODAA and its
implementing regulations contemplate a money-mandating scheme.
Although the Court has concluded that Trifunovich decides the matter, the parties
have mentioned a few other cases that are worth addressing. For reasons that should be
obvious from the foregoing, the Court respectfully disagrees with at least part of each of
these cases.
The earliest decision in the Court of Federal Claims that expressly addresses the
CPMI in a jurisdictional context is Striplin v. United States, 100 Fed. Cl. 493 (2011).
There, the court addressed a pair of different overseas allowances, but determined that the
allowances were discretionary based on the plain language of the ODAA, the DSSR and
the CPMI’s language regarding entitlements. See id. at 500. Trifunovich, however, is not
cited once in that opinion.
Less than one month after Striplin, the court reached the opposite conclusion, and
the court had before it the same statute and regulations at issue in this case. Specifically,
the court held that an LQA is an entitlement under the statute and DSSR. See Thomas v.
United States, 2011 WL 9976337, *1 (Fed. Cl. Sept. 7, 2011).3 Relying on the general
provisions section of the ODAA, that court observed that “5 U.S.C. § 5922 states, ‘[t]he
allowances and differentials authorized by this subchapter shall be paid under regulations
prescribed by the President[.]’” Id. at *4 (emphasis added in Thomas). Turning to
§5923, the court concluded that the “may be granted when applicable” language and
3
The case does not refer to the CPMI by name, but it cites Department of Defense
Instruction Manual 1400.25, which is the CPMI.
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following conditions rendered the statute mandatory upon satisfaction of the conditions.
Id. Finally, the CPMI was found invalid because it gave discretion where the DSSR
“would otherwise mandate allowance.” Id. As expressed above, this Court does not
believe the CPMI is invalid, but it does agree with the conclusion in Thomas that the
LQA provision in the ODAA is a money mandate.
Next, in Roberts v. United States, Civ. No. 10-754, the court had occasion to
address the issue in two contexts. First, on the Government’s motion to dismiss the
plaintiff’s LQA claim for lack of jurisdiction, the court determined, entirely based upon
Trifunovich, that the ODAA and DSSR mandated award of an LQA upon satisfaction of
the terms contained in those laws. See Roberts v. United States, 2011 WL 9975295, *1
(June 29, 2011) (“Roberts I”). The CPMI was not before the court when it decided the
motion to dismiss.
The CPMI was placed squarely before that same court when the Government
brought its motion for summary judgment. After a rather detailed analysis, the court
determined that the CPMI “do[es] not ‘mandate’ the payment of money to plaintiff.”
Roberts v. United States, 104 Fed. Cl. 598, 604 (2012) (“Roberts II”). Given that the
jurisdictional question was not before the court at this stage, and indeed, it had already
been decided in the affirmative, this Court believes Roberts II is inapposite to the case at
hand – the “mandate” language in Roberts II can be read simply as a conclusion that the
plaintiff in that case did not win on the merits, i.e., the law did not mandate an award
since he had not satisfied the necessary conditions to qualify for LQA. However, to the
extent that the Roberts court determined that an agency operating under the DSSR’s
delegation may remove the money mandate, this Court respectfully disagrees: as it has
already expressed, granting such authority to an agency eviscerates the scheme
established by the ODAA and the DSSR, and it flatly contradicts the language of the
DSSR’s delegation provision.
In sum, this Court believes that Trifunovich is controlling on the question of
whether the ODAA and its implementing regulations are money-mandating. The ODAA,
DSSR and CPMI “‘can fairly be interpreted as mandating compensation by the Federal
Government for the damage sustained.” White Mountain, 537 U.S. at 472. Thus, this
Court has jurisdiction over Stephan’s case.
IV. Conclusion
For the foregoing reasons, the Government’s motion to dismiss is DENIED. The
parties shall file a joint status report by July 31, 2013. This report shall indicate how the
parties wish to proceed and it shall indicate whether the stay on Plaintiff’s motion for
summary judgment should be lifted or left in place for the time being.
/s Edward J. Damich
EDWARD J. DAMICH
Judge
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