Robert A. Athey v. the United States 9

In the United States Court of Federal Claims
Case Number 99-2051C
FOR PUBLICATION
Filed: January 30, 2013
****************************
*
ROBERT A. ATHEY ET AL., * 5 U.S.C. § 5596, The Back Pay Act;
* 5 U.S.C. §§ 5551-5552, lump-sum
Plaintiff, * payment statutes; RCFC 12(b)(1),
* RCFC 12(b)(6); Wallace v. Office of
* Personnel Management, 283 F.3d
v. * 1360 (Fed. Cir. 2002); Muniz v.
* United States, 972 F.2d 1304THE UNITED STATES, * (Fed. Cir. 1992)
*
Defendant. *
*
****************************
Ira M. Lechner, Class Counsel and Attorney for Plaintiffs.
Sharon A. Snyder, Trial Attorney, with whom were Jeanne E. Davidson, Director, Todd
M. Hughes, Deputy Director, and Tony West, Assistant Attorney General, Commercial
Litigation Branch, Department of Justice, Washington, D.C. and Patricia Smith, Office of
General Counsel, U.S. Department of Veterans Affairs, Washington, D.C., for Defendant.
OPINION AND ORDER
SMITH, Senior Judge.
Before the Court is Defendant’s Motion to Dismiss pursuant to 12(b)(1) and 12(b)(6) of
the Rules of the Court of Federal Claims (“RCFC”) for lack of subject matter jurisdiction and in
the alternative, for failure to state a claim upon which relief can be granted. Plaintiffs, former
employees of the Department of Veterans Affairs (“VA”), seek correction of their accrued and
accumulated lump-sum annual leave payments, interest on those payments, and attorneys’ fees,
pursuant to 5 U.S.C. § 5596, the Back Pay Act, 5 U.S.C. §§ 5551-5552 and the Tucker Act 28
U.S.C. § 1346(a). Defendant argues that the Court lacks subject matter jurisdiction because the
Back Pay Act is not a money-mandating statute. The Defendant also argues that the Plaintiffs do
1
not come within the Back Pay Act’s definition of “employee” nor does interest fall within the
definition of “pay” and therefore, the case must be dismissed. For the reasons set forth below, the
Court hereby rejects Defendant’s arguments, and DENIES Defendant’s Motion.
Relevant Facts
Plaintiffs are former employees of the VA and bring this class action case on behalf of
themselves and similarly situated employees. Plaintiffs claim that when they retired or separated
from Federal service beginning April 3, 1993, the VA did not include the required pay in their
lump-sum payments to which they were entitled under 5 U.S.C. §§ 5551-5552 and 5 U.S.C. §
5596. Am. Compl. ¶¶ 1-2. Under the lump-sum payment statute, 5 U.S.C. §§ 5551-5552, when
an employee as defined by 5 U.S.C. § 2105 separates from the service, they are “entitled to
receive a lump-sum payment for accumulated and current accrued annual or vacation leave to
which he [or she] is entitled by statute.” 5 U.S.C. §5551(a). The lump-sum payment must equal
the pay the employee would have received had he or she worked their regular and customary
scheduled hours until expiration of the period of the annual or vacation leave expired. Id.Plaintiffs claim that their lump-sum payment should have included various forms of
additional or premium pay as well as a supplemental payment for any pay adjustments that
would have become effective had they remained in service for the period of their unused annual
leave. Am. Compl. ¶¶ 18-21. The computation of the lump-sum payment, Plaintiffs claim also
did not include an amount equal to the Sunday pay which they regularly and customarily
received immediately prior to the date the employee became eligible for a lump-sum payment.
Am. Compl. ¶ 2.
Plaintiffs assert that the Court has jurisdiction over their claims pursuant to 28 U.S.C.
§1346(a)(2) (the Tucker Act); 5 U.S.C. § 5596 (the Back Pay Act); and 28 U.S.C. § 2501 (statute
of limitations). Am. Compl. ¶ 5. Plaintiffs seek recovery in the form of back pay, interest, and
attorneys’ fees pursuant to 5 U.S.C. §§ 5551-5552 (Lump-Sum Payment) and 5 U.S.C. § 5596(Back Pay Act).
Standard of Review
In deciding a RCFC 12(b)(1) motion, “determination of jurisdiction starts with the
complaint, which must be well-pleaded in that it must state the necessary elements of the
Plaintiff’s claim, independent of any defense that may be interposed.” Holley v. United States,
124 F.3d 1462, 1465 (Fed. Cir. 1997). In addition, in a motion for a dismissal on the basis of
subject-matter, the non-moving party bears the burden of establishing jurisdiction. Meyers v.
United States, 50 Fed. Cl. 674, 680 (2001). Pursuant to RCFC 12(b)(6), the court may dismiss a
complaint if as a matter of law, it fails to state a claim upon which relief can be granted. This
type of motion is appropriate when the facts asserted by the claimant do not under law entitle
him to a remedy. Perez v. United States, 156 F.3d 1366, 1370 (Fed. Cir. 1977).
2
Discussion
A. Does The Back Pay Act, Pled in Conjunction with the Lump-Sum Payment Statutes,
Give this Court Jurisdiction to Hear Plaintiffs’ Claims?
Contrary to the Plaintiffs assertions, the Defendant argues that the Complaint must be
dismissed because the Plaintiffs have failed to plead under any money-mandating provision or
statute that would provide this Court with jurisdiction. The Defendant argues that Plaintiffs pled
jurisdiction solely under the Back Pay Act and the Tucker Act, and that the statutes do not
provide this Court with subject matter jurisdiction or provide for monetary relief. Defendant
relies on Sacco v. United States, 63 Fed. Cl. 424, 428 (2004) (citing United States v. Connolly,
716 F.2d 882, 887 (Fed. Cir. 1983) which held that the Back Pay Act, “does not, itself, provide a
statutory basis for invoking this Court’s jurisdiction.” Instead, “[t]he Back Pay Act is merely
derivative in application; it is not itself a jurisdictional statute.” Connolly, 716 F.2d at 887. Thus,
in order for this Court to have jurisdiction over a Back Pay Act violation, Defendant argues that
“some provision of law other than the Back Pay Act must first mandate, or at least be interpreted
to mandate, money damages to an employee suffering an unjustified or unwarranted personnel
action.” Sacco, 63 Fed. Cl. at 428. Thus, Defendant concludes that Plaintiffs’ claims must be
dismissed as the Back Pay Act alone does not provide any statutory basis for subject matter
jurisdiction.
However, the Court holds that Plaintiffs have adequately pled 5 U.S.C. §§ 5551-5552, the
lump-sum payment statutes, in conjunction with the Back Pay Act. See Am. Compl. ¶¶ 3-9.
These statutes together, allow for a money-mandating cause of action under this Court’s subject
matter jurisdiction. The lump-sum payment statutes are money-mandating statutes that provide
separated federal employees accumulated annual pay when entitled by law. United States v.
Mitchell, 463 U.S. 206, 216-18 (1983); see also Hall v. United States, 617 F.3d 1313, 1318 (Fed.
Cir. 2010). In so much as these laws are money-mandating, they are statutes that are also
covered by the Tucker Act which waives sovereign immunity giving citizens the right to bring
the claim. Of course, the claim must be based on a money mandating provision of a stuate or, of
course, a contract. This gives the Court its jurisdiction to hear such claims. 28 U.S.C. § 1491.
Therefore, when pled together, the Back Pay Act and the lump-sum payment statutes provide this
Court with jurisdiction to hear the Plaintiffs’ claims. Worthington v. United States, 168 F.3d 24,
26 (Fed. Cir. 1999) (finding that in order to “fall within the Tucker Act's jurisdictional grant, a
claim must invoke a statute that mandates the payment of money damages” and “[t]he Back Pay
Act is such a “money-mandating” statute when based on violations of statutes or regulations
covered by the Tucker Act). Having found jurisdiction, the Court now turns to whether Plaintiffs
claims survive Defendants 12(b)(6) motion to dismiss.
B. Do the Plaintiffs’ Claims Fit Within the Definitions of “Pay” and “Employee”?
For several reasons discussed infra, Defendant contends that Plaintiffs cannot satisfy the
meaning of the terms “employee” and “pay” as defined under the Back Pay Act, 5 U.S.C. § 2105(a) (1)-(3); the Office of Personnel Management (“OPM”) regulations, 5 C.F.R. § 555.803 and as
3
interpreted in Wallace v. Office of Personnel Management, 283 F.3d 1360 (Fed. Cir. 2002).
Therefore, Defendant asserts that Plaintiffs are not entitled to interest under the Back Pay Act on
their lump-sum payment, and the claim should be dismissed under 12(b)(6).
The Back Pay Act provides that
“[a]n employee of an agency who, on the basis of a timely appeal or an administrative
determination . . . is found by appropriate authority . . . to have been affected by an
unjustified or unwarranted personnel action which had resulted in the withdrawal or
reduction of all or part of the pay, allowances, or differential of the employee . . . is
entitled, on correction of the personnel action, to receive for the period for which the
personnel action was in effect—an amount equal to all or any part of the pay, allowances,
or differentials, as applicable,” plus reasonable attorneys’ fees and interest.
5 U.S.C. § 5596(b)(1)-(2).
The Court notes that the Back Pay Act enumerates a two part test for a successful claim. First, a
plaintiff must show that he or she suffered an unjustified personnel action against them. Second a
plaintiff must demonstrate that the action resulted in a withdrawal or reduction in all or part of
the employee’s pay, allowances, or differentials. Donovan v. United States, 580 F.2d 1203,
1206-07 (3d Cir. 1978) [emphasis added].
1. History and Definition of “Pay”
The Defendant argues that Plaintiffs claims cannot satisfy the definition of “pay” under
the Back Pay Act and OPM’s current accompanying regulations. OPM’s regulations,
promulgated in 1999, modified the old regulations to exclude lump-sum payments from coverage
under the Back Pay Act. However, the Defendant relies on the revised regulations, which took
effect January 10, 2000, in error. As the Plaintiffs claims accrued and vested beginning in April
1993, the Court must address the claim under the controlling regulations prior to the 1999
revisions.
Congress authorized OPM to “prescribe regulations to carry out” the Back Pay Act. 5
U.S.C. § 5596(c). In accordance with that authority, in December 1981, OPM promulgated
regulations interpreting the Back Pay Act and authorizing the payment of back pay, mandatory
pre-judgment interest and reasonable attorney fees “for the purpose of making an employee
financial whole.” See 5 C.F.R. 550.801 (1981); 46 Fed. Reg. 58271 (Dec. 1, 1981). The 1981
OPM regulation defined “pay” broadly as “monetary and employment benefits to which an
employee is entitled by statute or regulation by virtue of the performance of a Federal function.”
Id. The comments elaborated that “benefits received under the Federal employee health benefits
and group life insurance programs prior to retirement are employment benefits to which a
covered employee is entitled by virtue of the performance of a Federal function.” It is of
significance that while lump-sum payments were included, retirement benefits were not
actionable under the Back Pay Act’s 1981 regulations. 46 Fed. Reg. 58271-02 (1981).
4
In November 1998, OPM published proposed changes to pay administration regulations
and policies regarding the Back Pay Act. 63 Fed. Reg. 64880-64895 (Nov. 24, 1998). OPM’s
1999 regulations modified the definition of “pay” to explicitly exclude lump-sum payments for
unused annual leave, “post-separation” retirement benefits and severance pay from the coverage
of the Back Pay Act. The proposed change to the definition of “pay, allowance, and differential”
was adopted and became effective January 10, 2000. 64 Fed. Reg 69165. 1
While OPM’s 1999 regulations modify the definition of “pay,” retroactivity in
rulemaking is impermissible unless Congress expressly authorizes such retroactivity. See, Bowen
v. Georgetown Univ. Hospital, 488 U.S. 204, 208 (1988); Landgraf v. USI Film Products, 511
U.S. 244, 255-57 (1994). The 1981 OPM definition of “pay” stands as the controlling regulation
from April 7, 1993, through the accrual and vesting of all the Plaintiffs claims. As the revised
regulatory language was promulgated over six years after the accrual of the Plaintiffs claims, the
Court holds that the revised definitions are inapplicable to this case. Neither the 1981 OPM
regulation, nor the OPM commentary which accompanied it, excluded lump-sum payments for
unused annual leave from the Back Pay Act. The definition of “pay, allowances and
differentials” pertained to lump-sum payments that accrued “by virtue of the performance of a
federal function.” Accordingly, the Plaintiffs claims for compensation fall within the applicable
statutory and regulatory definitions of “pay.”
2. History and Definition of “Employee”
Under the Back Pay Act, “employee” is defined as “ . . . an officer and individual who is
(1) appointed in the civil services . . . (2) engaged in the performance of a Federal function
under authority of law . . . (3) subject to the supervision of an individual named by paragraph
(1).” 5 U.S.C. § 2105(a)(1)-(3). All three elements of the statute must be met for an individual to
qualify as a federal employee. Ainslei v. United States, 355 F.3d 1371, 1374-75 (Fed. Cir. 2004).
Under OPM’s 1981 regulations, “employee” includes both current and former employees of an
agency. 46 Fed. Reg. 58271-02. 2
The Defendant contends that the lump-sum payments are made “post-separation” and,
therefore, the Plaintiffs do not qualify as “employees” under the Back Pay Act. The Defendant
argues that these “post-separation” payments are similar to retirement annuity payments which
the Federal Circuit held were not entitled to pre-judgment interest. Wallace v. Office of
Personnel Mangament, 283 F.3d 1360 (Fed. Cir. 2002). In Wallace, the Plaintiff retired from
1
OPM revisions provided that pay meant: “Pay, allowances and differentials means pay, leave,
and other monetary employment benefits to which an employee is entitled by statute or
regulation. . . . Monetary benefits payable to separated or retired employees based upon a
separation from service, such as retirement benefits, severance payments and lump-sum
payments for annual leave, are not covered.” 63 Fed. Reg 64880, 64891 (Nov. 24, 1998).
2
Even under the regulations which were promulgated after the vesting of the Plaintiffs claims in
this case, OPM’s definition dictates that “Employee means an employee of an agency. When the
term employee is used to describe an individual who is making a back pay claim, it also may
mean a former employee.” 64 FR 69165-01.
5
government service and brought suit two years later seeking interest on his retirement benefits
under the Back Pay Act. Id. at 1362. In holding for the Government, the Court found that the
Plaintiff was not an “employee” engaged in the performance of a Federal function and his claim
was not in connection with a “period of active employment.” Id. at 1361. The Court excluded
from the definition of “employee” those that separated or retired from Federal service. Id. at
1362. The Defendant argues that this precedent is controlling.
However, the Defendant’s reliance on Wallace is misplaced. In Wallace, the Plaintiff
claimed an interest in unpaid retirement benefits that clearly vested after the employee retired
and was separated from service for some time. 3 As stated, these claims did not accrue upon
severance of employment and do not relate back to a time when the employee was still in active
Federal service. In contrast, the Plaintiffs in this case seek back pay for a lump-sum payment,
which relates to due compensation from active Federal service. This is a substantial distinction.
To support this holding, the Court turns to the statutory language of the lump-sum statute
which provides that “an employee, as defined by § 2105 of this title . . . who is separated from
the services, is transferred . . . or elects to receive a lump-sum . . . is entitled to receive a lump-
sum payment for accumulated and current accrued annual or vacation leave to which he is
entitled by statute. 5 U.S.C. § 5551(a). The purpose of the legislation was to provide a
mechanism to efficiently end a civilian employee’s Federal service by allowing the agency to
“buy back” an employee’s unused annual leave upon separation. 4 There is a distinction between
this lump-sum payment, or “buy back,” for unused annual leave accumulated during Federal
employment and post-separation payments such as retirement and severance benefits. The
Comptroller General clarified the difference in 1951 providing that “as the right to lump-sum
payment vests in the employee ‘wherever’ he ‘is separated from the service,’ the employee’s
rights become fixed as of the date of his separation and are not in any way changed by the
administrative delay in accomplishing payment.” 30 Comp. Gen. 513. Therefore the inevitability
of payments being paid “post-separation” is of no consequence, as lump-sum payments are
necessarily paid, or bought back, after the employee retires, separates or dies.
Furthermore, the reasoning articulated in Muniz v. United States 972 F.2d 1304 (Fed. Cir.
1992) as to the definition of “employee” is persuasive, as the facts are quite similar to the case at
bar. Muniz involved a former federal employee’s claim to correct an unjustified calculation of
3
Even under the 1981 regulations, retirement benefits were not actionable under the Back Pay
Act. OPM explained that “benefits received following retirement are not included because they
are not received for the period covered by the corrective action. However, it may become
necessary to adjust such benefits following the correction of an unjustified or unwarranted
personnel action.” 46 Fed. Reg. 58271-02 (1981).
4
“When employees retired or otherwise left federal service, agencies commonly carried them on
the payroll in a ‘terminal leave’ status until they had exhausted all unused annual leave.” In order
to a civilian employees’ eligibility for military service during World War II, the act extended
“agencies’ authority to buy back a separating employee’s accumulated, unused annual leave.”
U.S. Gov’t Accountability Office, GAO/GGD-97-100, Federal Civilian Personnel: Cost of
Lump-Sum Annual Leave Payments to Employees Separating from Government, at 2 (May 29,
1997).
6
his lump-sum payment for unused annual leave. The issue before the court regarded whether the
plaintiffs claim regarding lump-sum payments arose when he was a Federal employee. The
Federal Circuit held that payment for earned, accrued and unused annual leave vests during an
employee’s Federal service. Therefore, the court held that Mr. Muniz’s claim regarding lump-
sum payments arose during employment because the lump-sum was due upon severance and
based on the rights accrued while in active employment. Id. at 1332. The Court agrees with the
holding of Muniz; the employee’s claim for a lump-sum payment does not depend on whether
the claim is made when the employee is active, but rather on when his or her claim arose.
Therefore, under the definition in Muniz and the Back Pay Act, the Plaintiffs qualify as
“employees” because their claims arose during Federal service. Even if the Court were to rely
solely on Wallace, the case articulates the same legal test as Muniz. Regardless of the factual
distinctions, both cases ask whether the employee’s claim arose during Federal employment and
whether the claim was in connection with that period of employment. Although the Wallace
court found the Back Pay Act inapplicable, it was not because the court in Wallace looked at the
test differently than in Muniz, but rather because facts in Wallace related to retirement which
favors dismissal. The Court does not deny that the facts in Wallace lead to a dismissal of the
Plaintiffs claims. However, the holding in that case should be limited to an analysis of retirement
benefits, which undoubtedly vested after the Plaintiffs separated for some time and did not relate
to their period of employment. Here, the Plaintiffs claims arose during Federal employment and
fall within the definitions of “employees” and “pay” under the Back Pay Act, 5 U.S.C. § 2105(a)(1)-(3); the Office of Personnel Management (“OPM”) regulations, 5 C.F.R. § 555.803 and as
interpreted in Wallace v. Office of Personnel Management, 283 F.3d 1360 (Fed. Cir. 2002).
There is no conflict between Wallace and Muniz.
Conclusion
The Court holds that the Plaintiffs have properly pled 5 U.S.C. § 5596, (the Back Pay
Act) in conjunction with 5 U.S.C. §§ 5551-5552, (lump sum payment statutes) which gives this
Court proper and sufficient jurisdiction to hear the Plaintiffs claims. Further, the Court holds
that within the Back Pay Act itself, the Plaintiffs claims adequately fall within the defined terms
of “employee” and “pay.” Accordingly, both the Defendant’s RCFC 12(b)(1) and 12(b)(6)
motions are denied.
IT IS SO ORDERED.
s/Loren A. Smith
Loren A. Smith
Senior Judge
7