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Athey v. United States

United States Court of Appeals, Federal Circuit

October 31, 2018

ROBERT M. ATHEY, MICHAEL R. CLAYTON, THELMA R. CURRY, RICHARD S. DROSKE, RALPH L. FULLWOOD, PAUL D. ISING, CHARLES A. MILBRANDT, TROY E. PAGE, Plaintiffs-Appellants
v.
UNITED STATES, Defendant-Appellee

          Appeal from the United States Court of Federal Claims in No. 1:99-cv-02051-PEC, Judge Patricia E. Campbell-Smith.

          Ira Mark Lechner, Washington, DC, argued for plaintiffs-appellants.

          Mikki Cottet, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Hillary Stern, Chad A. Readler, Robert E. Kirschman, Jr., Reginald T. Blades, Jr.

          Before Reyna, Schall, and Stoll, Circuit Judges.

          SCHALL, CIRCUIT JUDGE.

         Robert M. Athey, Michael R. Clayton, Thelma R. Curry, Richard S. Droske, Ralph L. Fullwood, Paul D. Ising, Charles A. Milbrandt, and Troy E. Page ("Appellants") are former employees of the Department of Veterans Affairs ("VA"). Appellants were employed by the VA under title 38 of the United States Code.[1] During the period from 1993 through 1999, Appellants retired or separated from their positions with the VA with accrued but unused leave.

         The Lump Sum Pay Act ("LSPA"), 5 U.S.C. §§ 5551-5552, which covers Appellants, provides that an employee "who is separated from the service . . . 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 lump-sum payment must be equal to the pay the separated employee would have received had he or she remained in federal service until the expiration of the period of annual or vacation leave. Id. It is undisputed that Appellants received lump-sum payments for their accrued and unused annual leave pursuant to the LSPA. It also is undisputed that, after Appellants left the VA, they received supplemental lump-sum payments. These supplemental lump-sum payments reflected statutory pay increases and general system-wide pay increases that became effective prior to the expiration of Appellants' accrued annual leave.

         Appellants are members of a class of former VA employees. On June 21, 2006, the class filed a complaint in the United States Court of Federal Claims, alleging that the VA improperly omitted certain pay increases from class members' supplemental lump-sum payments. The allegedly omitted increases included Cost of Living Adjustments ("COLAs") and Locality Pay Adjustments. The complaint additionally alleged that lump-sum payments made to certain members of the class improperly omitted non-overtime Sunday premium pay that the members would have received had they remained in federal service until the expiration of their periods of annual or vacation leave. Certain class members also alleged that their lump-sum payments improperly omitted evening and weekend "additional pay" that they would have received had they remained in federal service until the expiration of their periods of annual or vacation leave.[2] Finally, all members of the class sought pre-judgment interest on their claims under the Back Pay Act ("BPA"), 5 U.S.C. § 5596, as in effect during the years 1993 through 1999. In pertinent part, the BPA provides that interest is authorized for "an amount equal to all or any part of the pay, allowances, or differentials" lost by an "employee" who has been subjected to "an unjustified or unwarranted personnel action." Id.[3]

         Appellants' claims for additional COLAs, Locality Pay Adjustments, and non-overtime Sunday premium pay have been resolved. Before us now is Appellants' appeal of two decisions of the Court of Federal Claims. In those decisions, the court held that, as members of the class, Appellants were not entitled to have evening and weekend "additional pay" included in their lump-sum payments. The court also held that Appellants were not entitled to receive pre-judgment interest on amounts improperly withheld from their lump-sum payments.[4]Appellants have timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3). For the reasons set forth below, we affirm.

         Background

         Proceedings in the Court of Federal Claims

         Three decisions of the Court of Federal Claims are relevant to this appeal. In the first decision, Athey v. United States, 78 Fed.Cl. 157, 161 (2007) ("Athey I"), the court addressed the claim that additional pay, in the form of evening and weekend pay, should have been included in lump sum payments received pursuant to 5 U.S.C. § 5551(a). On this issue, the government moved for dismissal pursuant to Rule 12(b)(6) of the Rules of the U.S. Court of Federal Claims ("RCFC") for failure to state a claim upon which relief could be granted. The government argued that title 38 entitles Appellants to a lump-sum payment of accrued annual leave, calculated based on the basic rate of pay they were earning prior to separation, but that 38 U.S.C. § 7453(i) prohibits the inclusion of "additional pay" (pay for evening and weekend work) in the payout amount. 78 Fed.Cl. at 161. Section 7453(i) states:

Any additional pay paid pursuant to this section shall not be considered as basic pay for the purposes of the following provisions of title 5 (and any other provision of law relating to benefits based on basic pay):
(1) Subchapter VI of chapter 55.
(2) Section 5595.
(3) Chapters 81, 83, 84, and 87.

38 U.S.C. § 7453(i). Relevant to this appeal, subchapter VI of Chapter 55 encompasses 5 U.S.C. §§ 5551-52, the LSPA. Section 5595 covers severance pay.

         Appellants countered with the argument that the term "pay" in 5 U.S.C. § 5551(a) is not limited to "basic pay" (referenced in § 7453(i)), but also includes premium pay. 78 Fed.Cl. at 161. They further argued that § 7453(i) is properly understood to simply mean that "additional pay" is not part of "basic pay" rather than as excluding it from the calculation of "pay" under the LSPA for purposes of a lump-sum payment. Id. at 162.

         In granting the government's motion, the court held that "additional pay" as part of a lump-sum payment is prohibited under 38 U.S.C. § 7453(i). As seen, § 7453(i) states in pertinent part that "[a]ny additional pay paid pursuant to this section shall not be considered as basic pay for the purposes of . . . Subchapter VI of chapter 55 [LSPA] [and] Section 5595 [Severance Pay]." Citing § 7453(i), the court stated that, in § 7453(i), Congress determined "with clarity" that lump-sum separation pay should not include "additional pay," even if title 5 pro- vides it to other civil service employees. Athey I, 78 Fed.Cl. at 163.

         In Athey v. United States, 108 Fed.Cl. 617 (2013) ("Athey II"), the Court of Federal Claims, in an opinion by the same judge who had issued the court's opinion in Athey I, determined that it had jurisdiction over Appellants' claims for interest and that, in seeking interest under the BPA, Appellants had stated a claim upon which relief could be granted. The court thus denied the government's motion to dismiss under RCFC 12(b)(1) for lack of jurisdiction or, in the alternative, under RCFC 12(b)(6) for failure to state a claim upon which relief could be granted.

         On the jurisdictional issue, the Court of Federal Claims rejected the government's argument that Appellants had failed to plead a money-mandating statute that would provide the court with jurisdiction under the Tucker Act, 28 U.S.C. § 1491. The court held that, when pled together, the LSPA and the BPA provided the court with jurisdiction to hear Appellants' claims. See 108 Fed.Cl. at 619 (citing Worthington v. United States, 168 F.3d 24, 26 (Fed. Cir. 1999) (stating 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 that the BPA is such a "money-mandating" statute when based on violations of statutes or regulations covered by the Tucker Act)). The court reasoned that, in this case, Appellants' claims under the BPA were based upon the LSPA, which the court found to be a money-mandating statute providing "separated federal employees accumulated annual pay when entitled by law." Id.

         The Court of Federal Claims next addressed the government's argument that Appellants had failed to state a claim upon which relief could be granted because Appellants had not suffered a loss of "pay" as required by the BPA and were not "employees" for purposes of the BPA. The court turned first to the question of whether Appellants could satisfy the definition of "pay" under the BPA and under the accompanying regulations promulgated by the Office of Personnel Management ("OPM") that were in effect during the period 1993-1999. 108 Fed.Cl. at 620.[5]The court noted that, in December 1981, OPM promulgated regulations interpreting the BPA and authorizing the payment of back pay, mandatory pre-judgment interest, and reasonable attorney fees "for the purpose of making an employee financially whole (to the extent possible)." 46 Fed. Reg. 58, 271, 58, 273 (Dec. 1, 1981); see 5 C.F.R. § 550.801 (1981). The court also noted that the 1981 regulations 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." 46 Fed. Reg. at 58, 272; see 5 C.F.R. § 550.803 (1981). The court determined that because the 1981 regulation defined "pay" so broadly and because OPM comments specifically excluded from that broad definition only retirement benefits and not lump-sum payments, lump-sum payments constituted pay under the BPA. 108 Fed.Cl. at 620 (citing 46 Fed. Reg. 58, 271-02). Acknowledging that later OPM regulations, which became effective in 2000, narrowed the definition of "pay," the court found that using the 2000 definition to retroactively modify the 1981 regulations would be impermissible. Id. (citing Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988)).[6] Accordingly, the court concluded that Appellants' claims for payments under the LSPA fell within the applicable statutory and regulatory definitions of "pay" under the BPA.

         The court also found that Appellants qualified as "employees" for purposes of the BPA. Id. at 620-22. The court thus denied the government's alternative motion to dismiss pursuant to RCFC (12)(b)(6). Id. at 622.

         After the decision of the Court of Federal Claims in Athey II, the government and Appellants cross-moved for summary judgment on the issue of entitlement to interest under the BPA on class members' lump-sum payments. These motions were decided in Athey v. United States, 123 Fed.Cl. 42 (2015) ("Athey III"). In Athey III, a Court of Federal Claims judge different from the judge who had decided Athey I and Athey II granted the government's motion for summary judgment that Appellants were not entitled to interest under the BPA. As seen, the BPA provides that interest is authorized for "an amount equal to all or any part of the pay, allowance, or differentials" lost by an "employee" who has been subjected to "an unjustified or unwarranted personnel action." 5 U.S.C. § 5596. The court held, among other things, that lump-sum payments do not, in fact, qualify as "pay, allowance, or differentials" under the BPA, so as to entitle Appellants to pre-judgment interest. 123 Fed.Cl. at 59-61.

         The Court of Federal Claims first addressed Appellants' argument that Athey II, which denied the government's earlier 12(b)(6) motion to dismiss, ipso facto also found liability to Appellants for BPA interest without the need for further argument or decision. Id. at 50. The court rejected this argument, pointing out that "[a]n initial denial of a motion to dismiss does not foreclose, as the law of the case, the court's later consideration of those claims on summary judgment." Id. (first citing Behrens v. Pelletier, 516 U.S. 299, 309 (1996); then citing Gould, Inc. v. United States, 66 Fed.Cl. 253, 266 (2005)).

         "In any event," the court continued, "whether BPA interest is available for violations of the lump-sum payment statute is an issue of largely first impression; thus, this court will not so woodenly apply the law of the case doctrine to preclude a thorough review of the claim." Id. at 51 (citing Jamesbury Corp. v. Litton Indus. Prods., Inc., 839 F.2d 1544, 1551 (Fed. Cir. 1988)). The court stated that this was "especially true" in the instant case because the court found "clear error in one of Athey II's principle findings that otherwise might have qualified for deference as law of the case." Id. Specifically, the court concluded ...


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