Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

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No. 07-279C (Judge Baskir) IN THE UNITED STATES COURT OF FEDERAL CLAIMS

THEODORE FATHAUER et al., Plaintiffs v. THE UNITED STATES, Defendant.

DEFENDANT'S RESPONSE TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND CROSS-MOTION FOR SUMMARY JUDGMENT AND APPENDIX

JEFFREY S. BUCHOLTZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director MARK A. MELNICK Assistant Director DEVIN A. WOLAK Trial Attorney Commercial Litigation Branch Civil Division Department of Justice 1100 L St., N.W. Attn: Classification Unit, 8th Floor Washington, D.C. 20530 Tel. (202) 616-0170 Fax. (202) 514-8624 March 10, 2008 Attorneys for Defendant

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TABLE OF CONTENTS Statement Of The Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Statement Of The Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 I. II. Factual Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Statutory And Regulatory Background . . . . . . . . . . . . . . . . . . . 2

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I. II. Standard of Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Part-Time Federal Employees Are Not Entitled To Receive Sunday Premium Pay . . . . . . . . . . . . . . . . . . . . . . . . 6 A. The Plain Language Of 5 U.S.C. § 5546(a) Does Not Precisely Address The Issue Of Whether Part-Time Federal Employees Are Entitled To Receive Sunday Premium Pay . . . . . . . . . . . 7 OPM's Regulatory Interpretation Of 5 U.S.C. § 5546(a) Is Reasonable And Entitled To Deference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

B.

III.

The Spirit and Purpose Of The Part-Time Career Employment Act Does Not Require The Court To Overturn OPM's Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . 14

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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TABLE OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cathedral Candle Co. v. United States Int'l Trade Comm'n, 400 F.3d 1352 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 10 Timex V.I., Inc. v. United States, 157 F.3d 879 (Fed. Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 United States v. Mead Corp., 533 U.S. 218 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 46 Comp. Gen. 337, 338 (October 19, 1966) . . . . . . . . . . . . . . . . . 4, 5, 6, 9

STATUTES, RULES, REGULATIONS, LEGISLATIVE HISTORY 5 U.S.C. § 2105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3 5 U.S.C. § 3401 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 5 U.S.C. §5541 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 8, 9 5 U.S.C. § 5546 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 6, 7, 8, 13, 14 5 U.S.C. § 5548 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 11 5 C.F.R. § 550.171 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 7, 11 1965 U.S.C.C.A.N. 3817 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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1966 U.S.C.C.A.N. 2495 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 13 RCFC 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 6

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS THEODORE FATHAUER et al., Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 07-279C (Judge Baskir)

DEFENDANT'S RESPONSE TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND CROSS-MOTION FOR SUMMARY JUDGMENT AND APPENDIX Pursuant to Rule 56 of the Rules of the United States Court of Federal Claims ("RCFC"), defendant, the United States, respectfully requests that the Court enter judgment in its favor with respect to plaintiffs' complaint and deny the Motion For Summary Judgment of plaintiffs Theodore Fathauer, Robin Fox, Edward K. Hogan, Jr., Laurie R. Nisbet, and Richard Thoman (collectively, the "plaintiffs"), upon the grounds that the Government is entitled to judgment as a matter of law. Statement Of The Issue Whether the Office of Personnel Management's regulatory interpretation of 5 U.S.C. § 5546(a) is arbitrary, capricious, or manifestly contrary to the statute.

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Statement Of The Case I. Factual Background The parties agree upon the only material fact in this case -- plaintiffs are part-time Federal employees. For purposes of this case, details of each plaintiff's employment beyond the fact that he or she is a part-time Federal employee do not affect the outcome; the plaintiffs are not entitled to receive the Sunday premium pay they seek because of their status as part-time Federal employees. II. Statutory And Regulatory Background

Section 5546 of Title 5 of the United States Code (the "Sunday premium pay statute"), provides in pertinent part: An employee who performs work during a regularly scheduled 8-hour period of service which is not overtime work as defined by section 5542(a) of this title a part of which is performed on Sunday is entitled to pay for the entire period of service at the rate of his basic pay, plus premium pay at a rate equal to 25 percent of his rate of basic pay. 5 U.S.C. § 5546(a). The definitional statute governing section 5546 states that an "employee" is "an employee in or under an Executive agency." 5 U.S.C. § 5541(2)(A).1
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Plaintiffs have also pointed to 5 U.S.C. § 2105, another definitional (continued...) -2-

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Congress expressly delegated to the Office of Personnel Management ("OPM") the authority to implement rules and regulations to administer the Sunday premium pay statute. See 5 U.S.C. § 5548(a) ("The Office of Personnel Management may prescribe regulations, subject to the approval of the President, necessary for the administration of this subchapter . . . ."). Pursuant to that authority, OPM promulgated 5 C.F.R. § 550.171 (the "Sunday premium pay regulation"), which provides that "[a] full-time employee is entitled to pay at his or her rate of basic pay plus premium pay at a rate equal to 25 percent of his or her rate of basic pay for each hour of Sunday work (as defined in § 550.103)." 5 C.F.R. § 550.171(a). OPM promulgated the Sunday premium pay regulations shortly after Congress enacted the Sunday premium pay statute. During the process of

(...continued) statute under Title 5, for an alternative definition of "employee." Brief In Support Of Plaintiffs' Motion For Summary Judgment ("Pl. Br."), at 7. However, that statute specifically provides that it is applicable only to the extent it is not modified elsewhere in the title. See 5 U.S.C. § 2105(a) ("`employee', except as otherwise provided by this section or when specifically modified, means . . . ."). Therefore, the definition at issue here is the one found at 5 U.S.C. § 5541. -3-

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drafting the regulation, the Chairman of the Civil Service Commission2 wrote to the Comptroller General seeking guidance as to whether the thenrecent amendments to the Federal Employees Pay Act of 1945 would support a regulation operating so "that an employee with a regularly prearranged tour of less than 40 hours a week is entitled to premium pay for Sunday work." 46 Comp. Gen. 337, 338 (October 19, 1966). The chairman also specifically stated that, in his view, "language of the statute does not limit the coverage of such provisions to full-time employees." Id. The Comptroller General disagreed. Citing the law's legislative history, the Comptroller General suggested that, notwithstanding the unqualified use of the term "employee" in the statute, Congress intended only to extend Sunday premium pay to Federal employees in the same manner it had granted Sunday premium pay to employees of the United States Postal Service the year before -- full-time employees may receive it, but part-time employees may not. Id. The Comptroller General referred specifically to Senate Report No. 1187, 89th Cong., 2d sess., which states: The Civil Service Commission is the predecessor to OPM. The United States Civil Service Commission was established by the Pendleton Civil Service Reform Act of 1883. The commission was abolished and replaced by OPM on January 1, 1979 pursuant to the Civil Service Reform Act of 1978 and Reorganization Plan No. 2 of 1978 (43 F.R. 36037, 92 Stat. 3783). -42

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Section 405 applies to classified and wage board employees a significant liberalization granted postal employees in 1965. This section requires a premium of 25 percent of base pay for any employee whose regularly scheduled 5-day work-week includes Sunday. The premium will be paid for the entire 8-hour period of service regardless of the numbers of hours which actually occur on Sunday. This is identical to the provisions for regular postal employees enacted last year. 46 Comp. Gen. at 338 (quoting 1966 U.S.C.C.A.N. 2495, 2498 (emphasis added)). The Comptroller General also cited tesimony from the hearings before the Committee on Post Office and Civil Service: The House bill, H.R. 14122, adds new * * * Sunday pay benefits for most Federal employees. Equity allows no alternative but to concur in the proposals to extend to additional groups * * * premium pay at 25 percent of base rates for nonovertime work on Sunday. * * * Congress last year prescribed premium pay for nonovertime Sunday work of postal employees; it is equitable to extend the same policy to other salaried employees and to those paid under wage-board schedules." Id. (quoting Hearings before the Committee on Post Office and Civil Service, United States Senate, 89th Cong., 2d sess., on H.R. 14122, held on April 20, 21, 22, 25, 26 and 27, 1966, at 4 (emphasis added)). Based upon these expressions of Congressional intent in the legislative history, the Comptroller General recommended that: -5-

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While the literal language of subsections 405(c) and 405(f) of Public Law 89-504 does not restrict the benefits in question to full-time employees we believe the legislative history previously referred to supports the view that only full-time employees were intended to be covered thereby and, therefore, we conclude that part-time employees are not entitled to premium pay for Sunday work. Id. at 339. OPM adopted this rationale when it promulgated its regulation, which provides Sunday premium pay for full-time Federal employees, but not part-time Federal employees. ARGUMENT I. Standard of Review Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. RCFC 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). II. Part-Time Federal Employees Are Not Entitled To Receive Sunday Premium Pay The plaintiffs' case is essentially a plea to the Court to accept their interpretation of 5 U.S.C. § 5546(a) over that of OPM. Plaintiffs ignore the fact that OPM -- the agency charged with administering the Federal pay statute at issue here -- has promulgated a regulation that limits the

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payment of Sunday premium pay to full-time Federal employees and is based upon OPM's understanding of Congress' intent in passing 5 U.S.C. § 5546. Indeed, plaintiffs attempt to minimize this regulation in their brief by asserting that "it was not OPM's idea to limit eligibility for Sunday differential to full-time employees." Pl. Br. at 5. This is, however, not an accurate portrayal of the statutory and regulatory scheme. OPM promulgated its Sunday premium pay regulation shortly after section 5546 was enacted. In the process of drafting that regulation, OPM consulted the Comptroller General for his opinion upon the precise issue that the plaintiffs raise here, and the Comptroller General articulated a reasonable interpretation of section 5546 that OPM adopted as its own when it promulgated 5 C.F.R. § 550.171(a). Thus, this case asks whether the regulation of the agency charged with enforcing the statute is entitled to Chevron deference. A. The Plain Language Of 5 U.S.C. § 5546(a) Does Not Precisely Address The Issue Of Whether Part-Time Federal Employees Are Entitled To Receive Sunday Premium Pay

To determine whether an agency's interpretation and application of a particular statute is "in accordance with law," the Court must undertake the two-step analysis prescribed by Chevron U.S.A. Inc. v. Natural Resources

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Defense Council, Inc., 467 U.S. 837 (1984). Under the first step, the Court reviews the agency's construction of a statutory provision to determine whether "Congress has directly spoken to the precise question at issue." Id. at 842. "To ascertain whether Congress had an intention on the precise question at issue, [the Court] employ[s] the `traditional tools of statutory construction.'" Timex V.I., Inc. v. United States, 157 F.3d 879, 882 (Fed. Cir. 1998). "The first and foremost `tool' to be used is the statute's text, giving it its plain meaning." Id. (citations omitted). Beyond the statute's text, the tools of statutory construction "include the statute's structure, canons of statutory construction, and legislative history." Id. (citations omitted). In this case, the precise question is whether the Sunday premium pay statute applies to part-time Federal employees. Despite plaintiffs' remonstrances, the statute does not precisely address whether part-time Federal employees are entitled to Sunday premium pay. To avoid this conclusion, plaintiffs argue that Congress' omission of "full-time" as a modifier of "employee" from the text of both 5 U.S.C. § 5546(a) and 5 U.S.C. § 5541 mandates the payment of Sunday premium pay to parttime Federal employees. Pl. Br. at 7-10. Implicit in this argument is the

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false assumption that Congress intended to extend Sunday premium pay to all Federal employees. See 5 U.S.C. §5541(2)(i)-(xvii) (listing seventeen separate exclusions from the statutory definition of "employee"). Furthermore, the statute's general definition of the term is circular, unhelpfully defining "employee" as "an employee in or under an Executive agency." 5 U.S.C. § 5541(2)(A). In short, the statute does not clearly state whether it is applicable to part-time Federal employees. As described above in the Statement Of The Case, OPM attempted to clarify this ambiguity by promulgating a regulation to govern the payment of Sunday premium pay. In formulating that regulation, OPM sought the advice of the Comptroller General, who highlighted passages in the statute's legislative history demonstrating Congress' intent to grant the benefit to "employee[s] whose regularly scheduled 5-day work-week includes Sunday," and that the benefits encompassed by the new amendments were "identical" to those passed for the Postal Service just the year before. 46 Comp. Gen. at 339. B. OPM's Regulatory Interpretation Of 5 U.S.C. § 5546(a) Is Reasonable And Entitled To Deference

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purpose "are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute." Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44 (1984). "Considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer." Id. at 844; see also United States v. Mead Corp., 533 U.S. 218, 230 (2001) (holding that where Congress has indicated that an agency shall administer a statute, a court reviewing an agency's actions "is obliged to accept the agency's position if Congress has not previously spoken to the point at issue, and the agency's interpretation is reasonable"); Cathedral Candle Co. v. United States Int'l Trade Comm'n, 400 F.3d 1352, 1362 (Fed. Cir. 2005) (noting that Chevron "requires the court to defer to the agency's interpretation if `the agency's answer is based on a permissible construction of the statute'") (internal citations omitted). An "administrative implementation of a particular statutory provision qualifies for Chevron deference when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority." Mead, 533 U.S. at 226-27.

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It is undisputed that Congress expressly delegated to OPM the responsibility to administer the Sunday pay statute. See 5 U.S.C. § 5548(a) ("The Office of Personnel Management may prescribe regulations, subject to the approval of the President, necessary for the administration of this subchapter . . . ."). As a result of that express delegation, OPM promulgated regulations for the general administration of the statute, and those regulations are entitled to Chevron deference. As explained above, the OPM regulation at 5 C.F.R. § 550.171 is based upon the rationale outlined by the Comptroller General in his October 19, 1966 decision upon the very question that the plaintiffs pose here. Plaintiffs argue that the Comptroller General's decision (and therefore, OPM's decision as well) is incorrect, stating that "even if Congress did intend the same exclusion, it was of `temporary substitutes' rather than part-time career employees, such as plaintiffs. . . . [and] the Comptroller General mistakenly conflated the two." Pl. Br. at 11-12. Plaintiffs' argument makes one false assumption and one critical omission. First, plaintiffs incorrectly assume that, in 1965, the Postal Service employed "part-time career employees." Plaintiffs cite nothing, and we are aware of nothing, supporting this assumption. To the contrary, the

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Senate Report cited by the plaintiffs in their explanation of the Postal Service's regular/substitute employee classes suggests that there was no full- and part-time employee distinction by that name in the 1965 Postal Service, and the regular/substitute distinction was the functional equivalent. "Regular" Postal Service employees not only received a regular schedule of work, as plaintiffs highlight in their brief, Pl. Br. at 11, but they also had "an advance-scheduled basic workweek of five 8-hour days." 1965 U.S.C.C.A.N. 3817, 3821. In other words, "regular" Postal Service employees were full-time employees. "Substitute" Postal Service employees, on the other hand, did not have a regular work schedule, id., and also typically did not work a full 40hour workweek. Defendant's Appendix ("DA") at 2 (H.R. Rep. 89-792 at 22) (noting that, under the high volume of mail being handled by the Postal Service in the mid-1960's, "[n]o longer were substitutes intermittent or parttime workers."). Hence, "substitute" Postal Service employees in 1965 were generally regarded as part-time employees. Therefore, the Comptroller General's conclusion that Congressional statements indicating an intent to pass a pay package "identical" to that provided to the Postal Service in 1965 meant that part-time employees

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should not receive Sunday premium pay is a rational and reasonable conclusion. The reasonableness of the Comptroller General's conclusion is further bolstered by the legislative history directly referencing a full-time employment schedule in the statement that the Sunday premium pay statute "requires a premium of 25 percent of base pay for any employee whose regularly scheduled 5-day work-week includes Sunday." 1966 U.S.C.C.A.N. 2495, 2498 (emphasis added). OPM's interpretation of 5 U.S.C. § 5546(a) has been in force for more than 40 years. In that time, individuals have posed the same question that plaintiffs pose here, and each time OPM has stood by its reasonable interpretation of the statute. See DA 4-10 (correspondence from OPM addressing questions identical to plaintiffs'). Moreover, members of Congress have inquired about the eligibility of part-time Federal employees for Sunday pay. DA 6 (October 12, 1977 letter to Representative M. Holt); DA 8(June 26, 1974 letter to Representative G. Gude); DA 9 (July 10, 1973 letter to Representative S. Matsunaga). In all this time, OPM's interpretation has remained law, and part-time Federal employees have not been eligible to receive Sunday premium pay. The rationale underlying the OPM regulation, first articulated by the

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Comptroller General and based upon Congress' clear expression of its intent in the legislative history of the Sunday premium pay statute, is rational and reasonable. OPM has adopted a permissible construction of the Sunday premium pay statute, and it should not be disturbed by this Court. III. The Spirit and Purpose Of The Part-Time Career Employment Act Does Not Require The Court To Overturn OPM's Regulation Finally, plaintiffs argue that denying part-time Federal employees Sunday premium pay under 5 U.S.C. § 5546(a) would undermine the general purpose and spirit of the Part-Time Career Employment Act, 5 U.S.C. § 3401 et seq., and may cause the failure of the part-time Federal employment program. Pl. Br. at 12-14. This aspect of plaintiffs' argument is no more than a policy argument that is more appropriately made to Congress than the Court. Plaintiffs do not contend, nor can they, that the Part-Time Career Employment Act contains a money-mandating provision that compels the Court to adopt their interpretation of 5 U.S.C. § 5546. The Court should decline this invitation to legislate from the bench and reject plaintiffs' argument.

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CONCLUSION For the foregoing reasons, we respectfully request that the Court deny plaintiff's Motion for Summary Judgment and grant our Cross-Motion for Summary Judgment. Respectfully submitted, JEFFREY S. BUCHOLTZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director s/ Mark A. Melnick (by Kirk T. Manhardt) MARK A. MELNICK Assistant Director s/ Devin A. Wolak DEVIN A. WOLAK Trial Attorney Commercial Litigation Branch Civil Division Department of Justice 1100 L St., N.W. Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tel. (202) 616-0170 Fax. (202) 514-8624 March 10, 2008 Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on March 10, 2008, a copy of the foregoing "DEFENDANT'S RESPONSE TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT AND CROSS-MOTION FOR SUMMARY JUDGMENT AND APPENDIX" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ Devin A. Wolak DEVIN A. WOLAK

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Theodore Fathauer, et al. v. United States Fed. Cl. No. 07-279C Index to Defendant's Appendix Document Page Number

Excerpts from H.R. Rep. 89-792 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DA 1 7/30/1979 correspondence from R. Weissenhorn (OPM) to S. Roman (Commerce) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DA 4 10/12/1977 correspondence from R. Weissenhorn (OPM) to Hon. M. Holt, U.S. Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DA 6 6/26/1974 correspondence from K. Newhall (OPM) to Hon. G. Gude, U.S. Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DA 8 7/10/1973, correspondence from K. Newhall (OPM) to Hon. S. Matsunaga, U.S. Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DA 9

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DA 1

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DA 2

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DA 3

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DA 4

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DA 5

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DA 6

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DA 7

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DA 8

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DA 9

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DA 10