Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

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No. 05-1043C (JUDGE WOLSKI)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

JORGE A. DELPIN APONTE, ET AL., Plaintiff, v. THE UNITED STATES, Defendant.

DEFENDANT'S PARTIAL MOTION TO DISMISS AND MOTION FOR SUMMARY JUDGMENT

PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director

MARK A. MELNICK Assistant Director

Of Counsel: NICOLE WYNN Attorney Law Department United States Postal Service 475 L'Enfant Plaza, SW Washington, D.C. 20260

JEFFREY S. PEASE Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tel: (202) 307-0292 Fax: (202) 514-8624 Attorneys for Defendant

August 10, 2006

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TABLE OF CONTENTS PAGE STATEMENT OF THE ISSUES ................................................................................................... 2 STATEMENT OF THE CASE ...................................................................................................... 2 I. II. Nature of the Case .................................................................................................. 2 Prior Related Administrative And Judicial Proceedings ....................................... 3 A. B. C. D. The First Department Of Labor Opinion Letter ......................................... 3 The Tisch Case In District Court ............................................................... 5 The McQuigg Decision On Appeal And As Implemented ........................ 6 Plaintiffs' Case In District Court ............................................................... 8

STATEMENT OF FACTS ............................................................................................................ 9 I. II. III. Background .......................................................................................................... 10 Definitions ........................................................................................................... 11 Postal Service Calculations .................................................................................. 12 A. B. Previous Pay Calculation (Before July 1992) .......................................... 12 Current Pay Calculation (Since July 1992) .............................................. 12

SUMMARY OF THE ARGUMENT .......................................................................................... 14 ARGUMENT ............................................................................................................................... 16 I. Standard Of Review ............................................................................................. 16 A. B. II. Dismissal for Lack of Jurisdiction ........................................................... 16 Summary Judgment ................................................................................. 16

This Court Does Not Possess Jurisdiction To Consider Plaintiffs' Claims That Accrued More Than Three Years Prior To Their Joining This Action, Because Those Claims Are Barred By The Applicable Statute of Limitations ........................................ 18 Plaintiffs' Claims For Interest Must Be Dismissed ............................................. 19 Plaintiffs' Claims For Retirement Pay Must Be Dismissed ................................ 20 The Postal Service's Overtime Pay Calculation Complies With The McQuigg Decision .............................................................. 21

III. IV. V.

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VI.

The Postal Service Complies With The FLSA And, Because It Also Complies With McQuigg, Pays Plaintiffs More Than The FLSA Requires ........................................................... 23 A. This Court Should Accord Proper Deference To OPM And DOL Regulations Interpreting The FLSA And TCOLA Statutes ........... 24 1. In McQuigg, The Ninth Circuit Incorrectly Held That The FLSA And TCOLA Statutes Require More Than The Regular Rate Times 40 Hours Plus The Regular Rate Times One And One Half Times Overtime Hours .............. 26 An Established Regulatory Scheme Exists Within Which The FLSA and TCOLA Statutes Should Be Interpreted .................................................... 28 The Postal Service's Pre-McQuigg Overtime Calculations Satisfy The Established FLSA And TCOLA Regulatory Scheme ................................................ 30 The McQuigg Court Improperly Created New Liability Under The FLSA And TCOLA Statutes That Is Not Required By The Plain Language Adopted By Congress ............ 34

2.

3.

4.

CONCLUSION ............................................................................................................................ 37

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TABLE OF AUTHORITIES AUTHORITIES PAGE(S)

Alexander v. United States, 1 Cl. Ct. 653 (1983) ................................................................................................... 32, 33 Alexander v. United States, 28 Fed. Cl. 475 (1993) ..................................................................................................... 33 Allison v. United States, 39 Fed. Cl. 471 (1997) ..................................................................................................... 18 Am. Fed'n of Gov't Employees, Local 3721 v. District of Columbia, 732 F. Supp. 1 (D.D.C. 1989) .......................................................................................... 33 American Federation of Government Employees, AFL-CIO v. Office of Personnel Management, 821 F.2d 761 (D.C. Cir. 1987) ......................................................................................... 31 Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ................................................................................................... 17, 18 Ardestani v. INS, 502 U.S. 129 (1991) ......................................................................................................... 35 Ayrault v. Pena, 60 F.3d 346 (7th Cir. 1995) ............................................................................................. 21 Blackie v. Maine, 75 F.3d 716 (1st Cir. 1996) .............................................................................................. 17 Boston Edison Co. v. United States, 64 Fed. Cl. 167 (Fed. Cl. 2005) ....................................................................................... 15 Brooks v. Weinberger, 730 F. Supp. 1132 (D.D.C. 1989) .............................................................................. 33, 34 Canfield v. United States, 14 Cl. Ct. 687 (1988) ......................................................................................................... 9 Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) ................................................................................................... 24, 35 Doyle v. United States, 931 F.2d 1546 (Fed. Cir. 1991) ....................................................................................... 20

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TABLE OF AUTHORITIES (cont'd) AUTHORITIES PAGE(S)

Eldredge v. Department of Interior, 451 F.3d 1337 (Fed. Cir. 2006) ....................................................................................... 24 Fine v. Office of Personnel Management, 243 F.3d 562, 2000 WL 1477040 (Fed. Cir. Oct. 5, 2000) .............................................. 30 Frank v. McQuigg, 950 F.2d 590 (9th Cir. 1991) ........................................... 1-8, 10, 12-16, 21-28, 30, 32-37 Hamlet v. United States, 873 F.2d 1414 (Fed. Cir. 1989) ....................................................................................... 16 Holley v. United States, 124 F.3d 1462 (Fed. Cir. 1997) ....................................................................................... 25 Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d 879 (Fed. Cir. 1985) ......................................................................................... 17 Kalv v. United States, 124 F. Supp. 654 (Ct. Cl. 1954) ....................................................................................... 30 Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50 (2004) ..................................................................................................... 25, 28 LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286 (5th Cir. 1975) ............................................................................................. 9 Land v. Dollar, 330 U.S. 731 (1947) ......................................................................................................... 17 Library of Cong. v. Shaw, 478 U.S. 310 (1986) ......................................................................................................... 20 Lindahl v. Office of Personnel Management, 470 U.S. 768 (1985) ......................................................................................................... 21 Mars, Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368 (Fed. Cir. 1994) ......................................................................................... 17 McLean v. Office of Personnel Management, 800 F.2d 254 (Fed. Cir. 1986) ................................................................................... 21, 30 ii

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TABLE OF AUTHORITIES (cont'd) AUTHORITIES PAGE(S)

McQuigg v. Tisch, No. A83-092 (April 30, 1987) ................................................................................... 3, 5, 6 Mingus Constructors, Inc. v. United States, 812 F.2d 1387 (Fed. Cir. 1987) ....................................................................................... 17 Miree v. DeKalb County, Ga., 433 U.S. 25 (1977) ........................................................................................................... 16 O'Conner v. United States, 60 Fed. Cl. 164 (2004) ..................................................................................................... 19 Reimer v. Champion Healthcare, Corp., 258 F.3d 720 (8th Cir. 2001) ........................................................................................... 27 Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746 (Fed. Cir. 1988) ......................................................................................... 16 Rocovich v. United States, 933 F.2d 991 (Fed. Cir. 1991) ......................................................................................... 17 Scheuer v. Rhodes, 416 U.S. 232 (1974) ......................................................................................................... 16 Sweats Fashions, Inc. v. Pannill Knitting Co., Inc., 833 F.2d 1560 (Fed. Cir. 1987) ................................................................................. 17, 18 Ulmet v. United States, 19 Cl. Ct. 527 (1990) ....................................................................................................... 20 United Sav. Assn. of Tex.v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365 (1988) ......................................................................................................... 25 United States v. Fausto, 484 U.S. 439 (1988) ......................................................................................................... 21 United States v. Mead Corp., 533 U.S. 218 (2001) ......................................................................................................... 24 United States v. Mendoza, 464 U.S. 154 (1984) ......................................................................................................... 15 iii

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TABLE OF AUTHORITIES (cont'd) AUTHORITIES PAGE(S)

Wisnewski v. Champion Healthcare Corp., No. A3-96-72, 2000 WL 1474414 (D.N.D. Jan. 16, 2002) ....................................... 27, 33 Worthington v. United States, 168 F.3d 24 (Fed. Cir. 1999) ........................................................................................... 21 Zumerling v. Devine, 769 F.2d 745 (Fed. Cir. 1985) ................................................................................... 31, 32 Zumerling v. Marsh, 783 F.2d 1032 (Fed. Cir. 1986) ....................................................................................... 20 FEDERAL STATUTES & REGULATIONS 5 U.S.C. § 5301 ............................................................................................................................ 35 5 U.S.C. § 5941 ............................................................................................ 4, 7, 25, 27, 28, 29, 30 5 U.S.C. § 7701(a) ....................................................................................................................... 20 5 U.S.C. § 7703(a) ....................................................................................................................... 21 5 U.S.C. § 8331 ...................................................................................................................... 21, 30 5 U.S.C. § 8339 ...................................................................................................................... 20, 21 5 U.S.C. § 8347 ............................................................................................................................ 20 28 U.S.C. § 1631 .......................................................................................................................... 19 28 U.S.C. § 2516(a) ..................................................................................................................... 20 29 U.S.C. § 201 ............................................................................................................................ 35 29 U.S.C. § 204 ............................................................................................................................ 28 29 U.S.C. § 207(a)(1) ....................................................................... 4, 6, 11, 25, 28, 29, 34, 36, 37 29 U.S.C. § 216 .................................................................................................................... 1, 9, 28 29 U.S.C. § 255(a) ................................................................................................................. 18, 19 iv

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TABLE OF AUTHORITIES (cont'd) AUTHORITIES PAGE(S)

29 U.S.C. § 256 ............................................................................................................................ 19 29 U.S.C. § 259 .............................................................................................................................. 6 39 U.S.C. § 410(a) ................................................................................................................. 20, 35 39 U.S.C. § 1005(b) ............................................................................................................... 21, 29 5 C.F.R. §551.501(a) .................................................................................................................... 34 5 C.F.R. § 551.511(a) ................................................................................................................... 31 5 C.F.R. § 551.512 ............................................................................... 6, 11, 16, 27, 28, 31, 32, 34 5 C.F.R. § 591.201 ..................................................................................................... 11, 21, 29, 30 5 C.F.R. § 591.204(a)(4) .............................................................................................................. 29 5 C.F.R. § 591.210(a) (1987) ......................................................................................................... 6 5 C.F.R. § 591.210(b)(1) (1991) ................................................................................................ 7, 8 5 C.F.R. § 591.238(a) ................................................................................................................... 11 5 C.F.R. § 591.239 ........................................................................................................... 11, 29, 36 29 C.F.R. § 778.109 ....................................................................................................... 4, 5, 11, 29 29 C.F.R. § 778.110 ..................................................................................... 4, 5, 16, 22, 27, 28, 32 13 F.R. 5453 ........................................................................................................................... 29, 36 92 Stat. 1175 ................................................................................................................................ 20

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS JORGE A. DELPIN APONTE, ET AL. Plaintiffs, v. THE UNITED STATES, Defendant ) ) ) ) ) ) ) ) )

No. 05-1043C (Judge Wolski)

DEFENDANT'S PARTIAL MOTION TO DISMISS AND MOTION FOR SUMMARY JUDGMENT Pursuant to Rules 12 and 56 of the United States Court of Federal Claims ("RCFC"), defendant, the United States, respectfully requests that the Court dismiss plaintiffs' claims that accrued outside of the statute of limitations or are otherwise not within this Court's jurisdiction, and requests that the Court grant summary judgment in favor of the Government on the remaining claims. The United States Postal Service's method of compensating plaintiffs is in accordance with Frank v. McQuigg, 950 F.2d 590 (9th Cir. 1991) ("McQuigg"), and complies with the Fair Labor Standards Act ("FLSA"). There are no genuine issues of material fact precluding summary judgment in favor of the Government. In addition, each plaintiff's claims for overtime pay that accrued more than three years prior to the date that plaintiff joined this action must be dismissed for lack of jurisdiction as barred by the applicable statute of limitations.1 This Court

Plaintiffs' complaint, fairly read, alleges a "willful" violation of the FLSA, without using that terminology. See, e.g., Complaint at ¶¶ 1, 35. Thus, if plaintiffs were able to prove this allegation of willfulness, the three-year statute of limitations would apply. See 29 U.S.C. § 216(b). To the contrary, defendant's conduct was in good faith; it had reasonable grounds for believing that its conduct was not a violation of the FLSA. Defendant reserves this affirmative defense and basis for applying the two-year statute of limitations, which is not material for the purposes of this motion.

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also does not possess jurisdiction over plaintiffs' claims for retirement pay and prejudgment interest, which likewise must be dismissed. STATEMENT OF THE ISSUES 1. Whether plaintiffs' claims for FLSA overtime pay outside of the statute of limitations must be dismissed for lack of jurisdiction. 2. Whether plaintiffs' claims for interest upon FLSA claims must be dismissed for lack of jurisdiction. 3. Whether plaintiffs' claims for retirement benefits must be dismissed for lack of jurisdiction. 4. Whether the Postal Service has paid plaintiffs for overtime hours in accordance with McQuigg, as plaintiffs concede the Postal Service has paid its employees in Alaska and Hawaii. 5. Whether the Postal Service has paid plaintiffs for overtime hours in accordance with the FLSA. STATEMENT OF THE CASE I. Nature of the Case Jorge A. Delpin Aponte, Jr., and other allegedly similarly situated individuals (collectively, "plaintiffs") who are also entitled to a territorial cost of living adjustment ("TCOLA"), bring this action claiming that the Postal Service has not paid them for overtime hours in accordance with the FLSA. Plaintiffs allege in their complaint that the Postal Service underpaid plaintiffs for overtime hours under the FLSA by allegedly calculating overtime pay at one and one half times the base rate of pay instead of one and one half times the regular rate of

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pay. As a result, plaintiffs claim that they have not been paid in accordance with the FLSA, and that they have not been paid in accordance with McQuigg. In addition to "not less than $30,000,000 exclusive of damages, penalties, interests, costs and attorneys fees," Compl. at ¶ 39, plaintiffs request interest, the alleged difference in retirement pay resulting from alleged underpayment for overtime hours, and injunctive and declaratory relief. Essentially, plaintiffs make the same substantive allegations as those addressed by the United States District Court for the District of Alaska in the partial summary judgment order in McQuigg v. Tisch, No. A83-092, slip op. at 1-17 (April 30, 1987) ("Tisch"), Defendant's Exhibit 7, and on interlocutory appeal to the United States Court of Appeals for the Ninth Circuit in McQuigg. However, plaintiffs also concede that "[o]vertime for Postal employees in Alaska and Hawaii are being calculated and paid as demanded in this complaint." Compl. at ¶ 17. As shown by the attached affidavit and other exhibits, and defendant's argument herein, the Postal Service pays plaintiffs for overtime hours in the same manner as it pays its employees in Alaska and Hawaii, in accordance with the McQuigg decision, and in accordance with the FLSA. II. Prior Related Administrative And Judicial Proceedings An early introduction to prior related proceedings is appropriate here because plaintiffs raise the issue of the McQuigg appellate decision in their complaint, which itself has a history necessary to understanding the issues in this case. A. The First Department Of Labor Opinion Letter

On January 8, 1982, an attorney for the National Association of Letter Carriers ("NALC") wrote a letter to the Department of Labor's ("DOL") Wage and Hour Division Administrator questioning the propriety of the Postal Service's overtime calculation for

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employees entitled to a TCOLA pursuant to 5 U.S.C. § 5941.2 See McQuigg, 950 F.2d at 59394; Def. Ex. 1. The NALC attorney contended that the Postal Service's formula failed to pay one and one half times the regular rate, as required by 29 U.S.C. § 207(a)(1) and 29 C.F.R. §§ 778.108-.110. See Def. Ex. 1. On May 13, 1983, the Administrator issued a five-page opinion letter analyzing the issues and concluding that the Postal Service's pay calculation formula complied with the FLSA, noting that "although the method of computing overtime which [the attorney] cite[d] as the `correct' method results in an employee receiving greater pay, its use is not required by the FLSA." Id. at 4. In its opinion letter, the DOL explained that the Postal Service paid the equivalent of [the regular rate times 40 hours] plus [one and one half times the regular rate times overtime hours]. Id. at 2. The NALC attorney argued that the Postal Service was instead required to pay [the base rate times 40 hours] plus a TCOLA plus [the regular rate time one and one half times overtime hours]. Essentially, the contention of the NALC attorney (and plaintiffs in this case) was that, because the TCOLA was divided by total hours to determine the regular rate, that portion of the TCOLA corresponding to overtime hours in the regular rate calculation had been effectively credited to overtime pay for the purpose of satisfying the Postal Service's requirement of paying one and one half times the regular rate for overtime hours, and that such "proration" was not permitted. The DOL explained that the regular rate should be used to establish the proper amount of pay for both the first 40 hours and the overtime hours. See id. at 3 ("[W]e note that in the computation you call `correct,' you have used the pay for a normal non-overtime workweek as the rate for the first 40 hours in an overtime workweek, instead of the `regular rate' obtained by

2

A TCOLA is also known as a nonforeign area cost of living allowance. 4

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dividing total compensation by hours actually worked during the week."). In other words, the regular rate is the sine qua non of FLSA pay calculation in an overtime week, regardless of how pay is calculated in a non-overtime week. The DOL considered the applicable statutory provisions and interpretive and regulatory guidance from the DOL and the OPM at that time. Id. at 3-5. The DOL recognized that a TCOLA must be included in the regular rate. Id. at 3 n.1. After its careful consideration, the DOL found the Postal Service's method of computation of [the regular rate times 40 hours] plus [one and one half times the regular rate times overtime hours] to comply with the FLSA, since all hours were paid at the regular rate, with an additional 50 percent overtime premium paid for overtime hours, totaling one and one half times the regular rate paid for overtime hours. Id. B. The Tisch Case In District Court

However, on February 14, 1983, a group of craft employees (the "McQuigg plaintiffs") working in the Postal Service's Alaska District filed a civil action in United States District Court for the District of Alaska, challenging the agency's calculation of overtime for employees in that district, where employees receive a TCOLA. See Tisch, Def. Ex. 7; McQuigg, 950 F.2d at 593. The McQuigg plaintiffs contended that the Postal Service's calculation at that time failed to compensate employees at one and one half times the regular rate. See Tisch, Def. Ex. 7, at 4; McQuigg, 950 F.2d at 593. On June 9, 1983, the attorney for the McQuigg plaintiffs wrote to the Administrator defending his clients' (and formerly the NALC attorney's) proffered formula, urging the Administrator to reconsider the conclusion of the May 1983 opinion letter. See Def. Ex. 2. On August 8, 1983, after "careful[] consider[ation]," the Administrator reaffirmed the earlier opinion that "present USPS pay practices relating to TCOLA conform to the requirements

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of the FLSA." Def. Ex. 2. On April 30, 1987, despite the DOL's opinion letters, the district court granted the McQuigg plaintiffs partial summary judgment on liability.3 Tisch, Def. Ex. 7; see McQuigg, 950 F.2d at 594. After considering the same calculations as those considered by the DOL in its opinion letters, the district court concluded: that there is a material difference between being paid T-COLA on hours in excess of forty per week, and being paid overtime based upon a regular rate of pay which is influenced by the receipt of TCOLA in the first forty hours of work. The former is proscribed. 5 C.F.R. § 591.210(a) [(1987)]. The latter is expressly permitted by the Department of Labor. 5 C.F.R. § 591.210(d) [(1987)]. Tisch, Def. Ex. 7, at 10. The Postal Service offered 5 C.F.R. § 551.512 as an example of its method being applied generally to all Federal employees, but the district court rejected the OPM regulation in part because it was not directly applicable to the Postal Service or the McQuigg plaintiffs. Id. at 15. The district court found that the Postal Service's calculation violated 29 U.S.C. § 207(a)(1) because it determined that the Postal Service's method paid less than one and one half times the regular rate for overtime pay. Id. at 17. The Postal Service appealed. C. The McQuigg Decision On Appeal And As Implemented

The Court of Appeals for the Ninth Circuit affirmed the district court's determination that the Postal Service's overtime calculation violated the FLSA with respect to employees entitled to a TCOLA. Id. at 599; see also 29 U.S.C. § 259. The court of appeals characterized the issue similarly to the district court, in this way:

The district court later rejected the agency's good faith defense, which determination was reversed on appeal, and is not relevant to this case. See McQuigg, 950 F.2d at 599. 6

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If Congress intended the TCOLA as an adjustment to basic pay, the TCOLA should be paid in full during the basic, 40-hour workweek, and may not be prorated. If the TCOLA may not be prorated, the Postal Service's formula fails. However, if Congress intended the TCOLA as an adjustment to total pay, including overtime, the TCOLA may be prorated, and the Postal Service's formula passes muster. McQuigg, 950 F.2d at 596 (emphasis in original). The court accepted the McQuigg plaintiffs' contention that a TCOLA, when divided by total hours in the regular rate computation, was effectively "prorated," or divided into amounts allocated and paid for the first 40 hours, or for overtime hours. Id. at 594-97. As a result, because the Postal Service's calculation was equivalent to [the regular rate times 40 hours] plus [one and one half times the regular rate times overtime hours], the court determined that the TCOLA portion of the regular rate was partially paid to satisfy the overtime pay requirement. Id. at 595-96. The McQuigg court refused to defer to the agency interpretations and regulations proffered by the Postal Service to justify its calculations. Id. at 596. Instead, it considered whether, as a matter of statutory construction, a TCOLA was required to be paid in its entirety for the 40-hour work week. Id. The court determined that 5 U.S.C. § 5941 required a TCOLA to be paid in its entirety for the 40-hour work week, without being "prorated" for overtime hours, on the basis of its reference to a TCOLA as paid to employees "whose rates of basic pay are fixed by statute," and because a TCOLA "may not exceed 25 percent of basic pay." Id. The court looked to certain regulations to buttress its statutory construction, but found the DOL opinion letters to be contrary to the statute. Id. at 597. It found Executive Order No. 10,000 and 5 C.F.R. § 591.210(b)(1) (1991) to be consistent with its interpretation of the statute, as permitting "proration" only when fewer than 40 hours were worked, and requiring calculation

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and payment of a TCOLA based only upon hours for which the employee received basic pay (as opposed to overtime pay). Id. The court also found no "express delegation of authority to determine whether the TCOLA is to be included in base or overtime pay," and determined that "Congress appears to have intended the TCOLA as an addition to base pay." Id. Therefore, the court of appeals held that the Postal Service was required to pay a TCOLA in its entirety for the first 40 hours, and that the Postal Service had failed to satisfy the FLSA because its overall pay calculation impermissibly allocated a portion of the TCOLA to meet its FLSA overtime pay obligation. Id. The Postal Service changed its overtime calculation in July 1992 to comply with the McQuigg decision, and did so for all of its employees who receive a TCOLA (including all plaintiffs in this action), not just those within the Ninth Circuit's jurisdiction. Def. Ex. 3, Affidavit of Jo Ann E. Mitchell at ¶¶ 17-18; see also Def. Ex. 4, Memorandum from Assistant Postmaster General. The post-McQuigg calculation determines the amount of TCOLA that McQuigg held to be impermissibly allocated to overtime under the prior formula, and adds that amount to its overtime pay calculation. See McQuigg, 950 F.2d at 596 n.7; Aff. at ¶¶ 16-18. As plaintiffs concede to be adequate in Alaska and Hawaii, this new formula, which is likewise in effect in Puerto Rico, pays Postal Service employees in accordance with McQuigg and as requested in plaintiffs' complaint. See Compl. at ¶ 17; Aff. at ¶¶ 17-18. D. Plaintiffs' Case In District Court

On May 24, 2002, thirteen plaintiffs initiated the predecessor to this action in the United States District Court for the District of Puerto Rico, alleging that the Postal Service failed to pay plaintiffs one and one half times the regular rate in accordance with McQuigg and the FLSA. On

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September 2, 2003, the district court authorized plaintiffs to join additional allegedly similarly situated individuals, as described in the court's order.4 Similarly situated plaintiffs joined the case, initiating their own FLSA claims, by filing their written consents to sue with the district court. The parties were afforded a full opportunity for discovery, and both parties conducted discovery. On September 30, 2004, the Government moved to dismiss or for summary judgment. On June 15, 2005, the district court partially granted the Government's motion, ruling it lacked subject matter jurisdiction over the claims, and ordered the case to be transferred to this Court. On February 24, 2006, in accordance with RCFC 3.1(a)(2), plaintiffs filed their amended complaint in this Court to specify only those claims they intend to pursue, "in lieu of" simply filing their district court complaint with any required changes. STATEMENT OF FACTS The United States respectfully refers the Court to our proposed findings of uncontroverted fact ("PFUF"), which are filed with this motion pursuant to Rule 56(h) of the RCFC. In addition to our Rule 56(h) submission, a summary of salient facts follows. Plaintiffs are current or former Postal Service employees in the Commonwealth of Puerto Rico, which is within the Postal Service's Caribbean District. See Complaint at ¶¶ 4, 5; Aff. at ¶ 9. Plaintiffs allege that they have worked overtime hours. Compl. at ¶ 18. The Postal Service

Although the district court referred to its action as a "conditional class certification," it is more accurately described as authorizing permissive joinder of certain individuals who meet the FLSA criteria of being "similarly situated" and providing written consent to join. The FLSA requirement of written consent, 29 U.S.C. § 216(b), is "exclusive of the class action remedy in FRCP 23, or [RCFC] 23." Canfield v. United States, 14 Cl. Ct. 687, 689 (1988) (citing LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 289 (5th Cir. 1975) ("It is crystal clear that [29 U.S.C. § 216(b)] precludes pure Rule 23 class actions in FLSA suits.")). 9

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has confirmed that at least some of the plaintiffs have, in fact, worked overtime hours within the applicable statute of limitations. Aff. at ¶ 5. The Postal Service pays a TCOLA to its employees in Alaska, Hawaii, and Puerto Rico, as well as other locations in which it is required by statute. Aff. at ¶ 9. Plaintiffs and other employees in Puerto Rico are paid in the same manner, with regard to the calculation of FLSA and TCOLA liability, as Postal Service employees in Alaska and Hawaii. Aff. at ¶¶ 9, 17, 18. The Postal Service calculates and pays TCOLA as a percentage of an employee's pay for their basic work week, up to 40 hours in a week (or 48 hours in a week for rural carriers working a 6-day basic work week). Aff. at ¶ 9; Def. Ex. 5, Postal Service Employee & Labor Relations Manual ("ELM") § 439.12. The Postal Service includes TCOLA payments in its calculations of employees' "regular rate" for purposes of determining the Postal Service's obligations under the FLSA. Aff. at ¶ 8; Def. Ex. 5. I. Background In July 1992, although the Postal Service did not agree with the McQuigg decision, it complied with the decision by implementing a new formula applicable to all of its TCOLAentitled employees, including employees in Puerto Rico, part of the Postal Service's Caribbean district. Aff. at ¶¶ 9, 17, 18; Def. Ex. 4. The Postal Service decided to implement the decision for all of its TCOLA-entitled employees to avoid duplicate litigation, such as the instant case. Aff. at ¶ 18. The revised overtime formula accords all TCOLA-entitled employees an extra "TCOLA premium" to compensate for what the Ninth Circuit determined was impermissible "proration." Aff. at ¶ 17.

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II.

Definitions For the purposes of the mathematical formulas in this brief, we define "base rate" as the

standard hourly wage paid to an employee before adding any night differentials, bonuses, premiums, or a TCOLA. See Def. Ex. 5, ELM § 432.21; 5 C.F.R. § 591.201 (defining "rate of basic pay"); 5 C.F.R. § 551.512(b) (defining "straight time rate of pay"). For example, an employee working full-time for an annual salary of $20,800 would have a base rate of $10 per hour based upon 52 40-hour workweeks. "TCOLA" as used in these formulas is the amount of territorial cost of living adjustment calculated and paid to an employee, pursuant to statute, in a standard 40-hour work week. See 5 C.F.R. § 591.238(a). Because only the treatment of TCOLA is at issue in this action, we are able to simplify our examples by assuming no other pay modifiers, such as differentials, bonuses, and other premium pay required under applicable collective bargaining agreements.5 We define "regular rate," as it is defined by statute, to mean the average hourly rate paid during an overtime week used to calculate the FLSA premium. The regular rate includes "all remuneration for employment" (excluding certain specified payments, such as overtime premiums, but including TCOLA). 29 U.S.C. § 207(e); 29 C.F.R. § 778.109; see also 5 C.F.R. § 591.239(a) (including cost-of-living adjustments in the computation of regular rate of pay).

Under the Postal Service's collective bargaining agreements with its unions, the agency must in certain circumstances pay certain differential and premium pay which exceed the requirements of the FLSA (e.g., night differential, Sunday premium, holiday-worked pay, double overtime). Some of these additional payments, such as night differential and Sunday premium, are also included in the calculation of the regular rate. Aff. at ¶¶ 7, 8; Def. Ex. 5, ELM § 434. Other payments, though paid under collective bargaining agreements, are statutorily excluded from inclusion in computing the FLSA regular rate and are creditable toward the agency's FLSA premium liability. See 29 U.S.C. §§ 207(e)(5), 207(h)(2).

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III.

Postal Service Calculations A. Previous Pay Calculation (Before July 1992)

Under its pre-McQuigg method of calculation, the Postal Service first computed the total remuneration for the week. Total remuneration was computed by adding together the pay, at the base rate, for all hours that an employee works in a workweek, including those over 40, plus the amount of TCOLA earned for the first 40 hours of the work week (and certain other differentials, bonuses, and other non-overtime premium pay, which are not material to this case). Aff. at ¶¶ 6-8, 16. The Postal Service next computed the employee's regular rate by dividing total remuneration by the total number of hours worked. Aff. at ¶ 10. Additional premium pay due for the overtime hours under the FLSA was calculated by multiplying the regular rate by one half, and multiplying that product by the number of hours worked over 40. Aff. at ¶ 11. Thus, the employee's pre-McQuigg total pay for the work week was the sum of the base rate of pay for all hours worked, a TCOLA payable for up to the first 40 hours, and the calculated overtime premium pay for the hours worked over 40. B. Current Pay Calculation (Since July 1992)

Because McQuigg required the Postal Service to pay a TCOLA in its entirety for the first 40 hours worked, and not to apply any portion of a TCOLA to satisfy its FLSA overtime pay requirements, the Postal Service revised its overtime calculation in July 1992 to add a payment related to the TCOLA. This "TCOLA premium" is calculated by dividing the total TCOLA paid by the total number of hours worked, arriving at an hourly TCOLA rate of pay (averaged over the entire work week). Aff. at ¶ 12. The hourly TCOLA rate of pay is then multiplied by the total number of hours worked over 40, and is added to an employee's pay to reach the total

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amount of post-McQuigg compensation. The TCOLA premium is equal to the amount that McQuigg considered to be impermissibly "prorated," that is to say, the TCOLA premium is the portion of TCOLA that the McQuigg plaintiffs alleged was paid (or "prorated") as overtime pay rather than as basic pay. To illustrate numerically, we will assume the base rate is $10, TCOLA is $100 per 40hour work week (or 25 percent of base pay), and total hours worked is 50, which includes 10 hours of overtime. The regular rate would be calculated as ((Base rate x total hours) + TCOLA) ÷ total hours worked: (($10 x 50) + $100) ÷ 50 = $12. This calculation is not disputed. Prior to July 1992, the Postal Service paid its TCOLA-entitled employees according to the following pre-McQuigg formula: (Base rate x total hours) + TCOLA + (Regular rate x overtime hours x 0.5), ($10 x 50) + $100 + ($12 x 10 x 0.5) = $660, which is mathematically equivalent to: (Regular rate x 40 hours) + (Regular rate x overtime hours x 1.5), ($12 x 40) + ($12 x 10 x 1.5) = $660. As a result of the McQuigg decision, the Postal Service changed its pay calculations to add the "TCOLA premium" for its TCOLA-entitled employees uniformly across the organization, even though McQuigg was binding with respect to Postal Service employees working within the jurisdiction of the Ninth Circuit (that is to say, Alaska, Hawaii, Guam, and the Commonwealth of Northern Mariana Islands). Aff. at ¶¶ 16-18. Plaintiffs concede that this calculation, as applied in Alaska and Hawaii, is that which the complaint demands. Compl.

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at ¶ 17. Since July 1992, the Postal Service pays its TCOLA-entitled employees according to the following post-McQuigg formula: (Base rate x total hours) + TCOLA + (Regular rate x overtime hours x 0.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($10 x 50) + $100 + ($12 x 10 x 0.5) + ([$100 ÷ 50] x 10) = $680, which is mathematically equivalent to: (Regular rate x 40 hours) + (Regular rate x overtime hours x 1.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($12 x 40) + ($12 x 10 x 1.5) + ([$100 ÷ 50] x 10) = $680, and is also mathematically equivalent to the formula proffered by the McQuigg plaintiffs: (Base rate x 40 hours) + TCOLA + (Regular rate x overtime hours x 1.5), ($10 x 40) + $100 + ($12 x 10 x 1.5) = $680. See Ex. 1. The post-McQuigg formula has been applied to plaintiffs, and to the other Postal Service employees in the agency's Caribbean District, which includes Puerto Rico. Aff. at ¶¶ 16-18. SUMMARY OF THE ARGUMENT Plaintiffs allege in their complaint that the Postal Service underpaid plaintiffs for overtime hours under the FLSA by allegedly calculating overtime pay at one and one half times the base rate of pay instead of one and one half times the regular rate of pay. As a result, plaintiffs claim that they have not been paid in accordance with the FLSA, and that they have not been paid in accordance with McQuigg. In addition to "not less than $30,000,000 exclusive of damages, penalties, interests, costs and attorneys fees," Compl. at ¶ 39, plaintiffs request interest, the alleged difference in retirement pay resulting from alleged underpayment for overtime hours,

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and injunctive and declaratory relief. Certain of plaintiffs' claims are not within this Court's jurisdiction, as explained in detail below. Those claims that are properly within this Court's jurisdiction lack merit. The Postal Service's current calculation and payment for overtime hours satisfies the McQuigg mandate. The FLSA sets a minimum rate of pay for overtime hours, which is one and one half times the regular rate. McQuigg requires that a TCOLA be paid in its entirety for the first 40 hours worked. The Postal Service's current calculation complies with McQuigg because it pays a post-McQuigg "TCOLA premium" that equals the portion of a TCOLA that McQuigg held to be improperly paid as part of overtime pay. The Postal Service's payment of the TCOLA premium also satisfies the requirement of the McQuigg decision because it is the arithmetic equivalent of the formula advanced by the McQuigg plaintiffs, which was approved by the court of appeals in affirming the district court's judgment on liability. Plaintiffs allege that the Postal Service does not comply with McQuigg in Puerto Rico, but concede that the Postal Service's identical practice in Alaska and Hawaii pays its employees "as demanded in this complaint." See Compl. at ¶ 17. Because the Postal Service clearly complies with McQuigg, and plaintiffs do not allege that the Postal Service must pay more than McQuigg requires, summary judgment should be granted in favor of the Government. The pay calculation the Postal Service performed prior to July 1992 also complied with the FLSA and TCOLA statutes, notwithstanding the McQuigg decision.6 The pre-McQuigg

Despite plaintiffs' claim of estoppel in their complaint, see Compl. at ¶ 28, plaintiffs were not a party to the McQuigg decision, and nonmutual collateral estoppel does not apply against the United States. United States v. Mendoza, 464 U.S. 154, 164 (1984); see also Boston Edison Co. v. United States, 64 Fed. Cl. 167, 185 (Fed. Cl. 2005). 15

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calculation complied with the FLSA and TCOLA statutes because it treated a TCOLA like other similar additional payments, including it in the regular rate as the parties agree is required, and calculating overtime pay in accordance with the established statutory and regulatory scheme, and regulatory and interpretive guidance of the agencies responsible for administering the statutes. See, e.g., 5 C.F.R. § 551.512(a); 29 C.F.R. § 778.110(b). The McQuigg decision improperly created additional liability not required by the FLSA and TCOLA statutes by reading into the TCOLA statute a requirement to effectively abandon the regular rate used to determine FLSA liability for overtime pay, instead requiring a TCOLA to be paid in its entirety for the first 40 hours of work. This is inconsistent with the established statutory and regulatory scheme as interpreted by the administering agencies because, rather than the regular rate being the standard applicable average rate paid in an overtime work week, as intended, employees must be paid more than the regular rate for their first 40 hours of work, while still being paid one and one half time the regular rate for overtime hours. ARGUMENT I. Standard Of Review A. Dismissal For Lack Of Jurisdiction

In evaluating a motion to dismiss for lack of jurisdiction pursuant to RCFC 12(b)(1), "the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Hamlet v. United States, 873 F.2d 1414, 1416 (Fed. Cir. 1989). The Court must presume that well-pleaded factual allegations in the complaint are true. Miree v. DeKalb County, Ga., 433 U.S. 25, 27 n.2 (1977); Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988).

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If the jurisdictional facts in the complaint are disputed, the Court may consider relevant evidence beyond the pleadings to decide the jurisdictional question. Land v. Dollar, 330 U.S. 731, 735 n.4 (1947); Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991); Indium Corp. of Am. v. Semi-Alloys, Inc., 781 F.2d 879, 883-84 (Fed. Cir. 1985). "Statutes purporting to confer federal subject matter jurisdiction must be narrowly construed, with ambiguities resolved against the assumption of jurisdiction." Mars, Inc. v. Kabushiki-Kaisha Nippon Conlux, 24 F.3d 1368, 1373 (Fed. Cir. 1994)(citation omitted). B. Summary Judgment

Summary judgment is appropriate where there are no genuine issues of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986); Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390 (Fed. Cir. 1987); RCFC 56(c). "In the lexicon of Rule 56, `genuine' connotes that the evidence on the point is such that a reasonable [factfinder], drawing favorable inferences, could resolve the fact in the manner urged by the nonmoving party, and `material' connotes that a contested fact has the potential to alter the outcome of the suit under the governing law if the controversy over it is resolved satisfactorily to the nonmovant." Blackie v. Maine, 75 F.3d 716, 721 (1st Cir. 1996). Summary judgment is a "salutary method of disposition designed `to secure the just, speedy, and inexpensive determination of every action.'" Sweats Fashions, Inc. v. Pannill Knitting Co., Inc., 833 F.2d 1560, 1562 (Fed. Cir. 1987) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)). As the court of appeals emphasized in Sweats Fashions: "the burden is not on the movant to produce evidence showing the absence of a genuine issue of material fact." 833 F.2d at 1563. Rather, "the burden on the moving party may be discharged by `showing' ­ that is, pointing out

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to the [Court] ­ that there is an absence of evidence to support the non-moving party's case." Id. (emphasis omitted) (quoting Celotex, 477 U.S. at 325). Once that is accomplished, the burden then shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue of material fact as to each issue upon which he would bear the ultimate burden of proof at trial." Liberty Lobby, 477 U.S. 242, 256 (1986). Thus, where the non-moving party fails to make a sufficient showing as to the existence of an essential element for which it bears the burden of proof, summary judgment is appropriate. Celotex, 477 U.S. at 322-23. "In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 322-323. II. This Court Does Not Possess Jurisdiction To Consider Plaintiffs' Claims That Accrued More Than Three Years Prior To Their Joining This Action, Because Those Claims Are Barred By The Applicable Statute of Limitations The statute of limitations applicable to FLSA claims is two years after the cause of action accrues, or, if there was a willful violation, three years after the cause of action accrues: . . . every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued. 29 U.S.C. § 255(a); see also Allison v. United States, 39 Fed. Cl. 471 (1997). Thus, plaintiffs were required to file their claims within either two years of the date such claims accrued for a non-willful failure to pay, or three years of the date such claims accrued for a willful failure to pay. In addition, "in the case of any individual claimant" in a collective action, a claim is considered to be filed:

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(a) on the date when the complaint is filed, if he is specifically named as a party plaintiff in the complaint and his written consent to become a party plaintiff is filed on such date in the court in which the action is brought; or (b) if such written consent was not so filed or if his name did not so appear ­ on the subsequent date on which such written consent is filed in the court in which the action was commenced. 29 U.S.C. § 256; see also O'Conner v. United States, 60 Fed. Cl. 164, 174 (2004). Since the thirteen original plaintiffs filed their consents to sue on May 24, 2002, any claims accruing prior to May 24, 1999, are barred. For those plaintiffs who joined this action after it was filed, any of their claims accruing prior to three years before they filed written consents to sue are similarly barred by the applicable statute of limitations. Plaintiffs' claims contained in their amended complaint before this Court are not limited by their plain language to any specific period of time. See, e.g., Compl. at ¶¶ 16-19. However, plaintiffs did not file their complaint in Federal district court until May 24, 2002. On June 15, 2005, the district court ordered plaintiffs' FLSA claims to be transferred to this Court. Pursuant to 28 U.S.C. § 1631, the date of filing in the district court is established as the date of filing in this Court. Thus, this Court must treat all original plaintiffs' claims as if they were filed on May 24, 2002, and, for later-joined plaintiffs, on the actual date that each plaintiff asserted his or her own claims by filing a written consent to sue. Plaintiffs' claims for pay allegedly due more than three years prior to filing do not fall within the two or three year statute of limitations set by 29 U.S.C. § 255(a), and must be dismissed. III. Plaintiffs' Claims For Interest Must Be Dismissed Plaintiffs claim that they are entitled to interest upon their substantive claims for overtime pay. See, e.g., Compl. at ¶¶ 39, 40, 44. However, claims for prejudgment interest

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against the United States must be expressly authorized. Library of Cong. v. Shaw, 478 U.S. 310, 314 (1986); Ulmet v. United States, 19 Cl. Ct. 527, 532 (1990); 28 U.S.C. § 2516(a). Plaintiffs' claims are based upon the FLSA, which "does not waive immunity for suits against the Government for interest." Doyle v. United States, 931 F.2d 1546, 1551 (Fed. Cir. 1991); see also Zumerling v. Marsh, 783 F.2d 1032, 1033 (Fed. Cir. 1986) (stating that "the United States has not waived its sovereign immunity with respect to an award of post-judgment interest in FLSA cases"). Therefore, plaintiffs' claims for interest upon their FLSA claims must be dismissed. IV. Plaintiffs' Claims For Retirement Pay Must Be Dismissed Plaintiffs allege that "the computation of retirement pay for each of the plaintiffs in this case will be significantly and negatively affected by the manner in which the USPS is currently and has historically calculated Overtime Pay for postal employees." Compl. at ¶ 19. This claim must be dismissed because it constitutes a claim for additional retirement pay over which this Court does not possess jurisdiction. The United States Court of Appeals for the Federal Circuit possesses exclusive jurisdiction to review MSPB decisions regarding challenges to the computation of retirees' annuity benefits. The Civil Service Retirement Act ("CSRA") establishes the amount of a Postal Service retiree's annuity, how it is calculated, and the remedy for violations. 5 U.S.C. §§ 8339, 8347; Civil Service Reform Act §§ 207, 906; 92 Stat. 1175, 1224; 39 U.S.C. § 410(a). Under the CSRA, the exclusive remedy for challenging the amount of the annuity benefit is to file a claim with the Office of Personnel Management ("OPM"). 5 U.S.C. § 8347(a)-(b). An adverse decision from the OPM may then be appealed to the Merit Systems Protection Board ("MSPB").

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5 U.S.C. §§ 7701(a), 8347(d)(1). Exclusive jurisdiction for review of the MSPB decision lies with the United States Court of Appeals for the Federal Circuit. United States v. Fausto, 484 U.S. 439, 449 (1988); Lindahl v. Office of Personnel Management, 470 U.S. 768, 773-74 (1985); 5 U.S.C. § 7703(a); cf. Worthington v. United States, 168 F.3d 24, 26 (Fed. Cir. 1999); see also Ayrault v. Pena, 60 F.3d 346, 348 (7th Cir. 1995) ("Part and parcel of the [Civil Service Reform Act]'s comprehensive scheme is the stated congressional intention that one agency, and one court, have the primary responsibility for interpreting the [Civil Service Reform Act]'s provisions."). Therefore, in order to maintain a Federal court action at all, employees must first exhaust their administrative remedies with OPM, before they may seek review by the MSPB, and review of the MSPB decision by the Federal Circuit. Even if this claim were properly before this Court, it would fail as a matter of law. As a matter of law, both overtime and TCOLA are excluded from the computation of the annuity payment. McLean v. Office of Personnel Management, 800 F.2d 254, 255 (Fed. Cir. 1986); 5 U.S.C. §§ 8331(3)-(4), 8339; 5 C.F.R. § 591.201; 39 U.S.C. § 1005(b). Thus, any alleged miscalculation of overtime payments here would not affect the plaintiffs' retirement annuity payments. For these reasons, this claim must be dismissed. V. The Postal Service's Overtime Pay Calculation Complies With The McQuigg Decision Plaintiffs allege, as the basis of their complaint, that the Postal Service has not complied with the McQuigg decision in Puerto Rico, thereby failing to comply with the FLSA and TCOLA statutes as interpreted by the United States Court of Appeals for the Ninth Circuit. See Compl. at ¶¶ 28-32. This contention is without merit. As shown above in the Government's statement of facts, in its proposed findings of uncontroverted fact, and in the attached affidavit 21

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and other exhibits, the Postal Service has implemented the McQuigg decision in all TCOLA jurisdictions. See Aff. at ¶¶ 17-18; Def. Ex. 4. In McQuigg, the court of appeals held that "[p]rorating the TCOLA, and thereby paying overtime employees less than nonovertime employees for the same 40 hours of work, does not yield `equal pay for equal work.'" 950 F.2d at 597. Thus, McQuigg required the Postal Service to treat a TCOLA differently than other additional payments that are also included in the regular rate. See, e.g., 29 C.F.R. § 778.110(b) (describing the proper overtime calculation for a bonus). According to McQuigg, a TCOLA must be paid only for the first 40 hours worked, and may not be "prorated" to allocate a portion of a TCOLA to satisfy overtime pay requirements under the FLSA. 950 F.2d at 596-97. As described above, the Postal Service's current (post-McQuigg) calculation, with an illustration, is: (Base rate x total hours) + TCOLA + (Regular rate x overtime hours x 0.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($10 x 50) + $100 + ($12 x 10 x 0.5) + ([$100 ÷ 50] x 10) = $680, which is mathematically equivalent to: (Regular rate x 40 hours) + (Regular rate x overtime hours x 1.5) + ([TCOLA ÷ total hours] x overtime hours) (the TCOLA premium), ($12 x 40) + ($12 x 10 x 1.5) + ([$100 ÷ 50] x 10) = $680, and is also mathematically equivalent to (the McQuigg plaintiffs' formula): (Base rate x 40 hours) + TCOLA + (Regular rate x overtime hours x 1.5), ($10 x 40) + $100 + ($12 x 10 x 1.5) = $680. These calculations and illustrations demonstrate that plaintiffs are receiving one and one half times the regular rate for their overtime hours worked, exclusive of the entire TCOLA being paid for the first 40 hours, in accordance with McQuigg. See Aff. at 16-18. In other words, after

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McQuigg, plaintiffs are paid the equivalent of their base rate times 40 hours, plus a TCOLA, plus one and one half times the regular rate times overtime hours worked. This formula is given as the McQuigg plaintiffs' formula in the McQuigg opinion. 950 F.2d at 594.7 Because an employee who has not worked overtime would receive his or her base rate times up to 40 hours, plus a TCOLA, it is also clear that the mandate of McQuigg has been met with regard to the court's comparison of overtime and non-overtime workers. See id. at 597. No part of a TCOLA can be attributed to the payment of one and one half times the regular rate for overtime hours. For the reasons described above, it is clear that the Postal Service now pays the entire amount required by McQuigg. Plaintiffs concede that the Postal Service is following McQuigg in Alaska and Hawaii, and demand that the Postal Service compute plaintiffs' pay according to McQuigg. See Compl. at ¶¶ 17, 29-32. Because the Postal Service already complies with McQuigg in Puerto Rico, where plaintiffs are employed, there is no merit to plaintiffs' complaint, and the Court should grant summary judgment in favor of the Government. VI. The Postal Service Complies With The FLSA And, Because It Also Complies With McQuigg, Pays Plaintiffs More Than The FLSA Requires In the event the Court declines to grant summary judgment on the ground that the Government is complying with McQuigg, and therefore paying all to which plaintiffs claim to be entitled, summary judgment should still be granted to the Government. McQuigg is not binding upon this Court. If the Court declines to find that the Government is already paying plaintiffs all that is required by McQuigg, then it should still grant the Government summary judgment on the ground that McQuigg is wrong and the FLSA requires far less overtime pay than required by

McQuigg did not address any other differentials or bonuses, and plaintiffs likewise do not allege that non-TCOLA additions to the regular rate should be treated differently. 23

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McQuigg or than plaintiffs receive. This issue should be resolved by according proper deference to the rules and regulations of the agencies entrusted with interpreting the FLSA and TCOLA statutes because, contrary to the Ninth Circuit's conclusion, there is no clear statutory mandate that precludes the Postal Service from following the reasonable regulatory interpretations of the FLSA and TCOLA statutes.8 Therefore, summary judgment should be granted in favor of the Government. A. This Court Should Accord Proper Deference To OPM And DOL Regulations Interpreting The FLSA And TCOLA Statutes

The United States Supreme Court has held that formal agency interpretations of statutes that they administer are entitled to deference when Congress has explicitly or implicitly "left a gap" in legislation for an agency to fill. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44 (1984). If a "statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843. When Congress has implicitly left such a gap, "a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Id. at 844. Informal determinations by administering agencies, such as opinion letters or manuals, are also accorded "respect" in proportion to their "power to persuade." United States v. Mead Corp., 533 U.S. 218, 220 (2001) (citation omitted); cf. Eldredge v. Department of Interior, 451 F.3d 1337, 1341-42 (Fed. Cir. 2006). In addition, "[s]tatutory construction is a `holistic endeavor.' . . .`A provision that may seem ambiguous in

As set forth in Part V above, if this Court concurs with the McQuigg decision, or simply declines to reach the underlying issue of whether McQuigg mandates pay in excess of that required by the FLSA, summary judgment should be granted because the Postal Service's current calculation still complies with McQuigg. 24

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isolation is often clarified by the remainder of the statutory scheme ­ because the same terminology is used elsewhere in a context that makes its meaning clear, or because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law.'" Koons Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50, 60 (2004) (quoting United Sav. Assn. of Tex.v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 371 (1988)) (citations omitted); see also Holley v. United States, 124 F.3d 1462, 1468 (Fed. Cir. 1997) ("It is a well-settled canon of statutory construction that the provisions of a unified statutory scheme should be read in harmony, leaving no provision inoperative or superfluous or redundant or contradictory."). Here, the plain language of both the FLSA and the TCOLA statute are clear when considered in context. Neither the plain language of the FLSA and its implementing regulations, nor the TCOLA statute and its regulations, requires TCOLA to be treated differently than any other part of an employee's total remuneration in calculating the FLSA regular rate and paying for overtime hours worked at one and one half times the regular rate. See 29 U.S.C. §§ 207(a)(1), 207(e); 5 U.S.C. § 5941. In McQuigg, the Ninth Circuit improperly read into the FLSA a requirement to treat TCOLA differently from other remuneration, rather than strictly construing the plain language of the statutes and according a