Asociacion De Empleados Del Area v. Panama Canal, 02-13789.

Citation329 F.3d 1235
Decision Date07 May 2003
Docket NumberNo. 02-13789.,02-13789.
PartiesASOCIACION DE EMPLEADOS DEL AREA CANALERA (ASEDAC), Mario Lopez, et al., Plaintiffs-Appellants, v. PANAMA CANAL COMMISSION, The Office of Transition Administration Established by the Panama Canal Commission, et al., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Joel S. Perwin, Podhurst, Orseck, Josefsberg, Eaton, Meadow, Olin & Perwin, P.A., Miami, FL, for Plaintiffs-Appellants.

William Kanter, Edward Himmelfarb and Howard S. Scher, Appellate Staff, Dept. of Justice, Civ. Div., Washington, DC, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before BARKETT and KRAVITCH, Circuit Judges, and FULLAM*, District Judge.

BARKETT, Circuit Judge:

The Asociacion De Empleados Del Area Canalera ("ASEDAC"), an employee association, appeals the dismissal of its complaint against the Panama Canal Commission ("PCC") for the PCC's alleged failure to provide back pay and other employment benefits as required by the Panama Canal Treaty and various United States laws. The District Court dismissed ASEDAC's complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, holding that 5 U.S.C. § 7121(a) barred it from exercising subject matter jurisdiction over ASEDAC's claims. Because the District Court erred in concluding that it lacked jurisdiction, we reverse the court's dismissal and remand the case for further proceedings.

BACKGROUND

In 1903, the United States and the Republic of Panama entered into a treaty which granted the United States occupation and control of the Panama Canal Zone, a strip of land ten miles wide across the Isthmus of Panama, for the purpose of constructing the Panama Canal. See Hay-Bunau Varilla Treaty, Nov. 18, 1903, U.S.-Panama, 33 Stat. 2234, T.S. No. 431. In 1950, Congress created the Panama Canal Company to operate the Canal and continued to exercise sovereignty over the Canal and the Canal Zone until October 1, 1979, the effective date of the Panama Canal Treaty of 1977. See Panama Canal Treaty, Sept. 7, 1977, U.S.-Panama, 193 Stat. 4521, T.I.A.S. No. 10030.

Under the Panama Canal Treaty, the United States and Panama agreed to reestablish Panamanian sovereignty over the Zone but granted the United States the right to continue operating the Canal until December 31, 1999, under the Panama Canal Commission ("PCC"), a U.S. governmental agency. Id. at Art. III, ¶ 3. To implement the 1977 treaty, Congress then passed the Panama Canal Act of 1979, which, inter alia, established the PCC as a United States government corporation and set terms for PCC employment, including treating PCC personnel as federal employees and subjecting them to certain provisions of the Civil Service Reform Act of 1978, Pub.L. No. 95-454, 92 Stat. 1111 ("CSRA"), including 5 U.S.C. § 7121(a), the provision at issue here. See 22 U.S.C. §§ 3611(a), 3641-3701.

ASEDAC, an association of former PCC employees and of specific Panamanian civilian employees of the U.S. Armed Forces at the Panama Canal Zone, appeals the dismissal of its complaint against the PCC, its successor entity the Office of Transition ("OTA"), the Secretary of the Army of the United States, and the Secretary of the Treasury of the United States ("the Defendants"). ASEDAC claims that the PCC and OTA violated the Panama Canal Treaty and various United States laws, including the Panama Canal Act, 22 U.S.C. § 3601 et seq., the Administrative Procedure Act, 5 U.S.C. § 701 et seq., and the Back Pay Act, 5 U.S.C. § 5596(b), by failing (1) to pay them an extra month's salary for every twelve months they worked for the PCC in accordance with Panamanian law, (2) to provide them severance pay in accordance with Panamanian and United States law, and (3) to make contributions on their behalf to the Panamanian social security system.

ASEDAC sought an order requiring the Secretary of the Army, in his capacity as a member of the PCC's supervisory board, to direct the PCC and/or the OTA to provide these benefits and requiring the Secretary of the Treasury to preserve and invest funds necessary to pay these benefits. The Defendants moved to dismiss ASEDAC's complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure on the grounds that it was preempted by the CSRA. Specifically, the Defendants argued that the district court was barred from considering ASEDAC's claims because of 5 U.S.C. § 7121(a), which, they contend, makes the grievance procedures of collective bargaining agreements the exclusive remedy for grievances falling within the CSRA's coverage.

The District Court dismissed ASEDAC's claims pursuant to Rule 12(b)(1), holding that § 7121(a) barred it from exercising subject matter jurisdiction over those claims. The District Court first held that ASEDAC's claims for back pay and other benefits were "grievances" within the meaning of the CSRA and were subject to CSRA preemption, which it construed as a jurisdictional bar mandating dismissal under Rule 12(b)(1) rather than, as ASEDAC argued, an affirmative defense subject to avoidances such as frustration or futility. The court further rejected ASEDAC's argument that a 1994 amendment to § 7121(a)(1) changed its meaning and established ASEDAC's right to seek judicial review of its claims.

On appeal, ASEDAC argues (1) that the District Court erred by failing to give meaning to the 1994 amendment to § 7121(a)(1), which ASEDAC contends limits that provision's exhaustion requirement only to administrative, but not judicial, remedies, and (2) that even if § 7121(a)(1) is held to preclude judicial review, ASEDAC's asserted failure to exhaust available grievance procedures as mandated by § 7121(a)(1) should not be interpreted as a jurisdictional bar, but rather as an affirmative defense subject to traditional avoidances such as frustration and futility, which ASEDAC contends are applicable here.

STANDARD OF REVIEW

We review the District Court's determination of its subject matter jurisdiction de novo. See Mexiport, Inc. v. Frontier Communications Serv., Inc., 253 F.3d 573, 574 (11th Cir.2001); Milan Express, Inc. v. Averitt Express, Inc., 208 F.3d 975, 978 (11th Cir.2000). The underlying issue on appeal, a question of statutory interpretation, is also subject to de novo review. See United States S.E.C. v. Vittor, 323 F.3d 930, 933 (11th Cir.2003); Estate of Shelfer v. C.I.R., 86 F.3d 1045, 1046 (11th Cir.1996).

DISCUSSION

The central issue on appeal is the meaning of 5 U.S.C. § 7121(a)(1), which, together with Section 7121(a)(2), reads as follows:

(1) Except as provided in paragraph (2) of this subsection, any collective bargaining agreement shall provide procedures for the settlement of grievances, including questions of arbitrability. Except as provided in subsections (d), (e), and (g) of this section, the procedures shall be the exclusive administrative procedures for resolving grievances which fall within its coverage.

(2) Any collective bargaining agreement may exclude any matter from the application of the grievance procedures which are provided for in the agreement.

5 U.S.C. § 7121(a) (2000) (emphasis supplied).

The dispute between the parties centers on the word "administrative" in § 7121(a)(1). Prior to 1994, the statute did not contain this word. Instead, § 7121(a)(1) formerly stated that the grievance procedures set forth in a collective bargaining agreement would "be the exclusive procedures for resolving grievances which fell within its coverage." 5 U.S.C. § 7121(a)(1) (1988) (emphasis supplied).

In Carter v. Gibbs, 909 F.2d 1452 (Fed. Cir.1990) (en banc), cert. denied, 498 U.S. 811, 111 S.Ct. 46, 112 L.Ed.2d 22 (1990), the Federal Circuit interpreted the pre-1994 language to preclude federal employees from resolving grievances covered by their collective bargaining agreement in court. Relying on the "unambiguous" text of unamended § 7121(a)(1), Carter held that the statute limited the resolution of such grievances to the negotiated procedures set forth in an employee's collective bargaining agreement. Carter, 909 F.2d at 1454.

However, ASEDAC contends that by adding the word "administrative" to § 7121(a)(1) in the 1994 amendment, Congress intended to overrule Carter and to establish a federal employee's right to bring an action in court despite the availability of an administrative grievance procedure. The PCC counters that the structure of the statute, the remedial scheme established by § 7121, and the central purposes of the CSRA all counsel against reading the 1994 amendment to allow federal employees to press their grievances in court when they could seek an administrative remedy under their collective bargaining agreement.

The District Court relied on Carter to conclude that § 7121(a)(1) bars a federal employee from bypassing the negotiated procedures contained in his or her collective bargaining agreement. However, while this appeal was pending, the Federal Circuit in Mudge v. United States, 308 F.3d 1220 (Fed.Cir.2002), overruled Carter, as well as three decisions of the Court of Federal Claims on which the District Court also relied,1 holding that Carter was "no longer applicable" to interpreting § 7121(a)(1). Mudge, 308 F.3d at 1227. Instead, the Federal Circuit determined that by adding the word "administrative" to § 7121(a)(1), Congress established a federal employee's right to bring his or her claims directly in federal court. Id.; see also O'Connor v. United States, 308 F.3d 1233, 1239-40 (Fed.Cir.2002).

In Mudge, the Federal Circuit interpreted § 7121(a)(1) by applying the fundamental canon of statutory construction that "statutory interpretation begins with the language of the statute." Mudge, 308 F.3d at 1227. Because the CSRA does not define the word "administrative," the court first determined that Congress must have given that term its ordinary meaning, according to which "administrative" is "distinguished from such...

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