391 F.3d 1212 (Fed. Cir. 2004), 04-5012, Adams v. United States

• Citation: 391 F.3d 1212
• Party Name: Stephen S. ADAMS, and 14,302 other similarly-situated plaintiffs, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Case Date: December 09, 2004
• Court: United States Courts of Appeals, U.S. Court of Appeals — Federal Circuit

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391 F.3d 1212 (Fed. Cir. 2004)

Stephen S. ADAMS, and 14,302 other similarly-situated plaintiffs, Plaintiffs-Appellants,

v.

UNITED STATES, Defendant-Appellee.

No. 04-5012.

United States Court of Appeals, Federal Circuit

December 9, 2004

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Richard P. Bress, Latham & Watkins LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief was J. Scott Ballenger and Nathaniel A. Vitan, Of counsel on the brief were Jules Bernstein and Linda Lipsett, Bernstein & Lipsett, of Washington, DC; and Edgar James, James & Hoffman, of Washington, DC.

Shalom Brilliant, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter

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D. Keisler, Assistant Attorney General, and David M. Cohen, Director.

Michael E. Malamut, New England Legal Foundation, of Boston, Massachusetts, for amicus curiae New England Legal Foundation.

Lawrence Berger, Mahon & Berger, of Garden City, New York, for amicus curiae Federal Law Enforcement Officers Association.

Before MICHEL, RADER, and PROST, Circuit Judges.

MICHEL, Circuit Judge.

Stephen S. Adams and 14,302 other similarly-situated individuals (collectively, "Appellants") were employed between 1984 and 1995 as GS-9, GS-11, GS-12, and GS-13 criminal investigators in various federal law enforcement agencies, including the Bureau of Alcohol Tobacco and Firearms ("BATF"), the Drug Enforcement Agency ("DEA"), the Internal Revenue Service ("IRS"), the United States Customs Service ("Customs Service"), and the United States Secret Service ("USSS"). ¹ They appeal from the order of the United States Court of Federal Claims granting the Government's motion to dismiss their takings complaint for failure to state a claim upon which relief may be granted. Adams v. United States, No. 00-447C, 2003 U.S. Claims LEXIS 238 (Fed.Cl. Aug.11, 2003). Appellants received overtime compensation, apparently pursuant to the Federal Employees Pay Act ("FEPA"), codified at 5 U.S.C. § 5542, at a rate less than one-and-one-half times their regular rate of pay. ² Appellants assert entitlement to overtime compensation at the rate specified under the Fair Labor Standards Act ("FLSA"), codified at 29 U.S.C.§§ 201-219, which is at least one-and-one-half times their regular rate of pay, rather than at the lower rate provided for in the FEPA. In other words, Appellants seek to recover as damages the difference between what they received under the FEPA versus the amount they would have received under the FLSA ("underpaid overtime compensation"). The case was submitted for decision after oral argument on September 7, 2004. Because Appellants do not have a cognizable property interest in either the underpaid overtime compensation or in an administrative claim thereto within the meaning of the Takings Clause of the Fifth Amendment, we affirm.

I. BACKGROUND

A. Statute of Limitations Applicable to FLSA Claims

The FLSA provides overtime compensation to certain employees who work more than forty hours per week at a rate not less than one-and-one-half times the employees' regular rate of compensation. This statute originally did not cover federal employees. In 1974, however, Congress extended it to federal employees, but exempted those classified as executive, administrative, or professional. Id. § 213(a) (1).

To recover unpaid overtime compensation under the FLSA, a federal employee may file either an action at law or a claim before the General Accounting Office ("GAO"). Actions at law brought under the FLSA are subject to the statute of

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limitations provided in the Portal-to-Portal Pay Act, codified at 29 U.S.C. §§ 251-262, which provides for a two-year limitations period for cases in which the FLSA violation is non-willful and a three-year period where the violation is willful. Id. § 255(a).

The statute of limitations for administrative claims before the GAO initially was selected, then revised by, the Comptroller General of the United States and twice altered by Congress. The numerous changes in the statute of limitations for claims before the GAO, in part, create the backdrop of the instant takings claim. Therefore, it is important to have a general understanding of the evolution of the limitations periods involved.

In 1978, the Comptroller General ruled that the statute of limitations for FLSA claims before the GAO was not the statutory period specific to FLSA claims, but was six years as set forth in the more generally applicable Barring Act, codified at 31 U.S.C. § 3702(b). In re Transp. Sys. Ctr., 57 Comp. Gen. 441 (1978). Sixteen years later, on May 24, 1994, the Comptroller General effectively changed the statute of limitations for FLSA claims before the GAO from six years to two years for non-willful violations and three years for willful violations, essentially recognizing as applicable the limitations period specifically set for FLSA claims in the Portal-to-Portal Pay Act. In re Ford, 73 Comp. Gen. 157 (1994).

Shortly thereafter, on September 30, 1994, Congress enacted the Treasury, Postal Service and General Government Appropriations Act of 1995, Pub.L. No. 103-329, 108 Stat. 2383, 2432 (1994). Section 640 of that act mandated that the Comptroller General apply a six-year statute of limitations period to any administrative claim under the FLSA filed prior to June 30, 1994, and a two-year statute of limitations period to any such claim filed after June 30, 1994.

On November 19, 1995, Congress enacted the Treasury, Postal Service, and General Government Appropriations Act of 1996, Pub.L. No. 104-52, 109 Stat. 468, 468-69 (1995), which amended Section 640 to further limit the types of FLSA claims that may be decided by the GAO ("amended Section 640"). Amended Section 640 precluded, among other changes, application of the six-year statute of limitations originally set forth in Section 640 to employees who had received overtime compensation under another provision of law. Thus, those employees were limited to the two-year statute of limitations period.

B. Appellants' Status Under the FLSA

Pursuant to 5 C.F.R. § 551.201, the BATF, the DEA, the IRS, the Customs Service, and the USSS independently determined, as the respective employing agencies, that Appellants were administrative employees exempt from the FLSA and its overtime provisions. In making this determination, the employing agencies evaluated whether Appellants' duties met the administrative exemption criteria set forth in 5 C.F.R. § 551.206. Significantly, Appellants were presumed to be non-exempt under the civil service regulations, thereby requiring the employing agencies to carry the burden of establishing that the Appellants met the criteria of § 551.206. Id. §§ 551.202(a), (c).

Dissatisfied with this exemption determination, Appellants filed an action at law under the Tucker Act, codified at 28 U.S.C. § 1491, against the Government in the United States Court of Federal Claims. Simultaneously, Appellants filed identical administrative claims before the GAO. In both proceedings, Appellants alleged that they were improperly ruled exempt

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from the FLSA and were entitled to damages flowing from this misclassification. In a decision dated October 30, 1992, the Court of Federal Claims concluded that some of the Appellants were exempt, while others were non-exempt. Adams v. United States, 27 Fed.Cl. 5, 28-29 (1992).

On September 23, 1998, we partially reversed the Court of Federal Claims' ruling in a non-precedential opinion and remanded the case for further proceedings as to those criminal investigators held exempted from the FLSA. Adams v. United States, No. 98-5011, 1998 WL 804552, 1998 U.S.App. LEXIS 23565 (Fed.Cir. Sept. 23, 1998) (Table). That case remains pending before the Court of Federal Claims.

C. Prior Court Proceedings Leading to the Instant Appeal

On October 27, 1995, prior to the enactment of amended Section 640, Appellants filed suit against the Government in the United States District Court for the District of Columbia, seeking mandamus, injunctive, and declaratory relief against the GAO for its inactivity on their administrative claims. Following the enactment of amended Section 640, Appellants twice supplemented their complaint to challenge the constitutionality of original Section 640 and amended Section 640 under the Due Process and Takings Clauses of the Fifth Amendment.

On October 12, 1996, the district court granted summary judgment in favor of the Government. Adams v. Bowsher, 946 F.Supp. 37 (D.D.C.1996). The district court addressed Appellants' due process arguments, ultimately concluding that neither Section 640 nor amended Section 640 violated the Due Process Clause. As to Appellants' takings claim, the district court concluded that a compensable taking did not occur, based upon the three factors set forth for regulatory takings in Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 224-25, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986). Adams, 946 F.Supp. at 44. Appellants appealed that decision to the United States Court of Appeals for the District of Columbia Circuit.

On August 28, 1998, the District of Columbia Circuit affirmed the district court's decision on the due process claim, but reversed its decision on Appellants' takings claim. Adams v. Hinchman, 154 F.3d 420 (D.C.Cir. 1998). The circuit court noted that takings claims for amounts greater than $10,000 fall within the exclusive jurisdiction of the Court of Federal Claims pursuant to the Tucker Act. Id. at 425-426. Consequently, the circuit court concluded that the district court might lack jurisdiction to entertain Appellants' takings claim and remanded the takings claim to the district court to determine whether jurisdiction was proper under the Little Tucker Act, codified at 28 U.S.C. § 1346(a) (2), for claims of less...