AMERICAN FED. OF GOVERNMENT EMPLOYEES v. US

• Decision Date: 21 December 1984
• Docket Number: Civ. No. C-83-1641-A.
• Parties: AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO v. UNITED STATES of America.
• Court: U.S. District Court — Northern District of Georgia

622 F. Supp. 1109

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO v. UNITED STATES of America.

Civ. No. C-83-1641-A.

United States District Court, N.D. Georgia, Atlanta Division.

December 21, 1984.

Stuart Kirsch, College Park, Ga., for plaintiff.

Myles Eastwood, Asst. U.S. Atty., Atlanta, Ga., for defendant.

ORDER

O'KELLEY, District Judge.

Presently pending are plaintiffs' and defendants' cross motions for summary judgment in this action brought pursuant to 28 U.S.C. § 1331. Plaintiffs, military retirees who currently are federal employees under the civil service regulations, challenge the constitutionality of § 301(d) of the Omnibus Budget Reconciliation Act of 1982 (the Act).¹ This section reduces their civil service pay in an amount equal to the cost of living adjustment (COLA) in their military retirement pay. Plaintiffs also assert that the Office of Personnel Management (OPM) regulations were promulgated contrary to the provisions of the Administrative Procedure Act (APA), 5 U.S.C. § 553 (1982), that deductions from lump-sum payments violate both the Constitution and the APA, and that the OPM acted arbitrarily in setting forth methods by which war-disabled veterans may claim their exemptions. During the pendency of this action, Congress repealed § 301(d).² Upon review, the court grants defendant's motion for summary judgment, and denies plaintiffs' motion for summary judgment.

Contending that § 301(d) violates their equal protection and due process rights, plaintiffs request that the court declare this section unconstitutional. To establish a claim alleging violations of equal protection or due process, a plaintiff must show first that he possesses a property or liberty interest protected by the fifth or fourteenth amendments. See Hunter v. Florida Parole & Probation Comm'n, 674 F.2d 847, 848 (11th Cir.1982). Plaintiff then must show that the state or federal government deprived him of the liberty or property interest in violation of due process or equal protection guarantees.

In the case at bar, plaintiffs contend that they possess a property interest in their civil service salaries. Specifically, they point out that an agency, pursuant to regulations issued by OPM, may reduce civil service employees' pay "only for such cause as will promote the efficiency of the service." 5 U.S.C. § 7513. See also 5 U.S.C. § 7512 (types of actions covered). Interpreting a predecessor statute containing the same language, the Supreme Court in Arnett v. Kennedy, 416 U.S. 134, 151-52, 94 S.Ct. 1633, 1642-43, 40 L.Ed.2d 15 (1974), determined that a nonprobationary federal employee possessed a property interest in his employment. See also id. at 166, 94 S.Ct. at 1650. (Powell, J., concurring) ("The federal statute guaranteeing appellee continued employment absent `cause' for discharge conferred on him a legitimate claim of entitlement which constituted a `property' interest under the Fifth Amendment.")

Plaintiffs also argue that other statutory provisions buttress their argument that they possess a protectible property interest in their civil service salaries. For example, at least three statutes provide that employees who perform substantially equal work will receive equal pay. See 5 U.S.C. §§ 2301, 5101, 5301(a)(1). These statutes indicate that plaintiffs possess more than a mere unilateral expectation of benefit in their employment with the federal government. Because a mutually recognized entitlement exists, the court finds that plaintiffs have satisfied the initial requirement of demonstrating that a protectible interest in property is present in this case. Therefore, the court will address whether reduction of plaintiffs' civil service pay by the amount of the COLA in their military retirement pay violates the guarantees of due process or equal protection.

The Supreme Court has distinguished between due process and equal protection as follows. "`Due process' emphasizes fairness between the State and the individual dealing with the State, regardless of how other individuals in the same situation may be treated. `Equal protection,' on the other hand, emphasizes disparity in treatment by a State between classes of individuals whose situations are arguably indistinguishable." Ross v. Moffitt, 417 U.S. 600, 609, 94 S.Ct. 2437, 2443, 41 L.Ed.2d 341 (1974). The court will address the equal protection issue first.

Although the federal government and its agencies are not bound by the equal protection clause of the fourteenth amendment, the due process clause of the fifth amendment imposes similar, if not identical, limitations on government actions. See e.g., Jean v. Nelson, 711 F.2d 1455, 1483 (11th Cir.1983). Therefore, if a classification is invalid under the equal protection clause of the fourteenth amendment, it also is inconsistent with the due process clause of the fifth amendment. NAACP v. Allen, 493 F.2d 614, 619 n. 6 (5th Cir.1974).

In this action, plaintiffs admit that the validity of the classification of civil servants also receiving military retirement pay should be examined under the rational basis standard — whether it is rationally related to a legitimate governmental interest and to the objective of the particular legislation.³ See Puglisi v. United States, 564 F.2d 403, 409, 215 Ct.Cl. 86 (1977). When a statutory provision does not violate a fundamental right or affect a suspect classification, "the burden is not upon the government to establish the rationality of its restriction, but is upon the challenger to show that the restriction is wholly arbitrary." Karr v. Schmidt, 460 F.2d 609, 617 (5th Cir.), cert. denied, 409 U.S. 989, 93 S.Ct. 307, 34 L.Ed.2d 256 (1972).

Plaintiffs in the instant case argue that a classification based solely upon military retirees in civil service positions is not rationally related to a legitimate governmental purpose. To support this argument plaintiffs assert that they are treated differently than military retirees who are not employed in civil service, and also are treated differently from civil servants not receiving military retirement.

Congress passed the Act to restrain federal spending, thus reducing large budget deficits and rising interest rates, that were plaguing the nation. See S.Rep. 97-504, 97th Cong., 2d Sess. 4, reprinted in 1982 U.S.Code Cong. & Ad.News 1641, 1643. This purpose certainly is reasonable. One method to accomplish the goal of reduced federal spending was the passage of § 301(d) of the Act. The legislative history reveals that the drafters of § 301(d) expected it to have the following effect:

the conference report falls short of the instruction by $1 billion, but still represents nearly $4 billion more than what we passed in the House.

The COLA savings are achieved through the following:

....

Third. For military retirees employed in the Federal civil service the so-called double dippers, the COLA increases would be offset by salary reductions. These are reasonable changes that get at some of the excesses in the program without impacting in any way on those truly relying on these retirement benefits for their existence. Frankly, at some point we are really going to have to take a hard look at this program, because we currently have too many people retiring at too early of an age. It is costing us billions that we simply cannot afford.

Cong. Record — H 6364, August 18, 1982. (daily ed.) (comments by House Minority Leader Robert H. Michel).

The court cannot say that § 301(d) is not rationally related to lowering federal spending, for it clearly would cause some reduction in federal monies paid out. Additionally, Congress has the power to establish pay scales for federal officers and employees. See McCorkle v. United States, 559 F.2d 1258, 1260-61 (4th Cir.1977). Federal employees generally serve by appointment, and their rights are a matter of statute. Kizas v. Webster, 707 F.2d 524, 535 (D.C.Cir.1983). Clearly, "no one could gainsay Congress' authority to provide prospectively that all retired officers could hold a federal civilian position only at the cost of losing part or all of their retirement pay." Puglisi, 564 F.2d at 409. Congress' choice of this method, which is reasonably related to its goal of lowering federal spending, is a rational solution to the perceived problem.

Plaintiffs contend that the classification is arbitrary and illogical, because military retirees who are not employed by the federal government in a civil service position but who are employed in private industry receive the cost of living adjustment. Likewise, civil servants who are not receiving military retirement benefits are permitted to receive their net pay without any reduction while military retirees who are performing the same tasks have their civil service pay reduced.

This court cannot declare that a statute is unconstitutional because the result seems unfair in a general sense. Puglisi, 564 F.2d at 411. "If the distinction embodied in the law is reasonably related to a legitimate government interest which Congress seeks to advance, the court must uphold the rule even though it may seem unwise or that a more just system could clearly be devised." Id. at 411; see also Massachusetts Board of Retirement v. Murgia, 427 U.S. 307, 312-14, 96 S.Ct. 2562, 2566-67, 49 L.Ed.2d 520 (1976). If Congress finds that an evil is especially acute for one group, it may select that aspect "and apply a remedy there, neglecting the others." Puglisi, 564 at 411 (quoting Williamson v. Lee Optical Co., 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1955)). The classification of military retirees in civil service positions is rational, because this group receives two federal checks. For the above reasons, the court finds that the purpose of § 301(d), reduction of federal spending, is a legitimate governmental concern and is rationally related to Congress' method of alleviating the problem.

Although the statute may further Congress' goal, plaintiffs...