Army and Air Force Exchange Service v. Sheehan

• Citation: 72 L.Ed.2d 520,102 S.Ct. 2118,456 U.S. 728
• Decision Date: 01 June 1982
• Docket Number: No. 80-1437,80-1437
• Parties: ARMY AND AIR FORCE EXCHANGE SERVICE, Petitioner v. Arthur Edward SHEEHAN
• Court: United States Supreme Court

456 U.S. 728

102 S.Ct. 2118

72 L.Ed.2d 520

ARMY AND AIR FORCE EXCHANGE SERVICE, Petitioner

v Arthur Edward SHEEHAN.

No. 80-1437.

Argued Feb. 23, 1982.

Decided June 1, 1982.

Syllabus

Respondent, while employed in a data processing position with petitioner Army and Air Force Exchange Service (AAFES), was selected for participation in the AAFES Executive Management Program (EMP). A regulation provided that EMP status could be withdrawn for conduct off the job reflecting discredit upon the AAFES. Respondent was discharged from the AAFES after pleading guilty to misdemeanor charges of violating state drug laws off the base. His administrative appeal was denied. While that appeal was pending before the Judge Advocate General of the Air Force, respondent filed suit against the AAFES in Federal District Court, alleging that his rights to due process and to a free and impartial appeal pursuant to AAFES regulations were infringed, and seeking reinstatement and damages, including backpay. The District Court dismissed the complaint for want of subject-matter jurisdiction. The Court of Appeals reversed, concluding that the Tucker Act, which gives the federal courts jurisdiction over certain suits against the United States founded upon express or implied contracts, provided a basis for jurisdiction over respondent's claims for monetary relief. The court held that, whether or not respondent's employment was initiated by appointment or contract, the AAFES regulations governing separation procedures created an implied-in-fact contract that the AAFES would adhere to those regulations while respondent continued in AAFES employment, and that respondent's allegation that his dismissal violated those regulations was equivalent to an allegation of breach of an implied-in-fact contract.

Held : The Tucker Act did not confer jurisdiction over respondent's claim for money damages. Pp. 733-741.

(a) Nothing in the record or relevant regulations indicates that respondent was employed pursuant to an express contract. Rather, the evidence shows that he was appointed to his positions. With respect to employment in the data processing position, regulations prohibited the AAFES from negotiating a contract with him, and his selection to the EMP clearly was pursuant to an appointment. There is no reason to remand for an evidentiary hearing on the nature of respondent's employment status. Pp. 735-738. (b) The Court of Appeals erred in implying a contract based solely on the AAFES personnel regulations and in premising Tucker Act jurisdiction on those regulations, which do not specifically authorize awards of money damages. United States v. Testan, 424 U.S. 392, 96 S.Ct. 948, 47 L.Ed.2d 114, is controlling. Moreover, Congress' intent to prohibit Back Pay Act claims by AAFES employees, as opposed to federal employees generally, would be subverted if an AAFES employee could sue under the Tucker Act whenever he asserted a violation of the AAFES regulations governing termination. In fact, the Court of Appeals' reasoning would extend Tucker Act jurisdiction to reach any complaint filed by a federal employee alleging the violation of a personnel statute or regulation. Pp. 738-741.

619 F.2d 1132, reversed.

Samuel A. Alito, Jr., Newark, N. J., for petitioner.

Ira E. Tobolowsky, Dallas, Tex., for respondent.

Justice BLACKMUN delivered the opinion of the Court.

The issue presented by this case is whether the federal courts have jurisdiction over a civil action for monetary damages brought by a former military exchange employee who contests the validity of his discharge. The employee claims that federal jurisdiction exists under the Tucker Act, 28 U.S.C. § 1346(a)(2) (1976 ed., Supp. IV).

I

A.

In 1962, respondent, Arthur Edward Sheehan, was selected for a data processing position with petitioner Army and Air Force Exchange Service (AAFES or Service).¹ Five years later, respondent was designated by the AAFES commander for participation in the Service's Executive Management Program (EMP); this program is "intended to fulfill the continuing requirement of AAFES for highly qualified and dedicated executive employees who will be readily available to meet the worldwide executive personnel requirements of AAFES." Army Regulation (AR) 60-21/Air Force Regulation (AFR) 147-15, ch. 5, § II, ¶ 5-6 (1 Aug. 1979).² Employees in the program enjoy special retention, insurance, and retirement benefits. On the other hand, those employees are subject to certain obligations, a principal one being that EMP personnel must accept transfer to any AAFES facility in this country or abroad. ¶ 5-9(a)(2). EMP status may be withdrawn for, among other things, "conduct off the job reflecting discredit upon AAFES." ¶ 5-9(c). Pursuant to the regulations governing the EMP, respondent was required to "acknowledg[e] in writing that he underst[ood] and accept[ed] the conditions of the EMP as prescribed by the Commander, AAFES." ¶ 5-7(b).

In 1975, while respondent was serving as a shopping center manager at Fort Jackson, S. C., he was arrested off the base for possession of controlled substances. Pursuant to a plea bargain, respondent pleaded guilty to four misdemeanor counts of violating state drug laws. He was sentenced to 18 months' probation and a $1,000 fine was imposed.

On March 16, 1976, respondent received advance written notice of separation from the Service for cause. Referring specifically to respondent's conviction, the notice stated that the reason for the separation was "conduct off the job which reflects discredit on the AAFES and which is of such a nature that your retention in any capacity is incompatible with the best interests of AAFES." App. 11. James J. Stapleton, the AAFES General Manager for the Piedmont Area Exchange, signed the notice, but, because of respondent's participation in the EMP, prior approval had been obtained from Major General C. W. Hospelhorn, Commander, AAFES. Following an investigation, Stapleton issued a final notice of separation for cause, effective April 19, 1976. Id., at 17. This notice advised respondent that he was to be dismissed "in view of the entire weight of evidence which resulted in your plea of guilty." Ibid.

Respondent, in accord with authorized AAFES procedures, filed an administrative appeal. The hearing examiner determined that the Service had acted in compliance with applicable laws and regulations, but concluded that respondent's conduct off the job did not reflect discredit on the AAFES and that his retention in some capacity was not incompatible with the interests of the Service. The examiner therefore recommended that respondent's appeal be granted and that he be reinstated with backpay to his former grade but transferred to an assignment in another region. General Hospelhorn, however, acting as the appellate authority, disagreed, and denied respondent's appeal.

In 1978, respondent, by a letter from counsel addressed to the new AAFES Commander, Major General Bobby W. Presley, requested reconsideration. Id., at 40. Respondent asserted that his separation was contrary to AAFES rules and regulations and that he had been denied due process of law. General Presley reopened the case and referred it to Lieutenant General Charles E. Buckingham, Chairman of the Board of Directors of AAFES. At General Buckingham's request, the administrative record was reviewed by the Judge Advocate General of the Air Force. He concluded that the record evidence supported the charge that respond- ent's conduct reflected discredit upon the AAFES and that his retention was inconsistent with the Service's best interests. The Judge Advocate General, however, agreed with respondent that General Hospelhorn was disqualified from acting as the appellate authority; he felt that it was appropriate for General Buckingham to act in that capacity, and he recommended that respondent's appeal be denied. General Buckingham followed that advice and denied respondent's appeal.

B

While the matter was pending before the Judge Advocate General, respondent filed suit against the AAFES in the United States District Court for the Northern District of Texas. The first count of respondent's complaint alleged that his rights to due process and to a free and impartial appeal pursuant to AAFES regulations were infringed when General Hospelhorn acted as both the separation authority and the appellate authority. In the second count, respondent claimed that the denial of his appeal was arbitrary and capricious, an abuse of discretion, unsupported by substantial evidence and unwarranted by the facts, and in violation of statutory and constitutional provisions. Respondent sought reinstatement and damages, including backpay.

The District Court, without opinion, dismissed the complaint for want of subject-matter jurisdiction. App. to Pet. for Cert. 17a.

The United States Court of Appeals for the Fifth Circuit reversed. It concluded that the Tucker Act, 28 U.S.C. § 1346(a)(2), which gives the federal courts jurisdiction over certain suits against the United States founded upon express or implied contracts, provided a basis for jurisdiction over respondent's claims for monetary relief. 619 F.2d 1132 (1980). Whether respondent's employment was initiated by appointment or by contract, the court held, the AAFES regulations providing for separation for cause only under certain conditions and guaranteeing an administrative appeal "manifest[ed] the understanding of the parties concerning discharge procedures while Sheehan continued in AAFES employment." Id., at 1138 (emphasis in original). Accordingly, the court considered those regulations to be "part of a collateral implied-in-fact contract between Sheehan and the AAFES that the AAFES would adhere to the regulations in its dealings with him." Ibid. In the court's view, the understanding of the parties was reinforced by the well-established legal principle that a federal agency must comply with its own regulations. The court...