Athey v. United States, 99-2051C

Decision Date31 August 2015
Docket NumberNo. 06-872C,No. 99-2051C,99-2051C,06-872C
PartiesROBERT M. ATHEY, et al., Plaintiffs, v. THE UNITED STATES, Defendant. GERALD K. KANDEL, et al., Plaintiffs, v. THE UNITED STATES, Defendant.
CourtU.S. Claims Court

ROBERT M. ATHEY, et al., Plaintiffs,

GERALD K. KANDEL, et al., Plaintiffs,

No. 99-2051C
No. 06-872C

United States Court of Federal Claims

August 31, 2015

Lump-Sum Payment for Annual Leave; 5 U.S.C. §§ 5551-5553; 5 C.F.R. § 550.1202; Back Pay Act; Interest; 5 U.S.C. § 5596; 5 C.F.R. § 550.803

Ira M. Lechner, Washington, D.C., for plaintiffs in both Athey and Kandel. Steven W. Winton, San Diego, CA, of counsel for plaintiffs in Kandel.

Hillary A. Stern, Senior Trial Counsel, with whom were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Reginald T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for defendant in Athey.

Mikki Cottet, Senior Trial Counsel, with whom were Joyce R. Branda, Acting Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Reginald T. Blades, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for defendant in Kandel.


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Pending before the court are two class actions, Athey v. United States, No. 99-2051C, and Kandel v. United States, No. 06-872C, comprised of former federal civilian employees of a variety of agencies who retired, died, or separated from federal civilian service at different times, during the years 1993 through 1999. Upon separation, these individuals were statutorily entitled to lump-sum payments for their accrued but unused annual leave. 5 U.S.C. §§ 5551 et seq. (lump-sum payment statute). They allege the government miscalculated these payments and should be liable for their correction, plus interest and attorneys' fees. See generally 4th Am. Comp., ECF No. 44-1, Athey; Compl., ECF No. 1, Kandel (formerly titled, Solow v. United States). The court consolidated the two cases for the limited purpose of addressing liability for interest under the Back Pay Act (BPA), 5 U.S.C. § 5596, which the court now addresses in the posture of cross-motions for partial summary judgment.


Federal employees covered by the lump-sum payment statute who separate from federal civilian service are entitled to a lump-sum payment for their accrued and accumulated unused annual leave. See 5 U.S.C. §§ 5551(a), 5552.1 The lump sum must equal the pay the employee would have received had the individual worked his or her regular and customary scheduled hours until expiration of the unused leave period. See id. § 5551(a) (noting some limitations); see also 5 C.F.R. §§ 550.1201-07 (regulations interpreting and implementing 5 U.S.C. §§ 5551-52).2

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To calculate the lump sum, the Office of Personnel Management (OPM) instructs that the agency first determine the leave period by projecting the unused leave from the first workday after separation and counting all subsequent workdays and holidays until exhausted. 5 C.F.R. § 550.1204(a). The agency should then "multipl[y] the number of hours of accumulated and accrued annual leave by the applicable hourly rate of pay, including other applicable types of pay listed in paragraph (b) of this section." Id. § 550.1205(a). In turn, paragraph (b) provides that the lump sum calculus shall include, at a minimum, an individual's "rate of basic pay" at separation as defined by 5 C.F.R. § 550.1202 and within-grade increases as defined by 5 U.S.C. §§ 5335, 5343(e)(2). See id. § 550.1205(b)(1), (4); see also id. § 550.1205(c) (vesting agency heads with discretion to include other types of pay as well by adopting agency-specific regulations or other standards). Lastly, individuals are also entitled to any cost-of-living adjustments (COLAs) and locality pay adjustments that take effect after the employee's separation date but before the expiration of his or her unused leave term. See id. § 550.1205(b)(2). In that instance, "[t]he agency must adjust the lump-sum payment to reflect the increased rate on or after the effective date of the pay adjustment." Id.

In practice, agencies appear to have computed and paid an initial lump sum based on the salary rate in effect on the date of separation, including any other applicable types of pay. See Def.'s Admis. Nos. 4, 53, ECF No. 198-2, Athey (citing VA policies not in the record); Andrus Decl. ¶ 3, ECF No. 98-3, Kandel. If a COLA or locality pay adjustment later took effect before an individual's unused leave period expired, the agency's policy was to issue a supplemental payment to cover the pay increase from the effective date of the adjustment to expiration of the outstanding leave. See VA Handbook 5007/30, part IV, app. B ¶ 2, ECF No. 198-6, Athey; Andrus Decl. ¶ 3, ECF No. 98-3, Kandel.

The VA explains that its field offices manually processed both the initial and supplemental lump sums for employees separating from the VA. Def.'s Admis. Nos. 43, 44, ECF No. 198-2, Athey. "[U]nless . . . payroll personnel within a Payroll Office or at a VA field office affirmatively submitted a Form TT 82 that indicated that an employee was entitled to a pay adjustment that became effective during the employee['s] lump-sum leave period, the employee did not receive the pay adjustment." Def.'s Admis. No. 41, ECF No. 198-2, Athey. This appears to have been a daunting task. The VA explains "[t]here are over 200 Veterans Administration (VA) field offices and over 225,000 VA employees who retired, separated, or died (from April 7, 1993 to April 14, 2002)." Def.'s Admis. No. 1, ECF No. 198-2, Athey. Likewise, the Government Accountability Office (GAO) explains that throughout the relevant period, "payments, such as awards, bonuses, lump sum leave payments, and dual rate payments for accrued leave," also known as

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supplemental lump sums, "were processed manually by GAO employees in the Human Capital Office." Andrus Decl. ¶ 2, ECF No. 98-3, Kandel. An initial lump-sum payment would issue based on an individual's rate of pay at separation; then, a second lump sum would issue reflecting COLA and locality pay adjustments if and when appropriate. Id. ¶ 3. The record does not contain any evidence regarding the processing of lump-sum payments at other agencies, but the court assumes that other agencies employed, or intended to employ, similar two-step processes.

Neither the Athey plaintiffs nor the Kandel plaintiffs challenge any agency's computation and payment of the initial lump sums. Rather, plaintiffs in both cases complain about their agencies' alleged failures to issue supplemental lump sums to eligible individuals reflecting applicable COLAs, locality pay adjustments, and non-overtime Sunday pay.


A. The Athey Action

The Athey class is comprised of former employees of the Department of Veteran Affairs (VA), who were eligible for lump-sum payments for unused annual leave when they retired, died, or separated from the VA on or after April 7, 1993. See Order App'g Class Certification 2, ECF No. 164, Athey. The court has determined it has jurisdiction over the Athey plaintiffs' claims under the lump-sum payment statute, 5 U.S.C. § 5551 et seq. Athey v. United States (Athey I), 78 Fed. Cl. 157, 159-61 (2007) (Smith, J.), recons. denied, Order, July 24, 2009, ECF No. 98 (Smith, J.) (denying reconsideration "for the reasons set forth in the [c]ourt's Kandel v. United States [(Kandel I)], 85 Fed. Cl. 437 (2009) opinion"). However, their claims for supplemental lump sums reflecting certain "additional" or "premium" pay did not survive defendant's Rule 12(b)(6) challenge. Id. at 161-63. This left the Athey plaintiffs with their claims for supplemental payments reflecting (i) non-overtime Sunday pay, for the time period April 7, 1993 through September 30, 1997, provided they regularly and customarily performed work on a Sunday prior to their separation, which survived defendant's motion to dismiss; and (ii) COLAs and locality pay adjustments, which defendant never challenged in its motion to dismiss. See id. at 162-64.

The court has also held it has jurisdiction over the Athey plaintiffs' claim for interest under the Back Pay Act. Athey v. United States (Athey II), 108 Fed. Cl. 617, 618-19 (2013) (Smith, J.). Further, the court determined that the Athey plaintiffs had stated a claim for relief under the BPA because, the court reasoned, their claims "adequately fall within the [Act's] defined terms of 'employee' and 'pay.'" Id. at 622.

Finally, the court also granted partial summary judgment to a sub-set of the Athey class, finding that the VA violated the lump-sum payment statute to the extent it failed to include COLAs and locality pay adjustments in supplemental lump sums for any of the

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agency's qualifying former General Schedule (GS) employees. Athey v. United States (Athey III), 115 Fed. Cl. 739, 744-48 (2014) (Campbell-Smith, J.). Liability to non-GS employees, as well as so-called "hybrid" employees, for COLAs and locality pay adjustments remains outstanding, as does liability to the entire class for non-overtime Sunday pay. See id. at 743, 748. The parties currently are engaged in damages discovery.

B. The Kandel Case

The Kandel class is comprised of former employees of "all" other agencies, excepting the VA covered in Athey; seventeen agencies who settled in earlier litigation, Archuleta v. United States, No. 99-205C; and sixty others...

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