Burns v. United States Postal Service

• Decision Date: 01 August 1974
• Docket Number: No. 73 Civ. 2444.,73 Civ. 2444.
• Citation: 380 F. Supp. 623
• Parties: Dalton BURNS, President of the New York State Branch of the National Association of Postal Supervisors ("N.A. P.S."), et al., Plaintiffs, v. The UNITED STATES POSTAL SERVICE et al., Defendants.
• Court: U.S. District Court — Southern District of New York

380 F. Supp. 623

Dalton BURNS, President of the New York State Branch of the National Association of Postal Supervisors ("N.A. P.S."), et al., Plaintiffs, v. The UNITED STATES POSTAL SERVICE et al., Defendants.

No. 73 Civ. 2444.

United States District Court, S. D. New York.

August 1, 1974.

Donald F. Menagh, New York City, for plaintiffs; Irwin Geller, New York City, of counsel.

Paul J. Curran, U.S. Atty, S.D.N.Y., New York City, for defendants; Taggart Adams, Asst. U.S. Atty., of counsel.

METZNER, District Judge:

Before the court for decision are cross-motions for summary judgment pursuant to Rule 56, Fed.R.Civ.P.

This is an action arising under the Postal Reorganization Act of 1970, 39 U.S.C. § 101 et seq. (Reorganization Act). Plaintiffs are sixteen supervisory employees of the United States Postal Service (Postal Service), who received certain compensation in April 1973 for which no contributions were made to the Civil Service Retirement Fund (Retirement Fund). Suing for themselves and others similarly situated, they seek a declaration that defendants have violated the Reorganization Act by refusing to treat this compensation as "basic pay," and by refusing to make contributions to the Retirement Fund. They also seek an order directing that such contributions to the Retirement Fund be made, and that basic pay be recomputed for the period from November 14, 1972 through March 3, 1973.

As a result of wage increases granted to the rank and file employees of the Postal Service in July 1971, the supervisory personnel, like the plaintiffs, were actually earning less than these employees. Therefore, the Postal Service issued Postal Service Order 72-3 on June 16, 1972, to provide a comparable pay increase and cost-of-living adjustment for the plaintiff class. These increases were mandated by 39 U.S.C. § 1004(a).

When this Order was issued, the nation was in the midst of Phase Two. Accordingly, any increases in compensation required prior approval of the Federal Pay Board. Postal Service Order 72-3 stated that its effective date of July 8, 1972 was conditioned on Pay Board approval of the "necessary pay adjustments" contained therein.

Subsequently, the Pay Board rejected the Postal Service's application to pay these increases on the ground that postal supervisory employees had already received an increase during the twelve months prior to the 1972 request for approval.

In November 1972, the Postal Service filed an application with the Pay Board for an exception to the wage ceilings then in effect for the period beginning November 11, 1972. It sought a general increase of $500 in the salary of the postal supervisors, as well as a cost-of-living adjustment of $166 per year. On February 15, 1973, the Pay Board granted the Postal Service permission to make certain "pay adjustments" not to exceed 5.9 per cent retroactive to November 14, 1972.

On March 20, 1973, the Postal Service issued Postal Service Order 73-1 granting postal supervisors a "salary increase" of $500 per year and a cost-of-living increase of $166 per year, to be effective March 3, 1973. In addition, the Order provided that the cost of living adjustment was not to be considered "an increase in basic compensation," and was "not applicable to benefit plans determined with respect to basic salary such as life insurance and retirement benefits."

It also provided for the lump-sum payment of compensation for the period between November 14, 1972 and March 3, 1973, which it denominated an "equalization payment," and which was not to be considered as basic pay for retirement and insurance purposes.

Under Section 1005(d) of Title 39, supervisory employees of the Postal Service are covered by the civil service retirement provisions of Chapter 83 of Title 5. In addition, these statutes require the Postal Service to "deduct and withhold 7 per cent of the basic pay of an employee," and to contribute an equal amount out of its own funds. (Emphasis added.)

As a result of the Postal Service's alleged improper classification of the equalization payment and the cost-of-living adjustment as nonbasic pay, plaintiffs claim that the Postal Service's contributions to the Retirement Fund for the period between November 14, 1972 and March 3, 1973 were not as much as they should have been.

In addition to the claimed loss of retirement benefits, plaintiffs also allege that the Postal Service's refusal to treat the equalization payment as basic pay deprived them of additional "premium wages" for overtime, night differential and Sunday work. Each of these premium payments is based on an employee's annual base pay. Plaintiffs have made a random sample of work records for the period between November 14, 1972 and March 3, 1973 and have determined that, because of the holiday season, an average supervisor worked approximately 60 hours in overtime, 240 to 400 night hours, and a varying number of Sundays.

Both parties have agreed that under the Reorganization Act, the Postal Service's authority to "set and classify the compensation and benefits of all officers and employees," is a matter of discretion. The threshold question we must consider, however, is whether the exercise of that discretion is subject to judicial review.

In its brief, the Postal Service maintained that its decision to classify the compensation in this case as nonbasic pay was a rational exercise of discretion which is reviewable by the court. At oral argument, however, the Postal Service argued for the first time that its action is not reviewable, citing Panama Canal Co. v. Grace Line, 356 U.S. 309, 78 S.Ct. 752, 2 L.Ed.2d 788 (1958).

The Panama Canal case stands for the proposition that certain agency decisions which Congress has committed to the agency's discretion, such as the setting of tolls for ships traversing the Panama Canal, involve "questions of judgment requiring close analysis and nice choices," and are not subject to judicial review under the Administrative Procedure Act (APA). 356 U.S. at 318, 78 S.Ct. at 758.

Such a claim must be rejected in this case. First of all, the Panama Canal decision, which has been described by this Circuit as "inscrutable" (Langevin v. Chenango Court, Inc., 447 F.2d 296, 303 (2d Cir. 1971)), is inapplicable to our situation. Section 410 of the Reorganization Act states that "no Federal law, . . . including the provisions of chapters 5 and 7 of title 5, shall apply to the exercise of the powers of the Postal Service." Chapters 5 and 7 are the judicial review provisions of the APA.

The fact that the APA is not applicable, however, does not indicate a congressional desire to foreclose judicial review of actions, such as the classification of compensation and benefits. The Supreme Court has repeatedly cautioned that "preclusion of judicial review of administrative action adjudicating private rights is not lightly to be inferred," (Barlow v. Collins, 397 U.S. 159, 166, 90 S.Ct. 832, 837, 25 L.Ed.2d 192 (1970)), and that "judicial review . . . will not be cut off unless there is persuasive reason to believe that such was the purpose of Congress," (Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967)).

There is nothing in the legislative history of the Reorganization Act which suggests that Congress either impliedly or expressly intended to commit the subject matter of this suit entirely to the Postal Service's discretion. In fact, just the opposite conclusion may be inferred from the enactment of Section 409 which grants original jurisdiction to the district court of "all actions brought by or against the Postal Service" except suits which seek judicial review of postal rates. As to that latter category, Congress provided for original jurisdiction in the Circuit Courts of Appeals. 39 U.S.C. § 3628. The existence of a jurisdiction-conferring section like Section 409 provides the basis for maintaining a "`non-statutory' review action." Byse & Fiocca, Section 1361 of the Mandamus and Venue Act of 1962 and "Nonstatutory" Judicial Review of Federal Administrative Action, 81 Harv.L.Rev. 308, 321, 323 (1967).

Secondly, unlike the Panama Canal case, the classification of compensation as basic pay does not appear from this case to involve a subject matter inappropriate for judicial consideration. Langevin v. Chenango Court, Inc., supra at 303. This is especially true because of the statutory constraints which Congress has placed on matters involving Postal employees' compensation and fringe benefits. (See, 39 U.S.C. §§ 1003, 1004, 1005(f); cf., Davis Associates, Inc. v. Secretary, HUD, 498 F.2d 385 (1st Cir. 1974)).

The standard for review in this case is whether the issuance of Order 73-1 was arbitrary, capricious or an abuse of discretion. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 413-416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971); Association of American Publishers, Inc. v. Governors of the United States Postal Service, 485 F.2d 768, 775 (D.C.Cir.1973); cf. Marrone v. United States Immigration and Naturalization Service, 500 F.2d 418 (2d Cir. 1974).

We turn first to the equalization payment. Defendants make two arguments why their decision to treat this payment as nonbasic pay should not be overturned. First, they claim that the payment does not meet the statutory definition of basic pay. Secondly, they argue that Order 73-1 was a rational exercise of discretion.

Order 73-1 states that the equalization payment was to be in addition to base pay. Excluded from the statutory definition of base pay is "pay given in addition to base pay of the position as fixed by law or regulation." Section 8331(3). Defendants rely on the wording of their own order to sustain their position, overlooking the fact that the issue in this lawsuit is the propriety of that order.

The inescapable conclusion from the sequence of events in this case from 1971 to March 1973 is that the lump sum equalization payment was in reality nothing...