CANAL ZONE CENTRAL LABOR UNION, ETC. v. Fleming

• Decision Date: 10 November 1965
• Docket Number: Civ. No. 5858.
• Citation: 246 F. Supp. 998
• Parties: CANAL ZONE CENTRAL LABOR UNION AND METAL TRADES COUNCIL, AFL-CIO, an employee-labor organization, Paul W. Bramlett, an employee of the Panama Canal Company, Pauline F. Blaney, an employee of the Canal Zone Government, Albert F. Hanson, an employee of the Canal Zone Government, James J. O'Donnell, an employee of the Panama Canal Company, Lydia M. Myers, an employee of the Canal Zone Government, Plaintiffs, v. Robert J. FLEMING, Jr., Governor of the Canal Zone and President of the Panama Canal Company and Stephen Ailes, Secretary of the Army and Sole Stockholder in the Panama Canal Company, Defendants.
• Court: U.S. District Court — Panama Canal Zone

246 F. Supp. 998

CANAL ZONE CENTRAL LABOR UNION AND METAL TRADES COUNCIL, AFL-CIO, an employee-labor organization, Paul W. Bramlett, an employee of the Panama Canal Company, Pauline F. Blaney, an employee of the Canal Zone Government, Albert F. Hanson, an employee of the Canal Zone Government, James J. O'Donnell, an employee of the Panama Canal Company, Lydia M. Myers, an employee of the Canal Zone Government, Plaintiffs, v. Robert J. FLEMING, Jr., Governor of the Canal Zone and President of the Panama Canal Company and Stephen Ailes, Secretary of the Army and Sole Stockholder in the Panama Canal Company, Defendants.

Civ. No. 5858.

District Court, Canal Zone Balboa Division.

November 9, 1965.

As Amended November 10, 1965.

Albert J. Joyce, Jr., Balboa, Canal Zone, for plaintiffs.

Rowland K. Hazard, U. S. Atty., Balboa, Canal Zone, for defendants.

CROWE, District Judge.

This action was begun by plaintiffs on November 12, 1964 by the filing of a complaint praying for a declaratory judgment that certain regulations promulgated by the defendant, Secretary of the Army, are invalid and for an injunction restraining the further implementation of the regulations.

The Canal Zone Government is an independent agency of the United States administered by a Governor under the supervision of the President or such officer of the United States as may be designated by the President. 2 C.Z.C. 31. The President has delegated this supervision to the Secretary of the Army under Ex. O. 10595, 3 C.F.R. (1954-58 Comp.) p. 242, United States Code Congressional and Administrative News, 1955, p. 1058.

The Panama Canal Company is a corporate agency and instrumentality wholly owned by the United States. 2 C.Z.C. 62. The Governor serves, ex officio, as president of the Company. 2 C.Z.C. 64.

Wage and employment practices of both the Government and the Company are regulated by Subchapter III of the Canal Zone Code, 2 C.Z.C. 141 et seq.

2 C.Z.C. 155 provides:

"(a) The President shall coordinate the policies and activities of the respective departments under this subchapter, and may promulgate regulations necessary and appropriate to carry out the provisions and accomplish the purposes of this subchapter.

"(b) The President may delegate any authority vested in him by this subchapter, and may provide for the redelegation of any such authority. 76A Stat. 19."

President Johnson delegated his power under the statute to the Secretary of the Army in Ex. O. 11171 of August 20, 1964, 29 F.R. 11897 United States Code Congressional and Administrative News, 1964, p. 4209.

For many years the employees of the Canal Zone Government and the Panama Canal Company, and before the creation of these entities, the employees of the preceding organizations received a 25 per cent overseas (tropical) differential. On July 28, 1964, the Secretary announced his proposal to modify the differential on the basis that environmental and cost-of-living factors, which at one time may have justified it, no longer exist.

The Secretary on July 29, 1964 modified the existing regulation, 5 C.F.R. 1204.12 by publishing in the Federal Register an interim regulation which froze the differential for each U. S. citizen employee in the dollar amount authorized for him as of July 20, 1964 and prohibited further increases in the differentials pending further revisions of the regulations.

On October 10, 1964 the Secretary published in the Federal Register a regulation which superseded and terminated the interim regulation. The new regulation, 29 F.R. 14024, provides that the tropical differential be fixed at 15 per cent of the basic compensation as to employees newly hired. As to employees currently on the payrolls, with certain exceptions, the dollar amount then being paid would not be reduced, but would be retained at the fixed dollar amount, without increase during future pay raises, until such time as 15 per cent of a given employee's attained salary should exceed his fixed dollar amount of differential. In other words, the 25 per cent differential would be gradually reduced to 15 per cent.

The new regulation excludes from the differential married women whose husbands reside in the Canal Zone or the Republic of Panama and children of such residents who are minors or who do not maintain separate households. (The termination date of their differentials becomes effective two years after the effective date of the regulation.)

The fixed or frozen differential as to the employees currently on the payroll was calculated as of July 5, 1964. Subsequent to that date the Canal Zone Government and the Panama Canal Company granted increases in basic compensation to their employees similar to the increases enacted in P.L. 88-426, the Government Employee's Salary Reform Act of 1964, 78 Stat. 400. These increases were retroactive to the first pay periods in July (July 5, 1964) but were not considered to affect the retained differential which had been set at the amount currently due as of July 20, 1964. In other words, the retroactive pay increase created a condition whereby the employees suffered an immediate diminution from the 25 per cent.

Plaintiffs Paul W. Bramlett and James J. O'Donnell are employed by the Panama Canal Company and were so employed on July 20, 1964. Bramlett is a control house operator in the non-manual category and O'Donnell is a senior operator in power branch group special category — wage board. Both allege adverse effects on their retirement benefits. Bramlett alleges a loss of $2.40 salary per pay period and O'Donnell alleges a loss of 23 cents per hour.

Plaintiffs Albert Hanson, Pauline Blaney and Lydia Myers are employees of the Canal Zone Government and were so employed on July 20, 1964. All three allege an adverse effect on their retirement benefits and Hanson, a window clerk in the postal group special category, alleges a reduction of $3.20 in his salary per pay period.

Plaintiff Blaney, a staff nurse in the non-manual category, alleges a reduction of $1.60 in her pay per pay period, and plaintiff Myers, a nurse-anesthetist, alleges a reduction of $2.40 in salary per pay period. Both allege that as they are married female employees the regulation discriminates against them by reason of their sex and marital status and that within a period of two years they will each be deprived of any tropical differential.

They further complain that the regulation is in contravention of Ex. O. 10980 of December 16, 1961 (26 F.R. 12059) United States Congressional Code and Administrative News 1962, p. 4252, in which the President set forth his desire to assure non-discrimination on the basis of sex and to enhance constructive employment opportunities for women in the employ of the United States Government and its agencies.

The plaintiff, Canal Zone Central Labor Union & Metal Trades Council, AFL-CIO alleges that the defendant, Ailes, promulgated the regulation and defendant, Fleming, implemented and effectuated it in the Canal Zone without first consulting with this plaintiff. It claims formal recognition under Ex. O. 10988 (3 C.F.R. (1959-63 Comp.) p. 521, United States Congressional Code and Administrative News, 1962, p. 4269, and alleges that under section 5(b) of that Order it was entitled to be consulted prior to the formulation or modification of rates of pay and compensation of Canal Zone Government and Panama Canal Company employees.

There are no questions of fact except concerning the matter of consultation with the plaintiff trade union. Counter affidavits have been submitted on that question.

The Secretary of the Army has not been served with process and has not entered his appearance.

As the interim regulation published on July 29, 1964 has been superseded and terminated by the regulation issued on October 10, 1964, 29 F.R. 14024, its terms will not be discussed in this opinion.

The code provision in question is Title 2, Canal Zone Code, 146, as follows:

"§ 146. Additional allowance and differential

"In addition to established basic compensation, there shall be paid to each employee who is a citizen of the United States such amounts as the head of the department concerned determines to be payable, as follows:

"(1) an allowance for taxes which operate to reduce his disposable income in comparison with the disposable incomes of those employees who are not citizens of the United States; and

"(2) an overseas (tropical) differential not in excess of an amount equal to 25 percent of the aggregate amount of the rate of basic compensation so established and the amount of the allowance provided in accordance with paragraph (1) of this section. 76A Stat. 17."

OPINION 1.

Defendants proceed on the premise that Title 2, Canal Zone Code, Section 146 without doubt reposes in the "head of the department concerned" the discretionary authority to establish or not an overseas differential as long as it does not exceed 25 per cent of the aggregate amount of the rate of basic compensation paid to the U. S. Citizen employee. They assume the position that "there is nothing in any statute or executive order which requires that a tropical differential in any fixed amount be paid to such employees in the Canal Zone."

Such a position is erroneous as the only reasonable interpretation that can be put upon Section 146 supra is that it is mandatory and that the differential shall be 25 per cent but "not in excess" of that sum. If any other construction is placed upon the meaning of the section it will lead to the intolerable differences and conditions that are the reason for this lawsuit.

Under the weird concoction that has been issued from the office of the Secretary of the Army we are confronted with a condition where two nurses, being U. S. citizens of the same age, education, and training, will work side by side doing the same work and one will receive at least 15 per cent less than the other merely because she is married. The same constant tropical heat will affect...