Hopkins v. United States

• Decision Date: 19 March 1975
• Docket Number: No. 342-72.,342-72.
• Parties: Roy C. HOPKINS v. The UNITED STATES.
• Court: U.S. Claims Court

513 F.2d 1360

Roy C. HOPKINS v. The UNITED STATES.

No. 342-72.

United States Court of Claims.

March 19, 1975.

Thomas H. McGrail, Washington, D. C., atty. of record, for plaintiff.

Thomas W. Petersen, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.

ON DEFENDANT'S MOTION TO DISMISS PETITION

KUNZIG, Judge.

The issue presented in this case of first impression is whether we have jurisdiction to grant a money judgment against the United States for an alleged improper discharge of an employee by a nonappropriated fund instrumentality of the United States. We hold that the 1970 amendment to the Tucker Act (Pub.L. 91-350) confers jurisdiction on this court over the claim asserted by plaintiff.

Plaintiff was discharged on August 6, 1968 from his position as a civilian employee of the European Exchange System of the Army and Air Force Exchange Service (AAFES), a nonappropriated fund instrumentality. He was discharged for alleged acts of misconduct incompatible with continued employment. Plaintiff seeks by this suit to recover from the United States back pay and appropriate allowances for the period following his alleged improper discharge. His action is grounded on the claim that his separation was arbitrary and capricious, was a breach of his contract of employment, and was in violation of due process and of prescribed regulations and procedures.

The United States has moved to have the petition dismissed on the procedural ground that no claim is stated within the jurisdiction of this court. For the reasons given below, we deny defendant's motion.¹

LEGAL BACKGROUND

The doctrine of sovereign immunity precludes suits against the Federal Government unless such immunity has been specifically waived by an act of Congress. United States v. Clarke, 33 U.S. (8 Pet.) 436, 443, 8 L.Ed. 1001 (1834). In this court, under the Tucker Act, 28 U.S.C. § 1491 (1970), only suits against the United States are permitted. Therefore, our jurisdiction exists only where such immunity has been waived. Prior to 1970, no act of Congress had waived sovereign immunity with respect to contracts of nonappropriated fund instrumentalities.

In 1942 the Supreme Court decided Standard Oil Co. v. Johnson, 316 U.S. 481, 62 S.Ct. 1168, 86 L.Ed. 1611 (1942). It held that a state statute which imposed a tax on the distribution of motor vehicle fuel would be unconstitutional if it was meant to apply to the Army's post exchanges. The exchanges, the Court said, "are arms of the government deemed by it essential for the performance of governmental functions. They are integral parts of the War Department * * *." However, the Court also stated that the "government assumes none of the financial obligations of the exchange." 316 U.S. at 485, 62 S.Ct. at 1170.

This latter statement in Johnson, supra, has served as the basis for a series of decisions of this court holding that we lack jurisdiction over disputes involving claims against nonappropriated fund activities. The first such case was Borden v. United States, 126 Ct.Cl. 902, 116 F.Supp. 873 (1953). Borden had contracted with the Army Exchange Service to be a senior accountant for a 2-year period. The issue raised was whether the United States could be sued on this employment contract with a nonappropriated fund instrumentality. We held the United States could not be sued because, as the Supreme Court held in Johnson, supra, if the Government assumed none of the Army Exchange Service's financial obligations, then no consent had been given by the Government to such suits. A similar result was reached in Pulaski Cab Co. v. United States, 157 F.Supp. 955, 141 Ct.Cl. 160 (1958), wherein plaintiff company had a contract with an exchange to provide cab services. Again, in G. L. Christian and Assoc. v. United States, 312 F.2d 418, 160 Ct.Cl. 1 (1963), cert. denied, 375 U.S. 954, 84 S.Ct. 444, 11 L.Ed.2d 314 (1963), we said in dictum, "The contracts of such agencies post exchanges, et al., although made by Government officers, do not bind appropriated funds, do not create a debt of the United States, and may not be vindicated in this court." 312 F.2d at 425, 160 Ct.Cl. at 14. More recently, in Kyer v. United States, 177 Ct.Cl. 747, 369 F.2d 714 (1966), cert. denied, 387 U.S. 929, 87 S.Ct. 2050, 18 L.Ed.2d 990 (1967), we arrived at the same result with regard to a sales commission contract with a nonappropriated fund agency other than a post exchange.

Seeing the failure by other litigants to obtain relief under a contract theory, one plaintiff attempted to recover via a different route. In Keetz v. United States, 168 Ct.Cl. 205 (1964), the plaintiff sued to recover back pay on the ground that his separation from the AAFES as an employee was illegal. Rather than to assert a contract of employment, Keetz alleged that civilian employees of post exchanges were Federal employees and relied on the violation of regulations of the executive department as a jurisdictional basis for his suit. We denied recovery, holding that plaintiff was not a Federal employee. No elaboration was made, but the Keetz court cited Gradall v. United States, 329 F.2d 960, 161 Ct.Cl. 714 (1963), in which it was held that plaintiff's employment in the AAFES did not constitute a civilian "office or position under the United States Government" within the meaning of the dual compensation provision, § 212(a) of the Economy Act of 1932. In Gradall, the court reasoned:

The trend of the pertinent decisions, statutes and regulations has generally been to establish that employees of Exchanges are not Federal employees, except for the purpose of unemployment compensation. However, this trend does not supply a definitive answer to what is meant by holding a position "under the United States Government" under the Economy Act of 1932. The Government contends that the logical and reasonable test is whether the services performed in the position constitute "Federal service" because performed for a Federal instrumentality, and not whether the person who holds the position is compensated by appropriated or nonappropriated funds. To accept this test as determinative merely because plaintiff performed services for a Federal instrumentality would be to accept an unrealistic and nebulous view of the actual "position" of both plaintiff and the instrumentality. For example, the American Red Cross, the United Service Organizations, the national banks, and several other institutions are "instrumentalities" of the Government. However, their employees are not subject to the dual compensation restrictions of the Act of 1932. No one has ever contended that they hold a position "under the United States Government" under the Act.

Gradall, 329 F.2d at 964, 161 Ct.Cl. at 720-21.

In summary, the decisions of this court prior to the enactment of Pub.L. 91-350 (1970) have held that no jurisdiction has been granted to hear claims against the United States where a nonappropriated fund agency is involved since (1) the United States did not obligate itself on contracts of such agencies, and (2) employees of such agencies do not qualify as Federal employees.

ENACTMENT OF PUBLIC LAW 91-350

While this court recognized a lack of jurisdiction over claims against nonappropriated fund activities, we also recognized the harshness of the result which effectively precluded alleged injured plaintiffs from obtaining a forum in which the merits of their claims could be aired. In Keetz, supra, we stated:

We are aware that plaintiff is placed in somewhat of a difficult position in that if he seeks redress of his claim in a Federal District Court directly against the Exchange Service his claim might be dismissed. * * * However, we believe that in these situations (especially where the question of the waiver of sovereign immunity is involved) it is up to Congress to remedy this apparent harsh result, and the courts should refrain from legislating by judicial fiat.

Id. 168 Ct.Cl. at 207.

The injustice and inequity worked by this jurisdictional "loophole" was again identified in Kyer, supra, where we stated:

We are mindful of the fact that the result reached spells an unduly harsh result. Plaintiff has searched in vain for a forum in which the merits of his claim might be aired. We add, though perhaps of little comfort, that the lack of jurisdiction which plaintiff has faced at every turn is a matter which sorely needs congressional correction.

Id. 369 F.2d at 719, 177 Ct.Cl. at 754.

It was within this setting that Congress, in 1970, enacted Public Law 91-350. The Tucker Act was amended in order to remove the sovereign immunity of the United States with respect to contracts of post exchange operations conducted within the military and the National Aeronautics and Space Administration. See H.R.Rep.No.91-933, 91st Cong., 2d Sess. 3 (1970) U.S.Code Cong. & Admin.News 1970, p. 3477.²

By this act, both 28 U.S.C. § 1346(a)(2)³ and 28 U.S.C. § 1491⁴ were amended to include the following new sentence:

For the purpose of this paragraph, an express or implied contract with the Army and Air Force Exchange Service, Navy Exchanges, Marine Corps Exchanges, Coast Guard Exchanges, or Exchange Councils of the National Aeronautics and Space Administration shall be considered an express or implied contract with the United States.

Thus, for the first time, Congress expressly waived sovereign immunity to claims arising from post exchange contracts, thereby bringing such actions within our jurisdiction under the Tucker Act.

Applying this new amendment, plaintiff has asserted his claim can now be heard in this court. Relying on Keetz, supra, i. e., exchange employees are not Federal employees, plaintiff argues that his relationship with the AAFES is contractual, the same as employees in the private sector. He further argues that Congress intended to afford exchange employees...