Linza v. Saul

• Decision Date: 08 March 2021
• Docket Number: August Term 2019,No. 19-2766,19-2766
• Citation: 990 F.3d 243
• Parties: Stephen LINZA, Plaintiff-Appellee, v. Andrew SAUL, Commissioner of Social Security, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

990 F.3d 243

Stephen LINZA, Plaintiff-Appellee,

v.Andrew SAUL, Commissioner of Social Security, Defendant-Appellant.

No. 19-2766

August Term 2019

United States Court of Appeals, Second Circuit.

Argued: June 2, 2020

Decided: March 8, 2021

Andrew O. Miller, Webster Szanyi LLP, Buffalo, New York, for Plaintiff-Appellee Stephen Linza.

Sushma Soni, Attorney, Appellate Staff, Civil Division (James P. Kennedy, Jr., United States Attorney for the Western District of New York, Alisa B. Klein, Attorney, Appellate Staff, Civil Division, on the brief), U.S. Department of Justice, Washington, DC, for Defendant-Appellant United States of America.

Before: Sullivan, Park, and Nardini, Circuit Judges.

Richard J. Sullivan, Circuit Judge:

This appeal concerns whether Plaintiff-Appellee Stephen Linza's federal civil service pension from his work as a National Guard "dual status technician" constitutes a payment based wholly on work performed as a member of a uniformed service under the Social Security Act (the "Act"). The answer to that question determines whether Linza's Social Security retirement benefits will be reduced, since a provision of the Act lowers retirement benefits for a person (like Linza) who receives a monthly payment based – at least in part – on income that is not subject to Social Security taxes, unless the monthly payment is exclusively for work as a uniformed service member.

A dual status technician is "a Federal civilian employee" who is required to maintain membership in the National Guard while "assigned to a civilian position as a technician." 10 U.S.C. § 10216(a)(1) ; see also 32 U.S.C. § 709. Focusing on the position's military characteristics, the district court held that Linza's pension qualified as "a payment based wholly on service as a member of a uniformed service." 42 U.S.C. § 415(a)(7)(A)(III). The district court expressly rejected the view that a dual status technician plays a role with bifurcated civilian and military components, finding instead that Linza served only in one position – namely, as a member of the National Guard with special technical capabilities. Having so found, it then determined that all of Linza's work as a dual status technician constituted work as a uniformed service member, which in turn meant that his pension was wholly based on such service.

Urging reversal, the government argues that the plain meaning of the provision at issue, along with its statutory context, makes clear that a dual status technician's federal civil service pension is not "based wholly on service as a member of a uniformed service." We agree with the government and reverse.

I. BACKGROUND

A. Statutory Scheme

The Social Security Act pays individuals a retirement benefit based on a percentage of their pre-retirement income from "covered" employment – i.e. , income that was subject to Social Security taxes ("covered income"). See 42 U.S.C. § 415 (describing the calculation of benefits). The Act uses a weighted formula to progressively distribute benefits based on how much covered income an individual has earned over her life. The lower the average covered income an individual has earned, the higher the percentage of her average earnings she will receive in Social Security benefits. See id. § 415(a)(1)(A). As a result, "lower-income workers receive a greater return on their Social Security contributions than higher-income workers." Babcock v. Comm'r of Soc. Sec. , 959 F.3d 210, 215 (6th Cir. 2020), cert. granted , Babcock v. Saul , 2021 WL 769691, ––– U.S. ––––, ––– S.Ct. ––––, ––– L.Ed.2d –––– (U.S. Mar. 1, 2021) (No. 20-480) ).

But some employment is not covered under the Act. See 42 U.S.C. § 410(a). For example, most federal civil service jobs for employees hired before 1984 are not covered. See id. § 410(a)(5). Noncovered income is exempt from Social Security taxes and not included in the calculation of Social Security benefits. See id. § 415(b). Because only the covered income is used to calculate Social Security benefits, workers with both covered and noncovered employment would tend to have their Social Security benefits calculated as if they had low lifetime earnings. See Rudykoff v. Apfel , 193 F.3d 579, 581 (2d Cir. 1999). Under the standard formula – that is, without any adjustments – workers whose careers span covered and noncovered employment would thus receive a windfall because of the progressively weighted formula, getting a higher return on their Social Security payments relative to workers with only covered employment.

Further, noncovered positions often provide non-Social Security retirement pay through pensions or annuity plans, like the pension provided under the Civil Service Retirement System ("CSRS") for noncovered civil service employees. Thus, under the standard formula, federal employees who receive a civil service pension for noncovered work and a favorably weighted Social Security benefit could receive total retirement income that would "most likely greatly exceed that of a worker with similar earnings all under social security." Id. (internal quotation marks omitted) (quoting H.R. Rep. No. 98-25, at 22 (1983), reprinted in 1983 U.S.C.C.A.N. 219, 240).

In 1983, Congress amended the Act to eliminate this unintended windfall by introducing the Windfall Elimination Provision ("WEP"). 42 U.S.C. § 415(a)(7). The WEP modifies the standard formula for a retiree who receives "a monthly periodic payment" that "is based in whole or in part upon his or her earnings" for noncovered employment. Id . § 415(a)(7)(A).

Congress amended the WEP in 1994, adding the "uniformed service exception" at issue here. Id . § 415(a)(7)(A)(III). Under this exception, "a payment based wholly on service as a member of a uniformed service" does not trigger application of the WEP. Id. Section 410(m) of the Act defines a "member of a uniformed service" as "any person appointed, enlisted, or inducted in a component of the Army, Navy, Air Force, Marine Corps, or Coast Guard," "including a reserve component" such as the Air National Guard. Id. § 410(m); see also 38 U.S.C. § 101(27)(G). By the time Congress passed the amendment, nearly all military pensions were covered and thus exempt from the WEP. See 42 U.S.C. §§ 415(a)(7)(B)(i), 410(l )(1). Only military pensions based on inactive duty between 1956 and 1988 were subject to WEP reduction, and the uniform service exception conformed such pensions with other military retirement pay.

B. Facts

Linza joined the New York Army National Guard in 1968. In 1977, he enlisted in New York's Air National Guard and worked as a dual status technician for the Air National Guard from 1977 until April 2008, when he retired. As noted, a dual status technician is defined as a "Federal civilian employee" who "is assigned to a civilian position as a technician" and is required to be a member of the National Guard. 10 U.S.C. § 10216(a) ; see also 32 U.S.C. § 709(b)(2)–(4) (providing that dual status technicians must be members of the National Guard, hold a specified military grade, and wear the appropriate uniform). A dual status technician's responsibilities include "the organizing, administering, instructing, or training of the National Guard," as well as "the maintenance and repair of supplies issued to the National Guard or the armed forces." 32 U.S.C. § 709(a)(1)–(2) ; see also 10 U.S.C. § 10216(a)(1)(C). Linza worked as an aircraft mechanic and trainer.

As a member of the National Guard, Linza performed fifteen days of active duty a year, in addition to attending weekend drills in uniform once a month, which was likewise considered active duty. Linza also went on active-duty missions overseas as needed. To go on these missions, Linza would use "leave time [or] vacation time" or other saved time. Joint App'x at 25; see also 5 U.S.C. § 6323 (military leave provisions for federal civilian employees). In addition, Linza was required to maintain physical standards, including by passing a physical fitness test and keeping a military shave and haircut.

For his active-duty service and inactive duty training, Linza received military pay, see 37 U.S.C. §§ 204(a)(2) & 206 (military pay provisions), and the parties do not dispute that all his active-duty employment was "covered" under the Social Security Act. Though his inactive duty employment was covered from 1988 to 2008, it was not covered from 1968 to 1988.

For his work as a dual status technician, Linza received civil service pay from the Office of Personnel Management. Those wages were noncovered and therefore not subject to Social Security taxes. See Appellant's Br. at 13 (explaining that at the time Linza "entered federal civil service, the term ‘employment’ for purposes of Social Security coverage excluded work performed by federal civilian employees, such as [Linza], who participated in a federal retirement system").

In retirement, Linza has received a military pension, which is based on his military pay for active and inactive duty, some of which was covered. Linza has also received a civil service annuity – which is separate from his military pension – under the Civil Service Retirement System, based on the noncovered civilian pay he received for his work as a dual status technician. Finally, Linza has received Social Security retirement benefits.

C. Procedural History

Linza applied for Social Security benefits based on his years of covered military employment. The Social Security Administration (the "SSA") reduced Linza's benefits under the WEP due to his receipt of a monthly civil service retirement pension, which was based on his noncovered civil service. The SSA did not reduce his benefits as to his military pension, which was based at least partially on his noncovered military pay for inactive duty before 1977. The parties agree that the military pension falls within the uniformed service exception.

Linza challenged the SSA's application of the WEP to his civil service pension. He sought reconsideration, arguing that he was eligible...