Payne v. Panama Canal Co.

• Decision Date: 26 November 1979
• Docket Number: No. 78-2197,78-2197
• Parties: Arthur C. PAYNE, Plaintiff-Appellant, Cross-Appellee, v. PANAMA CANAL COMPANY, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 155

607 F.2d 155

Arthur C. PAYNE, Plaintiff-Appellant, Cross-Appellee, v. PANAMA CANAL COMPANY, Defendant-Appellee, Cross-Appellant.

No. 78-2197.

United States Court of Appeals,

Fifth Circuit.

Nov. 26, 1979.

Henry L. Newell, Daniel D. Douglass, Balboa, Canal Zone, for plaintiff-appellant cross-appellee.

McKabney, Lindley & McQuary, Jess K. Totten, Dwight A. McKabney, Balboa Heights, Canal Zone, for defendant-appellee cross-appellant.

Appeals from the United States District Court for the District of the Canal Zone.

Before THORNBERRY, CHARLES CLARK and KRAVITCH, Circuit Judges.

CHARLES CLARK, Circuit Judge:

On May 9, 1964, the Panama Canal Company (PCC) discharged Arthur C. Payne from his position of Administrative Services Assistant. Payne appealed without success within the PCC and to the Civil Service Commission. In November 1965, Payne brought suits in the United States District Court for the District of Columbia seeking reinstatement and in the United States Court of Claims seeking back pay. This latter action was transferred to the United States District Court for the District of Columbia. On April 11, 1968, the district court dismissed Payne's suit for reinstatement for want of prosecution. On April 15, 1970, the district court dismissed his claim for back pay. The district court subsequently set aside both orders of dismissal. In the action seeking reinstatement, the district court dismissed one of three grounds offered in support of the discharge and remanded the case to the Civil Service Commission for reconsideration. On June 21, 1972, the Commission found the discharge unsustainable and imposed a ninety-day suspension, ordering the PCC to "retroactively restore Mr. Payne to the position from which he was removed or one of like seniority, status, and pay." On July 5, 1972, the district court dismissed the suits for reinstatement and back pay without prejudice on the ground of mootness. In May 1974, Payne submitted a back pay claim to the PCC in the amount of $187,665.00. PCC refused to acknowledge liability for any portion greater than $12,248.88. This dispute centered on whether general principles of equity together with various statutory provisions gave Payne a right to recover the following elements of his claim: (1) attorney's fees; (2) accumulated annual leave; (3) state and local taxes paid on interim earnings; (4) housing allowance; (5) costs of storage of household goods; (6) inflation factor; and (7) prejudgment interest. ¹

Being unable to compromise, Payne brought this action for a declaratory judgment. In a bifurcated judgment, the United States District Court for the District of the Canal Zone gave Payne credit for state and local taxes paid on interim earnings, ordered an inflation factor be used when calculating the back pay award, and found a grant of prejudgment interest proper. The court denied the remaining elements of the claim. Both parties appeal. We affirm in part and reverse in part.

The PCC argues that the dismissal of Payne's prior suits for reinstatement and back pay bars the present action for declaratory relief on grounds of res judicata. However, the United States District Court for the District of Columbia dismissed the prior actions on grounds of mootness and entered the dismissals without prejudice. To operate as a bar by res judicata, the prior action must have concluded in a final judgment rendered on the merits. Lawlor v. National Screen Service Corp., 349 U.S. 322, 326, 75 S.Ct. 865, 99 L.Ed. 1122 (1955); Cromwell v. County of Sac, 94 U.S. 351, 352, 24 L.Ed. 195 (1876). The dismissal without prejudice of the prior actions on grounds of mootness does not serve as a final adjudication on the merits so as to bar this action. F.R.Civ.P. 41(b). See United States v. Seckinger, 408 F.2d 146, 148-49 (5th Cir. 1969), Reversed on other grounds,397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970). See also De Volld v. Bailar, 568 F.2d 1162, 1165-66 (5th Cir. 1978).

The parties agree that the provisions of the Back Pay Act, 5 U.S.C. § 5596, and the statutory provisions relating to personnel actions taken against preference eligible employees, 5 U.S.C. §§ 7512, 7701, apply to this claim. These provisions, first enacted in 1966, were amended by Congress in 1975 and 1978. ² The applicability of these amendments to the present claim is disputed.

In 1975, Congress amended the provisions of § 5596 regarding credit for accumulated annual leave. ³ Under this amendment, annual leave restored to an employee that is in excess of the maximum leave accumulation permitted by law is credited to a separate leave account. Upon separation from agency service, an employee is entitled to receive a lump-sum payment for any leave credited to such an account that is unused and still available. 5 U.S.C. § 5551(a). See 5 C.F.R. § 550.804(f). Congress expressly made clear its intent for the 1975 amendment to "apply to any employee found, on or after March 30, 1966, to have undergone an unjustified or unwarranted personnel action the correction of which entitled or entitles such employee to the benefits provided under section 5596 of Title 5, United States Code." Act of Dec. 23, 1975, Pub.L. No. 94-172, § 1(b), 89 Stat. 1025. Since Payne was adjudged on June 21, 1972, to be the victim of an unjustified or unwarranted personnel action, the 1975 amendment clearly applies to his claim.

Congress amended §§ 5596, 7512 and 7701, and added § 7513 in 1978. ⁴ The amendments were passed on October 13, 1978, and took effect ninety days thereafter. Civil Service Reform Act of 1978, § 907, 92 Stat. at 1227. Congress was silent as to whether these amendments would apply to pending claims of employees found, prior to the effective date of the amendment, to have suffered an unjustified or unwarranted personnel action.

In the absence of a statutory direction or legislative history to the contrary, an appellate court must apply the law in effect at the time it renders its decision, thus giving effect to the intervening law even though such enactments do not explicitly recite that they are to be applied to pending cases. Bradley v. School Board of City of Richmond, 416 U.S. 696, 711-16, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974); Thorpe v. Housing Authority of City of Durham, 393 U.S. 268, 281-83, 89 S.Ct. 518, 21 L.Ed.2d 474 (1969). Payne's claim for back pay should be considered in light of the 1978 amendments to the applicable statutes.

In addition to the statutory basis for the claim of back pay, Payne seeks a declaration of relief based upon general principles of equity. He contends that Congress, by establishing the PCC as a corporate entity capable of suing and being sued in its corporate name, See C.Z.Code, tit. 2, § 65, waived the sovereign immunity of the United States and subjected the PCC to suit in any court of competent jurisdiction, including courts of equity. Payne is correct in contending Congress waives sovereign immunity when it authorizes a government agency to sue and be sued in its own name. Reconstruction Finance Corp. v. J. G. Menihan Corp., 312 U.S. 81, 84-85, 61 S.Ct. 485, 85 L.Ed. 595 (1941); Federal Housing Administration v. Burr, 309 U.S. 242, 245, 60 S.Ct. 488, 84 L.Ed. 724 (1940). However, Congress may limit such a waiver by imposing conditions and restrictions it deems necessary. Crown Coat Front Co. v. United States, 386 U.S. 503, 520, 87 S.Ct. 1177, 18 L.Ed.2d 256 (1967); Honda v. Clark, 386 U.S. 484, 501, 87 S.Ct. 1188, 18 L.Ed.2d 244 (1967); Hart v. United States, 585 F.2d 1280 (5th Cir. 1978), Cert. denied, --- U.S. ----, 99 S.Ct. 2882, 61 L.Ed.2d 310 (1979); Ducharme v. Merrill-National Laboratories, 574 F.2d 1307, 1311 (5th Cir. 1978), Cert. denied, 439 U.S. 1002, 99 S.Ct. 612, 58 L.Ed.2d 677 (1979). See also Tsakos Shipping and Trading S. A. v. M/T "Taboga," 597 F.2d 66 (5th Cir. 1979). In the instant case, while Congress waived sovereign immunity by establishing the PCC as a sue and be sued corporation, it conditioned its waiver by requiring that claims for back pay arising from an unjustified personnel action be brought in a specific manner. Rather than being considered under general principles of equity, Payne's claim for back pay must be assayed by the provisions of the Back Pay Act of 1966, as amended. See 5 U.S.C. §§ 105, 5595-96. In addition, because Payne is a veteran and thus a preference eligible employee within the meaning of 5 U.S.C. § 2108, his claim also must be considered under the provisions of 5 U.S.C. §§ 7511-13, 7701.

I. ATTORNEY'S FEES

Payne claims reasonable attorney's fees relating to the personnel action as an element of his back pay award. We affirm the district court's denial of this item. The American rule is that a prevailing party ordinarily is not entitled to recover attorney's fees unless a statute or contract so provides. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247-68, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975); Fleischmann Distilling Corp. v. Maier Brewing Co., 386 U.S. 714, 717-18, 87 S.Ct. 1404, 18 L.Ed.2d 475 (1967).

As amended in 1978, both the Back Pay Act and the statutory provisions relating to preference eligible employees authorize the award of attorney's fees in certain instances. However, Payne's claim does not fall within those specified. Section 5596 authorizes attorney's fees where the personnel action relates either "to an unfair labor practice or (to) a grievance processed under a procedure negotiated in accordance with Chapter 71" of title 5. The record does not disclose that the PCC's discharge of Payne in 1964 constituted an unfair labor practice as defined in 5 U.S.C. § 7116(a). Furthermore, it is clear that Payne's grievance was not processed under a procedure negotiated in accordance with chapter 71. Those provisions, enacted as part of the Civil Service Reform Act of 1978, were not in existence at the time Payne pursued agency review. The attorney's fee provisions of § 5596 are...