Perez v. Army and Air Force Exchange Service, s. 80-2472

• Decision Date: 04 June 1982
• Docket Number: Nos. 80-2472,81-1080,s. 80-2472
• Citation: 680 F.2d 779
• Parties: 29 Empl. Prac. Dec. P 32,809, 220 U.S.App.D.C. 230 Amalio M. PEREZ, Petitioner, v. ARMY AND AIR FORCE EXCHANGE SERVICE and Merit Systems Protection Board, Respondents. Mary A. WALTERS, Petitioner, v. DEPARTMENT OF THE NAVY and Merit Systems Protection Board, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 779

680 F.2d 779

29 Empl. Prac. Dec. P 32,809, 220 U.S.App.D.C. 230

Amalio M. PEREZ, Petitioner, v. ARMY AND AIR FORCE EXCHANGE SERVICE and Merit Systems

Protection Board, Respondents.

Mary A. WALTERS, Petitioner, v. DEPARTMENT OF THE NAVY and Merit Systems Protection Board,

Respondents.

Nos. 80-2472, 81-1080.

United States Court of Appeals, District of Columbia Circuit.

Argued Nov. 16, 1981.

Decided June 4, 1982.

As amended June 4, 1982.

Petitions for Review of Orders of the Merit Systems Protection board.

Charles A. Hobbie, Washington, D. C., with whom James R. Rosa, Washington, D. C., was on the brief, for petitioners.

Robert A. Reutershan, Atty., Dept. of Justice, Washington, D. C., with whom Charles F. C. Ruff, U. S. Atty., Washington, D. C., at the time the brief was filed, Royce C. Lamberth, Kenneth M. Raisler and Scott T. Kragie, Asst. U. S. Attys., Washington, D. C., Irene Jackson, Asst. Gen. Counsel, Army and Air Force Exchange Service, and Marian H. Harris, Associate Chief Trial Atty., Dept. of the Navy, Washington, D. C., were on the brief, for respondents.

Jane M. Edmisten, Atty., Merit Systems Protection Board, Washington, D. C., entered an appearance and filed a statement in lieu of brief for respondent, Merit Systems Protection Bd.

Before WRIGHT and WILKEY, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

Petitioners in these consolidated cases ¹ appealed their job terminations to the Merit Systems Protection Board ("MSPB" or "Board"), and now challenge in this court the Board's determination that, by reason of petitioners' status as nonappropriated fund employees, it lacked jurisdiction under the Civil Service Reform Act of 1978 to hear those appeals. For the reasons hereinafter appearing, we find that the Board correctly understood its jurisdictional limits, and we affirm its dismissal of the appeals.

I.

A.

Petitioner Amalio M. Perez held a position as a salesclerk with the South Texas Area Exchange, Lackland Air Force Base, a local facility of the Army and Air Force Exchange Service ("AAFES"). The AAFES is a nonappropriated fund instrumentality of the United States, a term denoting an activity whose monies are not received by congressional appropriation, ² and whose employees are paid primarily from income generated by the activity itself. ³ ] Functions of the AAFES include providing merchandise and services to authorized patrons, and furnishing motion picture entertainment to military personnel at Army and Air Force installations. Employees of the AAFES are subject to regulations issued jointly by the Army and Air Force. ⁴

By letter dated February 11, 1980, Perez learned that the AAFES proposed to "separate (him) for cause" following the passage of thirty days from Perez's receipt of the letter. Joint Appendix ("J.A.") 14. The letter gave as reasons for the action several incidents of Perez's insubordination, and informed him of his right to reply orally and in writing, as well as to enlist the assistance of a "representative" in making that reply, before the separation became final. In a letter dated February 20, 1980, Perez responded to the proposed action: he designated a representative, denied the charges of insubordination, and contended that the real motives for the action were racial discrimination and retaliation for Perez's exercise of his right to have union assistance in connection with an earlier conflict between him and his superiors. J.A. 8. After giving "(f)ull consideration" to this reply, J.A. 5, the AAFES sent a notice, dated March 4, 1980, telling Perez of his final separation, effective March 14, 1980. J.A. 5. The notice set forth the AAFES's conclusion that insubordination, and not racial discrimination, was the reason for the action. Also included in the notice was a description of the AAFES appeal procedure through which Perez could challenge the separation. ⁵

Perez did not make use of this procedure; instead, he filed on April 4, 1980, an appeal to the MSPB. J.A. 1. On July 10, 1980, the MSPB issued an initial decision dismissing the appeal for want of jurisdiction. J.A. 72. Perez then petitioned the Board to undertake discretionary review of the decision, J.A. 76, but the Board, on November 4, 1980, denied the petition because it fell short of the standards for such review, J.A. 87. ⁶ As a consequence, the initial decision became the Board's final decision five days from the November 4 order. Perez then filed a petition for review in this court on December 4, 1980.

B.

Petitioner Mary Walters was employed as a customer services clerk with the Navy Exchange at the Naval Air Station in Patuxent River, Maryland. The Exchange is a local facility of the Navy Resale and Service Support Office ("NAVRESSO"), the parent organization of all Navy exchanges. The NAVRESSO and its constituent exchanges are nonappropriated fund entities. Walters received a letter dated April 1, 1980, apprising her that, due to unsatisfactory work performance, her job would be terminated following the passage of the required thirty-day notice period. The letter set forth specific allegations of inadequate performance and described her right to appeal the proposed action through NAVRESSO procedures before the issuance of any final decision. ⁷ J.A. 97. After Walters made a verbal reply, the Exchange notified her that her termination would become effective May 1, 1980. J.A. 99. Walters appealed this decision on May 2 to the next level of NAVRESSO's internal review, J.A. 100; see note 7, and in addition filed an appeal with the MSPB on May 6, J.A. 101. In both appeals she pointed out that her removal had been accomplished in violation of NAVRESSO regulations, which, she claimed, required the Commanding Officer of the Naval Air Station to concur in the action taken against her. J.A. 100, 105. As a result of this procedural flaw, ⁸ the Exchange on May 12 reinstated her with backpay, but also informed her that the advance notice of termination was still in effect and that her removal would be forthcoming once the required concurrence had been obtained. J.A. 106. Apparently having received that concurrence, the Exchange, on May 13, terminated her employment and reminded her of the NAVRESSO appeal procedures. J.A. 107.

Walters once more took an appeal to the Exchange, alleging that the termination letter contained procedural defects, that she had been "deliberately programmed to fail" because her assigned duties were inconsistent with the stated requirements of her job, and that the Exchange could not validly remove her for poor performance without first instituting the agency-wide performance appraisal system said to be required under 5 U.S.C. § 4303 (Supp. III 1979). J.A. 114. These claims were rejected at the first level of NAVRESSO review, J.A. 124, ⁹ and Walters then notified the Exchange of her intent to move to the next stage of appeal, J.A. 126. The record does not disclose the outcome of this or any further NAVRESSO appeal.

Before any decision had been rendered in her first-level NAVRESSO appeal, Walters also filed an appeal with the MSPB on May 19, 1980, essentially repeating the contentions pressed in her NAVRESSO appeal. J.A. 108. The MSPB issued an initial decision on September 4, 1980, dismissing the appeal for lack of jurisdiction. J.A. 131. Walters petitioned the Board to review the decision, but on January 5, 1981, the Board held that the petition did not meet the criteria for discretionary review and therefore denied the petition. J.A. 147. As a result, the initial decision became final five days from the June 5 order. Walters then sought our review by a petition filed January 23, 1981.

II.

The disagreement between petitioners and the Board results from their differing interpretations of how the Civil Service Reform Act of 1978 ("CSRA" or "Act"), Pub.L.No.95-454, 92 Stat. 1111 (codified in 5 U.S.C. (Supp. III 1979)), affected the appeal rights of nonappropriated fund personnel. Under pre-CSRA law, such personnel were defined as non-"employees" for the purpose of laws, other than specified exceptions, that were "administered by the Civil Service Commission." 5 U.S.C. § 2105(c) (1976). ¹⁰ At that time, the laws "administered" by the Civil Service Commission ("CSC") included the provisions governing "adverse actions" ¹¹ as well as those concerning appeals taken from such actions. ¹² No argument could be made, therefore, that nonappropriated fund personnel had a right to appeal job removals to the CSC. ¹³

The CSRA amended section 2105(c), however, replacing "administered by the Civil Service Commission" with "administered by the Office of Personnel Management." ¹⁴ Because this amendment is a central component of all petitioners' arguments, we should relate some essential background to it before describing those arguments.

The amendment, which appears in the Act as a "technical and conforming" amendment, Pub.L.No.95-454, § 906(a)(2), 92 Stat. 1224, reflects the Act's abolition of the CSC and its replacement of that body with two new agencies, the MSPB and the Office of Personnel Management ("OPM"). A central purpose of this bifurcation was "to insure that those who are responsible for administering the civil service system will not have the primary responsibility of determining whether that system is free from abuse." S.Rep.No.95-969, 95th Cong., 2d Sess. 24 (1978), reprinted in II House Committee on Post Office and Civil Service, 96th Cong., 1st Sess., Legislative History of the Civil Service Reform Act of 1978, at 1461, 1488 (1979) (hereinafter cited as Legislative History), U.S.Code Cong. & Admin.News 1978, p. 2723.

In accord with this aim, the Act transferred to the OPM the CSC's responsibility as the central personnel administrator of the civil service system. 5 U.S.C. § 1103 (Supp. III 1979); H.R.Rep.No.95-1403, 95th Cong., 2d Sess. 4, 6 (1978), reprinted in I...