Sam v. United States, 352-79C.

• Citation: 682 F.2d 925
• Decision Date: 19 May 1982
• Docket Number: No. 352-79C.,352-79C.
• Parties: Ralph Ah SAM, Raymond F. Duffina, Richard J. Karasaki, Richard Y. C. Lau, and Edwin Pregill v. The UNITED STATES.
• Court: Court of Federal Claims

682 F.2d 925

Ralph Ah SAM, Raymond F. Duffina, Richard J. Karasaki, Richard Y. C. Lau, and Edwin Pregill v. The UNITED STATES.

No. 352-79C.

United States Court of Claims.

May 19, 1982.

COPYRIGHT MATERIAL OMITTED

Renton Nip, Honolulu, Hawaii, for plaintiffs. Walter G. Chuck, Honolulu, Hawaii, attorney of record. Allison H. Lynde, Honolulu, Hawaii, of counsel.

Robert G. Giertz, Washington, D. C., with whom was Asst. Atty. Gen. Alice Daniel, Washington, D. C., for defendant.

Before DAVIS, NICHOLS and KASHIWA, Judges.

ON PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

NICHOLS, Judge:

This civilian pay case is before the court on the parties' cross-motions for summary judgment. There being no factual dispute, the court is asked to determine whether prevailing rate wage employees who were promoted to General Schedule supervisory positions before June 26, 1974, are entitled to a further increase in wages under 5 U.S.C. §§ 5333 and/or 5334 and their implementing regulations. To the extent that this question has not been reached by the recent Supreme Court decision of United States v. Clark, 454 U.S. ___, 102 S.Ct. 805, 70 L.Ed.2d 768 (1982), we hold that these federal employees are not entitled to a further increase in wages under either statute.

I

The case at bar involves two totally separate federal pay systems, namely the prevailing rate wage (WS) and General Schedule (GS) systems. An understanding of the interplay between these two systems is necessary before plaintiffs' claim for increased wages can be reviewed. The GS system, governed by 5 U.S.C. § 5331 et seq., is a nationwide pay system divided into numbered grades and applicable to federal "white collar" employees. See United States v. Clark, supra. The numbered grades are further divided into "steps" up which the employee travels with longevity on the job. 5 U.S.C. § 5332. "The salary for each step of each grade in the GS is uniform nationwide." United States v. Clark, supra.

On the other hand, pay rates for comparable work under the WS system may vary nationwide. This is so because the WS, which applies generally to "blue collar" employees, provides that employees are to be paid at the local prevailing rate for comparable work. 5 U.S.C. § 5343. As prices in different geographic areas vary, so, too, do pay rates for comparable work. In some areas, the prevailing rate is so high that WS employees may earn more than the GS employees who supervise them, creating what is known as a "pay inversion."

In Title 5, Congress took steps to lessen the impact of "pay inversion" on GS employees. Section 5334, which applies to the initial setting of pay for GS employees whose positions have been changed in some manner, specifies the appropriate methods for calculation of the new wage rates. Section 5334 applies to all GS employees regardless of whether they serve in a supervisory capacity. Subsection 5334(a), through its implementing regulations, authorizes calculation of wages in accordance with the "highest previous rate" rule.¹

Section 5334 applies to all GS employees, but subsection 5333(b) only applies to GS employees who occupy some supervisory role over WS subordinates. Subsection 5333(b) provides further salary relief for some GS supervisors whose WS subordinates receive higher wages than they do.² Thus, if the reader has followed us so far, a former WS employee promoted to a GS supervisory position over his previous position, as here, has two sets of entitlements by statute: to maintenance of his basic pay at his highest previous rate (section 5334(a) and regulations) and also to basic pay above his new subordinate's pay (section 5333(b)).

In addition to the relief afforded under §§ 5333 and 5334, all GS employees, who are employed in certain areas outside the continental United States, are entitled to receive cost-of-living allowances (COLA) on top of their regular salaries. 5 U.S.C. § 5941. WS employees are not, as their prevailing wage is based on the cost-of-living.

The instant case requires a determination of the proper treatment of COLA in relation to the calculations made under §§ 5333 and 5334. Briefly stated, before June 26, 1974, the impact of COLA was considered by the Navy in all comparisons made under §§ 5333(b) and 5334(a). After June 26, 1974, COLA was excluded from comparisons made under § 5334(a) but maintained for those comparisons performed under § 5333(b). This distinction is critical and its importance will become evident in parts II and III.

Plaintiffs, in this case, are or were civilian employees at the Pearl Harbor Naval Shipyard in Hawaii. Plaintiffs were either promoted or transferred from WS positions to GS supervisory positions. Plaintiffs were, therefore, entitled to salary relief under 5 U.S.C. § 5334 solely by virtue of their transfer into the GS system. Because they were appointed to GS supervisory positions, plaintiffs were also entitled to have their pay adjusted in accordance with 5 U.S.C. § 5333(b). Furthermore, GS employees in Hawaii receive COLA in accordance with 5 U.S.C. § 5941. When the promotions and/or transfers occurred before June 26, 1974, the Navy, in complying with its then current interpretation of both the pertinent statutes and regulations, took COLA into account in deciding whether plaintiffs were entitled to an increase in pay. The net effect of the Navy's actions was to award plaintiffs a lower salary than they would have otherwise received after June 26, 1974, when COLA was not taken into account.

Plaintiffs expressed their dissatisfaction with the pre-June 26, 1974 interpretation and application of the pertinent statutes and regulations to Naval authorities. Plaintiffs also filed a group grievance with the Civil Service Commission (CSC) and sought the aid of their elected representatives to Congress. Plaintiffs' efforts came to naught and, on May 25, 1979, plaintiffs filed suit in the United States District Court for the District of Hawaii. Upon plaintiffs' motion to transfer the suit to the Court of Claims with respect to five of the eight plaintiffs and defendant's concurrence therewith, this case was transferred to this court on August 1, 1979, pursuant to 28 U.S.C. § 1406(c).

Plaintiffs filed their petition in this court on September 25, 1979, alleging that defendant's inclusion of COLA in the calculation violated 5 U.S.C. §§ 5333(b) and 5334(a) and had deprived plaintiffs of their constitutional right to equal protection of the law. The parties moved for summary judgment and oral argument was heard on January 13, 1981. By this time, plaintiffs' claims had expanded to include an alleged violation of 5 U.S.C. § 5334(b),³ an issue, if resolved in plaintiffs' favor, could conceivably have rendered plaintiffs' other claims moot. This court had recently addressed this same issue in Clark v. United States, 220 Ct.Cl. 278, 599 F.2d 411 (1979), and had held that "the two-step increase" rule of § 5334(b) applied to all WS employees transferring to GS positions. On notice that the Supreme Court had granted certiorari to hear argument in United States v. Clark, we stayed our decision in the present case pending the Supreme Court's decision. On January 12, 1982, the Supreme Court reversed our decision in Clark and held that "the statute § 5334(b) and the accompanying regulations reveal a congressional intent to apply the two-step increase provision of § 5334(b) only to promotions or transfers of employees already within the GS system." 454 U.S. at ___, 102 S.Ct. at 809-10. Accordingly, plaintiffs' claim for relief under 5 U.S.C. § 5334(b) must be denied. Plaintiffs' other claims must now be addressed.

II

At the outset, it must be noted that plaintiffs' claims for relief under 5 U.S.C. §§ 5333(b) and 5334(a) are not alternative grounds for recovery but are, in fact, separate and distinct legal entitlements for which plaintiffs could recover under either, all, or none of these theories. Accordingly, claims under §§ 5333(b) and 5334(a) will be dealt with separately. For the following reasons, we determine that plaintiffs are not entitled to recover under either § 5333(b) or 5334(a).

In applying the highest previous rate rule of 5 U.S.C. § 5334(a) and its implementing regulation, 5 C.F.R. § 531.203(c),⁴ the Navy initially compared the employee's highest previous rate earned in the WS system with the rate established for the GS position, plus the COLA to which that employee would be entitled. If the employee's highest previous rate exceeded the total of the GS salary plus COLA, the Navy would then raise the employee's rate of basic pay to a corresponding step at which level the GS salary plus COLA would exceed the employee's highest previous rate. At no time, however, did the Navy raise the employee's rate of basic pay to a level that would place him in a higher grade. After June 26, 1974, the Navy changed its interpretation of 5 C.F.R. § 531.203(c) and excluded the impact of COLA from its comparison. It is important to note that the Navy did not amend § 531.203(c), as of course it could not, but merely changed its interpretation of the pertinent section. This change in interpretation had the net effect of awarding higher overall wages to those WS employees who were promoted to GS positions after June 26, 1974.

The following example graphically portrays the effect of the Navy's change in interpretation:

                $ 9.47         GS basic pay rate
                  1.42         COLA
                ------
                $10.89         TOTAL
                $ 9.94         Highest previous rate
                                 earned under WS
                

Under the pre-June 26, 1974 interpretation, the GS employee would not be entitled to a higher starting pay rate because his or her GS basic pay plus COLA exceeded the employee's highest previous rate received under WS. After June 26, 1974, the Navy excluded COLA from the comparison under 5 U.S.C. § 5334(a). Referring to our example, the GS basic pay rate was less than the employee's highest previous...