Sprague v. King, No. 92 C 7263.

Decision Date23 June 1993
Docket NumberNo. 92 C 7263.
Citation825 F. Supp. 1324
PartiesRichard F. SPRAGUE, William D. Boham, J. Stanley Gill, James L. McElroy, Jr., John V. Evans, Donald E. Marrs, Gilbert Drucker, John A. McMenamin, Rollie D. Thedford, F. Neil Aschemeyer, David T. Hubbard, William E. Zleit, Denton Gossett, Francis J. O'Byrne, Charles N. Bono, W. Howard O'Bryan, Jr., Paul Harkey, F. Joseph Wieman, Sheldon L. Shepherd, Ralph L. Wampler, Mark W. Haase, Joseph M. May, James L. Garner, Alan L. Jonas, Maxwell Darks and Francis Mayhue, Plaintiffs, v. James B. KING, Director of the Office of Personnel Management, Defendant.
CourtU.S. District Court — Northern District of Illinois

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Nicholas Joseph Etten, Jeffrey Charles Blumenthal, Foran & Schultz, Chicago, IL, for plaintiffs.

Jack Donatelli, U.S. Atty's. Office, Chicago, IL, for defendant.

OPINION AND ORDER

NORGLE, District Judge:

Before the court is defendant James B. King's motion to dismiss pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the motion is granted.

FACTS

The action before the court is a suit by twenty-six Administrative Law Judges ("ALJs") who adjudicate social security claims within the Department of Health and Human Services. The lawsuit seeks to rescind pay classification regulations enacted by the Office of Personnel Management (the "OPM") pursuant to the Federal Employees Pay Comparability Act of 1990 ("FEPCA"), as incorporated in § 529 of Pub.L. 101-509. Specifically, the plaintiffs challenge the OPM's regulations as arbitrary, capricious, unreasonable, and in contravention of the intent of Congress.

The position of ALJ was created by the Administrative Procedure Act (the "APA"), 5 U.S.C. § 701 et seq., to provide an opportunity for a formal hearing on the record before an impartial hearing examiner, thereby ensuring fairness and due process in federal rule-making and enforcement proceedings. The salaries of ALJs are prescribed by the OPM pursuant to 5 U.S.C. § 5372. Prior to the enactment of FEPCA, the statutory language of § 5372 was broad enough to enable the OPM to create pay distinctions between Social Security Administration ("SSA") ALJs and ALJs who served at other agencies. Therefore, before FEPCA became effective, the OPM exercised it discretion under the Classification Act, 5 U.S.C. § 5101 et seq., which required that the OPM compensate ALJs based on the nature and complexity of their work and the level of responsibility which they were required to exercise.

Prior to the passage of FEPCA, the OPM used the General Schedule to determine the rates of basic pay for ALJs. The General Schedule, which is the pay system for most federal employees, consists of eighteen different "grade" classifications. Various jobs and positions are allocated to the different grades on the basis of the difficulty and responsibility of the work and the required qualifications of the worker. 5 U.S.C. §§ 5102 and 5104. In general, the higher the grade, the higher the salary. Under the General Schedule, SSA ALJs were compensated at the GS-15 pay level, while ALJs of other agencies were compensated under the General Schedule at the GS-15, -16, -17 and -18 pay levels.1

The OPM's statutory discretion to establish the salary schedules of ALJs was curtailed by the enactment of FEPCA, which amended § 5372 in several respects. As an initial matter, FEPCA removed ALJ pay from the General Schedule, providing instead three levels of basic pay for ALJs — AL-1, AL-2, and AL-3. The AL-3 level of pay is divided into six graduated rates, and advancement from one rate to the next is determined by the ALJ's length of service. Under FEPCA, the OPM has the responsibility to determine the level in which each ALJ position is placed and the qualifications required for appointment to each level. 5 U.S.C. § 5372(b)(2). Once appointed to the AL-3 level, however, the mechanics of advancement are governed solely by § 5372.

On February 14, 1991, the OPM published interim regulations which it proposed to utilize in the administration of the FEPCA requirements. The OPM published the interim regulations for notice and for the opportunity to consider the views of interested persons. Upon completion of the comment period, the interim regulations were adopted, becoming final on February 13, 1992. See 5 C.F.R. § 930.210(j) and (k) (1991).

The conversion regulations adopted by the OPM determined how the pay of incumbent ALJs would be converted from the General Schedule to the six different rates of pay, A through F, within the AL-3 level. The differences in pay between each of the six rates was $5,415 per annum, and therefore, the total difference in pay between rate A and rate F was $27,075. In addition to establishing the amount of pay an incumbent ALJ would receive, the placement of ALJs under the conversions regulations would correspondingly determine how quickly an ALJ would reach the maximum rate of pay.

The OPM used the former General Schedule as the basis for its conversion regulation, and accordingly, the distinctions between ALJs assigned to the GS-15 level and GS-16 level were incorporated therein. The conversion regulations stated that "under the pay plan conversion schedule, administrative law judges were converted to the new pay system on the basis of their grade and step under the General Schedule on the effective date of the conversion...." As a result of this scheme, all former GS-15 ALJs are being paid 13% to 23% less than former GS-16 ALJs having comparable periods of service. These pay disparities, which amount to $10,800 to $16,200 per year among former GS-15 and GS-16 ALJs having comparable periods of service, will persist for periods of four to seven years, until each former GS-15 ALJ reaches the maximum pay rate of AL-3, rate F. Furthermore, the impact of the OPM's conversion regulation may be felt by former GS-15 ALJs who retire or are disabled prior to reaching rate F, since their pensions will be determined in part by their lower level position at the time of their retirement.

DISCUSSION

Plaintiffs seek to set aside the OPM conversion regulations as being in violation of the APA because they unjustifiably discriminate against ALJs formerly paid at the GS-15 pay level and fail to eliminate the disparity in pay between former GS-15 and GS-16 ALJs with comparable years of service. The Plaintiffs contend that the legislative history of FEPCA mandates that the sole criterion for establishing the pay level of an incumbent ALJ should be based on their years of service as an ALJ, regardless of their prior compensation level. Because the OPM ignored the alleged congressional intent of FEPCA, the plaintiffs claim the OPM's conversion regulations are arbitrary, capricious, and not in accordance with the law. Accordingly, the plaintiffs ask the court to require the OPM to issue regulations that are consistent with their views and to apply these new regulations retroactively to February 14, 1991. The OPM has moved to dismiss the complaint for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) and for failure to state a claim upon which relief can be granted under Fed.R.Civ.P. 12(b)(6).

Lack of subject matter jurisdiction is appropriately raised in a motion to dismiss under Fed.R.Civ.P. 12(b)(1). Barnhart v. United States, 884 F.2d 295, 296 (7th Cir. 1989), cert. denied, 495 U.S. 957, 110 S.Ct. 2561, 109 L.Ed.2d 743 (1990). Once questioned, it is plaintiff's burden to establish that all jurisdictional requirements have been satisfied. Kontos v. U.S. Dept. of Labor, 826 F.2d 573, 576 (7th Cir.1987). In this context, it is proper for the court to look beyond the jurisdictional allegations in the complaint and to view whatever evidence has been submitted in response to the motion. Roman v. United States Postal Serv., 821 F.2d 382, 385 (7th Cir.1987). Furthermore, a complaint will be dismissed for failure to state a claim if the plaintiff can prove no set of facts upon which the sought after legal relief is to be granted. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Ross v. Creighton Univ., 957 F.2d 410 (7th Cir.1992).

The OPM argues that § 701(a)(2) of the APA prevents the plaintiff's pursuit of this case by precluding the review of the OPM conversion regulations. The APA presumptively entitles "a person suffering legal wrong because of agency action ... to judicial review thereof," 5 U.S.C. § 702, so long as such action is final within the meaning of § 704. In general, an agency's actions are subject to judicial review under the APA if the actions are arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with the law. 5 U.S.C. §§ 701(a), 702. This presumption of reviewability is limited by the threshold provisions of §§ 701(a)(1) and (2), which state that "this chapter applies ... except to the extent that — (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. § 701(a)(1), (2). The OPM does not allege that FEPCA expressly precludes judicial review; the OPM, however, contends that FEPCA committed the implementation of the FEPCA regulations to its discretion.

As to the second exception of § 701(a), the House Report notes that judicial review requires "standards, definitions, or other grants of power that deny or require action in given situations or confine an agency within limits as required by the Constitution." S.Doc. No. 248, 79th Cong., 2d Sess. 275 (1946). The absence of such standards and limits exempts agency action from judicial review. Id. The Senate Report also addresses the § 701(a)(2) exception:

the basic exception of matters committed to agency discretion would apply even if not stated at the outset. If, for example, statutes are drawn in such broad terms that in a given case there is no law to apply, courts of course have no statutory
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