Valentino Lopez v. Department of the Navy

UNITED STATES OF AMERICA

MERIT SYSTEMS PROTECTION BOARD

2014 MSPB 78

Docket No. SF-0752-13-2120-I-1

Valentino Lopez, 1

Appellant,

v.

Department of the Navy,

Agency.

October 2, 2014

Royal Carroll, Honolulu, Hawaii, for the appellant.

James J. Schubert, Esquire, and Lori Chang, Joint Base Pearl Harbor-

Hickam, Hawaii, for the agency.

NAVFAC Hawaii, Joint Base Pearl Harbor, Hawaii, for the agency.

BEFORE

Susan Tsui Grundmann, Chairman

Anne M. Wagner, Vice Chairman

Mark A. Robbins, Member

OPINION AND ORDER

¶1 The appellant has petitioned for review of an initial decision that affirmed

the agency’s furlough action. For the following reasons, we conclude that the

petitioner has not established a basis under 5 C.F.R. § 1201.115 for granting the

1

Pursuant to 5 C.F.R. § 1201.36(a), this appeal was part of a consolidation, NAVFAC

Employees – Hawaii v. Department of the Navy, MSPB Docket No. SF-0752-14-0265-

I-1.

2

petition for review. We therefore DENY the petition for review and AFFIRM the

initial decision AS MODIFIED by this Opinion and Order, still affirming the

furlough action. 2 The initial decision is MODIFIED by providing additional

support for the administrative judge’s determination that the agency met its

burden of proving that the furlough promoted the efficiency of the service.

BACKGROUND

¶2 The agency issued a decision notice furloughing the appellant for no more

than 11 work days from his WG-10 Utility Systems Repairer-Operator (USRO)

position based on “the extraordinary and serious budgetary challenges facing the

Department of Defense (DoD) for the remainder of Fiscal Year (FY) 2013, the

most serious of which is the sequester that began on March 1, 2013,” i.e.,

across-the-board reductions to federal budgetary resources caused by the Budget

Control Act of 2011, as amended by the American Taxpayer Relief Act of 2012.

NAVFAC Employees – Hawaii v. Department of the Navy, MSPB Docket

No. SF-0752-14-0265-I-1, Consolidated Appeal File (CAF), Tab 18 at 22-24,

29-31; Lopez v. Department of the Navy, MSPB Docket No. SF-0752-13-2120-

I-1, Initial Appeal File (IAF), Tab 2 at 1, 8. It appears that the agency ultimately

furloughed the appellant for 6 days. CAF, Tab 18 at 13-14, 16-18, 20 (time and

attendance report showing 6 dates with the time code “KE”).

¶3 On appeal to the Board, the appellant asserted that the agency based the

action on his national origin (Mexican) and status as a 30 percent or more

disabled veteran. IAF, Tab 1 at 6. The appellant also asserted that his command

2

In affirming the initial decision we have addressed only those arguments raised by the

appellant on petition for review. See 5 C.F.R. § 1201.115 (the Board normally will

consider only issues raised in a timely-filed petition for review or cross petition for

review). Because the appellant has not, for example, challenged the administrative

judge’s rejection of the appellants’ argument that the agency should not have

furloughed them because their salaries were paid through working-capital funds, rather

than direct appropriations, we do not address that finding at this time.

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is a working-capital-funds service, as defined by 10 U.S.C. § 2208, that is funded

through charges and reimbursements for goods and services rendered to other

activities and not through appropriated funds. IAF, Tab 2 at 6. He alleged that

employees of commands that are funded through working-capital funds are

considered “indirectly funded Government Employees,” and that, under 10 U.S.C.

§ 129, funds available to be paid to indirectly funded government employees of

DoD may not be controlled under any policy of the Secretary of a military

department for control of civilian manpower resources. Id. The appellant further

argued that his proposal notice incorrectly cited as grounds for his furlough a

reduction in base budget funding for the Operation and Maintenance accounts, as

directed by the Budget Control Act of 2011, and as amended by the American

Taxpayer Relief Act of 2012, even though he was funded by working-capital

funds. Id.

¶4 The administrative judge consolidated this appeal with other appeals from

various appellants with similar issues, circumstances, and/or defenses. CAF,

Tabs 1-2. After a hearing, the administrative judge affirmed the furlough actions

in a consolidated initial decision. CAF, Tab 24, Initial Decision (ID) at 1, 15.

The administrative judge found that the agency proved that the furloughs

promoted the efficiency of the service because the furloughs were a reasonable

management response to the sequestration. ID at 3-4. The administrative judge

found unpersuasive the appellants’ argument that DoD’s budget situation was

irrelevant because the Department of the Navy had adequate funding to avoid the

furloughs. ID at 4. The administrative judge held that it was reasonable for DoD

to consider its budget situation holistically, rather than isolating each military

department’s situation, because DoD had the authority to transfer appropriated or

working-capital funds from one account to another. ID at 4. In addition, the

administrative judge found it undisputed that sequestration caused sharp cuts to

the Department of the Navy’s accounts and that the agency therefore had a

legitimate need to find ways to cut its spending. ID at 4. Thus, the

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administrative judge held that the agency need not have proven that there was an

actual deficit—in the sense that it literally could not pay its employees their full

salaries without violating the Antideficiency Act—to justify the furlough; rather,

it need only have shown that the furloughs were a reasonable response to the

financial situation. ID at 4.

¶5 The administrative judge further found unpersuasive the appellants’

argument that they should not have been furloughed because their salaries were

paid through working-capital funds rather than direct appropriations. ID at 5.

The administrative judge held that DoD had some authority to “tap its working

capital funds if it needed money for other purposes; it therefore was appropriate

for the agency to try to conserve the working-capital funds so that they could be

drawn upon if needed to meet more urgent needs.” ID at 5. The administrative

judge noted that the agency submitted unrebutted evidence that, because of

sequestration, agency components funded through appropriations were planning

to reduce their orders for working-capital-fund activities; therefore, unless

working-capital-fund activities reduced their operating costs, they risked running

deficits. ID at 5. The administrative judge held that the agency had a legitimate

reason to include working-capital-fund employees in the furloughs because

furloughing those employees was expected to save more than $500 million. ID

at 5.

¶6 The administrative judge further found that the agency determined which

employees to furlough in a fair and even manner, offering evidence that it

imposed the furloughs uniformly on all civilian employees with a limited set of

exceptions, and generally providing reasonable explanations for the exceptions.

ID at 6. 3 The administrative judge noted that, although many of the appellants

3

The administrative judge and the agency appear to have used the terms “exceptions”

and “exemptions” interchangeably. See, e.g., ID at 6; CAF, Tab 4 (United States

Department of the Navy Administrative Record, FY 2013 Furlough Appeals), Part 1

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challenged the exemption of employees who worked directly for the Navy

shipyard, the agency exempted these employees because it would be particularly

difficult to make up delays in maintenance work on nuclear vessels, and these

vessels were critical to mission success. ID at 6. Further, although the

exemption apparently included not just the employees actually performing the

maintenance work but also the administrative and professional staff that

supported their work, such as three attorneys employed by the Pearl Harbor

shipyard who were exempted, the administrative judge found that the appellants

were not similarly-situated to the shipyard employees because the shipyard was in

an organizational unit from the Naval Facilities Engineering Command, and thus

in a separate competitive area. ID at 6-7. Alternatively, the administrative judge

held that, even if the appellants were similarly situated to the shipyard

employees, the agency’s reason for exempting the shipyard employees—the need

to avoid maintenance delays for nuclear vessels—was a legitimate management

reason for the disparate treatment. ID at 7. The administrative judge determined

that, because the agency was exempting the actual workers on the vessels, it was

reasonable for the agency to anticipate that the need for support services, such as

legal work, would remain higher for the shipyards and therefore to exempt the

employees who provided those services as well. ID at 7-8.

¶7 The administrative judge noted that the appellant was part of a group of

USROs who were required to provide around-the-clock coverage and that the

agency normally did this by staggering the scheduling of four teams of three

at 12, 14, 17 (Declaration of Robert T. Cali, Principal Deputy Assistant Secretary of the

Navy (Manpower and Reserve Affairs), indicating that a decision was made to “except”

several categories of employees from the furlough, and that in 270 instances deciding

officials granted relief from the proposed furlough based on a determination that the

position at issue was covered by an “exemption”). In this decision, we will generally

use the terms “except” and “exception,” see CAF, Tab 4 (United States Department of

the Navy Administrative Record, FY 2013 Furlough Appeals), Part 1 at 105-08

(May 14, 2013 memorandum from the Secretary of Defense referring to “exceptions”

from the furlough), unless we are quoting or paraphrasing a source in the record.

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employees each (one work leader and two USROs). ID at 8. During the furlough

period the agency concluded that it could manage with teams of two (one leader

and one USRO), and decided to exempt just the four work leaders and the four

most senior USROs, as determined by their service computation dates. ID at 8.

The appellant, who had the lowest service computation date, was furloughed for

6 days. ID at 8. The administrative judge found that, although the appellant was

similarly situated to the four USROs who were exempt from the furlough because

they all worked in the same position at the same location for the same

organizational unit, the agency offered a legitimate management reason for

furloughing the appellant while exempting the other USROs. ID at 8. The

administrative judge held that, once the agency determined that it could cover the

schedule with just four nonfurloughed USROs, it was appropriate for the agency

to furlough the rest, and it was permitted to use a neutral criterion like service

computation date to select the affected employees. ID at 9. The administrative

judge further held that there was no evidence that the agency chose this criterion

specifically to target or exempt any particular employees and that the agency also

used seniority to determine the furloughs for other work groups that required

around-the-clock coverage. ID at 9.

¶8 Moreover, the administrative judge noted that the agency’s decision to

exempt four USROs and furlough the rest, rather than create a schedule that

provided around-the-clock coverage but still furloughed each USRO for the same

number of hours, was a matter within the agency’s discretion. ID at 9. In this

regard, the administrative judge analogized furloughs to reductions in force

(RIFs), holding that an agency in a RIF is permitted to “impose the brunt of the

loss on a single employee even when it might be possible to spread the burden

more evenly.” ID at 9. Thus, the administrative judge held that, if an agency has

two employees performing a particular job but needs only one of them, it is

entitled to furlough or separate by RIF the employee who is lower on the

retention register rather than putting both employees on part-time schedules or

7

furloughing them sequentially. ID at 9-10. The administrative judge found that,

as long as the agency uses fair criteria as it did here, there was no reason why the

agency should not be allowed to do the same in the much less drastic context of a

short furlough. ID at 10.

¶9 Finally, the administrative judge found, among other things, that the

appellants did not prove harmful error, a violation of their constitutional right to

due process, national origin discrimination, retaliation for protected activity, or

discrimination based on military service. ID at 11-15.

ANALYSIS

¶10 The appellant asserts on review that the administrative judge incorrectly

found that the agency was obligated to furlough employees to the extent possible,

even though the appellant’s position was identified as exempt from the furlough

as necessary to protect safety, life, or property. Petition for Review (PFR) File,

Tab 1 at 7-8. In this regard, he contends that the document the administrative

judge relied upon to support this finding is silent as to the extent the agency was

expected to furlough employees who fell within a defined exception. Id. at 8.

¶11 One of the DoD furlough exceptions to the plan to furlough civilian

employees for a maximum of 88 hours provided that, “[i]n order to avoid harm to

mission, those employees necessary to protect safety of life and property are

excepted to the extent necessary to protect life and property.” CAF, Tab 4

(United States Department of the Navy Administrative Record, FY 2013 Furlough

Appeals), Part 1 at 108 (emphasis added). We find that this provided an

exception from the furlough for those employees who occupied positions that

were generally necessary to protect life and property only “to the extent” that it

was necessary for such employees to protect life and property. Id. at 106

(May 14, 2013 memorandum from the Secretary of Defense indicating that “[w]e

will except civilians . . . necessary to protect life and property (but only to the

extent needed to provide that protection)”). It did not necessarily create a blanket

8

exception for all employees occupying such positions regardless of whether their

exception was necessary to protect life and property. Cf. id. at 109; Dye v.

Department of the Army, 121 M.S.P.R. 142, ¶ 7 (2014) (describing a categorical

exemption from the furlough for “[a]ny” DoD employees who were not paid

directly by accounts included in the DoD-Military budget, without qualifying

language such as “to the extent necessary”). In other words, the exception quoted

above, when read as a whole, appears to contemplate the possibility that

employees occupying positions that are generally necessary to protect life and

property could be excepted for only a portion of a planned furlough, i.e., to the

extent necessary, or that some employees occupying positions that are generally

necessary to protect life and property could be excepted while others would not

be excepted. Cf. Jonson v. Federal Deposit Insurance Corporation, 121 M.S.P.R.

56, ¶ 12 (2014) (under a fundamental rule of statutory construction, the Board

must give effect, if possible, to every clause and word of a statute so as to avoid

rendering superfluous any of its language). Thus, to the extent that the appellant

is asserting that the agency excepted all USROs from the furlough regardless of

whether such employees were all necessary to protect life and property, we

disagree. The record supports the administrative judge’s finding that the relevant

exception applied only “to the extent necessary” to protect life and property.

¶12 The appellant also disagrees with the administrative judge’s determination

that it was within the agency’s discretion to furlough only three of the seven

USROs due to scheduling difficulty and its inability to avoid overtime. PFR File,

Tab 1 at 8. In this regard, the appellant contends that the administrative judge

ignored the testimony of an agency manager, Preston Iha, that no alternate

furlough plan was developed, discussed, or considered, and that he had never

heard of the term “fairly and equally” and did not know that he had an obligation

to furlough similarly-situated employees fairly and equally. Id. at 8-9.

¶13 Mr. Iha testified that the Assistant Secretary of the Navy was responsible

for deciding who to furlough. See Hearing Compact Diskette (HCD) (testimony

9

of Preston Iha). Contrary to the appellant’s assertion, Mr. Iha also testified that

he had heard of the term “fair and equal” in connection with a furlough but that

no one had explained to him “in detail” what that term meant. Id. In addition,

Mr. Iha testified that the agency used the employees’ service computation dates

as part of its effort to make the furlough fair and equal. Id. In any event,

regardless of what Mr. Iha knew or believed regarding the term “fair and equal,”

it is the Board’s responsibility to determine whether the agency in fact has met its

burden of proving by preponderant evidence that the furlough promotes the

efficiency of the service by showing that it applied its determination as to which

employees to furlough in a “fair and even manner,” i.e., uniformly and

consistently. Chandler v. Department of the Treasury, 120 M.S.P.R. 163, ¶ 8

(2013).

¶14 The appellant further contends that the administrative judge did not follow

the Board’s determination in Chandler that similarly-situated employees must be

treated fairly and equally when he held that the agency could impose the brunt of

a furlough, as it can do in a RIF, on a single employee even when it might be

possible to spread the burden more evenly. PFR File, Tab 1 at 10-16. The

appellant appears to allege that the agency should have spread the total hours of

the furlough across all USROs, rather than furloughing several of those with the

lowest service computation dates. Id. at 13-14. He further asserts that the agency

did not establish a legitimate management reason for failing to treat USRO

employees fairly and equally because, contrary to the testimony of an agency

manager that it would be difficult to fairly and equally distribute furlough hours

among all USROs due to the difficulty in changing the employees’ schedules and

avoiding overtime payment, all USRO schedules were in fact changed regardless

of who was furloughed, and a USRO work leader testified that “due to the built in

overtime in the USRO’s schedules that it was necessary for the agency to change

all USRO schedules regardless of whether the USRO was being furloughed or

not.” Id. at 16-18. Thus, the appellant contends that the agency’s decision to

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furlough only some of its USROs did not avoid potentially complicated

rescheduling but instead made the scheduling for the furlough period more

complicated by creating two classes of employees. Id. at 17.

¶15 An agency satisfies the efficiency of the service standard in a furlough

appeal by showing, in general, that the furlough was a reasonable management

solution to the financial restrictions placed on it and that the agency applied its

determination as to which employees to furlough in a “fair and even manner.”

Chandler, 120 M.S.P.R. 163, ¶ 8. The Board has held that “fair and even

manner” means that the agency applied the adverse action furlough uniformly and

consistently, “just as it is required to apply a RIF.” Id. This does not mean that

the agency is required to apply the furlough in such a way as to satisfy the

Board’s sense of equity. Id. Rather, it means that the agency is required to treat

similarly-situated employees similarly and to justify any deviations with

legitimate management reasons. Id. What the efficiency of the service

determination encompasses are issues relating to the uniform and consistent

application of the furlough, including whether the agency used a furlough to

target employees for personal reasons or attempted to exempt certain employees

from the furlough without legitimate management reasons. Id., ¶ 9.

¶16 We agree with the administrative judge’s analysis of this issue, which

relied upon general RIF principles. See supra ¶¶ 7-8; see also Chandler,

120 M.S.P.R. 163, ¶ 7 (RIF principles are instructive in determining the scope of

the Board’s review of adverse action furloughs and what it means for a furlough

of 30 days or less to be taken for the efficiency of the service). As the Board

held in Chandler, 120 M.S.P.R. 163, ¶ 8, the question is whether the agency

applied the adverse action furlough uniformly and consistently. Moreover, in

determining whether the agency structured a furlough in a fair and even manner,

the Board will not scrutinize an agency’s decision in such a way that second

guesses the agency’s assessment of its mission requirements and priorities.

Department of Labor v. Avery, 120 M.S.P.R. 150, ¶ 10 (2013). Here, the agency

11

made a determination that it needed only two individuals per shift to protect

property, health, and safety during the furlough, rather than the usual three. IAF,

Tab 15 at 7, 9-11; see HCD (testimony of Curtis Noborikawa). The appellant

does not challenge this determination that only two individuals were needed,

which was well within the agency’s discretion. See Veneziano v. Department of

Energy, 189 F.3d 1363, 1365-66 (Fed. Cir. 1999) (affirming the appellant’s

separation by RIF where the agency decided to eliminate eight positions in the

office where the appellant worked, three of which would be at her competitive

level); see also Griffin v. Department of Agriculture, 2 M.S.P.R. 168, 171 (1980)

(the decision whether a particular position is to be preserved or abolished is for

the agency to make).

¶17 Once the agency determined the number of USRO positions it needed to

keep filled during the furlough, it used a uniform and consistent criteria, service

computation date, in deciding which employees to furlough, just as it would have

been required to do in a RIF. See Chandler, 120 M.S.P.R. 163, ¶ 8; see also U.S.

Merit Systems Protection Board v. Federal Labor Relations Authority, 913 F.2d

976, 979-80 (D.C. Cir. 1990) (length of service, unlike bargaining unit

membership, is a retention factor that permits an agency to apply secondary

assignment rights uniformly and consistently); American Federation of

Government Employees, AFL-CIO v. Office of Personnel Management, 821 F.2d

761, 764-65 (D.C. Cir. 1987) (“When a RIF occurs, employees are generally

laid-off according to their seniority—employees with fewer years of service lose

their positions before employees with more years of service.”); 5 C.F.R.

§ 351.501(a). Thus, as the administrative judge suggested in his initial decision,

the legitimate management reason for the difference in treatment was, in the first

instance, the appellant’s lower service computation date. ID at 9-10. Although

there may have been other ways in which to structure the furlough that could have

satisfied the appellant’s or the Board’s sense of equity, the agency is not required

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to furlough its employees in those alternative ways. See Chandler, 120 M.S.P.R.

163, ¶ 8.

¶18 Moreover, in an adverse action furlough, as in a RIF and in a directed

reassignment, the Board’s general review is to assure that such actions are used

for legitimate reasons; therefore, the Board’s focus is on the legitimacy of the

reasons for the furlough, RIF, or reassignment. In re Tinker AFSC/DP v.

Department of the Air Force, 121 M.S.P.R. 385, ¶ 21 (2014). There is no

indication or allegation by the appellant that the agency chose this criterion,

service computation date, specifically to target or exempt any particular

employees. See ID at 9; cf. Phelps v. Department of Labor, 25 M.S.P.R. 30,

32 (1984) (the agency’s granting of an opportunity to obtain an unscheduled

performance appraisal to some employees while denying it to others resulted in

the denial of uniform and consistent application of RIF provisions). In fact, the

record indicates that the facilities manager who authorized the reduction of the

USRO teams to two-person teams during the furlough testified that he was not

aware of the service computation dates of the affected employees when he

decided to use this method to determine who would be furloughed and that

service computation dates had been used in the decision to furlough other

non-USRO employees, as well as in RIFs and decisions to fill critical vacant

positions. See HCD (testimony of Curtis Noborikawa); see also IAF, Tab 18 at 4.

¶19 Although the appellant contends on review that the agency did not establish

a legitimate management reason for failing to treat the USROs fairly and equally

because all USRO schedules had to be changed anyway, and the agency could

have changed the schedules to distribute the furlough hours equally without

excepting any USROs from the furlough, the mere fact that the agency had to

change schedules due to the furlough does not affect the level of difficulty

involved in creating schedules with different objectives. Mr. Iha testified that,

although anything is possible, it would have been an administrative burden and a

“nightmare” to come up with the schedule suggested at the hearing by the

13

appellant. See HCD (testimony of Preston Iha). Although a USRO called by the

appellant testified that the agency could have furloughed each USRO 4 hours per

week or one 8-hour shift per week, it is not clear how this proposal would have

affected overtime payments to USROs, which the agency had sought to reduce,

and this USRO admitted that creating schedules was not part of his job duties.

See id. (testimony of Thomas Kam). In any event, we have found that the

appellant’s service computation date served as a legitimate management reason

for his different treatment. We therefore agree with the administrative judge that

the agency had the discretion to determine whether to except four USROs and

furlough the rest or attempt to create a schedule under which none of the USROs

would be excepted from the furlough with all of them furloughed for the same

number of hours. See ID at 9-10.

¶20 Accordingly, we AFFIRM the agency’s furlough action in this case.

Finally, we agree with the administrative judge that the appellant failed to prove

his affirmative defenses. See ID at 11-15.

ORDER

¶21 This is the final decision of the Merit Systems Protection Board in this

appeal. Title 5 of the Code of Federal Regulations, section 1201.113(c) (5 C.F.R.

§ 1201.113(c)).

NOTICE TO THE APPELLANT REGARDING

YOUR FURTHER REVIEW RIGHTS

You have the right to request further review of this final decision.

Discrimination Claims: Administrative Review

You may request review of this final decision on your discrimination

claims by the Equal Employment Opportunity Commission (EEOC). See Title 5

of the United States Code, section 7702(b)(1) (5 U.S.C. § 7702(b)(1)). If you

submit your request by regular U.S. mail, the address of the EEOC is:

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Office of Federal Operations

Equal Employment Opportunity Commission

P.O. Box 77960

Washington, D.C. 20013

If you submit your request via commercial delivery or by a method requiring a

signature, it must be addressed to:

Office of Federal Operations

Equal Employment Opportunity Commission

131 M Street, NE

Suite 5SW12G

Washington, D.C. 20507

You should send your request to EEOC no later than 30 calendar days after

your receipt of this order. If you have a representative in this case, and your

representative receives this order before you do, then you must file with EEOC no

later than 30 calendar days after receipt by your representative. If you choose to

file, be very careful to file on time.

Discrimination and Other Claims: Judicial Action

If you do not request EEOC to review this final decision on your

discrimination claims, you may file a civil action against the agency on both your

discrimination claims and your other claims in an appropriate United States

district court. See 5 U.S.C. § 7703(b)(2). You must file your civil action with

the district court no later than 30 calendar days after your receipt of this order. If

you have a representative in this case, and your representative receives this order

before you do, then you must file with the district court no later than 30 calendar

days after receipt by your representative. If you choose to file, be very careful to

file on time. If the action involves a claim of discrimination based on race, color,

religion, sex, national origin, or a disabling condition, you may be entitled to

15

representation by a court-appointed lawyer and to waiver of any requirement of

prepayment of fees, costs, or other security. See 42 U.S.C. § 2000e-5(f) and

29 U.S.C. § 794a.

FOR THE BOARD:

______________________________

William D. Spencer

Clerk of the Board

Washington, D.C.