Opinion

Federal Education Association, Inc. v. United States

120 Fed. Cl. 791
2015 U.S. Claims LEXIS 508
2015 WL 1927088

Court: United States Court of Federal Claims
Filed: Apr 28, 2015
Status: Published
Author: Firestone
On the bench: Nancy B. Firestone
Cited by: 0 cases
Authority: More cited than 34.4%

“Chevron did nothing to eliminate Skidmore’s holding that an agency’s interpretation may merit some deference whatever its form _” (citations omitted)

How later courts described this case

“Chevron did nothing to eliminate Skidmore’s holding that an agency’s interpretation may merit some deference whatever its form _” (citations omitted)

Written by the judges who cited it.

The opinion

In the United States Court of Federal Claims

No. 14-331C

(Filed: April 28, 2015)

)

FEDERAL EDUCATION )

ASSOCIATION, INC., et al., )

)

Plaintiffs, ) Pay Freeze Act; Overseas Teachers

) Pay and Personnel Practices Act;

v. ) Application of Pay Freeze Act after

) expiration; Skidmore deference

THE UNITED STATES, )

)

Defendant. )

)

Richard J. Hirn, Washington, DC, for plaintiffs.

Phyllis Jo Baunach, Civil Division, United States Department of Justice,

Washington, DC, with whom were Joyce R. Branda, Acting Assistant Attorney General,

Robert E. Kirschman, Jr., Director, Commercial Litigation Branch, and Reginald T.

Blades, Jr., Assistant Director. Kristine T. Bourgos, Associate General Counsel, Labor

and Employee Relations Attorney Advisor, Alexandria, VA, of counsel.

OPINION

FIRESTONE, Judge.

This case arises from the pay freeze for teachers in overseas Department of

Defense Educational Activity (“DoDEA”) schools, imposed by Congress as part of an

overall freeze of salaries for Federal employees from 2011 to 2013. Pending before the

court are the Federal Education Association, Inc.’s (“FEA”) motion for summary

judgment and defendant the United States’s (“the government”) motion for summary

judgment.1 Plaintiffs allege that the United States Office of Personnel Management

(“OPM”) erred by determining that the Pay Freeze Act (“PFA”), passed by Congress as

part of the Continuing Appropriations and Surface Transportation Extensions Act of

2011, applied to overseas teachers whose pay is set pursuant to the Overseas Teachers

Pay and Personnel Practices Act (“OTPPPA”), 20 U.S.C. §§ 901-907. Plaintiffs argue

that the OTPPPA is not among the statutes covered by the PFA and that, even if they

were covered, the government erred by extending a freeze of their pay beyond the

deadline set by the statute. The government argues that Congress sought to apply the

PFA broadly and that the President, through OPM, properly included overseas teachers in

the pay freeze. The government further argues that DoDEA’s application of the pay

freeze for overseas teachers beyond the pay freeze deadline was lawful in that the

teachers were only subject to a pay freeze for 3 years, the same length of freeze as all

other affected employees. The extension of a pay freeze beyond the statutory deadline,

the government argues, was necessary given the timing of the school year relative to the

pay freeze period. For the reasons that follow, the court agrees with the government that

overseas teachers were subject to the pay freeze, but finds that the government erred in

applying the pay freeze beyond the statutory period.

I. BACKGROUND

Because the parties have submitted, and the court has considered, evidence outside of the

pleadings, the court shall not address the government’s motion to dismiss and deals solely with

the parties’ motions for summary judgment. See Rule 12(d) of the Rules of the United States

Court of Federal Claims.

A. Pay Rates for Overseas DoDEA Teachers

Salaries for overseas teachers employed by DoDEA are set by 20 U.S.C. § 903,

which states:

The Secretary of Defense shall fix the basic compensation for teachers and

teaching positions in the Department of Defense at rates equal to the

average of the range of rates of basic compensation for similar positions of

a comparable level of duties and responsibilities in urban school

jurisdictions in the United States of 100,000 or more population.

20 U.S.C. § 903.

The Secretary of Defense is given the authority to determine how to maintain the

pay parity required by the OTPPPA. 20 U.S.C. § 902(a)(2).2 Initially, the Secretary

collected data from representative districts for a school year, and then used that data to set

a rate of pay for the following school year. This procedure was challenged following a

1966 amendment on the grounds that this practice allowed salaries to lag behind those

districts. March v. United States, 506 F.2d 1306, 1315 (D.C. Cir. 1974). The court

The statute states:

(a) Not later than the ninetieth day following July 17, 1959, the Secretary of Defense shall

prescribe and issue regulations to carry out the purposes of this chapter. Such regulations

shall govern—

....

(2) the fixing of basic compensation for teachers and teaching positions at rates equal to

the average of the range of rates of basic compensation for similar positions of a

comparable level of duties and responsibilities in urban school jurisdictions in the

United States of 100,000 or more population.

20 U.S.C. § 902(a).

agreed and the pay adjustments are now made retroactive to the beginning of the school

year.3

During the time period at issue in this case, the DOD set teacher salaries by

surveying urban school districts populations of 100,000 or more. Hritz Decl. ¶ 3; Terhaar

Decl. ¶ 8. Until 2013, this included 231 school districts. Id. This number was

recalculated following the 2010 census and expanded to 267 school districts. Id. The

survey process occurs between November and January, after which DOD sets a pay rate

for each category of DoDEA employee: teachers, guidance counselors, speech

pathologists, and school psychologists. Hritz Decl. ¶ 4; Terhaar Decl. ¶ 9. These rates

are then shared with the FEA, corrected if necessary, and published. Hritz Decl. ¶¶ 5-8;

Terhaar Decl. ¶ 9. The effective date of the pay adjustment is August 1 of the previous

year. Terhaar Decl. ¶ 9.

B. The Pay Freeze

In December 2010, as part of the Continuing Appropriations and Surface

Transportation Extension Act, Pub. L. No. 111-322, Congress passed the PFA, which

prevented increases in salary for certain federal employees. The Act provided, in

relevant part:

(a)(1) the term ‘employee’--

(A) means an employee as defined in section 2105 of title 5, United

States Code; and

According to the plaintiffs, this retroactive adjustment is carried out through a lump sum

payment.

(B) includes an individual to whom subsection (b), (c), or (f) of such

section 2105 pertains (whether or not such individual satisfies

subparagraph (A));

....

(b)(1) Notwithstanding any other provision of law, except as provided in

subsection (e), no statutory pay adjustment which (but for this subsection)

would otherwise take effect during the period beginning on January 1,

2011, and ending on December 31, 2012, shall be made.

(2) For purposes of this subsection, the term ‘statutory pay adjustment’

means--

(A) an adjustment required under section 5303, 5304, 5304a, 5318,

or 5343(a) of title 5, United States Code; and

(B) any similar adjustment, required by statute, with respect to

employees in an Executive agency.

subsection (e), during the period beginning on January 1, 2011, and ending

on December 31, 2012, no senior executive or senior-level employee may

receive an increase in his or her rate of basic pay absent a change of

position that results in a substantial increase in responsibility, or a

promotion.

(d) The President may issue guidance that Executive agencies shall apply in

the implementation of this section.

(e) The Non-Foreign Area Retirement Equity Assurance Act of 2009 (5

U.S.C. 5304 note) shall be applied using the appropriate locality-based

comparability payments established by the President as the applicable

comparability payments in section 1914(2) and (3) of such Act.

Pub. L. No. 111-322 § 147, 124 Stat. 3518. Thus, the Act explicitly froze increases

pursuant to 5 U.S.C. §§ 5303, 5304, 5304a, 5318, and 5343(a), which together govern

wage increases pursuant to the General Schedule. In addition, it froze “any similar

adjustment, required by statute, with respect to employees in an Executive agency.”

The PFA also provided that the President may issue guidance that Executive

Agencies shall apply in the implementation of the act. The President delegated that

responsibility to OPM in a memorandum issued on December 22, 2010, in which the

President stated:

While this legislation will prevent adjustments in executive branch pay

schedules that are made by statute, some laws allow such adjustments to be

made by agency heads as an exercise of administrative discretion. In order

to ensure consistent treatment of executive branch employees and to

promote the fiscal purposes of my original proposal, agency heads who

have such discretion should not provide any upward adjustments in Federal

employees’ pay schedules or rates during the two-year period covered by

the statutory pay freeze.

The Director of [OPM] shall issue guidance on implementing this

memorandum, and is hereby authorized and directed to publish this

memorandum in the Federal Register.

Accordingly, you should suspend any increases to any pay systems or pay

schedules covering executive branch employees that could otherwise take

effect as a result of an exercise of administrative discretion during the

period beginning on January 1, 2011, and ending on December 31, 2012.

You also should forgo any general increases (including general increases

for a geographic area, such as locality pay) in covered employees’ rates of

pay that could otherwise take effect as a result of the exercise of

administrative discretion during the same period. To the extent that an

agency pay system provides performance-based increases in lieu of general

increases, funds allocated for those performance-based increases should be

correspondingly reduced to reflect the freezing of the employees’ base pay

schedule.

Memorandum for the Heads of Executive Departments and Agencies, 75 Fed. Reg.

81829 (Dec. 22, 2010). On December 30, 2010, the Director of OPM issued the guidance

requested by the President. In a memorandum, OPM stated:

Covered Employees

The pay freeze is expected to apply to approximately 2 million Federal

civilian employees in the Executive branch. Employees of the United

States Postal Service and the Postal Regulatory Commission are not

covered, nor are members of the uniformed services (as defined in 37

U.S.C. 101(3), i.e., Army, Navy, Air Force, Marine Corps, Coast Guard,

National Oceanic and Atmospheric Administration, and Public Health

Service). Covered employees include employees under the General

Schedule, Executive Schedule, Senior Executive Service (SES), Senior

Foreign Service (SFS), senior-level and scientific and professional (SL/ST),

prevailing rate, and other Executive branch pay systems and schedules.

Additional information on employees covered by the pay freeze is provided

in Attachment 3.

Covered Pay Adjustments

The pay freeze statute prohibits “statutory pay adjustments” for Federal

civilian employees that would otherwise take effect in 2011 and 2012.

These statutory pay adjustments include across-the-board adjustments

under 5 U.S.C. 5303, locality pay adjustments under 5 U.S.C. 5304 or

5304a, Executive Schedule adjustments under 5 U.S.C. 5318, prevailing

rate adjustments under 5 U.S.C. 5343(a), and any similar pay adjustments

required by statute with respect to covered employees in an Executive

agency. In addition, the statute prohibits certain additional pay adjustments

for SES, SFS, SL/ST, and other senior executive and senior-level

employees. The Presidential memorandum further states that agencies

should forgo similar pay system and pay schedule adjustments and general

increases that could otherwise be granted by an agency to employees

through administrative discretion. Additional information on pay

adjustments covered by the pay freeze is provided in Attachment 3.

Pay Freeze Exclusions

Given the breadth of the statute and the Presidential memorandum, virtually

all pay system and pay schedule adjustments and general increases for

covered civilian employees in Executive branch agencies should be covered

by the pay freeze. Pay adjustments not covered by the freeze include

promotion increases, within-grade step increases, and other similar

individually-based pay increases. (See Attachment 3 for additional

guidance on exclusions.)

....

Effective Date

The statute and Presidential memorandum cover pay adjustments that

would otherwise take effect during the period beginning on January 1,

2011, and ending on December 31, 2012.

Memorandum for Heads of Executive Departments and Agencies, available at

http://www.chcoc.gov/transmittals/TransmittalDetails.aspx?TransmittalID=3384 (last

visited April 28, 2015). OPM further elaborated on which adjustments fall within the PFA

in an attachment to the memo, stating:

An adjustment is considered to be “required by statute” if a law mandates

that a given type of adjustment be made (including a determination to

provide a zero adjustment) based on the existence of specific conditions.

This does not mean that a law must specify the exact amount of the

adjustment. Both General Schedule across-the-board increases and locality

pay increases are required by statute based on specific conditions, but the

governing laws leave room for determining the amount of the adjustment

and allow for the determination of a zero increase. Other pay systems may

be governed by similar laws.

Memorandum for Heads of Executive Departments and Agencies, Attachment 3, available

at http://archive.opm.gov/oca/compmemo/2010/2011freeze_attach3.pdf (last visited April

28, 2015). Similarly, the Secretary of Defense issued a memorandum stating that no pay

adjustment would be made. Memorandum for Secretaries of The Military Departments,

Def.’s App’x 44.

In January 2011, DoDEA contacted OPM by email for guidance regarding the

application of the PFA to overseas teachers. OPM replied with a determination that the

pay adjustment for the 2010-2011 school year, which would be finalized in 2011 but had

an effective date of August 1, 2010, would not be affected by the PFA. Def.’s App’x 22.

However, OPM determined that the following years’ pay adjustments would be frozen by

the PFA, lasting until August 2013. Id.4 Despite the freeze, OPM instructed DoDEA to

continue to perform wage surveys. Id. at 42-43.

In 2013, Congress extended the pay freeze for another year as part of the

Consolidated and Further Continuing Appropriations Act, Pub. L. 113-6. Id. at 46-47. On

April 5, 2013, as before, the President issued a memorandum directing OPM to issue

guidance. Id. at 47-48. The Director of OPM issued the requested guidance on that same

day. Id. This guidance reaffirmed OPM’s initial guidance.

Plaintiffs filed this case on April 22, 2014, and moved for summary judgment on

June 13, 2014. The government filed its motion on October 27, 2014. Briefing is complete

and oral argument was held on April 23, 2015.

II. STANDARD OF REVIEW

Both parties have moved for summary judgment under Rule 56 of the Rules of the

United States Court of Federal Claims (“RCFC”). Under RCFC 56, summary judgment is

appropriate “if the movant shows that there is no genuine dispute as to any material fact

In the email providing guidance, OPM stated:

We have determined that the pay freeze does not apply to pay increases for these

teachers that take effect in August 2010, since those increases are required to take

effect prior to the pay freeze period.

However, those teachers may not receive schedule increases during the 2011-

2012 pay freeze period. Thus, the August 2011 and August 2012 increases would

be blocked. We believe it would be appropriate as a matter of policy for pay

increases to be blocked until August 2013 so that these teachers are subject to a

full 2-year freeze.

Def.’s App’x 22, Email from Jerry Mikowicz, Deputy Associate Director, Pay and Leave, OPM,

to Darryl E. Roberts (Feb. 14, 2011, 11:09 EST).

and the movant is entitled to judgment as a matter of law.” RCFC 56(a). The court’s task

is to determine whether there exists a genuine issue of material fact for trial, and not “to

weigh the evidence and determine the truth of the matter . . . .” Anderson v. Liberty Lobby,

477 U.S. 242, 249 (1986). As it does for all Rule 56 motions, the court views the evidence

in a light most favorable to the nonmoving party, drawing reasonable inferences in its

favor. See Schooner Harbor Ventures, Inc. v. United States, 569 F.3d 1359, 1362 (Fed.

Cir. 2009); Galvin v. Eli Lilly & Co., 488 F.3d 1026, 1031 (D.C. Cir. 2007). If the court

finds that a rational trier of fact could not find for the nonmoving party, then there is no

genuine issue for trial and the movant is entitled to summary judgment. Ricci v. DeStefano,

557 U.S. 557, 586 (2009) (quoting Matsushita Elec. Industr. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587 (1986)).

III. DISCUSSION

A. OPM Properly Determined That Agencies Should Apply the PFA

Broadly To Include Salaries Set Under the OTPPPA

According to plaintiffs, the PFA was not sufficiently broad to override the

OTPPPA. Plaintiffs argue that the PFA specifically lists several statutes, not including

the OTPPPA, and that the OTPPPA is not sufficiently “similar” to those statutes to have

been included within the ambit of the PFA. Plaintiffs contend that the statutes identified

in the PFA all include some element of administrative discretion in granting a pay

increase, while the OTPPPA’s use of the word “shall” creates a mandatory duty that

places it outside the PFA. In support of this contention, plaintiffs argue that there is a

presumption that appropriations acts do not change substantive law, citing Building and

Construction Trades Dep’t, AFL-CIO v. Martin, 961 F.2d 269, 273 (D.C. Cir. 1992), and

that clause 3(f)(i) of the Rules of the House of Representatives for the 111th Congress

require that any new legislation must specifically identify the existing statutes that it

changes. Plaintiffs argue that Congress’s actions are still meaningful with the reading

they propose and have identified several pay statutes that plaintiffs believe would still fall

within the PFA’s ambit under this interpretation, including 5 U.S.C. § 5348, which covers

Federal mariners, and 5 U.S.C. § 5349, which covers employees of the Government

Printing Office and the Bureau of Engraving and Printing.

In addition to their statutory argument, plaintiffs also argue in their brief that

OPM’s decision to include teachers covered by the OTPPPA within the pay freeze should

not be given any deference because it was not done through a formal rulemaking, citing

Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 843-44 (1984).

To the extent that deference is also available to OPM under Skidmore v. Swift & Co.,

323 U.S. 134 (1944), plaintiffs argue that any ambiguity must be resolved in favor of

plaintiffs. Plaintiffs further note that the domestic teachers in DoDEA schools5 received

pay increases, and argue that it would be paradoxical for overseas teachers to be treated

differently from their domestic counterparts. While plaintiffs recognize that pay increases

for domestic teachers are covered by a collective-bargaining agreement (“CBA”),

plaintiffs argue that nothing in the PFA exempts CBAs from the pay freeze. In this

Domestic teachers in DoDEA schools are not the domestic teachers referred to in the OTPPPA,

but rather DoDEA teachers at schools in the United States. As discussed below, infra note 9,

their pay statutes operate independently.

connection, plaintiffs argue that OTPPPA was passed to ensure that overseas teachers

received pay parity with their domestic counterparts, and that nothing in the PFA

indicates an intention to undermine Congress’s prior specifically-stated intentions.

In response, the government argues that Congress clearly stated an intention for

the PFA to apply as broadly as possible. According to the government, because Congress

has the authority to pass pay freezes, the question in this case is one of whether they

intended to include teachers covered by the OTPPPA rather than whether Congress had

the authority to freeze their wages. The government argues that the plain language of the

PFA supports a finding that the pay freeze was to be applied to all executive branch

employees unless expressly exempted, and overseas teachers—covered by the OTPPPA

as executive branch employees—were subject to statutory pay adjustments and therefore

covered by the PFA. Specifically, the government contends that the language in §

147(b)(2) specifying that the PFA shall apply “notwithstanding” other provisions of law

makes the broad scope of the PFA clear, as it expressly disallows statutory pay increases

during the specified period. The government further contends that the language in the

PFA regarding any statute that provides for a “similar” adjustment further demonstrates

the broad scope of the PFA.

To the extent that the PFA was ambiguous with regard to scope, the government

argues that Congress explicitly delegated interpretative authority to the President to find

“similar” statutes and to apply the pay freeze to those executive branch employees. In

this connection, the government also argues that OPM’s interpretation of the PFA on

behalf of the President is entitled to deference as an agency interpretation under

Skidmore, stating that it is appropriate in light of OPM’s expertise, authorized by the

statute, and a reasonable interpretation. The government further argues that plaintiffs’

arguments regarding pay parity with domestic DoDEA teachers must be rejected because

domestic teachers are covered by a CBA and are therefore treated differently under the

PFA.

The court agrees with the government that the plaintiffs were covered by the PFA

and thus subject to the pay freeze. As an initial matter, the court agrees with the

government that it must give deference to OPM’s guidance under Skidmore. In

Skidmore, the Supreme Court created a standard deferring to the experience and

judgment of administrators, stating:

We consider that the rulings, interpretations and opinions of the

Administrator under this Act, while not controlling upon the courts by

reason of their authority, do constitute a body of experience and informed

judgment to which courts and litigants may properly resort for guidance.

The weight of such a judgment in a particular case will depend upon the

thoroughness evident in its consideration, the validity of its reasoning, its

consistency with earlier and later pronouncements, and all those factors

which give it power to persuade, if lacking power to control.

Skidmore, 323 U.S. at 140. The Supreme Court has reaffirmed that Skidmore deference

is still available post-Chevron. United States v. Mead Corp., 533 U.S. 218, 234 (2001)

(“Chevron did nothing to eliminate Skidmore’s holding that an agency’s interpretation

may merit some deference whatever its form . . . .” (citations omitted)). The court finds

that the term “similar” is not self-defining, leaving the specific classification of pay

adjustment statutes as falling within the PFA to OPM.6 Without a definition by

Congress, the similarity of two pay statutes is necessarily subjective, making such a

determination an appropriate task for an agency that is entitled to deference.7 The court

further agrees with the government that Congress’s explicit delegation of decision-

making authority to OPM entitles the agency’s guidance proferred pursuant to that

authority to receive deference.

In accordance with the deference afforded to OPM, the court finds OPM’s

interpretation of the PFA is persuasive. Under the PFA, a statutory pay adjustment is

defined as either “an adjustment required under section 5303, 5304, 5304a, 5318, or

5343(a) of title 5, United States Code” or “any similar adjustment, required by statute,

with respect to employees in an Executive agency.” Pub. L. No. 111-322 § 147(b), 124

Stat. 3518. The five enumerated statutes all deal with adjustments to employees covered

by the pay comparability system (including the General Schedule) and the prevailing rate

system. See 5 U.S.C. §§ 5303, 5304, 5304a, 5318, 5343(a). As long as the OTPPPA

Plaintiffs argue that any ambiguity in the statute requires a finding in favor of plaintiffs, as

appropriations statutes are required by Congressional rules to state the statutes to be affected

with specificity. However, the court finds this argument unpersuasive. See infra, note 10.

Plaintiffs argue that the guidance offered by OPM lacks the indicia of careful consideration

required to receive deference, citing Cathedral Candle Co. v. U.S. Int’l Trade Comm’n, 400 F.3d

1352 (Fed. Cir. 2005). The government relies on the same case to argue that OPM is the agency

with the expertise most germane to the issue of pay freezes on pay adjustments and thus must be

given deference. In that case, the Federal Circuit described Skidmore not as a threshold test but

as a standard that “requires courts to give some deference to informal agency interpretations of

ambiguous statutory dictates, with the degree of deference depending on the circumstances.”

Cathedral Candle, 400 F.3d at 1365. Under this approach, the court finds that OPM’s guidance

is entitled to deference because OPM is the agency with relevant expertise.

reasonably fits the description in § 147(b)(2) of a statute providing a “similar

adjustment,” teachers paid in accordance with the OTPPPA were covered by the pay

freeze. Regarding such adjustments, OPM stated: