Recinto v. United States Department of Veterans Affairs

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IRENEO RECINTO ; BIENVENIDO No. 11-16341

GALAS, SR.; RICARDO PINERO ;

JUANITA QUIMBO ; FLORENTINO S. D.C. No.

TORRALBA ; EDER ANDRADE; JOHN 4:10-cv-04542-

M. ASPIRAS, JR.; MARIA AGBUNAG ; SBA

CORAZON AMBATA ; OFELIA C.

AMIO ; BEATRIZ BUENA BALLAIS;

RAMONA F. BATTUNG ; LAUREANA E. OPINION

BUNGAY ; FLORENTINA DELOS

SANTOS; CORA DIMLA ; LOLITA

EUGENIO ; EUSTOQUIA B. FABER;

MARIA D. GALANG ; ESTER G.

GALANG ; FELIZA GALEON ; JUANITA

GILO ; PACIENCIA M. MENDOZA ;

ANGELINA V. NATIVIDAD ;

ENGRACIA A. OCAMPO ; SOLEDAD N.

RESPITO ; JULIE DE VERA ; JOVITA

SALAMAT ; ANTONIETA VILLAREAL,

Plaintiffs-Appellants,

v.

THE UNITED STATES DEPARTMENT

OF VETERANS AFFAIRS ; ERIK K.

SHINSEKI, Secretary of Department

of Veterans Affairs; W. SCOTT

GOULD , Deputy Secretary of

Department of Veterans Affairs.

Defendants-Appellees.

2 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

Appeal from the United States District Court

for the Northern District of California

Saundra B. Armstrong, District Judge, Presiding

Argued and Submitted

November 5, 2012—San Francisco, California

Filed February 7, 2013

Before: Robert D. Sack,* Ronald M. Gould, and

Milan D. Smith, Jr., Circuit Judges.

Opinion by Judge Gould

SUMMARY**

Veterans Affairs

The panel affirmed the district court’s judgment

dismissing for failure to state a claim and for lack of subject

matter jurisdiction claims brought by a group of Filipino

World War II veterans and their widows who did not receive

payments under the Filipino Veterans Equity Compensation

Fund.

*

The Honorable Robert D. Sack, Senior Circuit Judge for the United

States Court of Appeals for the Second Circuit, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 3

Under the Veterans Judicial Review Act of 1988, the

district court does not have jurisdiction over claims that

would require it to review a question of fact or law relating to

or affecting veterans’ benefits decisions. The panel held the

Act barred review of plaintiffs’ due process claim, and

therefore the district court’s dismissal of the claim was

appropriate. The panel also held that it had jurisdiction to

consider plaintiffs’ equal-protection challenge to the Filipino

Veterans Equity Compensation Fund. On the merits, the

panel held that plaintiffs failed to state a claim for an equal

protection violation.

COUNSEL

Arnedo S. Valera (argued), Law Offices of Valera &

Associates, Fairfax, Virginia, for Plaintiffs-Appellants.

Thomas M. Bondy and Henry C. Whitaker (argued), United

States Department of Justice, Washington, D.C., for

Defendants-Appellees.

OPINION

GOULD, Circuit Judge:

This case involves a group of Filipino World War II

veterans and their widows who did not receive payments

under the Filipino Veterans Equity Compensation Fund

(“FVEC”), a fund established by statute in 2009 to give a

one-time payment to each qualifying service member. These

veterans and their widows either: (1) were ineligible for

benefits under the statute; or (2) qualified for benefits, but

4 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

were denied them because the Department of Veterans

Affairs (“VA”) could not verify military service. Plaintiffs

contend that their Fifth Amendment rights to due process and

equal protection were violated by the statute establishing the

fund and by the VA’s administration of it, resulting in their

lack of payment. The district court dismissed Plaintiffs’

claims with prejudice on the pleadings for lack of subject-

matter jurisdiction and for failure to state a claim upon which

relief can be granted. We consider whether the district

court’s dismissal was correct.

I

To place this appeal in context, we start with a refresher

on World War II history, explain the FVEC and the benefits

it provides, review the administrative process for filing and

adjudicating claims, and then discuss Plaintiffs’ claims.

A

When World War II started, the Philippines were in

transition: The islands were still a United States territory, but

they had the right to self-governance in preparation for

independence. The United States had military bases in the

Philippines and could call the archipelago’s armed forces into

service. A few months after the surprise attack on Pearl

Harbor, President Franklin Delano Roosevelt issued an

executive order placing the Filipino military under the

command of the United States Armed Forces of the Far East.

As a result of this and similar initiatives, Filipino soldiers

served alongside American troops in the Pacific Theater

during World War II.

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 5

After the War, Congress passed the First Supplemental

Surplus Appropriation Rescission Act of 1946, Pub. L. No.

79-301, 60 Stat. 6, 14 (1946) (codified as amended at

38 U.S.C. § 107(a)), and the Second Supplemental Surplus

Appropriation Rescission Act of 1946, Pub. L. No. 79-391,

60 Stat. 221, 223 (1946) (codified as amended at 38 U.S.C.

§ 107(b)). These acts transferred $200 million to the post-

war Filipino military, but they disqualified certain Filipino

fighters from receiving the same benefits enjoyed by active

members of the United States Armed Forces.

B

More than sixty years later, in February 2009, President

Obama signed into law the American Recovery and

Reinvestment Act of 2009 (“the Act”), which established the

FVEC. Pub. L. No. 111-5, § 1002, 123 Stat. 115, 200–02

(2009). The FVEC aimed to recognize the contributions

made by Filipino World War II veterans and granted one-

time, lump-sum payments to each of those who qualified

under the Act. See id. at § 1002(e).

Section 1002(d) of the Act reads:

(d) ELIGIBLE PERSONS.—An eligible person is

any person who—

(1) served—

(A) before July 1, 1946, in the

organized military forces of the Government

of the Commonwealth of the Philippines,

while such forces were in the service of the

Armed Forces of the United States pursuant to

6 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

the military order of the President dated July

26, 1941, including among such military

forces organized guerrilla forces under

commanders appointed, designated, or

subsequently recognized by the Commander

in Chief, Southwest Pacific Area, or other

competent authority in the Army of the United

States; or

(B) in the Philippine Scouts under

section 14 of the Armed Forces Voluntary

Recruitment Act of 1945 (59 Stat. 538); and

(2) was discharged or released from

service described in paragraph (1) under

conditions other than dishonorable.

Veterans must have also filed a claim for benefits within the

year after the statute’s enactment. Id. at § 1002(c). If a

qualifying veteran who filed a timely claim dies before

receiving payment, a surviving spouse takes. Id. at

§ 1002(c)(2).

Qualifying United States citizens receive $15,000 under

the FVEC, while non-citizens receive $9,000. Id. at

§ 1002(e). Acceptance of the payment constitutes “a

complete release of any claim against the United States by

reason of any [qualifying] service.” Id. at § 1002(h)(1). The

VA controls the application process, and applications “shall

contain such information and evidence as the Secretary may

require.” See id. at § 1002(c)(1). The Secretary must

administer FVEC claims “in a manner consistent with

applicable provisions of title 38, United States Code, and

other provisions of law.” Id. at § 1002(j)(2).

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 7

C

To adjudicate veterans’ claims, the VA uses a two-step

process, beginning with a regional office that processes

claims and makes an initial decision. See Henderson ex rel.

Henderson v. Shinseki, __ U.S. __, 131 S. Ct. 1197, 1200

(2011). If a veteran is not satisfied with the decision made by

the regional office, he or she may appeal it to the VA’s Board

of Veterans’ Appeals, which makes the agency’s final

decision. Id.; see also 38 U.S.C. §§ 7101, 7104(a).

From there, benefits determinations may be appealed in

the manner established by the Veterans’ Judicial Review Act

of 1988 (“the VJRA”), Pub. L. No. 100-687, div. A, 102 Stat.

4105 (1988) (codified in sections of 38 U.S.C.). The VJRA

established an Article I court called the United States Court

of Appeals for Veterans Claims, which has exclusive

jurisdiction to review decisions of the Board of Veterans’

Appeals. See 38 U.S.C. §§ 7251,7252(a), 7261. On further

appeal, decisions from the Court of Appeals for Veterans

Claims are reviewed by the Federal Circuit. 38 U.S.C.

§ 7292(c)–(d). A person aggrieved by decision of that circuit

may seek review from the United States Supreme Court, but

for most litigants the Federal Circuit will be the last stop.

This case comes to us, rather than the Federal Circuit,

because Plaintiffs here sought to characterize their claims as

something other than an appeal of denial of benefits.

D

Plaintiffs are comprised of two groups. The first contains

seven Filipino veterans, all United States citizens, who filed

claims for FVEC benefits within the requisite one-year filing

window. As part of their application for benefits, these

8 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

veterans attached proof of their membership in the

Commonwealth Army of the Philippines. They were all

notified that their claims were rejected by a letter reading as

follows:

Basic eligibility to VA benefits may be

established upon verification of valid military

service by the National Personnel Records

Center (“NPRC”) at St. Louis, [Missouri].

Based on the information/evidence you

submitted with your claim, NPRC is unable to

verify that you served as a member of the

Commonwealth Army of the Philippines,

including the recognized guerillas, in the

service of the Armed Forces of the United

States.

None of the veterans appealed this adverse decision to the

Board of Veterans’ Appeals.

The second group contains twenty-one widows of Filipino

veterans. These women were never eligible for benefits

under the FVEC because their husbands died before its

enactment. None of them filed a claim with the VA.

Plaintiffs filed suit in the Northern District of California

raising four constitutional claims. The district court

dismissed these claims on the pleadings for lack of subject-

matter jurisdiction and failure to state a claim upon which

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 9

relief can be granted. Plaintiffs filed a timely appeal

challenging the dismissal of two of their four original claims.1

The claims appealed by Plaintiffs are: (1) a due-process

challenge to the VA’s exclusive reliance on records from the

NPRC to verify service history2; and (2) an equal-protection

challenge to the FVEC’s failure to provide Filipino veterans

the same benefits enjoyed by veterans of the United States

Armed Forces.

II

We have jurisdiction to review the district court’s

dismissal of these claims under 28 U.S.C. § 1291. We review

de novo the district court’s finding that it lacked subject-

matter jurisdiction. K2 Am. Corp. v. Roland Oil & Gas, LLC,

653 F.3d 1024, 1027 (9th Cir. 2011). We also review de novo

the district court’s dismissal for failure to state a claim upon

which relief can be granted. Barrett v. Belleque, 544 F.3d

1060, 1061 (9th Cir. 2008).

1

The other two claims were not raised by Plaintiffs in their opening

brief and so are waived. See United States v. Kama, 394 F.3d 1236, 1238

(9th Cir. 2005) (“Generally, an issue is waived when the appellant does

not specifically and distinctly argue the issue in his or her opening brief.”

(citations omitted)).

2

Plaintiffs support this claim in part with allegations that NPRC records

are incomplete because a fire at the records facility in 1973 destroyed

more than sixteen million official records covering the W orld W ar II

service period.

10 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

III

We begin by considering whether the district court had

jurisdiction to hear Plaintiffs’ claims.

A

The district court dismissed Plaintiffs’ due-process

challenge to the VA’s use of NPRC records after finding that

the VJRA and sovereign immunity barred review. We first

address the VJRA’s effect on jurisdiction.

We held in Veterans for Common Sense v. Shinseki that

a district court does not have jurisdiction over claims that

would require it to review a question of fact or law relating to

or affecting veterans’ benefits decisions. 678 F.3d 1013,

1022–25 (9th Cir. 2012) (en banc) (“First, Congress has

expressly disqualified us from hearing cases related to VA

benefits in [38 U.S.C.] § 511(a) . . . and second, Congress has

conferred exclusive jurisdiction over such claims to the

[Court of Appeals for Veterans Claims] and the Federal

Circuit.” (citations omitted)). Stated another way, if

reviewing Plaintiffs’ claim would require review of the

circumstances of individual benefits requests, jurisdiction is

lacking. See id. at 1034. “Benefits” include “any payment,

service, . . . or status, entitlement to which is determined

under laws administered by the Department of Veterans

Affairs pertaining to veterans and their dependents and

survivors.” Id. at 1026 (citing 38 C.F.R. § 20.3(e)). We must

therefore evaluate both of Plaintiffs’ claims to determine

whether they require us to consider veterans’ individual

benefits decisions.

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 11

Plaintiffs contend that their due-process claim does not

impel the court to look at the specifics of any individual

veteran’s case because it requires consideration of only the

VA policy demanding verification of service from the NPRC,

the history of the NPRC fire, and the exigent circumstances

of World War II. But in Veterans for Common Sense we held

that we lacked jurisdiction to review a claim that average

delays in the VA’s provision of mental healthcare violated

due process. Id. at 1028. We reasoned that “[t]he fact that [a

plaintiff] couches [a] complaint in terms of average delays

cannot disguise the fact that it is, fundamentally, a challenge

to thousands of . . . benefits decisions made by the VA.” Id.

at 1027. And we noted that holding otherwise “would

embroil the district court in the day-to-day operation of the

VA.” Id. at 1028.

Similarly, we hold here that the VJRA bars review of

Plaintiffs’ due-process claim. Even viewing Plaintiffs’ claim

as a systemic challenge rather than as a challenge to a group

of individual VA decisions, we conclude that addressing the

constitutionality of the VA’s exclusive reliance on NPRC

records to verify military service would necessarily require

consideration of individual cases. To determine whether the

VA policy unfairly deprives veterans of a protected property

interest, we would have to inquire into the circumstances of

at least a representative sample of those veterans who were

denied FVEC benefits based on the NPRC’s inability to

verify their service for the purpose of determining whether

members of that sample could sufficiently prove their

military service without NPRC verification. See Krainski v.

Nev. ex rel. Bd. of Regents, 616 F.3d 963, 970 (9th Cir. 2010)

(stating that a procedural due-process violation requires

showing deprivation of a constitutionally protected interest

and denial of adequate procedural protection). Our

12 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

interpretation of the VJRA in Veterans for Common Sense

forecloses this type of inquiry. 678 F.3d at 1027–28.

Because we hold that the VJRA precluded the district court’s

review of this claim, the district court’s dismissal of the claim

was appropriate. We do not consider whether sovereign

immunity, the alternative basis supporting dismissal, also

precludes review.3

We next consider Plaintiffs’ equal-protection claim. In

Veterans for Common Sense, we held that the VJRA did not

bar jurisdiction over a facial challenge to the constitutionality

of a statute because review of that challenge would not

require consideration of “‘decisions’ affecting the provision

of benefits to any individual claimant[].” Id. at 1034 (citing

38 U.S.C. § 511). For the same reasons, we conclude that we

have jurisdiction over Plaintiffs’ facial equal-protection

claim. Evaluation of that claim only requires us to look at the

text of the statute establishing the FVEC, nothing more. To

assess this claim we need not assess whether individual

claimants have a right to veterans benefits.

3

Plaintiffs allege for the first time on appeal that a transfer of this claim

to the Court of Appeals for Veterans Claims is warranted under 28 U.S.C.

§ 1631. But this argument is waived. See O’Guinn v. Lovelock Corr.

Ctr., 502 F.3d 1056, 1063 n.3 (9th Cir. 2007) (“Because these arguments

were not raised before the district court, they are waived.” (citation

omitted)). Even if transfer had been properly requested, we doubt that

§ 1631 would apply because Plaintiffs did not appeal their initial VA

decision to the Board of Veterans’ Appeals and the Court of Appeals for

Veterans Claims only reviews decisions from that court. See 38 U.S.C.

§ 7252(a). The claim therefore could not have been brought in the Court

of Appeals for Veterans Claims when it was filed in the district court, as

required by 28 U.S.C. § 1631.

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 13

B

Because we have determined that there is jurisdiction to

review Plaintiffs’ facial equal-protection challenge to the

FVEC, we now consider whether the district court properly

dismissed this claim under Federal Rule of Civil Procedure

12(b)(6).4

A complaint is properly dismissed under Rule 12(b)(6)

unless it contains “enough facts to state a claim to relief that

is plausible on its face.” Coto Settlement v. Eisenberg,

593 F.3d 1031, 1034 (9th Cir. 2010) (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 697 (2009)). Well-pleaded factual

allegations are taken as true, but conclusory statements or

“bare assertions” are discounted. See Chavez v. United

States, 683 F.3d 1102, 1108 (9th Cir. 2012); see also Iqbal,

556 U.S. at 681.

Specifically, an equal-protection claim must assert that a

plaintiff was treated differently than other similarly situated

persons and that the disparate treatment was intentional. See

Sischo-Nownejad v. Merced Cmty. Coll. Dist., 934 F.2d 1104,

1112 (9th Cir. 1991), superseded by statute on other grounds

as recognized by Dominguez-Curry v. Nev. Transp. Dep’t,

4

The VA contends that Plaintiffs waived their remaining equal-

protection claim because (1) they did not reallege on appeal that the FVEC

does not satisfy rational basis review, and (2) they contend for the first

time on appeal that the FVEC fails to satisfy strict scrutiny because it

classifies the veterans on the basis of national origin. See Kama, 394 F.3d

at 1238 (waiver applies to issues not raised by an appellant in the opening

brief); see also O’Guinn, 502 F.3d at 1063 n.3 (waiver applies to issues

not raised before the district court). But we assume, without deciding, that

the claim is not waived and consider whether the district court’s dismissal

was proper.

14 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

424 F.3d 1027 (9th Cir. 2005). To avoid dismissal, a plaintiff

must plausibly suggest the existence of a discriminatory

purpose. See Iqbal, 556 U.S. at 677.

Plaintiffs contend that the FVEC violates their right to

equal protection because it gives fewer benefits to Filipino

veterans than to veterans of the United States Armed Forces.

But our circuit, as well as one of our sister circuits, has

already held that the disparity in benefits created by § 107 of

title 38, established by the Surplus Appropriation Rescission

Acts, does not require strict scrutiny because it is based on

status as a territory and not on the basis of race, nationality,

or alienage and is constitutional under rational basis review.

See Besinga v. United States, 14 F.3d 1356, 1360–62 (9th Cir.

1994) (holding that the “broad powers of Congress under the

Territory Clause are inconsistent with the application of

heightened judicial scrutiny” and finding several potential

rational bases, including conserving finances, to support the

law); see also Quiban v. Veterans Admin., 928 F.2d 1154,

1160–62 (D.C. Cir. 1991) (rejecting an argument that strict

scrutiny should apply because Filipino veterans are an insular

minority and finding that limiting tax-funded social-welfare

programs to United States veterans is a rational basis for the

law).

Because of this precedent adverse to their equal-

protection claims, Plaintiffs must show that the statute

establishing the FVEC creates a new and distinguishable

classification. Plaintiffs contend that two provisions of the

American Recovery and Reinvestment Act—the “Release”

provision and the “Recognition of Service” provision—do

just that. See Pub. L. No. 111-5, §§ 1002(h)(1), (i), 123 Stat.

at 201–02 (2009).

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 15

We first address the “Release” provision. It reads:

(h) RELEASE.—

(1) IN GENERAL .—Except as provided in

paragraph (2), the acceptance by an eligible

person or surviving spouse, as applicable, of

a payment under this section shall be final,

and shall constitute a complete release of any

claim against the United States by reason of

any [qualifying] service . . . .

(2) PAYMENT OF PRIOR ELIGIBILITY

STATUS.—Nothing in this section shall

prohibit a person from receiving any benefit

(including health care, survivor, or burial

benefits) which the person would have been

eligible to receive based on laws in effect as

of the day before the date of the enactment of

this Act.

Id. at § 1002(h)(1). The statutory language preserves the

benefits granted to veterans under 38 U.S.C. § 107. This

provision does not forfeit any benefits that Filipino veterans

currently receive under the status quo and creates no new

classification to be challenged.

Plaintiffs next argue that the “Recognition of Service”

provision within the American Recovery and Reinvestment

Act of 2009 creates a new classification by altering § 107.

That provision reads:

(i) RECOGNITION OF SERVICE .—The

[qualifying] service of a person . . . is hereby

16 RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS

recognized as active military service in the

Armed Forces for purpose of, and to the

extent provided in, this section.

Pub. L. No. 111-5, § 1002(i), 123 Stat. at 202 (2009). But the

provision’s plain language limits the recognition of service to

§ 1002 and administration of the FVEC. See In re Meruelo

Maddux Props., Inc., 667 F.3d 1072, 1076 (9th Cir. 2012)

(“Where the statute’s language is plain, the sole function of

the courts is to enforce it according to its terms, for courts

must presume that a legislature says in a statute what it means

and means in a statute what it says there.” (quoting Int’l Ass’n

of Machinists & Aerospace Workers v. BF Goodrich

Aerospace Aerostructures Grp., 387 F.3d 1046, 1051 (9th

Cir. 2004) (citations and internal quotation marks omitted))).

Nothing in the American Recovery and Reinvestment Act

suggests that the “Recognition of Service” provision alters

38 U.S.C. § 107 and the limitations imposed by that statute.

Indeed, other provisions of § 1002 of the American

Recovery and Reinvestment Act acknowledge and preserve

the limitations in 38 U.S.C. § 107. See Pub. L. No. 111-5,

§§ 1002(a)(5), (h)(2), (j)(2), 123 Stat. at 200–02 (2009). We

consider the statute as a whole and hold that the “Recognition

of Service” provision does not affect our previous decisions.

See Exxon Mobile Corp. v. E.P.A., 217 F.3d 1246, 1249 (9th

Cir. 2000) (“In interpreting the intent of Congress, it is

essential to consider the statute as a whole.” (citations

omitted)). Because Plaintiffs’ complaint did not challenge a

new classification established by the Act and did not allege

any plausible facts suggesting that the classification in

38 U.S.C. § 107 was created for a discriminatory purpose, we

hold that the district court did not err when it dismissed this

claim under Federal Rule of Civil Procedure 12(b)(6).

RECINTO V . U.S. DEP’T OF VETERANS AFFAIRS 17

IV

For the foregoing reasons, all of Plaintiffs’ claims were

properly dismissed by the district court on the pleadings.

AFFIRMED.