Appendix — Kline v. United States

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UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

NO. 04-5012

STEPHEN S. ADAMS, AND 14,302 OTHER

SIMILARLY-SITUATED PLAINTIFFS,

Plaintiffs-Appellants,

v.

UNITED STATES,

Defendant-Appellee.

FILED December 9, 2004.

Before MICHEL, RADER, and PROST, Circuit Judges.

MICHEL, Judge:

Stephen S. Adams and 14,302 other similarly-situated

individuals (collectively, “Appellants”) were employed

between 1984 and 1995 as GS-9, GS-11, GS-12, and GS-13

criminal investigators in various federal law enforcement

agencies, including the Bureau of Alcohol Tobacco and

Firearms (“BATF”), the Drug Enforcement Agency

(“DEA”), the Internal Revenue Service (“IRS”), the United

States Customs Service (“Customs Service”), and the

United States Secret Service (“USSS”).1 They appeal from

the order of the United States Court of Federal Claims

granting the Government’s motion to dismiss their takings

complaint for failure to state a claim upon which relief may

be granted. Adams v. United States, No. 00-447C, 2003 U.S.

Claims LEXIS 238 (Fed. Cl. Aug.11, 2003). Appellants

1 Several of those agencies or units thereof have since been renamed

and/or merged into the United States Department of Homeland Security.

See Homeland Security Act of 2002, Pub.L. No. 107-296 § 1502, 2002

_ US.C.C.AN. (116 Stat. 2135, 2308 (2002)).

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received overtime compensation, apparently pursuant to the

Federal Employees Pay Act (“FEPA”), codified at 5 U.S.C.

§ 5542, at a rate less than one-and-one-half times their

regular rate of pay.2 Appellants assert entitlement to

overtime compensation at the rate specified under the Fair

Labor Standards Act (“FLSA”), codified at 29 U.S.C.

§§ 201-219, which is at least one-and-one-half times their

regular rate of pay, rather than at the lower rate provided

for in the FEPA. In other words, Appellants seek to

recover as damages the difference between what they

received under the FEPA versus the amount they would

have received under the FLSA (“underpaid overtime

compensation”). The case was submitted for decision after

oral argument on September 7, 2004. Because Appellants do

not have a cognizable property interest in either the

underpaid overtime compensation or in an administrative

claim thereto within the meariing of the Takings Clause of

the Fifth Amendment, we affirm.

I. BACKGROUND

A. Statute of Limitations Applicable to FLSA

Claims

The FLSA provides overtime compensation to certain

employees who work more than forty hours per week at a

rate not less than one-and-one-half times the employees’

regular rate of compensation. This statute originally did not

cover federal employees. In 1974, however, Congress

extended it to federal employees, but exempted those

classified as executive, administrative, or professional. Id.

§ 213(a)(1).

To recover unpaid overtime compensation under the

FLSA, a federal employee may file either an action at law or

- The parties fail to analyze the specific provision under which

Appellants received compensation for overtime work. Nevertheless, the

Government cited the FEPA in its brief, a citation that was not

contradicted in Appellants’ reply brief.

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a claim before the General Accounting Office (“GAO”).

Actions at law brought under the FLSA are subject to the

statute of limitations provided in the Portal-to-Portal Pay

Act, codified at 29 U.S.C. §§ 251-262, which provides for a

two-year limitations period for cases in which the FLSA

violation is non-willful and a three-year period where the

violation is willful. Jd. § 255(a).

The statute of limitations for administrative claims

before the GAO initially was selected, then revised by, the

Comptroller General of the United States and twice altered

by Congress. The numerous changes in the statute of

limitations for claims before the GAO, in part, create the

backdrop of the instant takings claim. Therefore, it is

important to have a general understanding of the evolution

of the limitations periods involved.

In 1978, the Comptroller General ruled that the statute

of limitations for FLSA claims before the GAO was not the

statutory period specific to FLSA claims, but was six years

as set forth in the more generally applicable Barring Act,

codified at 31 U.S.C. § 3702(b). In re Transp. Sys. Ctr., 57

Comp.Gen. 441 (1978). Sixteen years later, on May 24, 1994,

the Comptroller General effectively changed the statute of

limitations for FLSA claims before the GAO from six years

to two years for non-willful violations and three years for

willful violations, essentially recognizing as applicable the

limitations period specifically set for FLSA claims in the

Portal-to-Portal Pay Act. In re Ford, 73 Comp.Gen. 157

(1994).

Shortly thereafter, on September 30, 1994, Congress

enacted the Treasury, Postal Service and General

Government Appropriations Act of 1995, Pub.L. No. 103-

329, 108 Stat. 2383, 2432 (1994). Section 640 of that act

mandated that the Comptroller General apply a six-year

statute of limitations period to any administrative claim

under the FLSA filed prior to June 30, 1994, and a two-year

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statute of limitations period to any such claim filed after

June 30, 1994.

On November 19, 1995, Congress enacted the Treasury,

Postal Service, and General Government Appropriations

Act of 1996, Pub.L. No. 104-52, 109 Stat. 468, 468-69 (1995),

which amended Section 640 to further limit the types of

FLSA claims that may be decided by the GAO (“amended

Section 640”). Amended Section 640 precluded, among other

changes, application of the six-year statute of limitations

originally set forth in Section 640 to employees who had

received overtime compensation under another provision of

law. Thus, those employees were limited to the two-year

statute of limitations period.

B. Appellants’ Status Under the FLSA

Pursuant to 5 C.F.R. § 551.201, the BATF, the DEA, the

IRS, the Customs Service, and the USSS independently

determined, as the respective employing agencies, that

Appellants were administrative employees exempt from the

FLSA and its overtime provisions. In making this

determination, the employing agencies evaluated whether

Appellants’ duties met the administrative exemption

criteria set forth in 5 C.F.R. § 551.206. Significantly,

Appellants were presumed to be non-exempt under the civil

service regulations, thereby requiring the employing

agencies to carry the burden of establishing that the

Appellants met the criteria of § 551.206. Id. §§ 551.202(a),

(c).

Dissatisfied with this exemption determination,

Appellants filed an action at law under the Tucker Act,

codified at 28 U.S.C. § 1491, against the Government in the

United States Court of Federal Claims. Simultaneously,

Appellants filed identical administrative claims before the

GAO. In both proceedings, Appellants alleged that they

were improperly ruled exempt from the FLSA and were

entitled to damages flowing from this misclassification. In a

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decision dated October 30, 1992, the Court of Federal Claims

concluded that some of the Appellants were exempt, while

others were non-exempt. Adams v. United States, 27

Fed.Cl. 5, 28-29 (1992).

On September 23, 1998, we partially reversed the Court

of Federal Claims’ ruling in a non-precedential opinion and

remanded the case for further proceedings as to those

criminal investigators held exempted from the FLSA.

Adams v. United States, No. 98-5011, 1998 WL 804552, 1998

U.S.App. LEXIS 23565 (Fed.Cir. Sept. 23, 1998) (Table).

That case remains pending before the Court of Federal

Claims.

C. Prior Court Proceedings Leading to the Instant

Appeal

On October 27, 1995, prior to the enactment of amended

Section 640, Appellants filed suit against the Government in

the United States District Court for the District of

Columbia, seeking mandamus, injunctive, and declaratory

relief against the GAO for its inactivity on their

administrative claims. Following the enactment of amended

Section 640, Appellants twice supplemented their complaint

to challenge the constitutionality of original Section 640 and

amended Section 640 under the Due Process and Takings

Clauses of the Fifth Amendment.

On October 12, 1996, the district court granted summary

judgment in favor of the Government. Adams v. Bowsher,

946 F.Supp. 37 (D.D.C.1996). The district court addressed

Appellants’ due process arguments, ultimately concluding

that neither Section 640 nor amended Section 640 violated

the Due Process Clause. As to Appellants’ takings claim,

the district court concluded that a compensable taking did

not occur, based upon the three factors set forth for

regulatory takings in Connolly v. Pension Benefit Guaranty

Corp., 475 U.S. 211, 224-25, 106 S.Ct. 1018, 89 L.Ed..2d 166

(1986). Adams, 946 F.Supp. at 44. Appellants appealed that

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decision to the United States Court of Appeals for the

District of Columbia Circuit.

On August 28, 1998, the District of Columbia Circuit

affirmed the district court’s decision on the due process

claim, but reversed its decision on Appellants’ takings claim.

Adams v. Hinchman, 154 F.3d 420 (D.C.Cir.1998). The

circuit court noted that takings claims for amounts greater

than $10,000 fall within the exclusive jurisdiction of the

Court of Federal Claims pursuant to the Tucker Act. Id. at

425-426. Consequently, the circuit court concluded that the

district court might lack jurisdiction to entertain Appellants’

takings claim and remanded the takings claim to the district

court to determine whether jurisdiction was proper under

the Little Tucker Act, codified at 28 U.S.C. § 1346(a)(2), for

claims of less than $10,000, which lodges concurrent

jurisdiction in the district courts.

On March 30, 2000, the district court issued an opinion

answering the jurisdictional question posed by the circuit

court. Adams v. Walker, No. 95-2015 (D.D.C. Mar.30, 2000).

The district court noted that Appellants sought to amend

their complint to allege an amount in controversy in excess

of $10,000. The district court stated that the circuit court

“essentially rejected [Appellants’] claim for injunctive relief

and viewed it instead as a claim for money damages.” Id.,

slip. op. at 5. Hence, the district court concluded that justice

required it to allow Appellants to amend their complaint

and, therefore, to transfer the case to the Court of Federal

Claims. /d., slip. op. at 6. The district court thus vacated its

ruling concerning Appellants’ takings claim and ordered the

case transferred to the Court of Federal Claims pursuant to

the transfer provision in 29 U.S.C. § 1631. Id., slip. op. at 9.

D. The Court of Federal Claims Decision

On August 4, 2000, after transfer from the district court

to the Court of Federal Claims, Appellants’ complaint

claimed that three separate governmental actions effected a

Ta

taking of their property under the Fifth Amendment: (1)

the Comptroller General’s Ford decision that retroactively

applied a two- or three-year statute of limitations to their

administrative claims instead of the six-year statute of

limitations; (2) the GAO’s failure and refusal in the

intervening year to apply the original Section 640 to their

administrative claims; and (3) Congress’s amendment of

Section 640 in late 1995 restricting restoration of the six-

year limitations period to situations where no overtime was

paid at all. In response, the Government asserted that

Appellants’ case is merely a standard FLSA entitlement

case disguised as a Fifth Amendment takings claim. Put

differently, the Government argued that Appellants’ claim is

one for statutory entitlement under the FLSA because the

only property allegedly taken was FLSA overtime

compensation. The Government also argued that a claim to

FLSA overtime compensation is not “property” within the

meaning of the Takings Clause, and subsequently moved to

dismiss the complaint under Court of Federal Claims Rule

12(b)(6) for failure to state a claim upon which relief can be

granted and Court of Federal Claims Rule 12(b)(1) for lack

of jurisdiction over the subject matter of the case.

The trial court distilled the parties’ arguments to a

single issue: whether Appellants’ claim involves “property”

within the meaning of the Takings Clause of the Fifth

Amendment. Adams, 2003 U.S. Claims LEXIS 238 at *20.

To address that issue, the trial court considered Appellants’

claim for underpaid overtime compensation separate from

Appellants’ administrative claim. Relying on

Commonwealth Edison Co. v. United States, 271 F.3d 1327

(Fed.Cir. 2001) (en banc), the trial court held that a

governmental obligation to pay money pursuant to a statute

is not a protected “property” interest under the Takings

Clause. Adams, 2003 U.S. Claims LEXIS 238 at *20. In

reaching that holding, the trial court focused its analysis on

the identification of a true property interest but concluded

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that “{aJll the [appellants] have identified is a run-of-the-mill

claim for liability.” Jd. at *27. Additionally, the court

reasoned that even if a statutory right to payment could be

considered “property,” the Government had not “taken”

Appellants’ money for its own use; it simply did not pay

them because it determined after analysis that they were

exempt from the FLSA. 7d. at *30.

As for Appellants’ administrative claim, the court

observed that the abolition of a cause of action may rise to

the level of a taking, but only if the cause of action secures a

“legally protected interest.” Jd. at *40. For that reason, the

court concluded that Appellants’ administrative claim also

must fail, since the interest underlying this claim is not

cognizable as a property right protected by the Takings

Clause of the Fifth Amendment. Jd. Moreover, the court

noted that the district court and District of Columbia Circuit

already had rejected Appellants’ due process claims. Id.

The court concluded, therefore, that no cause of action to

protect Appellants’ property or procedural rights had been

unconstitutionally taken from them. Id. at *41.

Accordingly, the Court of Federal Claims granted the

Government’s motion to dismiss and ordered entry of final

judgment in favor of the Government.

Appellants timely appealed, arguing that the Court of

Federal Claims erred in deciding that they did not have a

property interest in either FLSA overtime compensation, or

an administrative claim thereto, cognizable under the

Takings Clause. We have jurisdiction pursuant to 28 U.S.C.

§ 1295(a)(3) because the appeal is from a final judgment of

the Court of Federal Claims.

II. DISCUSSION

A. Standard of Review

The Court of Federal Claims did not explicitly state

whether the motion to dismiss was granted under Rule

12(b)(1) or under Rule 12(b)(6) of the Rules of the Court of

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Federal Claims. Nevertheless, it appears that the

Government did not present an exclusively jurisdictional

argument, which would invoke Rule 12(b)(1). Additionally,

the Court of Federal Claims focused on the merits of

Appellants’ case in its opinion. Therefore, the Court of

Federal Claims can best be described as having granted the

motion to dismiss under Rule 12(b)(6) of the Court of

Federal Claims for failure to state a claim on which relief

can be granted.3

Dismissal for failure to state a claim under Rule 12(b)(6)

of the Federal Rules of Civil Procedure is proper only when

a plaintiff “can prove no set of facts in support of his claim

which would entitle him to relief.” Leider v. United States,

301 F.8d 1290, 1295 (Fed.Cir.2002) (quoting Conley v.

Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed..2d 80 (1957)).

In reviewing the Court of Federal Claims’ grant of a Rule

12(b)(6) motion, we must assume that all well-pled factual

allegations in the complaint are true and draw all reasonable

inferences in favor of the non-movant. See Leider, 301 F.3d

at 1295. Whether the Court of Federal Claims properly

dismissed Appellants’ complaint for failure to state a claim

upon which relief can be granted is a question of law which

we review de novo. See id. (citing Boyle v. United States,

200 F.3d 1369, 1372 (Fed.Cir.2000)).

B. The Takings Clause

The Takings Clause of the Fifth Amendment provides,

in pertinent part: “nor shall private property be taken for

public use, without just compensation.” U.S. Const. amend.

V, cl. 4. A claimant under the Takings Clause must show

that the government, by some specific action, took a private

property interest for a public use without just

compensation. Hodel v. Va. Surface Mining & Reclamation

Ass'n, 452 U.S. 264, 294, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981).

3 Rule 12 of the Court of Federal Claims mirrors Rule 12 of the

Federal Rules of Civil Procedure.

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In evaluating a takings claim, we have developed a two-step

approach. First, we determine whether the claimant

possessed a cognizable property interest in the subject of

the alleged taking for purposes of the Fifth Amendment, 7.e.,

whether the claimant possessed a “stick in the bundle of

property rights.” Karuk Tribe of Cal. v. Ammon, 209’ F.3d

1366, 1374 (Fed.Cir.2000) (internal citation omitted).

Second, once we have determined that such a property

interest exists, we decide “whether the governmental action

at issue constituted a taking of that ‘stick.” Jd. (citing M &

J Coal Co. v. United States, 47 F.3d 1148, 1154

(Fed.Cir.1995)).

In this case, our analysis focuses on the threshold

requirement of a recognized property interest, 7.e., whether

Appellants possessed any cognizable property interests

within the meaning of the Takings Clause in either FLSA

overtime compensation or in an administrative claim

thereto. The Constitution itself neither creates nor defines

the property interests that if taken by the government are

compensable under the Fifth Amendment. Bd. of Regents of

State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33

L.Ed..2d 548 (1972). Rather, “existing rules or

understandings that stem from an independent source,”

such as state, federal, or common law, create and define the

dimensions of property interests for purposes of

establishing a cognizable right and hence a potential taking.

Lucas v. S.C. Coastal Council, 505 U.S. 1008, 1030, 112 S.Ct.

2886, 120 L.Ed..2d 798 (1992). We have observed:

Property interests are about as diverse as the human

mind can conceive. Property interests may be real and

personal, tangible and intangible, possessory and

nonpossessory. They can be defined in terms of

sequential rights to possession (present interests—life

estates and various types of fees—and future interests),

and in terms of shared interests (such as those of a

mortgagee, lessee, bailee, adverse possessor), and there

ee ee We tee

lla

are interests in special kinds of things (such as water,

and commercial contracts). And property interests play

across the entire range of legal ideas.

Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560, 1572

n.32 (Fed.Cir.1994). In light of the complex nature of

property interests and associated rights, we must identify

the precise nature of Appellants’ takings claim on appeal.

Appellants argue, as they did before the Court of Federal

Claims, that two specific property interests are implicated,

namely, an interest in payment of underpaid overtime

compensation according to FLSA rates and an interest in an

administrative claim thereto before the GAO. We consider

each of these alleged property interests in turn.

i. Do Appellants Possess a Cognizable

Property Interest in Their Asserted Right to

Underpaid Overtime Compensation

According to FLSA Rates?

Appellants argue that as of November 18, 1995, they

possessed a valid claim against the Government for six

years of underpaid overtime compensation. Appellants

contend that when Congress amended Section 640 on

November 19, 1995, reducing the limitations period for

certain claims from six to two years, the Government

confiscated via a per se taking four years of their claim for

underpaid overtime compensation under the FLSA without

just compensation.

Appellants assert that vested property rights may be

created by either statute or contract, proceeding on both

theories in the alternative. Focusing first on statutory

grounds, Appellants contend that they acquired property

rights in underpaid overtime compensation under the FLSA

for six previous years because such rights vested at the end

of each pay period during which they worked hours of

overtime, and the statute of limitations was six years.

Appellants assert that the Government was obligated as a

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matter of law to pay them for these overtime hours at the

FLSA rate (7.e., at least one-and-one-half times their regular

rate), not at any lesser rate under the FEPA or any other

statute. As examples of cases that recognize property

interests and derivative rights created by statute,

Appellants cite United States v. Larionoff; 431 U.S. 864, 97

S.Ct. 2150, 58 L.Ed..2d 48 (1977), Zucker v. United States,

758 F.2d 637 (Fed.Cir.1985), and Kizas v. Webster, 707 F.2d

524 (D.C.Cir.1983).

We disagree that Appellants own any Fifth Amendment

property interest pursuant to the FLSA statute.

Appellants confuse a property right cognizable under the

Takings Clause of the Fifth Amendment with a due process

right to payment of a monetary entitlement under a

compensation statute.4 Larionoff, Zucker, and Kizas are

inapposite because each involves enforcing a statutory

entitlement to compensation for employment, not

recognizing the predicate for a takings claim. In Larionoff,

the Supreme Court considered a soldier’s entitlement to a

reenlistment bonus under the _ statutory Variable

Reenlistment Bonus Program. 431 U.S. at 866, 97 S.Ct.

2150. Similarly, in Zucker, we decided civil servant retirees’

entitlement to cost-of-living-adjustments under the Civil

Service Retirement Act, while in Kizas, the United States

Court of Appeals for the District of Columbia Circuit

addressed FBI agents’ entitlement to a “special preference”

as an element of compensation under Title 5 of the United

States Code. Zucker, 758 F.2d at 639-40; Kizas, 707 F.2d at

534-38.

4 Generally, entitlements are considered to be government conferred

benefits, safeguarded exclusively by procedural due process. See Bd. of

Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).

In light of this, entitlements are often referred to as “property interests”

within the meaning of the Due Process Clause in cases decided under that

clause, but such references have no relevance to whether they are

“property” under the Takings Clause.

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Appellants alternatively contend that the assertedly

applicable FLSA rate of overtime compensation became a

contractual right once the work was completed. Appellants

rely on a passage from Fisk v. Jefferson Police Jury, 116

US. 131, 6 S.Ct. 329, 29 L.Ed.. 587 (1885), to support that

contention: “But after the services have been rendered,

under a law, resolution, or ordinance which fixes the rate of

compensation, there arises an implied contract to pay for the

services at that rate. This contract is a completed contract.”

Id. at 133-34, 6 S.Ct. 329. Pursuing a contract theory,

Appellants contend that they acquired vested property

rights to the underpaid overtime compensation via an

implied contract with the Government formed when they

completed the overtime work. For support, Appellants cite

to selected cases, such as Lynch v. United States, 292 U.S.

571, 54 S.Ct. 840, 78 L.Ed. 1434 (1934), wherein courts have

found that sometimes rights arising out of a contract can be

protected by the Takings Clause of the Fifth Amendment.

Appellants’ contract theory is without merit. At the

outset, Appellants mischaracterize Fisk. The plaintiff in

Fisk served as a Louisiana parish district attorney by

appointment, and a municipal law fixed his salary. When

the Parish of Jefferson failed to pay his salary for four years,

plaintiff sued in state court for recovery, requesting a writ

of mandamus to compel the parish to assess and collect a tax

for the payment of his salary. The Supreme Court of

Louisiana denied the writ based upon a provision of the

Louisiana Constitution limiting the power to levy a tax. The

plaintiff sought review in the United States Supreme Court,

arguing that the Louisiana constitutional provision impaired

the obligation of his contract as guaranteed by the Contract

Clause of the United States Constitution. Fisk, 116 U.S. at

133, 6 S.Ct. 329. The United States Supreme Court agreed,

concluding that:

[the plaintiffs] appointment as district attorney was

lawful and was a request made to him by the proper

'

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authority to render the services demanded of that office.

He did render these services for the parish, and the

obligation of the police jury to pay for them was

complete. Not only were the services requested and

rendered, and the obligation to pay for them perfect, but

the measure of compensation ‘was also fixed by ‘the

previous order of the police jury. There was here

wanting no element of a contract.

Id. at 1384, 6 S.Ct. 329. Thus, Fisk involved an

unconstitutional provision of state law and was decided

under the Contracts Clause, not the Takings Clause.

Appellants cite no case law to show that either the

United States Supreme Court or this court would view a

takings claim against the United States in the same light.

Like all federal employees, Appellants served by

appointment. The terms of their employment and

compensation, consequently, were governed exclusively by

statute, not contract. They had not, and could not have,

entered into any separate agreement with the Government,

express or implied, for additional overtime compensation

beyond that to which they were entitled by the applicable

statute. Hence, contrary to Appellants’ characterization of

their entitlement to underpaid overtime compensation as

based on an implied contract, Appellants had nothing more

than a unilateral expectation to receive FLSA, rather than

FEPA, overtime compensation for their hours of overtime

work. Indeed, the District of Columbia Circuit previously

recognized that

federal workers serve by appointment, and their rights

are therefore a matter of legal status even where

compacts are made. In other words, their entitlement to

pay and other benefits must be determined by reference

to the’ statutes and regulations governing

[compensation], rather than to ordinary contract

principles. Though a distinction between appointment

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and contract may sound dissonant in a regime

accustomed to the principle that the employment

relationship has its ultimate basis in contract, the

distinction nevertheless prevails in government service.

Applying these doctrines, courts have consistently

refused to give effect to government-fostered

expectations that, had they arisen in the private sector,

might well have formed the basis for a contract or an

estoppel. These cases have involved, inter alia,

promises of appointment to a particular grade or step

level, promises of promotion upon satisfaction of certain

conditions, promises of extra compensation in exchange

for extra services, and promises of other employment

benefits.

Kizas, 707 F.2d at 535 (citations and internal quotations

omitted).

Furthermore, Appellants’ reliance on Lynch is

misplaced. In Lynch, despite the government having duly

issued the insured a lawful insurance policy, Congress

abrogated by legislation all such policies in force. Here,

unlike in Lynch, the Government did not enter into any

private agreement with Appellants regarding the terms or

rates of Appellants’ overtime compensation, and Congress

did not abrogate any such contract. The Government, in

fact, could not have contracted to pay Appellants for

overtime work at a rate of at least one-and-one-half their

regular rate of pay because, like all government employees,

Appellants’ compensation is governed exclusively by

statute. Consequently, as previously stated, Appellants

cannot be contractually entitled to overtime compensation

at the rate specified under the FLSA or any other pay

statute. When the Government and private parties

contract, as in Lynch, the private party usually acquires an

intangible property interest within the meaning of the

Takings Clause in the contract. The express rights under

this contract are just as concrete as the inherent rights

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arising from ownership of real property, personal property,

or an actual sum of money. Here, no contract established in

Appellants a property interest in overtime compensation at

a particular rate under the FLSA. Because Appellants

cannot show that they had a contract with the Government,

they are not entitled to Takings Clause protection under

Lynch.

Extending its contract theory, Appellants particularly

equate the Government’s alleged statutory obligation to pay

them overtime compensation at the FLSA rate with a debt

owed by a debtor to a lender. They use the word “debt”

repeatedly, but they distort the meaning of this word. That

is, Appellants claim that when they performed the overtime

work, the Government incurred a debt commensurate with

paying them for their labor at the FLSA rate, not a lesser

rate under an alternative overtime pay statute. Appellants

contend, in turn, that paying this “debt” is akin to paying

the insurance policy proceeds in Lynch or the gold standard

bonds in Perry v. United States, 294 U.S. 330, 55 S.Ct. 432,

79 L.Ed. 912 (1935).

Appellants’ argument is wholly unpersuasive. In Lynch,

an insured purchased a war insurance policy from the

United States, effectively lending money to the Government

in exchange for future payment on the value of the policy at

the time of the insured’s death. 292 U.S. at 574-75, 54 S.Ct.

840. Likewise, in Perry, the bond owner purchased a gold

bond from the United States, also in effect lending money to

the Government in exchange for payment of the principal —

amount of the bond plus interest in gold coins. 294 U.S. at

346-47, 55 S.Ct. 482. In both cases, the Government agreed

with the lenders, i.e., the insured and the bond owner, to

make future payment of either the policy amount in the case

of a war insurance policy or the bond principal plus interest

in the case of the gold bond in exchange for the immediate

use of their money. Also, the Government’s “debt” to the

insured and the bond owner was evidenced in a legal

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instrument issued by the Government to acknowledge and

create the debt, respectively an insurance policy and a bond

certificate. Here, as stated above, the Government and

Appellants did not, and could not have, agreed that the

Appellants would “loan” their underpaid overtime

compensation to the Government in exchange for a “debt”

owed by the Government to them. Additionally, the

Government issued no underlying legal instrument

evidencing the Government’s agreement to a loan. The only

legal instrument, the Form 50, rather than acknowledging

Appellants’ right to be paid for overtime at the rate

specified in the FLSA, instead indicated that the FLSA did

not apply to them. Thus, Appellants are not in the same

position as the insured and bond holder in Lynch and Perry,

but instead are in the opposite position. Accordingly, as the

Government argues, Appellants are not owed a debt; they

have nothing more than a bald allegation that they are owed

underpaid overtime compensation by the Government.

Lastly, Appellants argue that the Court of Federal

Claims misunderstood and misapplied our Commonwealth

Edison decision. Appellants assert that this court in

Commonwealth Edison did not intend to suggest by using

the phrase “specific fund of money” that the Takings

Clause applies only when a particular sum or account is at

stake. Rather, Appellants contend that this court used the

phrase merely to distinguish between an obligation imposed

by the Government to pay money to achieve a regulatory

objective, as in that case, and confiscation of specific money

> The phrase “fund of money” as used in Commonwealth Edison

derives from Justice Breyer’s dissent in Eastern Enterprises v. Apfel, 524

U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). Justice Breyer stated:

“But the monetary interest at issue there {referring to Webb's Fabulous

Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358

(1980)} arose out of the operation of a specific, separately identifiable

fund of money.” E. Enters., 524 U.S. at 555, 118 S.Ct. 2131 (emphasis

added).

18a

by the Government, as in a classic per se taking, which

Appellants argue occurred here.

New England Legal Foundation (“NELF”), as amicus

curiae,© advances a similar argument, going so far as to

assert that the alleged underpaid overtime compensation is

a “fund of money.” NELF reaches this position by

advocating that “[t]he key to a ‘fund of money’ is that it

must be ‘specific’ and ‘separately identifiable,’ not that it be

kept in a separate account.” In other words, NELF appears

to claim that as long as the money allegedly owed is both

“specific” and “separately identifiable,” then it qualifies as a

protected “fund of money.” NELF contends that

Appellants theoretically could calculate the amount of

underpaid overtime compensation by multiplying the total

number of overtime hours by the applicable overtime rate

under the FLSA. Accordingly, NELF asserts that the

amount of underpaid overtime compensation due to

Appellants is both “specific” and “separately identifiable,”

even if it is not maintained in a separate account by the

Government.

The Government seeks to refute Appellants’ and

NELF’s positions, arguing that the Court of Federal Claims

was correct that an ordinary statutory obligation to pay

money can never constitute property for purposes of the

Takings Clause. The Government asserts that Appellants

and NELF plainly ignore the holding in Commonwealth

Edison and attempt to distinguish that case based on

differences between the facts there and those here that are

immaterial. Additionally, the Government claims that

NELF fails to explain how the alleged underpaid overtime

compensation is any more a “fund of money” than the

6 The Federal Law Enforcement Officers’ Association (“FLEOA”)

also presented an amicus curiae brief in support of Appellants’ position.

However, the FLEOA did not address the substance of a takings

analysis, but instead focused primarily on the unfairness of not granting

Appellants’ relief.

De yh SaNye

19a

obligation to pay money in Commonwealth Edison. Indeed,

the Government further contends the allegedly underpaid

overtime compensation here is even less a “specific” and

“separately identifiable” fund than the monetary obligation

in Commonwealth Edison.

Like the Government, we do not read Commonwealth

Edison in the same light as either Appellants or NELF. In

Commonwealth Edison, Congress imposed a monetary

assessment in the Energy Policy Act of 1992, Pub.L.

No. 102-486, 106 Stat. 2776 (codified as amended in various

sections of 42 U.S.C.), on all domestic utilities such as

Commonwealth Edison that used uranium re-processing

facilities operated on their behalf by the United States

Department of Energy. Under the Energy Policy Act, the

Government was to use the revenue generated by the

assessment to fund part of the cost of environmental

remediation of its contaminated re-processing facilities. We

held that Congress did not effect a taking within the

meaning of the Fifth Amendment by imposing a statutory

obligation to pay money on the utility companies.

Commonwealth Edison, 271 F.3d at 1340. In reaching this

conclusion, we followed the views of a majority’ of the

justices of the Supreme Court in Eastern Enterprises. Id.

at 1338. In that case, the Supreme Court addressed the

constitutionality of the Coal Industry Retiree Health

Benefit Act of 1992, codified at 26 U.S.C. §§ 9701-9722 (the

“Coal Act”).

The Coal Act required certain coal mine operators to

fund future health benefits of former coal mine employees of

defunct companies, even though the paying, extant

companies never employed them. Writing for the plurality,

7 ON otably, there was not a majority opinion of the Supreme Court in

Eastern Enterprises. By referring to “a majority” view herein, we mean

those views expressed in the concurring opinion of Justice Kennedy

together with those expressed in the dissenting opinion of Justices

Stevens, Souter, Ginsburg, and Breyer.

Ee

20a

Justice O’Connor, joined by Chief Justice Rehnquist and

Justices Scalia and Thomas, concluded that the retroactive

impact of the Coal Act as applied to Eastern Enterprises

was an unconstitutional taking because it placed a “severe,

disproportionate and extremely retroactive burden” on the

extant coal operators. E. Enters., 524 U.S. at 538, 118 S.Ct. -

2131. While concurring in the result, Justice Kennedy

disagreed with the plurality’s conclusion that an obligation

to pay money can support a taking, because:

[the Coal Act] does not operate upon or alter an

identified property interest, and it is not applicable to or

measured by a property interest. The Coal Act does not

appropriate, transfer, or encumber an estate in land (e.g.,

a lien on a particular piece of property), a valuable

interest in an intangible (e.g., intellectual property), or

even a bank account or accrued interest. The law simply

imposes an obligation to perform an act, the payment of

benefits.

Id. at 540, 118 S.Ct. 2181. Indeed, the four dissenters,

namely, Justices Stevens, Souter, Ginsburg, and Breyer,

specifically “agreed that the Takings Clause was not

implicated because ‘the private property upon which the

[Takings] Clause traditionally has focused is a specific

interest in physical or intellectual property .... This case

involves not an interest in physical or intellectual property,

but an ordinary liability to pay money.” Jd. at 554, 118 S.Ct.

2131. We thus held in Commonwealth Edison that “the

mere imposition of an obligation to pay money, as here, does

not give rise to a claim under the Takings Clause of the

FifthAmendment.” Commonwealth Edison, 271 F.3d at

1340. Given the precise language found in Justice

Kennedy’s concurrence and the dissent, we premised our

holding in Commonwealth Edison not on whether the

statutory obligation was imposed for purposes of regulation

or confiscation as suggested by Appellants, but rather on

the nature of the interest in dispute (ze, a legally-

a

2la

recognized property interest such as one in real estate,

personal property, or intellectual property, versus an

ordinary obligation to pay money). The former is protected

as property under the Takings Clause, whereas the latter is

not because it lacks any foundation in property law.

We also took care in Commonwealth Edison to

distinguish the specific funds implicated in Phillips v.

Washington Legal Foundation, 524 U.S. 156, 118 S.Ct. 1925,

141 L.Ed.2d 174 (1998), and Webb’s Fabulous Pharmacies,

Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358

(1980), as legitimate property interests from statutory

obligations to pay money. 271 F.3d at 1338. Particularly, we

noted that each contributor’s share of interest income

generated by funds held in a specific, consolidated Interest

on Lawyers Trust Account, commonly known as an IOLTA

account, is the private property of that contributor for

purposes of the Takings Clause. See Phillips, 524 U.S. at

160, 118 S.Ct. 1925. Similarly, we observed that each

contributor’s share of interest generated from deposits into

a specific, consolidated interpleader account is a property

interest of that contributor within the meaning of the

Takings Clause. See Webb’s Fabulous Pharmacies, 449 U.S.

at 164-65, 101 S.Ct. 446. In light of our use of the term

“specific” to mean an actual sum of money representing

interest derived from ownership of particular deposits in an

esta"lished account, as opposed to some abstract sum of

money capable of being calculated, NELF’s argument

cannot stand.

While it may be debatable to what extent the precise

holding in Commonwealth Edison controls the instant case,

this decision certainly provides the principle for determining

how to treat the instant claim of a statutory entitlement to

money under the Takings Clause. Both the Government

and the Court of Federal Claims correctly noted that

Commonwealth Edison clearly suggests that no statutory

obligation to pay money, even where unchallenged, can

22a

create a property interest within the meaning of the

Takings Clause. Here, in Appellants’ claim that the

Government is obligated to pay underpaid overtime

compensation under the FLSA, we are faced with a

statutory obligation to pay money, just as was implicated in

Commonwealth Edison. Hence, based upon the principle of

Commonwealth Edison, Appellants do not possess a

property interest under the Takings Clause.

What is more, we conclude that a statutory right to be

paid money, at least in the context of federal employee

compensation and benefit entitlement statutes, is not a

property interest for purposes of the Takings Clause.

Appellants have neither cited, nor are we independently

aware of, any appellate court decision recognizing a

statutory obligation to be paid money as a property interest

grounded in property law. We decline to treat a statutory

right to be paid money as a legally-recognized property

interest, as we would real property, physical property, or

intellectual property. Instead, we view it as nothing more

than an allegation that money is owed. We thus conclude

that Appellants cannot prove any set of facts that could

support granting their requested relief.

ii. Do Appellants Possess a Cognizable

Property Interest in an Administrative

Claim to Underpaid Overtime Compensation

Before the GAO?

Appellants argue, but only in a cursory fashion, that as

of November 18, 1995, they owned a valid administrative

claim before the GAO to recover their unpaid overtime

compensation.8 They contend that when Congress amended

Section 640 on November 19, 1995, the Government entirely

8 Appellants devoted little attention to this issue, discussing it only in

a handful of paragraphs in their opening and reply briefs. Consequently,

we view it as a secondary argument and treat it accordingly in this

opinion.

TERE SNE ST ee eee Sere a ee

23a

extinguished their administrative claim to underpaid

overtime compensation, effecting a per se taking of their

private property without just compensation. Appellants

rely on Alliance of Descendants of Texas Land Grants v.

United States, 37 F.3d 1478 (Fed.Cir.1984), to support their

argument that their GAO claim, like certain causes of action,

is “property” within the meaning of the Takings Clause.

What is more, Appellants maintain that it was immaterial

that their claim had not yet been decided by the GAO when

Section 640 was amended.

Although we agree with Appellants that sometimes a

cause of action may fall within the definition of property

recognized under the Takings Clause, we observe, like the

Court of Federal Claims, that precedent has limited the

application of the Takings Clause to cases in which the cause

of action protects a legally-recognized property interest.

See, e.g., Cities Serv. Co. v. McGrath, 342 U.S. 330, 72 S.Ct.

334, 96 L.Ed.359 (1952) (holding that seizure by Alien

Property Custodian of interest represented by bond or

debenture without seizure of instrument itself is

unconstitutional taking of obligor’s property unless he is

assured that he has claim against United States for

recoupment in the event of subsequent recovery against him

in foreign court by holder in due course of debenture). Such

is not the case here because, as discussed in detail above, the

underlying subject matter of Appellants’ alleged

administrative claim fails to qualify as a recognized property

interest under the Takings Clause. Appellants’ reliance on

Alliance of Descendants is utterly misplaced because the

cause of action there was to recover compensation for an

interest in land, a property interest cognizable under

established takings jurisprudence because land is, beyond

question, property under state and common law. Alliance of

Descendants, 37 F.3d at 1481. Appellants have not cited any

precedent finding such a property interest in a claim of

Government liability before an administrative agency.

es

24a

Hence, we conclude that Appellants do not possess a

cognizable property interest in any part of their

administrative claim before the GAO.

iii. Per Se Takings Argument

Because we agree with the Court of Federal Claims that

Appellants do not possess any cognizable property interest

within the meaning of the Takings Clause, we necessarily

hold that the Government could not commit a per se taking

without just compensation any more than it could commit a

regulatory or any other kind of taking.

III. CONCLUSION

The order of the Court of Federal Claims granting the

Government’s motion to dismiss and the resulting juagment

for the Government are

AFFIRMED.

25a

IN THE UNITED STATES COURT

OF FEDERAL CLAIMS

No. 00-447 C.

(Filed: August 11, 2003)

STEPHEN S. ADAMS, et al.,

Flaintiffs,

v.

THE UNITED STATES,

Defendant.

OPINION AND ORDER

Block, Judge:

To James Madison, rightly termed the Father of the

Constitution, “that alone is a just government which

impartially secures to every man whatever is his own.”9

What must be secured by government is personal security

and private property, the protection of which was

considered by the Founders of our Republic to be the

centerpiece of civil society and the source of all other

liberties. Although originally opposed to a Bill of Rights, it

was Mr. Madison who ultimately penned and fought for its

ratification. The Fifth Amendment to our Constitution was

'm part adopted to protect private property from arbitrary

governmental action.

Two clauses of this amendment are pertinent in this

case. First, the Due Process Clause, which protects, “life,

liberty, or property” from being seized without “due process

of law.” Second, the Takings Clause, which proscribes the

9 James Madison, Essay on Property, reprinted in Kurland, The

Founders’ Constitution, Vol. 1, Ch. 16 Document 23, University of

Chicago Press (1987) (emphasis original).

26a

taking of private property “for public use” without “just

compensation.” The District Court for the District of

Columbia and the D.C. Circuit have already opined as to the

applicability of the first clause. This court is asked to do the

same for the latter.

More succinctly, this case revolves around the interplay

between the Takings Clause and the Fair Labor Standards

Act, 29 U.S.C. § 201 et seg. (1994) (FLSA), which in part

mandates the payment of “overtime” wages beyond the set

rate of pay. Plaintiffs bring suit on the claim that the

Takings Clause was violated by a congressional amendment

to the FLSA’s statute of limitations, which was applied to

them retroactively and denied them their alleged

entitlement to overtime compensation. Defendant moves to

dismiss this claim on grounds of either a lack of subject

matter jurisdiction or because it fails to state a claim upon

which relief may be granted.

The central issue facing the court is whether the

statutorily mandated overtime pay falls within the meaning

of “property” under the Fifth Amendment’s Takings Clause.

A collateral issue is whether the nullification by Congress of

plaintiffs’ FLSA overtime payments amounts to a

unconstitutional taking of a “cause-of-action” to sue to

protect property or a right recognized by law. For the

reasons set forth below, the court finds plaintiffs possess no

property right cognizable under the Takings Clause of the

Fifth Amendment, and therefore, the defendant’s motion to

dismiss must be granted.

I. Facts

The facts, unless otherwise noted, are undisputed and

are drawn from the complaint, defendant’s motion to

dismiss, plaintiffs’ motion in opposition, and the appendices

attached thereto.

This case is brought on behalf of nearly 14,000

employees of the Bureau of Alcohol Tobacco and Firearms

27a

(ATF), Drug Enforcement Agency (DEA), Internal

Revenue Service (IRS), United States Customs Service

(USCS), and United States Secret Service (USSS). Each

plaintiff seeks over $10,000 in FLSA overtime back pay

from the United States government.

Claims for back pay brought under the FLSA are

governed by the Portal-to-Portal Act which establishes a

two year statute of limitations for non-willful violations, and

a three year statute of limitations for willful ones. 29 U.S.C.

§ 255(a) (2000). The importance of the statutory linsitations

period is significant in back pay cases such as this because

the statute of limitations determines how many years of

compensation each claimant receives. Since these are

continuing claims, a separate cause-of-action accrues each

payday. Thus, a six year statute of limitations means that

an employee could recover six years of back pay or overtime

compensation from the date of filing; whereas, a two year

statute would limit recovery to only two years wo: th of such

compensation. See Adams v. Hinchman, 154 F.3d 420, 422

(D.C. Cir. 1998). It thus is this difference in potential

recovery that is at issue in this case.

In 1978, the General Accounting Office (GAO) issued In

re Transportation Systems Center, 57 Comp. Gen. 441

(1978). The In re Transportation Systems Center opinion

altered the statute of limitations period for claims brought

before an administrative agency, as opposed to ones brought

before the courts of law. The Comptroller General reasoned

that the language of the Portal-to-Portal Act limited its

applicability to “actions at law” which meant the Act only

applied to those actions brought before the courts, rather

than those brought before an administrative agency. Jd. As

a result, back pay cases under the FLSA brought before the

GAO were governed by the Barring Act’s six year statute of

limitations (31 U.S.C. § 3702(b) (2002)), while FLSA back

pay cases brought to the courts were still governed by the

28a

FLSA’s two or three year limitations period (29 U.S.C.

§ 255(a) (2002)).

Such was the state of affairs between 1990 and 1995

when plaintiffs simultaneously filed both administrative

claims, and claims in this court for the FLSA overtime back

pay allegedly owed them. Adams v. United States, 27 Fed.

Cl. 5 (1992).19 Due to the simultaneous pendency of both

types of claims, the GAO stayed the administrative claims

pending the outcome of the claims in the this court. During

the time of the stay, however, the Comptroller General

issued another opinion, Jn re Joseph M. Ford, 73 Comp. Gen.

157 (1994) (“Ford decision”), instructing the GAO to apply

the two or three year statute of limitations to all FLSA

administrative claims. This change time barred many of

plaintiffs’ claims. As a result, plaintiff wrote to the

Comptroller General urging him to reverse the Ford opinion

or, at least, not apply it to plaintiffs. The Comptroller

General allegedly did not respond.

A month after plaintiffs’ missive was mailed to the GAO,

Congress effectively reversed in part the Comptroller

General’s Ford decision with passage of section 640 of the

Treasury, Postal Service and General Government

Appropriations Act of 1995, Pub. L. No. 103-329, 108 Stat.

2383, 2432 (1995). Section 640 mandated a six year statute

of limitations for administrative claims filed prior to June 30,

1994, but a two year statute of limitations remained for

claims filed after June 30, 1994.11 Since the Comptroller

10 The court concluded that some of the plaintiffs employed by the

named agencies were exempt from the FLSA’s overtime compensation

provisions, while others were not. Jd. Thereafter, in 1994, a partial

settlement was reached with the United States as to those employees the

court ruled were exempt from the overtime provisions.

11 The precise text of the statute read:

In the administration of Section 3702 of title 31, United States

Code, the Comptroller General of the United States shall apply a

6-year statute of limitations to any claim of a Federal Employee

29a

General’s decision applied retroactively, the claims of nearly

3,000 plaintiffs who fell into this latter category became time

barred.

Plaintiffs then wrote to the GAO requesting a meeting

to discuss the effect of section 640 on the resolution of

plaintiffs’ claims. The GAO responded by acknowledging

that section 640 modified the Ford decision, but instructed

the plaintiffs to exhaust their administrative claims before

the particular agency (the ATF or the DEA, for example)

before commencing an action before the GAO. Plaintiffs

reluctantly agreed and took their claims to the ATF, DEA,

IRS, USCS and the USSS. On January 27", 1995, Stephen J

McHale, attorney for the Department of Treasury (the

parent agency of the ATF, DEA, IRS, USCS, and USSS),

responded to plaintiffs stating that section 640 was clear and

therefore plaintiffs’ claims filed after June 30, 1994 were

time barred. Plaintiffs thereafter received letters from each

individual agency reiterating Mr. McHale’s decision.

Having obtained adverse decisions from the individual

agencies, plaintiffs sought review by the GAO. In plaintiffs’

appeal letter, they argued: (1) plaintiffs’ claims filed before

June 30, 1994 should be immediately settled12 by the GAO,

and (2) as for plaintiffs’ claims filed after June 30, 1994, they

too should be settled since the GAO did not have authority

to retroactively shorten the statute of limitations under the

under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et

seq.) for claims filed before June 30, 1994.

12 The term “settled” is a term of art in this area of law and means “to

administratively determine the validity of that claim. ... Settlement

includes the making of both factual and legal determinations. The

authority to settle and adjust claims does not, however, include the

authority to compromise claims.” GENERAL ACCOUNTING OFFICE,

PRINCIPLES OF FEDERAL APPROPRIATIONS LAW 11-6 (1982); see also

Illinois Surety Co. v. United States ex rel. Peeler, 240 U.S. 214, 219, 60 L.

Ed. 609, 36 S. Ct. 321 (1916).

30a

Barring Act. Again, allegedly nm» response was received

from the GAO.

During the pendency of the appeal to the GAO, two

significant occurrences took place, which make the facts of

this is case somewhat byzantine. First, plaintiffs intervened

in a related case (In re Marvin B. Atkinson, 1996 U.S.

Comp. Gen. LEXIS 27 (Jan. 29, 1996) (“Atkinson opinion”))

in which a U.S. Customs agent brought an FLSA back pay

claim before the GAO. The Customs agent’s claim was filed

January 1", 1994—approximately 5 months before section

640’s June 30, 1994 cut-off date—and sought six years of

FLSA back pay from the government. The GAO, however,

decided to withhold its opinion in Atkinson because the

agency thought Congress would soon once again amend

section 640 and thereby potentially render the GAO’s

decision moot. This, in turn, meant that the agency would

refrain from “settling” plaintiffs’ similar claims for the same

reason.

The second significant occurrence took place on

November 19, 1995, when the GAO’s decision to withhold

the Atkinson opinion proved prescient and Congress again

amended section 640 as follows:

This section shall not apply to any claims where the

employee has received any compensation for the

overtime hours worked during the period covered by the

claim under any provision of law ... or to any claim for

compensation for time spent commuting between the

employees residence and duty station.13

13 When this amendment to section 640 was introduced,

_ Representative Lightfoot made the following statement concerning the

need for the amendment: “{tJhe problem is that [the unamended statute]

will cost as much as $460 million ... the conferees were faced with a

choice—either pay hundreds of millions for work done many years ago ...

or give the Federal workers the same rights as their private sector

counterparts. ... We included language providing for the same treatment

of public and private workers ... not just because it costs a lot of money,

3la

The effect of this Amendment was to further limit plaintiffs’

potential recovery. Not only were plaintiffs still restricted

to the two year statute of limitations for claims filed after

June 30, 1994, but the new amendment also retroactively

eliminated plaintiffs’ substantive rights under the FLSA to

recover overtime pay for time spent commuting or to

recover FLSA overtime if they had already received

overtime pay under another provision of law.

The seme and substance of all of this is that plaintiffs can

now be divided into two distinct groups: (1) those who filed

their claims after June 30, 1994, and therefore, fall under the

two or three year limitations period GAO applies to FLSA

claims, and (2) those who filed their claims prior to June 30,

1994, but received overtime compensation under other

provisions of law or claim overtime for time spent

commuting, and are, therefore, excluded from coverage

under amended section 640.

Plaintiffs filed a claim in the District Court for the

District of Columbia challenging the constitutionality of

section 640 of the 1995 Act, as well as the subsequent

amendment to that section, under the Due Process and

Takings Clauses of the Fifth Amendment. Adams v.

Bowsher, 946 F.Supp. 37, 44 (D.D.C. 1996), affd in part,

vacated in part, sub nom., Adams v. Hinchman, 154 F.3d

420 (D.C. Cir. 1998), cert. denied, 526 U.S. 1158, (1999).

Plaintiffs due process arguments were based on the dual

premise that retroactive application of both section 640 and

the amendment to that section nullified plaintiffs’ pending

back pay claims and denied them their earned but unpaid

FLSA overtime compensation.

The district court concluded that those plaintiffs who

filed their claims after June 30, 1994 had no property

interest in back pay claims because those claims were not

but because it is fair.” 141 Conc. Rec. H12376 (Nov. 15, 1995); see also

Adams, 154 F.3d 420, 425 (D.C. Cir. 1998).

32a

reduced to judgment. Adams, 946 F. Supp. at 44. Nor, the

district court also concluded, was this group of plaintiffs

denied due process because unpaid overtime compensation

was not a property interests as defined by the Due Process

Clause. Jd. at 41-42. As to the other category of plaintiffs,

those who filed their claims prior to June 30, 1994; the

district court concluded that due process was served

because the retroactive application of the legislation was

furthered by a rational purpose. Jd. (citing General Motors

Corp. v. Romein, 503 U.S. 181, 191 (1992)).14

As for the Takings Clause argument, the district court,

applying the three-part test for regulatory takings, denied

plaintiffs’ claim. Jd. at 20 (citing Connolly v. Pension

Benefit Guar. Corp., 475 U.S. 211, 224-225 (1986)).19 What

weighed heavily against the plaintiffs, according to the trial

court, was the lack of a showing that any individual plaintiff

would suffer any significant economic detriment and would

lose merely “an entitlement that only in recent years had

been discovered.” Jd. at 20.

On appeal, the D.C. Circuit essentially affirmed the

district court’s due process, equal protection, and statutory

analysis. Adams v. Hinchman, 154 F.3d 420 (D.C. Cir. 1998)

(per curium). The court held that regardless of whether

plaintiffs’ possessed a property interest in either the

pending administrative claims or the overtime back pay, any

14 The district court also denied both plaintiffs’ equal protection

argument based on the implied equal protection component of the Due

Process Clause of the Fifth Amendment (see Bolling v. Sharpe, 347 U.S.

497, 499 (1954)), as well an Administrative Procedure Act claim primarily

challenging the GAO’s Ford opinion. Adams, 946 F. Supp. at 22-26.

15 “(Tjhe Supreme Court identified the following three factors: (1) the

economic impact of the regulation, (2) the extent to which the regulation

has interfered “with distinct investment-backed expectations, and (3) the

character of the government action.” Adams, 946 F. Supp. at 19-22. It is

interesting to note that the district court in applying this balancing test

for regulatory takings, merely assumed, but never analyzed, the existence

of a property interest cognizable under the Takings Clause.

33a

hypothetical property interest was properly extinguished

because the retroactive economic legislation, that is, the

amendment to section 640, had a legitimate legislative

purpose and was furthered by rational means. Jd. at 424-

425. Accordingly, the court never reached the issue of

whether plaintiffs’ alleged property interest was cognizable

under the Due Process Clause.

As to the takings claim, the court held that the district

court lacked jurisdiction because the Tucker Act, 28 U.S.C.

§ 1491(a)(1), confers on the Court of Federal Claims

exclusive jurisdiction over takings claims above $ 10,000. Jd.

at 425-426. Consequently, the appellate court remanded the

takings claim to the district court with orders to transfer the

case here.

As a result, plaintiffs filed the present complaint alleging

that three separate actions effected a taking under the Fifth

Amendment: (1) the GAO’s Ford decision that retroactively

limited the statute of limitations for administrative claims to

two years, (2) the GAO’s decision to withhold “settlement”

on those of plaintiffs’ claims filed before June 30, 1994 during

the pendency of the Atkinson decision, and (3) Congress’

amendment of section640 which limited overtime and

commuting compensation.

Defendant moved to dismiss the complaint under

Rules 12(b)(1) and 12(b)(6) of the Court of Federal Claims

(RCFC). Oral argument was heard on April 28, 2003, in

Washington, D.C. Further supplemental briefing was

requested by plaintiffs and granted by the court.

Thereafter, plaintiffs also sought permission to file

supplemental authority, which was also granted by the

court.

II. Discussion

A. Standard of Review

RCFC 12(b)(6) mandates dismissal of a case where the

plaintiff fails to state a claim upon which relief can be

34a

granted. When faced with a Rule 12(b)(6) motion, the court

should grant the motion only if “it appears beyond doubt

that [plaintiff] can prove no set of facts in support of [its]

claim which would entitle [it] to relief.” Davis v. Monroe

County Bd. of Educ., 526 U.S. 629, 654, 143 L. Ed. 2d 839,

119 S. Ct. 1661 (1999) (quoting Conley v. Gibson, 355 U.S. 41,

46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)); Consolidated Edison

Co. v. O’Leary, 117 F.3d 538, 542 (Fed. Cir. 1997), cert.

denied sub nom. Consolidated Edison Co. v. Pena, 522 U.S.

1108, 140 L. Ed. 2d 103, 118 S. Ct. 1036 (1998). The facts

must be viewed in a light most favorable to the plaintiff.

Papasan v. Allain, 478 U.S. 265, 283, 92 L. Ed. 2d 209, 106

S. Ct. 2982 (1986) (citing Scheuer v. Rhodes, 416 U.S. 232,

236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974)); Gould Inc. v.

United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991).

RCFC 12(b)(1) directs dismissal when the court lacks

jurisdiction over the subject matter of the case. When

deciding on a motion to dismiss based on lack of subject

matter jurisdiction, much like a Rule 12(b)(6) motion, this

court must assume that all undispvied facts alleged in the

complaint are true and must draw all reasonable inferences

in the non-movant’s favor. E.g., Scheuer v. Rhodes, 416 U.S.

232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Boyle v.

United States, 200 F.3d 1369, 1372 (Fed. Cir. 2000); Henke v.

United States, 60 F.3d 795, 797 (Fed. Cir. 1995); Ho v.

United States, 49 Fed. Cl. 96, 100 (2001), aff'd, 30 Fed. Appx.

964 (Fed. Cir. 2002).

Conversely, unlike a Rule 12(b)(6) motion, when hearing

a motion under Rule 12(b)(1), the court can consider matters

outside the pleadings. Cedars-Sinai Med. Ctr. v. Watkins,

11 F.3d 1578, 1584 (Fed. Cir. 1993), cert. denied, 512 U.S.

1235 (1994) (“[iJn establishing predicate jurisdictional facts,

a court is not restricted to the face of the pleadings, but may

review evidence extrinsic tu the pleadings, including

affidavits’ and deposition testimony”). Furthermore, unlike

—_—

35a

a Rule 12(b)(6) motion, a motion to dismiss for lack of

subject matter jurisdiction under Rule 12(b)(1), may be

raised by the court sua sponte at any time. Fanning,

Phillips & Molnar v. West, 160 F.3d 717, 720 (Fed. Cir.

1998) (quoting Booth v. United States, 990 F.2d 617, 620

(Fed. Cir. 1993), reh’g denied (1998)).

B. Are Statutory “Earned” Overtime Payments

Property?

Defendant essentially makes two arguments, only the

latter of which is really determinative. The first is that

plaintiffs’ case is really an FLSA case disguised in Fifth

Amendment rubric. This is so, defendant argues, because

the property allegedly taken and the damages resulting

therefrom are plaintiffs’ FLSA overtime payments. As

such, the claim is in essence one for statutory entitlement

under the FLSA and, regardless of what the disputed time

limitations period should have been for plaintiffs’

administrative claims, the claim before this court is time

barred under the two year limitations period for FLSA

claims in the Court of Federal Claims under 29 U.S.C.

§ 255(a).16 Defendant’s second argument, which when

reformulated as a question presents the core issue in this

case, is that plaintiffs’ FLSA overtime payments do not

16 This provision provides that:

Any action commenced on or after May 14, 1947, to enforce any

cause of action for unpaid minimum wages, unpaid overtime

compensation, or liquidated damages, under the Fair Labor

Standards Act of 1988, as amended [29 U.S.C.A. § 201 et seq.] ....

(a) if the cause of action accrues on or after May 14, 1947—may be

commenced within two years after the cause of action accrued, and

every such action shall be forever barred unless commenced within

two years after the cause of action accrued, except that a cause of

action arising out of a willful violation may be commenced within

three years after the cause of action accrued ...

The defendant correctly notes that this limitations provision constitutes a

waiver of sovereign immunity. See Saraco v. United States, 61 F.3d 863,

865-866 (Fed. Cir. 1995), cert. denied, 517 U.S. 1166 (1996).

36a

constitute property within the meaning of the Takings

Clause of the Fifth Amendment to the United States

Constitution.17

Nevertheless, the court believes defendant’s arguments

are topsy-turvy, for only if unpaid statutorily mandated

overtime does not constitute property within the meaning of

the Fifth Amendment’s Takings Clause, is plaintiffs’ claim

one solely under the FLSA. If this is so, then indeed

plaintiffs’ hypothetical FLSA claim might very well be time

barred. Thus, the issue squarely before the court involves

the definition of property under the Takings Clause of the

Constitution’s Fifth Amendment.

As Judge Plager of the Federal Circuit observed: “A

man’s home may be his castle, but that does not keep the

Government from taking it. As an incident to its

sovereignty, the Government has the authority to take

private property for a public purpose.” Hendler v. United

States, 952 F.2d 1364, 1371 (Fed. Cir. 1991). The Takings

Clause of the Fifth Amendment, however, prohibits the

government from “taking property for public use” unless it

provides “just compensation.” U.S. CONST. amend. V.

What constitutes property is the initial determination

17 Defendant also asserts that this case is barred under the doctrine of

collateral estoppel, or issue preclusion, since the issues presented were

decided by the D.C. Circuit in the preceding litigation. This court rejects

that argument, however, under a well established exception to collateral

estoppel that blocks the doctrine’s applicability where the party against

whom preclusion is sought could not, as a matter of law, have raised the

issue in the prior litigation. Since this court has exclusive jurisdiction

over takings claims above $10,000, neither the D.C. District Court nor the

D.C. Circuit would have jurisdiction over plaintiffs’ claims. As a result,

plaintiffs could not, as a matter of law, have raised their takings claims in

the prior litigation. See RESTATEMENT (SECOND) OF JUDGMENTS § 28

(1982) (noting that collateral estoppel is inappropriate where “the party

against whom preclusion is sought could not, as a matter of law, have

obtained review of the judgment in the initial action”); See also Golden

Pac. Bank Corp v. United States, 15 F.3d 1066, 1073-1074 (Fed. Cir.), cert.

denied, 513 U.S. 961, 115 S. Ct. 420, 130 L. Ed. 2d 335 (1994).

37a

triggering application of the Takings Clause to a claim.

Indeed, the Federal Circuit explicitly requires defining the

relevant property interest as the first of a two-step

approach to takings claims. “First, a court determines

whether the plaintiff possesses a valid i rest in the

property affected by the governmental action, ..e., whether

the plaintiff possessed a ‘stick in the bundle of property

rights.‘ Boise Cascade Corporation v. United States, 296

F.3d 1339, 1343 (Fed. Cir. 2002) (quoting Karuk Tribe of

Cal. v. Ammon, 209 F.3d 1366, 1374 (Fed. Cir. 2000)

(internal citation omitted)). If so, “the court proceeds to the

second step, determining ‘whether the governmental action

at issue constituted a taking of that ‘stick.” Jd. (quoting

Karuk Tribe of Cal. 209 F. 3d at 1374).

Concerning step one, defendant contends that plaintiffs’

claim must fail because the claim is for money and that

money does not constitute property within the Fifth

Amendment’s Takings Clause, citing Commonwealth

Edison Co. v. United States, 46 Fed. Cl. 29, 37-42 (2000).

Defs Mot. to Dismiss at 14. Plaintiffs respond with a

plethora of arguments, employing a shotgun approach with

the hope that one may very well hit the target.

Plaintiffs’ first shot is to distinguish Commonwealth

Edison Co. as a case involving a government imposed

payment, while plaintiffs claim involves an unlawful taking

of labor, and that Donovan v. Sovereign Security, Ltd., 726

F.2d 55 (2™ Cir. 1984) establishes that the U.S. Department

of Labor recognizes this precept. Tr. at 49-52; Pl.’s Mot. in

Opp’n to Def.’s Mot. to Dismiss at 22. Plaintiffs’ second blast

is the contention that their claim falls under the Supreme

Court’s holdings in Webb’s Fabulous Pharmacies v.

Beckwith, 449 U.S. 155 (1980), United States v. Larionoff,

431 U.S. 864 (1977), Armstrong v. United States, 364 U.S. 40

(1960), and, more recently, Brown v. Legal Foundation of

Washington, 123 S. Ct. 1406 (2003). Id. at 27; Pl.’s

38a

Supplemental Br. in Opp’n to Def.’s Mot. to Dismiss at 1-4.

As explained below, all these arguments misfire. Plaintiffs’

last shot is the argument that the retroactive abolition of

plaintiffs’ overtime payments really is akin to a taking of a

cause-of-action securing either a property interest or a right

recognized by law. Pl.’s Supplemental Br. in Opp'n to Def.’s

Mot. to Dismiss at 9-10. This argument misses the mark

and the target.

In Commonwealth Edison Co., the primary issue was

the constitutionality under the Fifth Amendment’s Due

Process and Takings Clauses of the Energy Policy Act of

1992 which imposed a monetary assessment on domestic

utilities for the remediation of the government’s uranium

enrichment facilities operated by the U.S. Department of

Energy. See 42 U.S.C. § 2297g et seg. (2002). This court

concluded that the imposition of the special assessment was

an obligation to pay money, which did not constitute a

protected property interest for Takings Clause purposes.

Commonwealth Edison Co., 46 Fed. Cl. at 37-42. The court

also rejected the due process exaction arguments. /d. at 45.

Because of the many companion cases pending in the Court

of Federal Claims, the Federal Circuit after oral argument

sua sponte determined to decide the case en banc.

Commonwealth Edison Co. v. United States, 271 F.3d 1327

(Fed. Cir. 2001).

In upholding the trial court, the Federal Circuit held

that an obligation to pay money is not a protected property

interest under the Takings Clause. In so holding, the court

relied upon the view of the majority of justices in Eastern

Enterprises v. Apfel, 524 U.S. 498 (1998). In this case the

Supreme Court confronted the constitutionality of the

retroactive liability provisions of the Coal Industry Retiree

Health Benefit Act of 1992, 26 U.S.C. § 9701 et seg. (2002)

(“Coal Act”). The Coal Act required certain coal operators

39a

to fund future health benefits of current and former coal

mine employees.

The Federal Circuit noted that a plurality of the

Supreme Court concluded that the retroactive impact of the

Coal Act resulted in an unconstitutional taking of property

because it placed a “severe, disproportionate and extremely

retroactive burden” on various coal operators such as

Eastern. Id at 1336 (quoting Eastern Enters., 524 U.S. at

538 (plurality opinion of O’Connor, J., joined by Rehnquist,

C.J., Scalia and Thomas, J.J.)). But the Federal Circuit also

observed that five justices rejected the theory that an

obligation to pay money constitutes a taking because such

an obligation is not the same thing as a taking of a discreet

property interest.18 Jd. at 1389. “Thus five justices of the

Supreme Court in Eastern Enterprises agreed that

regulatory actions requiring the payment of money are not

takings. We agree with the prevailing view that we are

obligated to follow the views of that majority.” Jd. (citing

several sister circuits for the same proposition: Parella v.

18 In his concurring opinion, Justice Kennedy disagreed with the

plurality’s conclusion that the Coal Act resulted in an unconstitutional

taking of property because while the Coal Act may impose a staggering

financial burden on the petitioner:

it regulates the former mine owner without regard to property. It

does not operate upon or alter an identified property interest, and it

is not applicable to or measured by a property interest. The Coal

Act does not appropriate, transfer, or encumber an estate in land

(e.g., a lien on a particular piece of property), a valuable interest in

an intangible (e.g., intellectual property), or even a bank account or

accrued interest. The law simply imposes an obligation to perform

an act, the payment of benefits.

in physical or intellectual property. ... This case involves not an interest

in physical or intellectual property, but an ordinary liability to pay money

---” Id. at 554 (Stevens, Souter, Ginbsurg, and Breyer, J.J., dissenting).

40a

Ret. Bd. of the R.I. Employees’ Retirement Sys., 173 F.3d 46,

58 (1* Cir. 1999); Unity Real Estate Co. v. Hudson, 178 F.3d

649, 659 (3™ Cir.), cert. denied, 528 U.S. 963, 120 S. Ct. 396

(1999); Holland v. Big River Minerals Corp., 181 F.3d 597,

606 (4th Cir. 1999), cert. denied, 528 U.S. 1117, 120 S. Ct. 936

(2000)).

Indeed, prior to the plurality’s decision in Eastern

Enterprises, it was well-accepted that an obligation to pay

money does not constitute a taking. See, e.g., United States

v. Sperry Corp., 493 US. 52, 6 n.9, 110 S. Ct. 387 (1989)

(holding that a federal statute requiring the payment of a

portion of an arbitral award from the Iran-United States

Claim Tribunal to the United States government did not

violate the Takings Clause because, in part, “(i]t is artificial

to view deductions of a percentage of a monetary award as

physical appropriations of property. Unlike real or personal

property, money is fungible”); Atlas Corp. v. United States,

895 F.2d 745, 756 (Fed. Cir.), cert. denied, 498 U.S. 811, 111

S. Ct. 46 (1990) (holding that Uranium Mill Tailings

Radiation Control Act’s requirement that uranium

producers spend large sums to clean up uranium tailings

piles did not constitute an unconstitutional taking of

property under the Takings Clause because there is no

allegation “of a physical taking of any of its property ....

(Uranium producer] alleges only that it will be required to

spend sums of money for reclamation of tailings and mill

decommissioning”).

One distinction, this court notes, is that every one of

these “obligation to pay” cases involves private parties’

obligation to pay pursuant to either a federal statute or

regulation, whereas the case at bar is the very reverse—it is

the government that is alleged to have an obligation to pay

money (here FLSA alleged “earned” overtime to multiple

private parties). Yet this is a distinction without a

difference. The analysis turns on the identification of a

4la

discreet property interest. All the plaintiffs have identified

is a run-of-the-mill claim for liability. As the Federal Circuit

in Commonwealth Edison Co. put it: “[W]hile a taking may

occur when a specific fund of money is involved, the mere

imposition of an obligation to pay money ... does not give

rise to a claim under the Takings Clause of the Fifth

Amendment.” Commonwealth Edison Co., 271 F.3d at

1340.

This conclusion by the Federal Circuit that a specific

fund of money need be the subject of a takings claim

naturally leads to consideration of plaintiffs’ argument that

such Supreme Court cases as Webb’s Fabulous Pharmacies,

Armstrong, and the recent Brown decision, support their

cause. Far from helping plaintiffs, however, these

precedents are wholly consistent with Commonwealth

Edison Co. because they involve either specific sums of

money or discreet property interests recognized under state

or common law. See Brown v. Legal Foundation of

W shington, 123 S. Ct. 1406 (2003) (holding that a state law

requiring interest from IOLTA account be transferred to a

different owner for public use could be a per se taking

requiring the payment of just compensation to the owner);

Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.

155, 164-65, 101 S. Ct. 446 (1980) (holding that the Takings

Clause applies to monetary interest generated from the

operation of a specific, separately identifiable fund of

money); Armstrong v. United States, 364 U.S. 40, 44-46

(1960) (holding that a materialmen’s lien provided under

state law was a “compensable property interest within the

meaning of the Fifth Amendment“). See also Phillips v.

Washington Legal Found., 524 U.S. 156, 160, 118 S. Ct. 1925

(1998) (holding that interest on income generated by funds

held in IOLTA accounts is private property of the owner for

purposes of the Takings Clause).

i

42a

The court must emphasize what is and what is not

involved in plaintiffs’ claim. Plaintiffs are not complaining

that they were not paid wages for their labor, which might

hypothetically state a claim for breach of an employment

agreement. They do not allege that they were not paid for

overtime work. See Federal Employee Pay Act, 5 U.S.C.

§ 5541 et seq. (2002). What they do complain of is that they

are owed money for overtime for an amount that need be

calculated under the FLSA before it was amended by

Congress.

This is either a standard claim for money under the

FLSA or a due process claim challenging retroactive

application of the amendment. However, it is not a Takings

Claim under the Fifth Amendment, for even if an obligation

to pay money can be considered property, no property was

here seized for public use. In other words, nothing was

really “taken” from plaintiffs for the of the public—at best,

proceeds simply were not paid. See Connolly v. Pension

Benefit Guaranty Corp., 475 U.S. 211, 224 (1986) (holding

that there can be no compensation under the Takings Clause

if “the United States has taken nothing for its own use”).

Accordingly, the government did not appropriate

plaintiffs’ money for its own purpose. Instead, it simply did

not pay plaintiffs FLSA overtime because it believed

plaintiffs’ exempt, a conclusion buttressed by the D.C.

Circuit. See Adams v. Hinchman, 154 F.3d 420 (D.C. Cir.

1998), cert. denied, 526 U.S. 1158 (1999). Indeed, for courts

to rule otherwise in cases like this one would elevate

ordinary claims for monies owed by government into

constitutional cases. And this court agrees with defendant

that to so rule would also produce absurd semantic results.

See Branch v. United States, 69 F.3d 1571, 1575-1576 (Fed.

Cir. 1995) (“To be sure, analyzing the assessment under the

principles of takings law is awkward ... because the

property allegedly taken in this case was money [which]

iia a a

48a

leads to the curious conclusion that the government may

take the bank’s money as long as it pays the money back”).

When cash payments are solely involved, it is strained to

talk about cash for cash as compensation when it is really a

kind of replevin or debt payment.

Plaintiffs’ initial defense—that what is at stake here is

not an obligation to pay earned overtime, but rather labor

taken by the government—is likewise unconvincing. The

primary case plaintiffs cite for the proposition that labor is

in-and-of-itself property, Donovan v. Sovereign Security,

Ltd., 726 F.2d 55 (2™ Cir. 1984), says nothing of the kind.

Donovan clearly is not a takings case, but a statutory FLSA

case for pre- and post-judgment interest on wrongfully

withheld overtime compensation by a private employer. All

that was at stake in this case was at best a statutory right.

Also unpersuasive is plaintiffs subsequent argument

that Donovan falls under the Supreme Court’s holding in

Brown because in both these cases the amount of interest

owed was ascertainable. PIl.’s Supplemental Br. at 2-3.

First, this misconstrues Brown, which held that transfer of

interest to a non-owner of a specific IOLTA account was a

taking. Unlike Brown, Donovan dealt with interest owed on

a judgment not yet paid to the claimed owner. Second,

Donovan is a mere liability case. The fact that the amount

or type of damages sought in a claim is ascertainable does

not transform it into a property right, nor elevate what is an

ordinary action for money into a constitutional case.

Be that as it may, how one interprets Donovan is here

largely academic. Plaintiffs may not at this late date raise

novel theories.19 It is not in their complaint, which instead

19 For instance, plaintiffs also argue that the proposition that labor is

a property is supported by none other than James Madison himself, the

author of the Bill of Rights, of which the Fifth Amendment is, of course, a

component. P1.’s Supplemental Br. at 1. Plaintiffs quote from an article in

the Spring/Summer 1990 edition of the Cato Journal, which, in turn,

dda

refers to the alleged property interest taken as “duly earned

wages.” Compl. at 44 40-45.

Finally, plaintiffs’ multitude of other cases cited to

support the proposition that statutorily earned overtime

selectively quotes from James Madisor’s famous Essay on Property.

Plaintiffs are perhaps correct in concluding that James Madison’s

definition of property in his famous essay (first published in the March 27,

1792 edition of The National Gazette) might be wide enough to encompass

their labor-is-property postulate:

This term in its particular application means ‘that dominion which

one man claims and exercises over the external things of the world,

in exclusion of every other individual.’ In its larger and juster

meaning, it embraces every thing to which a man may attach a value

and have a right; and which leaves to every one else the like

advantage. In the former sense, a man’s land, or merchandize, or

money is called his property. In the latter sense, a man has a

property in his opinions and the free communication of them. He has

a property of peculiar value in his religious opinions, and in the

profession and practice dictated by them. He has a property very

dear to him in the safety and liberty of his person. He has an equal

property in the free use of his faculties and free choice of ‘t= objects

on which to employ them. In a word, as a man is said to have a right

to his property, he may be equally said to have a property in his

rights.

James Madison, Essay of Property, reprinted in Kurland, The Founders’

Constitution, Vol. 1, Ch. 16, Document 23, University of Chicago Press

(1987) (emphasis original, original spelling). One can readily see that

Madison recognizes that his definition is broader than that of the common

law and Blackstone’s, which is quoted in the first sentence in this excerpt.

The essay reveals that Mr. Madison’s definition of property includes such

ideas as freedom of conscience and religion, precepts we today typically

associate with the First Amendment. Madison’s ideas certainly had an

immense impact on the founding generation and on posterity, but his

philosophy should not be confused with “the law.” This court is bound by

precedent and other law—not by a particular political creed—no matter

how personally persuasive it is to the court. Indeed, James Madison, wno

along with Alexander Hamilton and John Jay authored The Federalist

Papers under the pseudonym Publius, likely would approve. See THE

FEDERALIST No. 78 (“It can be of no weight to say that the courts, on the

pretense of a repugnancy, may substitute their own pleasure to the

constitutional intentions of the legislature .... The courts must declare

the sense of the law ....” Alexander Hamilton).

45a

payments are property requiring compensation under the

Takings Clause are either inapplicable29 or inapposite.

United States v. Larinoff, 431 U.S. 864 (1977) is the prime

example of the latter. In this case, the Supreme Court

struck down the retroactive elimination of a military

reenlistment bonus. A serviceman had enlisted in a special

military program which trained personnel in

communications technology. Because this specialized

training was in short supply, the military offered Mr.

Larinoff a bonus if he agreed to extend his service beyond

the original enlistment period. Larinoff agreed to this “re-

enlistment,” however, during the time of his service

Congress retroactively eliminated the bonus. The Court

held that Larinoff was entitled to the bonus at the time he

originally enlisted since it was at that time that he agreed to

extend his service through the re-enlistment agreement.

Plaintiffs in the case at bar claim Larionoff applies

because their right to the FLSA overtime “vested”—as

plaintiffs term it—at the end of each pay period, and

therefore, Congress could not retroactively eliminate

plaintiffs’ entitlement to that payment. Nevertheless,

Larionoff is not a constitutional takings case establishing

the existence of a property interest. Instead, it is a case of

statutory interpretation establishing the right to an

entitlement.21 Larionoff, 431 U.S. at 868, 97 S. Ct. at 2154

20 Among other of plaintiffs’ sundry cases cited for support are:

Cienega Gardens v. United States, 2003 WL 21356416 (Fed. Cir. 2003);

Gonzales v. United States, 275 F.3d 1340 (Fed. Cir. 2001); Hatter v.

United States, 953 F.2d 626 (Fed. Cir. 1992); National Air Traffic

Controllers Ass'n v. United States, 160 F.3d 714 (Fed. Cir. 1998); and PI

Electronics Corporation v. United States, 55 Fed. Cl. 279 (2003). What

each of these cases have in common is that they have little or nothing in

common with the precise issue in this case. The court will address only

those cited authorities where such citation adds a colorable argument to

the controversy sub judice.

21 Generally, entitlements are government conferred benefits

safeguarded by procedural due process; for a claim for entitlement to be

46a

(“Both the Government and respondents recognize that [a]

‘soldier’s entitlement to pay is dependent upon statutory

right,’ and that accordingly the rights of the affected service

members must be determined by reference to the statutes

and regulations governing the [program], rather than to

ordinary contract principles.”) (citing Bell v. United States,

366 U.S. 393, 401, 6 L. Ed. 2d 365, 81 S. Ct. 1230, 1235

(1961)).

considered legitimate, it must be based on something more than a

unilateral expectation. See Board of Regents v. Roth, 408 U.S. 564, 577

(1972). Traditionally, whether property was protected as such was

determined by whether it was a right or a privilege. See Barsky v. Board

of Regents, 347 U.S. 442, 451, 74 S. Ct. 650, 655-656 (1954) (noting that the

right-privilege distinction is between common law property and state

largess such as attendance in state universities). With the growth of

government benefits, the distinction between rights and privileges broke

down. See generally Reich, The New Property, 73 Yale L. J. 733 (1964)

(certain government benefits which do not fall under traditional notions of

property ought to have some protection against arbitrary government

action). Towards the last decades of the Twentieth Century, the Supreme

Court began to apply procedural due process to various benefits to

safeguard against unfairness. See Goldberg v. Keliy, 397 U.S. 254 (1970)

(holding A*DC welfare payments were considered “entitlements”

deserving Fifth Amendment due process protection) (citing Reich, at 1017

n. 8).

The Supreme Court appears now to require protection for only

those discreet interests encompassing life, liberty or property contained

in the Due Process Clause. See Lawrence v. Texas, 123 S. Ct. 2472 156 L.

Ed. 2d 508 2003 U.S. LEXIS 5013 (holding that the precept of liberty

historically encompasses the protection of intimacy in the bedroom); Roth,

408 U.S. at 577 (holding that entitlements can not be a mere expectancy

to qualify for due process protection as something akin to a statutorily

created property interest). This has been interpreted as a partial return

to the old right-privilege distinction. See Smolla, The Re-emergence of the

Right-Privilege Distinction in Constitutional Law: The Price of

Protesting Too Much, 35 Stan. L. Rev. 69 (1982); Simon, Liberty and

Property in the Supreme Court: A Defense of Roth and Perry, 71 Cal. L.

Rev. 1039, 1044 (1984). See generally R. Rotunda and J. Nowak, 3

Treatise on Constitutional law: Substance and Procedure (3™ ed. 1999) at

6-7.

47a

Plaintiffs similarly cite Zucker v. United States, 758 F.2d

637 (Fed. Cir. 1985), for the proposition that their

expectation of FLSA overtime payments is a property right.

But their effort fails because, like Larionoff, Zucker is in

essence a statutory entitlement case and not a Fifth

Amendment takings case. In Zucker, the Federal Circuit

held that a congressional amendment to the Civil Service

Retirement Act which decreased the cost-of-living

adjustments (COLA) for retirees did not violate procedural

due process because retirement benefits were legitimately

subject to change and, therefore, could not be considered an

entitlement. Zucker, 758 F.2d at 639-640. In so holding, the

court’s analysis revolved around whether the applicable

COLA was a statutory entitlement. Jd. at 639 (“To have a

property interest in a benefit protected by procedural due

process, a person must have a legitimate claim of

entitlement to the benefit.”) (citing Board of Regents v.

Roth, 408 U.S. 564, 577, 33 L. Ed. 2d 548, 92 S. Ct. 2701, 2709

(1972)). It is significant that the court rejected a takings

argument in this context because COLA increases were

statutory and not contractual in nature.22 Jd. at 640.

The confusion for plaintiffs lies in that Zucker uses the

term “property interest” interchangeably with the more

accurate description “entitlement.” But what may be a

statutorily created entitlement or “property interest” in a

Due Process Clause context may or may not neatly fit into

Takings Clause analysis, as Zucker amply demonstrates.

22 A problem raised before, yet not addressed by, the Zucker court is

where a statutory program creates both an “entitlement” and a cognizable

property interest protected under the Takings Clause of the Fifth

Amendment. This may conceivably occur when the statutory program

calls for, or in essence creates, a contractual relationship defined as

property by common law or state law. A breach of the contract could give

rise to a takings clause violation. See Ruckelshaus v. Monsanto Co, 467

U.S. 986 (1984). But, the property interest must be separate and distinct

from any rights conferred by contract. Prudential Insurance Co. v.

United States, 801 F.2d 1295, 1300 n.13 (Fed. Cir. 1986).

48a

This court, however, need not reach this issue, for under the

facts of the case sub judice, plaintiffs’ claim falls under

neither.

At its heart, plaintiffs’ claim really is a challenge to

retroactive legislation that allegedly illicitly diminished

plaintiffs’ then existing statutory benefits. The crux of

plaintiffs’ claim is therefore that the amendments to section

640 are unlawful. As a general proposition: “Such a holding,

however, cannot properly derive from the Takings Clause,

which is not prohibitory, but rather compensatory in

nature.” Commonwealth Edison Co., 46 Fed. Cl. at 41-42

(quoting First English Evangelical Lutheran Church of

Glendale v. County of Los Angeles, 482 U.S. 304, 314-315,

107 S. Ct. 2378 (1987) (“(The Takings Clause] does not

prohibit the taking of private property, but instead places a

condition on the exercise of that power. This basic

understanding of the Amendment makes clear that it is

designed not to limit the governmental interference with

property rights per se, but rather to secure compensation in

the event of otherwise proper interference amounting to a

taking.”) (emphasis in original) (citations omitted).

Consequently, plaintiffs’ claim does not fall under the

safeguard of the Takings Clause, but is at best a due process

claim to secure an alleged entitlement—a claim heretofore

rejected by the D.C. Circuit in Adams v. Hinchman.

C. Did the Retroactive Amendments to Section 640

Amount to an Unconstitutional Taking of a “Cause-

of-Action” or “Right”?

Almost as an afterthought, plaintiffs present an

alternative theory for recovery under the Takings Clause

based on the premise that what was taken from them was a

cause-of-action to protect property or another legal right. It

is not all together clear what this argument entails. There

are two possibilities.

49a

The first is predicated on the fact that in the present

action plaintiffs are seeking to vindicate both their “claims

to FLSA back wages” and their “statutory rights ... under

the FLSA.” PIl.’s. Supplemental Br. in Opp’n to Def.’s Mot.

to Dismiss at 9-10. Citing Alliance of Descendants of Texas

Land Grants v. United States, 37 F.3d 1478, 1481-1482 (Fed.

Cir. 1994), and Hodel v. Irving, 481 U.S. 704 (1987) plaintiffs

correctly establish that the Takings Clause requires

compensation for a taking of a cause-of-action to sue to

protect a legal right, such as real property (Alliance), or an

appropriation of a right protected by law, such as the

common law right of descent and devise (Hode/). Plaintiffs

go on to equate these two rules of law with their own cause

by contending that “in the instant case, plaintiffs have been

deprived not merely of their FLSA pay, which the

Government has withheld for their own use, but also of

[both] their statutory rights thereto under [the] FLSA” (Jd.

at 10), as well as their right to vindicate “plaintiffs’ claims to

FLSA back wages” (id. at 9 (emphasis original)).

But these contentions are fatally flawed. As to the latter

two, those are legal conclusions that either were rejected by

the D.C. District Court and D.C. Circuit, or belied by the

salient fact that plaintiffs were able to prosecute actions to

protect their constitutional, statutory and administrative

rights in those fora. As to the former, that is a contention

rejected by this court in the prior section of this opinion. In

reality, plaintiffs are attempting to shoehorn their spurned

argument that an obligation to pay overtime is a property

right into the rhetoric of Alliance and Hodel. It simply does

not fit.

However, perhaps—it is not clear—plaintiffs are

arguing a second scenario: that because the retroactive

amendment to section 640 shortened the statute of

limitations period in which to vindicate FLSA statutory

rights, for at least the discreet period of time lost, a cause-

50a

of-action protecting a federal statutory entitlement was

unconstitutionally extinguished. But even this somewhat

more sophisticated argument must fail for essentially the

same reasons as did the prior one. While it is true that in

certain circumstances abolition of a cause-of-action can rise

to a ievel of an unconstitutional taking (see Cities Servs. Co.

v. McGrath, 342 U.S. 330, 72 S. Ct. 334 (1952); Ware v.

Hylton, 3 U.S. (3 Dall.) 199 (1796)), it is equally true that

plaintiffs’ cause-of-action must secure a cognizable “legally

protected interest.” See United States v. Willow River

Power Co., 324 U.S. 499, 508, 65 S. Ct. 761, 764 (1945).

Plaintiffs have two fundamental problems in that regard.

The first, as explained above, is that their claim for overtime

payment is not cognizable as a property right protected by

the Takings Clause. The second, is that the D.C. District

Court and the D.C. Circuit on appeal upheld the legality of

Congress’ retroactive amendment to section 640, and

rejected plaintiffs’ other constitutional, as well as, statutory

and Administrative Procedure Act claims.

Thus, no matter how one looks at it, no claim, in other

words, no cause-of-action, to protect plaintiffs’ rights has

been unconstitutionally taken from them. To be sure,

plaintiffs in this case are not really complaining about a

taking of a specie of property. What they are in reality

seeking to safeguard is a statutory grant of largesse from

revocation by Congress. Such a claim more properly falls

under the rubric of due process of law, a claim over which

this court has no jurisdiction and which plaintiffs previously

and unsuccessfully prosecuted in the D.C. District Court and

the D.C. Circuit Court of Appeals.

III. Conclusion

For the foregoing reasons, defendant’s motion to dismiss

is GRANTED. The Clerk of the Court is hereby

ORDERED to enter final judgment in favor of defendant.

a

a

4

¥

4

x

*

&

NO COSTS.

Lawrence J. Block

Judge

5la

52a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

STEPHEN S. ADAMS, et al.,

Plaintiffs,

v.

DAVID M. WALKER, Comptroller General of the

United States, et al.,

Defendants.

Civil Action No. 95-2015.

Filed: Mar. 30, 2000

ORDER

JUNE L. GREEN, District Judge.

For the reasons stated in the attached memorandum of

law, it is by the Court this 30" day of March 2000,

ORDERED that Plaintiffs’ Motion for Leave under

Rule 15, F.R.C.P. to Amend their Complaint; to Vacate this

Court’s Prior Decisions Concerning Plaintiffs’ Takings

Claims; and to Transfer Plaintiffs’ Amended Complaint to

the United States Court of Federal Claims Pursuant to 29

U.S.C. §1631, is GRANTED and the Clerk is directed to file

Plaintiffs’ First Amended Complaint, and then transfer this

case to the Court of Federal Claims. The Court’s rulings

with regard to the Plaintiffs’ takings claims are deemed

VACATED; it is further

ORDERED that the Defendants’ Motion to Dismiss is

DENIED; and it is further

ORDERED that the Clerk shall send copies of this

Order to:

Jules Bernstein, Esq.

Bernstein & Lipsett

1920 L Street, N.W., Suite-602

Washington, D.C. 20036

Edgar N. James, Esq.

James & Hoffman

1146 19” Street, N.W., Suite 600

Washington, D.C. 20036

Susan K. Rudy, Esq.

U.S. Department of Justice

Civil Division

Federal Programs Branch

Rm-968

901 E Street, N.W.

Washington, D.C. 20530

/s/ J . Green.

June L. Green

United States District Court

Judge

54a

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

eee

No. 97-5121

STEPHEN S. ADAMS, et al.,

Appellants,

v.

JAMES F. HINCHMAN, Acting Comptroller General of

the United States General Accounting Office, et al.,

Appellees.

Argued: March 12, 1998.

Decided: Aug. 28, 1998.

Rehearing Denied: Nov. 9, 1998.

Before RANDOLPH, ROGERS, and TATEL, Circuit

Judges.

PER CURIAM:

This is an appeal from the district court’s judgment

rejecting the claims of 14,122 current and former federal

criminal investigators or other law enforcement officers.

The plaintiffs were employed between 1984 and 1995 in

federal agencies such as the Customs Service, the Secret

Service, the Internal Revenue Service, the Drug

Enforcement — and the Bureau of Alcohol, Tobacco

and Firearms. Between February 16, 1990, and

23 ‘The original defendants were then Comptroller General of the

General Accounting Office, Charles A. Bowsher, and the heads of the

various federal agencies. On September 30, 1996, Mr. Bowsher retired.

55a

December 13, 1995, they filed civil actions in the Court of

Federal Claims alleging that they had been wrongfully

classified as exempt from the overtime provisions of the

Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq.

During the same period, each employee also filed an

administrative claim at the Government Accounting Office.

Of the 14,122 employees, 11,247 brought suit before June 30,

1994.

In a consolidated case, the Court of Federal Claims held

that certain grades of employees—namely, GS-9 and GS-11

investigators at BATF, DEA, IRS, and Secret Service, and

GS-9 investigators at Customs Service—were not exempt

from FLSA, and thus had been entitled to overtime pay.

Adams v. United States, 27 Fed. Cl. 5 (1992). On March 16,

1994, these plaintiffs entered into settlement agreements

with the United States. The agreements gave the plaintiffs

“back pay and interest ... for the two-year period prior to

the date that each such plaintiff filed suit” but did not

prejudice their rights to pursue administrative remedies.

Counsel then corresponded with the GAO regarding the

pending administrative claims.

The authority of the GAO to settle claims against the

United States is found in the Barring Act, 31 U.S.C.

§ 3702.24 According to the GAO, “to settle a claim means to

administratively determine the validity of that claim ....

Settlement includes the making of both factual and legal

determinations. The authority to settle and adjust claims

does not, however, include the authority to compromise

claims.” GENERAL ACCOUNTING OFFICE, PRINCIPLES OF

FEDERAL APPROPRIATIONS LAW 11-6 (1982); see also

The acting Comptroller General, James Hinchman, was substituted as

defendant.

24 = The GAO’s authority to settle federal employees’ compensation

claims has since been transferred to the Office of Personnel Management.

See 31 U.S.C.A. § 3702(a)(2) (West Supp.1998)

56a

Illinois Surety Co. v. United States ex rel. Peeler, 240 U.S.

214, 219, 36 S.Ct. 321, 60 L.Ed. 609 (1916). Under 31 U.S.C.

§ 3702(b)(1)(A), a claim against the government “must be

received ... within six years after the claim accrues except

... aS provided in this chapter or another law.”

Lawsuits for back pay under FLSA are subject to the

Portal-te-Portal Act’s statute of limitations—two years for

non-willful violations and three years for willful ones.2° See

29 U.S.C. §255(a). Shortly after FLSA coverage was

extended to federal employees, however, the GAO ruled

that “the time limitation for the filing of claims by federal

employees under the FLSA which may be considered by our

office is six years ....” In re Transportation Sys. Ctr., 57

Comp. Gen. 441 (1978). The GAO relied in part on a letter

from the Civil Service Commission, reasoning that the

language of 29 U.S.C. § 255—which spoke exclusively in

terms of a “cause of action”—limited it to judicial

proceedings and did not apply to administrative claims. See

also PRINCIPLES 11-22 (“(TJhe time limit for filing a claim

under the Fair Labor Standards Act is the six years

prescribed by [then-] 31 U.S.C. § 7la, notwithstanding a

two-year statute of limitations for commencing actions at

law. Thus, a claim filed under the FLSA more than two

years but less than six years after it accrued could still be

considered administratively, although the claimant would

have lost his recourse to the courts.”).

In back pay and overtime cases, the statute of

limitations determines how many years of compensation

each claimant receives. Since these are continuing claims, a

separate cause of action accrues each payday. A six-year

25 One of the purposes of the Portal-to-Portal Act, enacted in

response to Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct.

1187, 90 L.Ed. 1515 (1946), was to substitute a uniform federal limitations

period for the diverse periods provided under state law. See Carter v.

Panama Canal Co., 463 F.2d 1289, 1293 (D.C.Cir.1972).

57a

statute of limitations means that an employee could recover

six years of back pay or overtime compensation dating from

the time he or she first filed suit.

On May 23, 1994, the GAO overruled Transportation

Systems Center.26 In In re Joseph M. Ford, 73 Comp. Gen.

157 (1994), the GAO held that the shorter statute of

limitations found in the Portal-to-Portal Act would

henceforth be applied “in the settlement of pending and

future FLSA claims filed with GAO by federal employees.”

The GAO concluded that 29 U.S.C. § 255 was “another

law”—and thus an exception to the six-year limitation

period in 31 U.S.C. § 3701(b)(1)(A).

On July 1, 1994, Senator Sarbanes introduced legislation

intended, he said, “to reverse a very destructive ruling by

the General Accounting Office to apply a retroactive change

in the statute of limitations from 6 years to 2 years for

Federal employees to file back pay claims under” FLSA.

140 CONG. REC. S8400 (July 1, 1994). As enacted on

September 30, 1994, § 640 of the Treasury, Postal Service

and General Government Appropriations Act of 1995, Pub.L.

No. 103-329, 108 Stat. 2383, 2432, provided:

In the administration of Section 3702 of title 31, United

States Code, the Comptroller General of the United

States shall apply a 6-year statute of limitations to any

claim of a Federal Employee under the Fair Labor

Standards Act of 1938 (29 U.S.C. § 201 et seq.) for claims

filed before June 30, 1994.

Senator Sarbanes added that while “the underlying question

regarding the appropriate length of the statute of limitation

for FLSA claims is one of continuing debate ... under no

circumstances should GAO apply the proposed change

retroactively.” 140 CONG. REC. S8400.

26 —_In doing so, the GAO also overruled In re Henry G. Tomkowiak,

67 Comp. Gen. 247 (1988), and In re Federal Firefighters, 68 Comp. Gen.

681 (1989), which had applied the six-year statute of limitations.

58a

In what was apparently its first decision after passage of

§ 640, the GAO applied a six-year statute of limitations to

claims filed on May 22, 1989, and pending before it as of June

30, 1994. See In re Molly D. Kinsley, 1995 WL 9720 (Jan. 9,

1995). The GAO explained that § 640 “obviates the need for

us to discuss the effect, if any, of Joseph M. Ford .... In light

of section 640, the Ford holding is applicable only to claims

filed on or after June 30, 1994.” Jd. at n. 7.

Meanwhile, counsel for the employees again contacted

the GAO and requested a meeting to resolve pending claims

in light of §640. The GAO acknowledged that “the Act of

Congress has modified our Ford decision” but pointed out

that “our regulations require that the agency from which

the claim originated shall initially adjudicate the claim. See

4 C.F.R. §31.4 (1994)."27 Counsel then brought their

clients’ claims to the attention of the employing agencies,

each of which responded that § 640 gave specific authority

to apply a six-year statute of limitations only to the

Comptroller General and that the agencies themselves were

without statutory authority to do so. Counsel appealed these

denials to the GAO, but the GAO did not respond.

However, with regard to an unrelated FLSA case, the GAO

informed the Personnel Director of the U.S. Customs

Service that it did “not intend to issue a decision in Marvin

B. Atkinson ... until the Treasury, Postal Service, and

General Government Appropriations Bill, 1996 ... is enacted

(because of the possible retroactive repeal of § 640).”

27 4 C.F.R. § 31.4 provides in part:

A claimant should file his or her claim with the administrative agency

or department out of whose activities the claim arose. The agency

shall initially adjudicate the claim. If the claimant is not satisfied

with the agency’s determination, he or she may appeal that

determination to the Claims Group, General Accounting Office.

Claims which cannot be resolved by the department or agency shall

be transmitted to the Claims Group, General Accounting Office, for

resolution.

59a

In November 1995, Congress amended § 640 to state:

This section shall not apply to any claim where the

employee has received any compensation for overtime

hours worked during the period covered by the claim

under any other provision of law, including, but not

limited to, 5 U.S.C. 5545(c), or to any claim for

compensation for time spent commuting between the

employee’s residence and duty station.

Pub.L. No. 104-52, 109 Stat. 468. Introducing this

amendment, Representative Lightfoot said that the GAO, in

its 1978 decision, “made a mistake and established

regulations stating that Federal employees can get up to 6

years back pay for overtime claims” under the FLSA. The

GAO discovered and corrected “its mistake,” but then the

103rd Congress “reversed GAO, and passed a law allowing

Federal workers to get up to 6 years back pay. The problem

is that this act will cost as much as $ 460 million .... The

conferees were faced with a choice—either pay hundreds of

millions for work done many years ago ... or give the

Federal workers the same rights as their private sector

counterparts .... [W]e included language providing for the

same treatment for public and private workers ... not just

because it costs a lot of money, but because it is fair.” 141

CONG. REC. H12376 (Nov. 15, 1995).

After the amendment of §640, the GAO decided

Atkinson, a case in which the plaintiffs here had been

granted leave to intervene. In re Marvin B. Atkinson, 1996

WL 31212 (Jan. 29, 1996). Atkinson’s claim had been filed on

January 1, 1994, and sought compensation for the time he

spent traveling between home and work while driving a

government vehicle. Atkinson’s employing agency denied

his claim after the GAO decided Ford; he based his

administrative appeal on the original § 640. The GAO held

that “the November 19, 1995 amendment to section 640

effectively reestablishes the two-year statute of limitations

60a

for any claim where the employee has received overtime pay

under any other law or any claim for time spent commuting.

We see no basis for the assertion that this amendment does

not apply to Mr. Atkinson’s claim.” Jd.

On October 27, 1995—before passage of the amendment

to §640 or the GAO’s decision in Atkinson—plaintiffs

brought this action in district court seeking “mandamus and

injunctive and declaratory relief.” The complaint challenged

Ford’s adoption of a shortened, retroactive statute of

limitation; the GAO’s insistence that plaintiffs bring their

claims before their respective agencies; the refusal of those

agencies to grant the claims; and the GAO’s refusal to pass

on their appeals. In Supplemental Complaints dated

December 13, 1995, and January 29, 1996, plaintiffs added

the arnendment to § 640 and the GAO’s decision in Atkinson

to their list of requests for declaratory relief.

Plaintiffs alleged that the GAO’s decision in Ford and

the amendment to § 640 had offended due process. They

asserted property interests in their back pay claims before

the GAO and in their earned but unpaid compensation.28

On October 10, 1996, the district court (Judge June L.

Green) granted defendants’ motion for summary judgment.

The court later denied plaintiffs’ motion for reconsideration.

Our review of a grant of summary judgment is de novo.

With one exception, we shall affirm the district court’s

judgment substantially for the reasons stated in the court’s

thorough and well-reasoned opinion.29

28 On appeal, plaintiffs also maintain that they have a property

interest in the statute of limitations itself. Brief for Appellants at 45.

They cite no support for the assertion of such an interest and we are

aware of none. As explained earlier, the amount of overtime that

plaintiffs can claim is limited by the governing statute of limitations.

Thus the two are essentially the same and the same analysis applies.

29 Appellees have moved to strike section III of plaintiff-

appellants’ reply brief on the ground that it raised issues not advanced in

their opening brief. Plaintiffs there contended for the first time that the

———

6la

The district court held that the GAO’s prior application

of a six-year statute of limitations had been an error.

Adams v. Bowsher, 946 F.Supp. 37, 42 (D.D.C.1996). ~ It

decided that plaintiffs had no property interest in their

pending administrative claims because “a cause of action ...

affords no definite or enforceable property right until

reduced to a final judgment.” Jd. at 41 (quoting Austin v.

City of Bisbee, Arizona, 855 F.2d 1429, 1436 (9th Cir. 1988)).

See also Sowell v. American Cyanamid Co., 888 F.2d 802,

805 (11th Cir.1989); Hammond v. United States, 786 F.2d 8

(Ist Cir.1986). Without reaching the issue whether

enactment of the original §640 gave certain plaintiffs

property rights in their unpaid overtime, we agree with the

district court that any such property interest could be

extinguished so long as the retroactive economic legislation

met the guarantees of due process. See General Motors

Corp. v. Romein, 508 U.S. 181, 191, 112 S.Ct. 1105, 117

L.Ed.2d 328 (1992). Analyzing the legislative history of the

amendment to § 640, the district court found that the statute

had a “legitimate legislative purpose which was furthered

by rational means.” 946 F.Supp. at 44 (relying on Pension

Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717,

730, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984) and Usery v.

Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 49

L.Ed.2d 752 (1976)). The court. emphasized that

Representative Lightfoot’s statement indicated a desire to

promote fairness and to equate “the rights enjoyed by

federal employees to those of private sector employees.”

946 F.Supp. at 43.

Back Pay Act, 5 U.S.C. § 5596, and the Civil Service Reform Act, 5 U.S.C.

§ 7121(a), display congressional intent to treat federal and private sector

employees differently. See Reply Brief for Appellants at 10-13. It is our

practice not to consider any issue “raised for the first time in a reply

brief,” a point at which the opposing side has no opportunity to respond.

See Rollins Environmental Servs., Inc. v. EPA, 937 F.2d 649, 652 n. 2

(D.C.Cir.1991). We grant the motion to strike.

62a

As for plaintiffs’ equal protection claim, the district court

determined that plaintiffs and the Kinsley claimants, whose

claims had been subject to a six-year statute of limitations,

were not similarly situated. Jd. at 45. Unlike the claimants

in Kinsley, plaintiffs did not have a sufficiently developed

factual record for their claims to be processed by the GAO

prior to the enactment of the amendment. In addition,

plaintiffs charged that the GAO violated the Administrative

Procedure Act in deciding Ford and in failing to handle their

cases in a timely fashion—.e., before § 640 was amended.

Such claims were moot, the district court concluded, because

Congress “had impliedly adopted the two or three-year

limitation period” and the amendment “passe[d]

constitutional muster.” 946 F.Supp. at 45. Thus the Ford

and Atkinson decisions were valid and it was beyond the

power of the court to compel the GAO to apply a longer

statute of limitations.

While we therefore are in general agreement with the

district court, we cannot affirm the portion of the court’s

decision holding that plaintiffs’ “property” had not been

taken without just compensation, in violation of the Fifth

Amendment to the Constitution. See Adams, 946 F.Supp. at

44. Applying the test for a compensable taking set forth in

Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211,

224-25, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986), the district

court concluded that any economic impact on individual

plaintiffs was slight, that the amended § 640 did not “unduly

interfere with a distinct investment-backed expectation,”

and that “the nature of the action taken by Congress is not

inconsistent with the purpose behind the takings clause.”

946 F.Supp. at 44.

Repeating the argument they made below, plaintiffs

argue that “deprivation of [their] previously earned FLSA

wages constitutes an unlawful taking of [their] labor without

just compensation under the Fifth Amendment.” Brief for

63a

Appellants at 19. We are without jurisdiction to decide this

claim. The usual remedy for unconstitutional takings is “a

suit for money damage (i.e., the ‘just compensation’ that the

Constitution assures) under the Tucker Act in the Court of

Federal Claims, 28 U.S.C. § 1491 ....°80 Student Loan

Marketing Ass’n v. Riley, 104 F.3d 397, 401 (D.C.Cir.1997).

“Except in cases in which the amount in controversy is less

than $10,000, in which event jurisdiction is concurrent with

the federal district courts, see 28 U.S.C. § 1346(a)(2), the

Federal Claims Court’s jurisdiction in such actions is

exclusive.” Railway Labor Executives’ Ass’n v. United

States, 987 F.2d 806, 816 (D.C.Cir.1993). While there may be

certain exceptions “involv[ing] mandates of direct transfers

of money to the government,” see Student Loan Marketing

Ass'n, 104 F.3d at 401 (quoting In re Chateaugay Corp., 53

F.3d 478, 493 (2d Cir.1995)), they are not applicable here. At

oral argument, counsel for the plaintiffs represented that

each of their individual claims amounted to more than

$10,000. If that were true, the district court would not have

had jurisdiction to hear the taking claim in the first place.

Even if each back pay claim were less than $10,000 and

jurisdiction was based on the “Little Tucker Act” (28 U.S.C.

§ 1346(a)(2)), the United States Court of Appeals for the

Federal Circuit—not us—would have exclusive jurisdiction

over the appeal. See 28 U.S.C. § 1295(a)(2). Either way

then, plaintiffs’ taking claim is not properly before us.21 We

30 In relevant part 28 U.S.C. § 1491(a)(1) provides:

The United States Court of Federal Claims shall have

_ jurisdiction to render judgment upon any claim against the United

States founded either upon the Constitution, or any Act of

Congress or any regulation of an executive department, or upon

any express or implied contract with the United States, or for

liquidated or unliquidated damages in cases not sounding in tort.

31 After oral argument, the parties called our attention to two

recently decided cases—National Treas. Employees Union & Federal

Deposit Ins. Corp., 58 F.L.R.A. No. 134 (Feb. 27, 1998); and Eastern

Enterprises v. Apfel, — U.S. —, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998)

64a

therefore remand the takings issue to the district court for a

determination of whether jurisdiction was proper under the

Little Tucker Act, 28 U.S.C. § 1346(a)(2).

For the reasons stated above, the district court’s grant

of summary judgment is affirmed in part and reversed and

remanded in part.

So ordered.

(plurality opinion). Neither decision affects the outcome of this case.

National Treasury Employees Union appears to support the reasoning of

the district court. In Eastern Enterprises, four Justices concluded that it

was within the district court’s power to award equitable relief for a claim

arising under the Takings Clause. See — U.S. at —, 118 S.Ct. at 2145

(quoting In re Chateaugay Corp., 53 F.3d at 493). Unlike Eastern

Enterprises, plaintiffs here are not threatened with a taking by a

“challenged statute” that “requires a direct transfer of funds” from them

to the government. See id. Rather, they seek compensation from the

government for unpaid overtime. The only effect of a longer statute of

limitations would be to grant plaintiffs more money. Thus the

circumstances found to support district court jurisdiction in Eastern

Enterprises do not exist in this case.

65a

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

STEPHEN S. ADAMS, ET AL., PLAINTIFF,

Vv.

CHARLES A. BOWSHER, COMPTROLLER GENERAL OF

THE UNITED STATES, ET AL., DEFENDANTS

CIVIL ACTION NO. 95-2015

FILED MARCH 7, 1997

MEMORANDUM

JUNE L. GREEN, United States District Court J udge

Before the Court is Plaintiffs’ motion for reconsideration

and to alter and amend this Court’s Order dated October 10,

1996. The motion is made pursuant to Federal Rule of Civil

Procedure 59(e). As a basis for this motion, Plaintiffs argue

that reconsideration is required because the Court relied on

theories not litigated by the parties and that the Court’s

_conclusions, in certain respects, are contrary to the facts and

law. For the reasons that follow, Plaintiff's motion is denied.

A motion brought pursuant to Federal Rule of Civil

Procedure 59(e) gives the Court discretionary authority to

reconsider an earlier ruling when there has been an

“intervening change of controlling law, new evidence

becomes available, or there is need to correct a clear error

or prevent manifest injustice.” Firestone v.Firestone, 76

F.3d 1205, 1208 (D.C. Cir. 1996), citations omitted.

I. LEGITIMATE LEGISLATIVE PURPOSE

Plaintiffs argue that the Court erred on several

important points in reaching its decision. First, Plaintiffs

66a

state that the Court erred by assuming that Plaintiffs would

have received “double overtime compensation” had it not

been for amended Section 640. The Plaintiffs misinterpret

the Court’s use of the phrase “double overtime

compensation.” Whether these Plaintiffs sought or were

entitled to “double overtime compensation” is irrelevant to

the Court. In analyzing the legitimacy of the Treasury,

Postal Service, and General Government Appropriations

Act of 1996, Pub. L. 10452, 109 Stat. 468-69

(1995)(“amended Section 640”), the Court meant only to

show that the provision excluding employees who had

received overtime compensation under another provision of

law, was reasonable. As the Court concluded,.“fairness” was

one of the reasons given for enacting amended Section 640.

It is rational for Congress to have determined that

employees who had not been compensated under another

provision of law were entitled to a longer limitations period.

II. EQUALITY OF FEDERAL WORKER

LIMITATIONS PERIOD

- Plaintiffs argue also that Congress could not have been

attempting to place private and government workers in a

position of parity with regard to commuting time because

non-federal workers generally are afforded fewer rights to

overtime under the Fair Labor Standards Act (“FLSA”).

Plaintiffs go to some length to show that many differences

exist between the rights of federal and private sector

employees in the application of the FLSA and argue that

parity between the two groups has never been a goal of

Congress.

Again, Plaintiffs have misinterpreted the Court’s

analysis. In concluding that Congress acted rationally

concerning the commuting provision of amended Section

640, the Court determined that equating rights of federal

employees and private sector employees under the FLSA

was, in fact, one of the reasons for enactment. This does not

67a

mean, however, that the rights of federal and private sector

employees must be equalized in every aspect under the

FLSA in order for the statute to survive scrutiny. Even if

differences remain concerning the rights of the two groups,

equating the limitation period for federal and private sector

employees for commuting claims is consistent with

Congress’ stated intention of “fairness” and complies with

the rational basis test.

III. APPLICABILITY OF THE WINSTAR

DECISION

Plaintiffs next argue that the Court erred by applying

the permissive rational basis test. In support, Plaintiffs cite

the recent case United States v. Winstar Corp., 116 S.Ct.

2432 (1996), for the proposition that the federal government

is held to a higher standard where it seeks to avoid

obligations it voluntarily assumed. Plaintiffs argue that the

Court failed to address this case in its ruling.

Quite simply, the Court did not address the Winstar

decision because it is not applicable to the facts here. The

Winstar decision is a contract case that deals with the

federal government’s breach of the terms of an express

agreement into which it had voluntarily entered. Id. There

the Plaintiffs, viable financial institutions, were induced by

the federal government (Federal Home Loan Bank Board

(“FHLBB”)) to acquire failing thrifts in return for being

given certain accounting treatment. Thereafter, Congress

enacted the Financial Institutions Reform Recovery and

Enforcement Act of 1989 (“FIRREA”) making accounting

standards for thrifts more stringent. The result of FIRREA

was that it effectively altered the existing contracts because

it changed the accounting standards. Consequently, two of

the plaintiff institutions failed and were forced into

liquidation. The Supreme Court, in a plvrality decision,

concluded that the express contracts had been breached and

the plaintiffs were entitled to damages. Id. at 1. The

68a

Plaintiffs here, by contrast, did not plead this case as a

contract action. Further, there have never beerr any facts to

suggest the existence of an express contract. An implied

contract theory, similarly, is not available to Plaintiffs

because, as the Defendants properly point out, any

entitlement federal employees may have to compensation is

not determined by ordinary contract principles, but by

applicable statutes and regulations governing compensation.

Kizas v. Webster, 707 F.2d 524, 535 (D.C. Cir. 1983) (citing

United States v. Larionoff, 431 U.S. 864, 859 (1977).) The

Court has already addressed those statutes and regulations

and has made the appropriate rulings.

Even if there were an express contract in this case (or

an actionable implied contract), Winstar would not apply.

The Supreme Court in Winstar made it clear that nothing in

the Winstar record “purported to prevent the Government

from changing the way it regulated the thrift industry.”

Winstar at 28. Contrary to the Plaintiffs here, the plaintiffs

in Winstar did not seek to invalidate the new statute nor did

they seek injunctive relief against applicetion of the new

law. Id. at 41.1 Instead, the Winstar Plaintiffs sought

money damages for breach of the Government’s express

agreements, and it was on that basis that the Supreme

Court made its analysis. The Plaintiffs are simply incorrect

in stating that in Winstar “the legislation [FIRREA] was

declared unconstitutional.” (Mtn. for Recon. at 20).

IV. PLAINTIFFS’ “TAKING” CLAIM

The Plaintiffs next argue that this Court erred when it

denied their “taking” claim on the basis that Plaintiffs would

not suffer a great economic impact. In support, Plaintiffs

now allege that each employee would be entitled to

1 The Plaintiffs here have never asked for money damages. Instead,

they seek declaratory and injunctive relief concerning the statutory

limitations period for filing administrative claims. Compl. pp. 1234-1236.

69a

approximately $28,000 in back pay and argue that such an

amount is not insubstantial.

The Plaintiffs take issue with the relevance the Court

attributes to the fact that this case was not brought as a

class action. The Plaintiffs are correct in that the amount of

loss to the Plaintiffs would be the same even if this case had

been brought as a class action. What the Court was

attempting to show, however, was that the Plaintiffs had

provided no record evidence reflecting their alleged

individual losses and therefore the Court could only

speculate as to economic impact. Even now, the Plaintiffs

ask the Court to divide an estimated amount a congressman

stated during a congressional debate by the number of

Plaintiffs here, in order to arrive at an average amount for

each Plaintiff. The Court declines to do so.

More important, even if it could be shown that there was

a great economic impact on the Plaintiffs, it would not

change the Court’s holding. As discussed in the original

Memorandum and Order, the Court made its conclusions

regarding the “taking” claim on the basis that the alleged

investment-backed expectation was the limitation period

rather than back-pay (which was never sought in the

Complaint). The Court determined that there was no

legitimate “investment-backed expectation” to a six-year

limitation period.

V. RETROACTIVE SHORTENING OF THE

STATUTE OF LIMITATIONS

Another basis upon which Plaintiffs ask for

reconsideration is that the Court allegedly ignored authority

that retroactive shortening of a limitations period is

improper. The Court did not address those cases because it

determined that such an argument was subsumed by the

earlier analysis concerning the viability of the claims at

issue and whether the statutes in question withstood

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scrutiny. The Plaintiffs present nothing now that would

cause the Court to re-visit this issue.

VI. THE DOCTRINE OF EQUITABLE TOLLING

Yet another reason the Plaintiffs ask for reconsideration

is on the basis that the “doctrine of equitable tolling”

prevents the retroactive application of amended Section 640.

Contrary to what Plaintiffs argue, this is a new argument

that could have been, but was not, raised earlier. Federal

Deposit Insurance Corporation v. Meyer, 781 F.2d 1260,

1268 (7th Cir. 1986)(motions to alter or amend cannot be

used to raise arguments which could, and should, have been

made before the judgment issued, nor can such motions be

used to argue a case under a new legal theory (internal

citations omitted)). It is, therefore, untimely.

Even if this claim had been raised in a timely fashion,

the Court’s conclusion would have been no different. The

doctrine of equitable tolling is a judicially constructed

doctrine that allows a limitation period to be tolled in two

situations: 1) where a Plaintiff files a defective pleading

within the statutory period, or 2) “where a complainant has

been induced or tricked by his eovecmny’s misconduct into

allowing the filing deadline to pass.” Irwin v. Dept. of

Veterans Affairs, 498 U.S. 89, 96 (1990), citing, Glus_v.

Brooklyn _Eastern__Dist. Terminal, 359 US. 231

(1959)(adversary’s misrepresentation caused plaintiff to let

filing period lapse). The Plaintiffs argue that equitable

tolling should apply here because they relied on agency

notices that the statute of limitations for filing FLSA claims

was six years. Reliance: alone, however, is not enough.

Missing from Plaintiffs’ argument is any allegation that the

agency engaged in misrepresentation as did the Defendant

in Glus. Without the element of intentionality of some

wrongdoing, the Court concludes that the doctrine of

equitable tolling would not be available to Plaintiffs even if

this theory had been raised in a timely manner.

Tla

Even more important, Plaintiffs cite no authority that

the doctrine of equitable tolling can be used to contravene

express congressional action. Congress has considered all of

the factors and equities at issue and its conclusions are

contained in amended Section 640..

VII. “EQUAL PROTECTION”

As a final basis for reconsideration, Plaintiffs ask the ©

Court to revisit the issue of equal protection. The Court has

reviewed Plaintiffs’ arguments on this issue and concludes

that nothing has been presented that the Court has not

already considered. No further analysis, therefore, is

warranted and the Court will not alter its Judgment in this

regard.

VIII. CONCLUSION

For the reasons stated, the Court finds no basis to alter

its Judgment in this case. The Plaintiffs have failed to show

that there has been an intervening change of controlling

law, new evidence has become available, or there is need to

correct a clear error or prevent manifest injustice.

Accordingly, Plaintiffs’ motion is denied. An appropriate

order accompanies this Memorandum.

/s/ June L. Green.

June L. Green

United States District Court Judge

DATE:

[March 6, 1997]

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

STEPHEN S. ADAMS, ET AL., PLAINTIFF,

V.

CHARLES A. BOWSHER, COMPTROLLER GENERAL OF

THE UNITED STATES, ET AL., DEFENDANTS

CIVIL ACTION NO. 95-2015

FILED MARCH 7, 1997

ORDER

Upon review of Plaintiffs’ Motion Under F.R.C.P. Rule

59(e) for Reconsideration and to Alter and Amend the

Judgment Filed Herein, the Opposition and Reply thereto,

the entire record herein and for the reasons stated in the

accompanying memorandum of law, it is by the Court this 6”

day of March 1997,

ORDERED that Plaintiffs’ motion is DENIED; and it is

further

ORDERED that the Clerk shall mail copies of this

Order to:

Jules Bernstein, Esq.

Linda Lipsett, Esq.

Bernstein & Lipsett

1920 L Street, N.W.

Suite 602

Washington, D.C. 20036

Edgar James, Esq.

Michael Lewis, Esq.

James & Hoffman

1146 19th Street, N.W.

Suite 600

Washington, D.C. 20036

Susan K. Rudy, Esq.

Kathryn D. Ray, Esq.

U.S. Dept. of Justice

Civil Division

Federal Programs Branch

901 E Street, N.W.

Rm-936

P.O. Box 883

Washington, D.C. 20044

_/s/ June L. Green. _

June L. Green

United States District Court

Judge

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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

STEPHEN S. ADAMS, et al.,

Plaintiffs,

v.

CHARLES A. BOWSHER, Comptroller General of the

United States, et al.,

Defendants.

Civil Action No. 95-2015.

Filed: Oct. 10, 1996

MEMORANDUM

JUNE L. GREEN, District Judge.

Before the Court are Plaintiffs’ Motion for Summary

Judgment and Defendants’ Motion for Judgment on the

Pleadings, or, in the Alternative, for Summary Judgment.

For the reasons stated hereafter, Plaintiffs’ motion is denied

and Defendants’ motion for Summary Judgment is granted.

I. BACKGROUND

Plaintiffs are current or former employees of the United

States, employed by one of several agencies as criminal

investigators or in some other law enforcement capacity.

Those agencies include the Bureau of Alcohol, Tobacco and

Firearms (“BATF”), Drug Enforcement Administration

(“DEA”), Internal Revenue Service (“IRS”), Customs

Service (“Customs”), and the U.S. Secret Service (“Secret

Service”).

In February of 1990, Plaintiffs brought actions in the

United States Court of Federal Claims (“CFC”), alleging,

75a

inter alia, that they improperly had been considered exempt

from the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.

(“FLSA”), and were entitled to compensation for unpaid

overtime wages.2 (Compl. { 16). Identical claims were filed

simultaneously with the General Accounting Office (GAO).

(Compl. 420). In a decision dated October 30, 1992, the

CFC concluded that some of the Plaintiffs employed by

those agencies were exempt from the FLSA’s overtime

compensation provisions, while others were not exempt.

Adams v. United States, 27 Fed.Cl. 5 (1992). Thereafter, in

March 1994, the United States reached “partial” settlement

agreements with those plaintiffs the CFC had determined to

have been non-exempt from the FLSA. See Bernstein Decl.,

Exhibits 8-10.

In the wake of the CFC decision, as well as the ensuing

settlements, Plaintiffs in this case, on April 12, 1994,

attempted to have their previously filed administrative

claims resolved by GAO. Def.Mot.Sum.J., Ex. 4. On May 23,

1994, GAO issued a ruling in a case similar to Plaintiffs’,

concluding that the two or three-year statute of limitations

period contained in the Portal-to-Portal Act, 29 U.S.C.

§ 255(a), rather than the six-year limitations period

contained in the Barring Act, 31 U.S.C. §3702(b)(1), was

applicable to all pending and future FLSA administrative

claims, and, therefore, the claim was time barred. Matter of:

Joseph M. Ford, 1994 WL 201742 (C.G.) (May 23, 1994).

This decision reversed the GAO’s previous longstanding

interpretation that a six-year limitation period applied for

filing FLSA claims.3

2 Those cases have been consolidated in the CFC under the caption

Adams v. United States, No. 90-162C.

3 In fact, GAO had been applying the six-year limitations period found

in the Barring Act as early as 1978 and at least twice thereafter. See

Transportation Systems Center, 57 Comp.Gen. 441 (1978); Federal

Firefighters, 68 Comp.Gen. 681 (1989).

76a

On September 30, 1994, a six-year statute of limitations

for FLSA claims filed with GAO was enacted by Congress

with the passage of the 1995 Treasury, Postal Service and

General Government Appropriations Act, P.L. 103-329,

§ 640, 108 Stat. 2482 (1994). (“1995 Act.”) Section 640 of the

1995 Act (“original Section 640”) directed that a six-year’

statute of limitations be applied for all claims filed prior to

June 30, 1994, thereby reversing the GAO’s decision in

Ford. Id. Notwithstanding, Plaintiffs’ claims before GAO

were not resolved. Instead, Plaintiffs were told that their

claims must first be filed with the Plaintiffs’ employing

agencies. Def.Mot.Sum.J., Ex. 7.

As directed, Plaintiffs filed their claims in the form of

letters to the employing agencies outlining their claims.4

Def.Mot.Sum.J., Exs. 13, 14.

Between February 15 and May 9, 1995, the agencies

denied Plaintiffs’ claims on the basis that Section 640 of the

1995 Act authorized only the Comptroller to apply a six-year

statute of limitations. Def.Mot.Sum.J., Ex. 15. Plaintiffs

appealed these decisions to the GAO. Def.Mot.SumJ., Ex.

16. The GAO, however, did not act on the appeals

immediately, but instead sought comments from the

employing agencies. Def.Mot.Sum.J., Ex. 17.

On November 19, 1995, Congress amended Section 640

of the 1995 Act, reaffirming the six-year limitation period

for FLSA claims filed prior to June 30, 1994, but making the

section inapplicable to employees who had previously

“received any compensation for overtime hours worked

during the period covered by the claim under any other

provision of law ...” and for time spent driving between

home and duty station. Treasury, Postal Service, and

4 Although only those Plaintiffs who had filed before June 30, 1994,

were affected by the 1995 Act, the excluded Plaintiffs continued to argue

that they should be extended a six-year limitation period, as well.

Def.Mot.Sum_J., Ex. 9 at 2.

77a

General Government Appropriations Act of 1996, Pub.L.

104-52, 109 Stat. 468-69 (1995). (“amended Section 640”).

GAO has since applied this statute to deny claims for

compensation where an employee was paid for

administratively uncontrollable overtime (“AUO”) and for

time spent driving between the claimant’s home and office.

Matter of: Marvin B. Atkinson, 1996 WL 31212 (C.G.)

(January 29, 1996).

II. DISCUSSION

This case presents complex issues of law because it not

only requires interpretation of various competing statutes,

but raises constitutional questions, as well.

Plaintiffs argue that Section 640 of the 1995 Act, as well

as the subsequent amendment to that section, violate due

precess because they operate retroactively to divest

Plaintiffs of already earned overtime pay. The Government

asserts that no property rights are implicated and, even if

there were, the government acted properly because its

purpose in passing the statute was both reasonable and

rational.

The analytical framework for this case begins with

whether Plaintiffs had a vested property interest at stake,

see Association of Accredited Cosmetology Schools v.

Alexander, 979 F.2d 859, 864 (D.C.Cir.1992), and, if so,

whether the retroactive effect of such economic legislation

had a “legitimate legislative purpose furthered by rational

means.” General Motors Corp. v. Romein, 503 U.S. 181, 191,

112 S.Ct. 1105, 1112, 117 L.Ed.2d 328 (1992) (quoting

Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S.

717, 730, 104 S.Ct. 2709, 2718, 81 L.Ed.2d 601 (1984)). An

examination of the relevant statutes serves as a starting

point.

78a

A. Statute of Limitations Under Fair Labor

Standards Act (FLSA)

The Fair Labor Standards Act, 29 U.S.C. § 201 et seq.,

which allows claims for unpaid overtime compensation to

employees, was made applicable to federal workers by

amendment in 1974. 29 U.S.C. § 207(a) (1974). The Statute

of Limitations for FLSA claims is found in the Portal-to-

Portal Act and allows for a two-year limitations period in

cases where the violation of the FLSA is nonwillful and

three years where the violation is willful. 29 U.S.C. § 255(a)

(1947). Notwithstanding the provisions of the Portal-to-

Portal Act, the GAO, pursuant to its authority to settle

administrative claims under the Barring Act, 31 U.S.C.

§ 3702, traditionally has applied the six-year statute found in

that section, to administrative FLSA claims. See

Transportation Systems Center, 57 Comp. Gen. 441 (1978);

Federal Firefighters, 68 Comp. Gen. 681 (1989).

As stated previously, this policy changed with GAO’s

decision in Ford when the GAO determined that the two or

three-year statute of limitations contained in the Portal-to-

Portal Act (which is expressly applicable tu the FLSA)

trumped the six-year period found in the Barring Act. Ford

at 4. In so concluding, the GAO relied on the language of the

Barring Act, which establishes a six-year limit on filing

claims with GAO “except ... as provided by ... another law.”

31 U.S.C. §3702(b)(1)(A). The GAO determined “another

law” to be the Portal-to-Portal Act and denied the claims on

that basis. Ford at 4.

Congress, however, extended the two or three-year

limitation period to six years by passing Section 640 of the

1995 Act. Although this section effectively reversed the

Ford decision, it did so only for those Plaintiffs who filed

their claims prior to June 30, 1994. Moreover, the

amendment to Section 640, enacted a year later, placed

further limitations on even these individuals by making the

79a

six-year limitation period applicable only to those who had

not received overtime compensation under other specified

statutes and circumstances or, whose claims involved

commuting time. 1996 Act, § 640.

As matters now stand, the Plaintiffs can be divided into

two distinct groups for purposes of this analysis: 1) those

who filed their claims after the June 30, 1994, date, and,

therefore, fall under the 2-3 year limitation period GAO

applies to FLSA claims, and 2) those who filed their claims

prior to June 30, 1994, but received overtime compensation

under other provisions of law or claim overtime for time

spent commuting, and are, therefore, excluded from

coverage under amended Section 640.

In either instance, the Court, as an initial matter, must

decide whether there is a property interest at stake.

B. Property Interest

The two alleged property interests advanced here are:

1) "pending and accrued administrative backpay claims” and

2)”earned but unpaid FLSA overtime compensation.”

Pls’.Mot.Sum.J. at 1, 44. Courts have held that a cause of

action, while a “species of property” protected by due

process, nonetheless is “inchoate, and affords no definite or

enforceable property right until reduced to a final

judgment.” Austin v. City of Bisbee, Arizona, 855 F.2d

1429, 1435 (9th Cir.1988), citing In re Consolidated U.S.

Atmospheric Testing Litigation, 820 F.2d 982 (9th Cir.1987).

In the Austin case, the Plaintiff was a police officer who had

filed his FLSA claim in court. Before the court ruled,

however, Congress passed retroactive legislation that

effectively extinguished the plaintiffs claim. The appellate

court concluded that the Plaintiff had failed to perfect his

rights prior to the change in the law, and, therefore, had no

property interest in the cause of action. Jd. at 1435. Here,

of course, there is no final judgment involving the Plaintiffs’

claims and so, the Court reaches a similar conclusion.

80a

With regard to Plaintiffs’ alleged property interest in

their “earned but unpaid FLSA overtime compensation,”

the Court views this as a much closer question. “Property

rights to public benefits are defined by the statutes or

customs that create the benefits.” Jones v. Reagan, 748

F.2d 1331, 1338 (9th Cir.1984) citing Board of kegents v.

Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548

(1972). The court in Austin dealt with this issue contritely

by relying on the decision in Jones which stated: “When ...

the statute authorizing the benefits is amended or repealed,

the property right disappears.” Jd. Although the outcome

essentially is correct, the Court is not inclined to agree with

the reasoning in Jones.

Prior to FLSA being made applicable to federal

workers, there was no_ expectation of overtime

compensation under FLSA and, therefore, no due process

property interest. Once added to the FLSA, however,

federal workers could thereafter expect to receive overtime

compensation treatment under FLSA. While this arguably

created a property interest, such a conclusion, without

looking further, misses the point that the FLSA is a

creature of statute and can only confer benefits contained

within the statute. The expectation to overtime

compensation, therefore, is governed by the provisions of

the FLSA and any other applicable statutory provisions.

The question then becomes, exactly what rights did the

FLSA and relevant statutes confer on the Plaintiffs, e.g.,

what is the applicable statute of limitations period for the

Plaintiffs?

It is at this juncture of the analysis that the posture of

the two groups of Plaintiffs becomes important. For the

Plaintiffs who filed their claims after June 30, 1994, or are

otherwise excluded under amended Section 640, the

question is whether they should have been given the two or

8la

three-year limitation period under the Portal-to-Portal Act,

or the six-year period under the Barring Act.

Plaintiffs claim that the Barring Act refers to

administrative claims while the Portal-to-Portal Act refers

only to “causes of action” filed in court. The Court finds no

support for such a position. The Court agrees with the

reasoning in Hickman v. United States, 10 Cl.Ct. 550, 552

(1986), in which the CFC concluded that Congress acted

deliberately in setting the limitation period at two or three

years and that there was nothing in the legislative record

indicating congressional intent to impart a more liberal

limitations period to federal employees than to employees in

the private sector. Accordingly, this Court cannot construct

a statutory interpretation contrary to congressional intent.

Chevron U.S.A. v. Natural Resources Defense Council, 467

U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).

The Court is aware that for many years the GAO applied

a six-year statute of limitations to FLSA claims filed

administratively. The simple fact is that GAO was wrong to

do so. Until the passage of Section 640 in the 1995 Act, GAO

had no authority to permit a 6 year limitation period for

FLSA claims. Moreover, GAO’s error cannot impart an

expectation sufficient to create a property interest. As the

Defendants correctly point out, GAO is granted its authority

by Congress and is subject to any limitations Congress may

impose. Chrysler Corp. v. Brown, 441 U.S. 281, 302, 99 S.Ct.

1705, 1718, 60 L.Ed.2d 208 (1979). (“The legislative power of

the United States is vested in the Congress, and the

exercise of quasi-legislative authority by governmental

departments and agencies must be rooted in a grant of such

power by the Congress and subject to limitations which that

body imposes.”). Here, that limitation was a two or three-

year limitation period for FLSA claims. The Court

concludes, therefore, that Plaintiffs who are not included

under the amended Section 640 (because their claims were

82a

filed after June 30, 1994) have no property interest in back

pay claims or unpaid overtime compensation.

The remaining Plaintiffs are a different matter. When

Congress extended the statute of limitations for FLSA

claims to six years by passage of the original Section 640 of

the 1995 Act, Plaintiffs suddenly acquired property

interests in their unpaid overtime compensation. Although

amended Section 640 excludes many of those who otherwise

would have fallen within the original Section 640, the Court

does not find that these Plaintiffs automatically lose their

property interests. The Court disagrees with the reasoning

in Jones and Austin that Congress may extinguish an

otherwise vested property interest concerning agency

action merely by passing new legislation. This distinction,

however, is academic in light of Congress’s authority to

deny Plaintiffs their property under a different standard.

C. Economic Legislation and Due Process

The Supreme Court has held that retroactive economic

legislation is permissible even if it interferes with legitimate

expectations as long as it meets due process guarantees.

Pension Benefit Guaranty Corporation v. R.A. Gray and

Co., 467 U.S. 717, 730, 104 S.Ct. 2709, 2718, 81 L.Ed.2d 601

(1984). In order for due process to be satisfied, economic

legislation, applied retroactively, must have “a legitimate

legislative purpose furthered by rational means.” General

Motors Corp. v. Romein, 503 U.S. 181, 191, 112 S.Ct. 1105,

1112, 117 L.Ed.2d 328 (1992). In fact, such legislation is

given a presumption of constitutionality and the burden

rests on the party challenging the statute to show that it

was “arbitrary and irrational.” Usery v. Turner Elkhorn,

428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752 (1976).

There is no question that the legislation involved is

economic in nature. Amended Section 640 involves the

limitations period for money claims made under FLSA. See

Austin v. City of Bisbee, 855 F.2d at 1485 (“The FLSA is one

83a

of myriad ‘legislative Acts adjusting the burdens and

benefits of economic life.” (internal citations omitted)).

Further, by its express language, amended Section 640 is

retroactive because it applies to individuals who filed their

claims prior to June 30, 1994. Moreover, the statute takes

away property rights conferred by the original Section 640

by excluding individuals if they have received overtime

compensation under different provisions or if their claims

involve overtime for commuting.

The question then becomes whether the purpose of the

act was legitimate. In determining the legislative purpose,

the Court looks both to the legislative history and the

language of the statute for guidance.

The legislative record for amended Section 640 is sparse.

In fact, there appears to have been little debate on the

matter when it came up for a vote on the floor of the House

of Representatives on November 15, 1995. What little

debate there was took the form of a statement made by

Representative Lightfoot in which he indicated that the bill

had bipartisan support. 141 Cong.Rec. H12371-02, H12376

(Nov. 15, 1995). Rep. Lightfoot urged passage of the bill on

the basis that the government would otherwise be required

to pay out an unanticipatedly large sum of money and that

government workers should be given the same rights as

their private sector counterparts. Jd. Rep. Lightfoot

concluded by stating: “We agreed, not just because it costs

a lot of money, but because it is fair.” Id.

Were the purpose of this statute merely about saving

money, the Court would find the legitimacy element to be a

more difficult question. As the record shows, however,

avoiding a large expenditure is only one of the several

stated purposes behind Amended Section 640. More telling

is the legislature’s stated intention to put federal workers in

the same position as private sector workers—a position

84a

consistent with the 1974 legislation which made FLSA

applicable to federal workers.

Complicating this analysis, however, is the final

language of Amended Section 640, which provides:

This section shall not apply to any claim where the

employee has received any compensation for overtime

hours worked during the period covered by the claim

under any other provision of law, including, but not

limited to, 5 U.S.C. 5545(c), or to any claim for

compensation for time spent commuting between the

employee’s residence and duty station.

109 Stat. 468-69. If the intention was to equate the rights of

federal workers with the private sector, then why did

Congress leave the six-year limitation period relatively

intact for some employees? Such language seemingly

creates a contradiction between one of the purposes for the

legislation, and the final language of Amended Section 640.

The Court, however, is only slightly concerned about

such a discrepancy. Perhaps Congress, wanting to be “fair”

to many who had already filed their claims, let stand the six-

year limitation period for those whose claims had been filed

prior to June 30, 1994. After all, future claims would be

given only the two or three-year limitation period in the

Portal-to-Portal Act, which is consistent with the rights

afforded to the private sector. What Congress changed in

the Amended Section 640 was who (of those who filed prior

to June 30, 1994) could take advantage of the extended

limitation period. While deciding to allow the six-year

limitation period to remain temporarily, Congress

apparently decided to limit such claims to those workers

who had not received overtime compensation for the same

period under another provision of law and to exclude any

claims involving time spent commuting. There is nothing

improper about this. In fact, with regard to the first

limitation, it is difficult to imagine any purpose more

85a

legitimate than preventing workers from receiving double

overtime compensation.

As for the limitation concerning commuting, this is a

closer question, especially because there is nothing specific

in the legislative history that might offer guidance.

Nonetheless, consistent with the reasoning thus far, the

Court finds the purpose of this provision to be legitimate.

As already noted, Rep. Lightfoot gave as reasons for

passage of the amendment “cost” and “fairness.” But Rep.

Lightfoot also spoke of equating the rights enjoyed by

federal employees to those of private sector employees.

Under 29 U.S.C. § 254(a) and (b) (1947), employers are not

generally liable for overtime compensation for commuting

absent a contract or custom. This provision has been

extended to include federal workers, as well. Carter v.

Panama Canal Co., 463 F.2d 1289 (D.C.Cir.1972), cert.

denied 409 U.S. 1012, 93 S.Ct. 441, 34 L.Ed.2d 306. In any

event, private sector employees are limited by the two or

three-year statute of limitations for such actions, as would

be the Plaintiffs here were it not for the original Section 640.

29 U.S.C. § 255 (1947). To the extent that Congress acted to

equate federal workers’ rights with those of the private

sector concerning overtime claims for commuting, the Court

finds amended Section 640 to have a legitimate purpose.

Further, the rational means was to enact amended Section

640.

Accordingly, the Court concludes that Congress, by

enacting amended Section 640, had a legitimate purpose

which was furthered by a rational means.

D. Taking without Compensation

Plaintiffs also argue that their unpaid FLSA overtime

was property that was taken without just compensation in

violation of the Fifth Amendment of the Constitution. The

Court disagrees.

86a

The test for determining whether a compensable taking

has occurred is set forth in Connolly v. Pension Benefit

Guar. Corp., 475 U.S. 211, 224-25, 106 S.Ct. 1018, 1026, 89

L.Ed.2d 166 (1986), in which the Supreme Court identified

the following three factors: 1) the economic impact of the

regulation on the claimant, 2) the extent to which the

regulation has interfered with distinct investment-backed

expectations, and 3) the character of the governmental

action.

Concerning the first factor, the Court does not find that

Plaintiffs will suffer a great economic impact. It is true that

the total payout for Plaintiffs’ claims would run into the

millions of dollars and some of the claims go back as far as

twelve years. This case, however, is not a class action. The

“millions of dollars” figure does not, therefore, inure to the

group as a whole. Rather, any impact must be measured

against the individual claims. Plaintiffs have failed to show

how any one of the Plaintiffs would suffer a greater

economic impact than merely losing an entit.ement that only

in recent years had been discovered. Moi over, insofar as

amended Section 640 prevents the Plaintiffs from receiving

overtime compensation under FLSA _ when = such

compensation was paid under another provision of law,

there can be little, if any, economic impact to the Plaintiffs.

Similarly, under the second prong, amended Section 640

does not unduly interfere with a distinct investment-backed

expectation. Although the hours worked by the Plaintiffs

are tantamount to an investment, there was no legitimate

expectation to a six-year limitation period. As recounted

previously, the proper limitation period for FLSA claims is

two or three years as stated by the Portal-to-Portal Act. 29

U.S.C. §255(a) (1947). While Congress extended the

limitation period for some individuals in some instances, it

could also limit the application of this extension and did so.

87a

Plaintiffs’ only legitimate expectation was to a two or three-

year limitation period.

The final factor concerns the character of the action.

The Court finds that this factor, for the most part, is

subsumed by the above discussion concerning due process

and the legitimacy of Congress’s purpose in passing

amended Section 640. As the Supreme Court stated in

Connolly: “The purpose of forbidding uncompensated

takings of private property for public use is ‘to bar

Government from forcing some people alone to bear public

burdens which, in all fairness and justice, should be borne by

the public as a whole.” Connolly v. Pension Benefit Guar.

Corp., 475 U.S. at 227, 106 S.Ct. at 1027, quoting Armstrong

v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563,

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