Amicus Curiae Brief — Favreau v. United States, 124 S. Ct. 50 (2003) (No. 02-1466)

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Supreme Court, U_S.

Yn FILED

i 6 ye

atl JUL 7 2003

No. 02-1466 OFFICE OF THE CLERK |

Supreme Court of the Gifited States

BERTRAND R. FAVREAU, II, et al.,

Petitioners,

UNITED STATES,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF OF

NATIONAL VETERANS

LEGAL SERVICES PROGRAM

AS AMICUS CURIAE IN SUPPORT OF PETITIONERS

BARTON F. STICHMAN STEPHEN B. KINNAIRD*

NATIONAL VETERANS LEGAL TANYA Y. BARTUCZ

SERVICES PROGRAM SIDLEY AUSTIN BROWN &

2001 S Street, N.W. WOOD LLP

Washington, DC 20009 1501 K Street, N.W.

(202) 265-8305 Washington, DC 20005

(202) 736-8000

Counsel for Amicus Curiae

July 7, 2003 * Counsel of Record

SO TANT TIC TEETER INET RIENCE AS IM ITE

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

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QUESTIONS PRESENTED

1) Is a service member who is involuntarily discharged for

not meeting weight and fitness standards obligated to refund

an enlistment or reenlistment bonus on the ground that he or

she has “voluntarily” failed to “complete the term of

enlistment for which a bonus was paid” within the meaning of

the governing statutes?

2) May a court disregard an agency’s published regulations

by (a) treating unpublished, internal agency memoranda as

legally binding “regulations” whose terms prevail over the

published regulations, and (b) granting Chevron/Mead

deference to an agency’s statutory construction set forth in

litigation affidavits that contradict the published regulations?

(i)

TABLE OF CONTENTS

QUESTIONS PRESENTED ....................::ccsccsesssssessoees

TABLE OF AUTHORITIEG.......................0ccssesccessseees

INTEREST OF AMICUS CURIAE ............00.cc6c0ccccceees

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REASONS FOR GRANTING THE WRIT..................

II.

THE COURT OF APPEALS MISREAD THE

STATUTE, CREATING A CONFLICT BE-

TWEEN THE CIRCUITS, AND FAILED TO

DEFER TO THE GOVERNING REGULA-

THE DECISION BELOW THAT AN UNPUB-

‘LISHED INTERNAL MEMORANDUM HAS

THE FORCE AND EFFECT OF LAW CON-

FLICTS WITH THIS COURT’S PRECEDENT ...

ENTITLEMENT TO ENLISTMENT AND

REENLISTMENT BONUSES IS AN IMPOR-

TANT ISSUE AFFECTING THOUSANDS OF

SERVICE MEMBERS. ....................cccccccseccsesscsesees

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(iii)

Page

TABLE OF AUTHORITIES

CASES Page

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204

Soe a 5

Bowles v. Seminole Rock & Sand Co., 325 US.

| ENE SLT HET 5

Chevron U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837 (1984) ...............00. 4

Iliff v. Schlessinger, 539 F.2d 1275 (10th Cir.

BOER eRe ROE EEE EEE EEE EEE HEHEHE EEE EEE HEHEHE HEHE EES

King v. St. Vincent’s Hosp., 502 U.S. 215 (1991).. 4

Massachusetts Fair Share v. Law Enforcement

Assistance Admin., 758 F.2d 708 (D.C. Cir.

| TAR LEE ED RR BRIER WET 5

Morton v. Ruiz, 415 U.S. 199 (1974) .........0... 7

Motor Vehicles Mfrs. Ass’n of the U.S., Inc. v.

State Farm Mut. Auto. Ins. Co., 463 U.S. 29

(UE 0 ee 5

Shalala v. Guernsey Mem’! Hosp., 514 U.S. 87

CROW OR Ss vcciibevs cures Sat rae Mie Ree x ey 5

Texaco, Inc. v. Short, 454 U.S. 516 (1982)............ 6

Torres v. INS, 144 F.3d 472 (7th Cir. 1998).......... 7

United States v. Alaska, 503 U.S. 569 (1992)........ 7

ar 7

Vigil v. Andrus, 667 F.2d 931 (10th Cir. 1982)

Wright v. Georgia, 373 U.S. 824 (1963) ...............

STATUTES AND REGULATION

SF OF eee Be ised caiccrsclididearnsieniaricseianinesss 3

37 U.S.C. § 308a(b) (1998) (repealed 2000).......... y

7A Dep’t of Def., DOD 7000.14-R, Financial

Management Regulation: Military Pay Policy

and Procedures — Active Duty and Reserve

BR I BIE soviet cide tartans 2,4

TABLE OF AUTHORITIES - continued

OTHER AUTHORITIES

Defense Fin. & Accounting Serv., 2003 Military

Pay Rates: Active Duty and Reserve Monthly

Drill Pay Tables (Jan. 1, 2003), at http:

/Iwww.dfas. mil/money/milpay/pay/01-2003.pdf

(updated May 29, 2003) ooo... occcecccccccccccceceeeee.

U.S. GAO, GAO/NSIAD-97-39, Military Attri-

tion: DOD Could Save Millions by Better

Screening Enlisted Personnel (Jan. 1997)..........

U.S. GAO, GAO/NSIAD-00-146, Military Per-

sonnel: Services Need to Assess Efforts to Meet

Recruiting Goals and Cut Attrition (Jun. 2000)..

U.S. GAO, GAO-03-149, Military Personnel:

Management and Oversight of Selective

Reenlistment Bonus Program Needs

Improvement (Nov. 2002)..............cccccccccccceeceeees

SCHOLARLY AUTHORITIES

1 William Blackstone, Commentaries on the Laws

of England (photo reprint 1979) (1765) .............

—

Page

INTEREST OF AMICUS CURIAE

Amicus curiae National Veterans Legal Services Program

(NVLSP) is an independent non-profit organization dedicated

to helping veterans whom our country’s institutions have

failed.” NVLSP first focused its efforts on soldiers who

emerged from the military with less-than-fully-honorable

discharges, many of whom were young, undereducated, and

from minority backgrounds. More recently, NVLSP has also

advocated and litigated on behalf of disabled veterans. The

ruling below deprives discharged veterans of a central

element of their compensation in conflict with the plain

meaning of the statute and official regulation, and NVLSP

_ thus has an interest in the proper resolution of a question of

federal law that affects thousands of this country’s veterans.

INTRODUCTION

Named petitioners in this case are fifteen individuals who

were separated froin the military for failure to meet weight or

fitness standards. They represent a certified class cf

thousands of others similarly situated. The government has

stipulated that each named petitioner was inyoluniarily

separated. It is also undisputed that each tried in good faith to

meet the standards, but was unsuccesstui. The named

petitioners had received enlistment bonuses ranging from

$1,000 to $30,000.

Pursuant to 37 U.S.C. § 308a(b) (now § 309), a service

member “who voluntarily, or because of his misconduct, does

not complete the term of enlistment for which a bonus was

paid to him ... shall refund” a portion of the bonus

' No party authored this brief in whole or in part. No person other than

amicus curiae, its members, and its counsel has made a monetary

contribution to the preparation or submission of this brief.

Both parties have consented to the submission of this brief.

proportional to the unexpired term of the enlistment. 37

U.S.C. § 308a(b) (1998) (repealed 2000) (emphasis added).

The regulation implementing this statute is more detailed,

providing that “the term ‘who voluntarily or because of

misconduct’ includes (but is not limited to) members

separated .. . upon the application and interest of the member

because of special or unusual circumstances including, but

not limited to ... overweight/obesity or lack of physical

fitness.” 7A Dep’t of Def., DOD 000 7000.14-R, Financial

Management Regulation: Military Pay Policy and

Procedures — Active Duty and Reserve Pay § 090503(M)(6)

(May 2003) (“FMR”). Both the statute and the regulation are

clear that only the service member’s voluntary decision to

separate from the military justify recoupment. The regulation

further clarifies that separation for reasons of weight or lack

of fitness are voluntary only if the service member applies for

separation on that basis.

Despite the plain language of both the statute and the

regulation, the government has sought to recoup the

enlistment bonuses of petitioners, all of whom _ were-

involuntarily discharged by the military because they were

deemed overweight or unfit. To justify this conduct, the

government relies solely on affidavits prepared for this

litigation that attempt to relate two internal memoranda by

Assistant Defense Secretaries to the statute and regulation at

issue. In accepting the government’s position and holding

that “[t]he Korb memo is a regulation entitled to the force and

effect of law,” Pet. App. lla n.11, the Court of Appeals

adopted an interpretation that contravenes the plain meaning

of the statute and the regulations, in conflict with decisions of

this Court and the United States Court of Appeals for the

Tenth Circuit. It is imperative that this Court resolve these

important issues of federal law that affect thousands of

service members.

REASONS FOR GRANTING THE WRIT

I. THE COURT OF APPEALS MISREAD THE

STATUTE, CREATING A CONFLICT BETWEEN

THE CIRCUITS, AND FAILED TO DEFER TO

THE GOVERNING REGULATION.

The statutory language governing this case is plain: a

service member “who voluntarily, or because of his

misconduct, does not complete the term of enlistment for

which a bonus was paid to him . . . shall refund” a portion of

the bonus proportional to the unexpired term of the

enlistment. 37 U.S.C. § 308(d)(1) (emphasis added). The

language of 37 U.S.C. § 308a(b) (1998) (repealed 2000) is

identical in relevant part. Under the statutes, the government

may recoup enlistment or reenlistment bonuses only if the

member has voluntarily failed to complete his or her term of -

service, or has committed misconduct. Petitioners were all

involuntarily separated from the armed forces, as the

government has stipulated. Pet. App. 19a. Thus, none of

them voluntarily failed to complete the term of service. As

the court below noted, its contrary conclusion conflicts with

that of the Tenth Circuit in Jliff v. Schlessinger, 539 F.2d

1275 (10th Cir. 1976). Pet. App. 19a-20a n.18.

The Court of Appeals held that the term “voluntary” in the

statute could encompass petitioners’ failure to complete their

separation relate to acts of volition.” Pet. App. 20a.

However, the statute is clear that the word “voluntarily” refers

to the failure to complete the term of service itself, and not to

underlying conduct. Further, it is undisputed that petitioners

made diligent, good-faith efforts to comply with weight and

fitness requirements. They were not discharged because they

chose not to meet the requirements, rather, they were

discharged because despite performing all the “acts of

volition” required by the services’ remedial programs, the

results of those acts did not meet military standards.

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Even if the statute were ambiguous, “provisions for benefits

to members of the Armed Services are to be construed in the

beneficiaries’ favor,” and Congress is presumed to be familiar

with this canon of interpretation when it drafts legislation.

King v. St. Vincent’s Hosp., 502 U.S. 215, 220-21 n.9 (1991).

The King presumption reinforces the conclusion that only a

voluntary decision not to complete the term of service, or

misconduct, can justify recoupment.

Leaving aside the statute’s plain language, the Court of

Appeals’ application of Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984) to this

case was fundamentally misguided: instead of deferring to

the Department’s clearly worded regulation, as Chevron

requires in cases of statutory ambiguity, the court instead

relied on to affidavits prepared for litigation and outdated,

internal agency memoranda that were not available to

petitioners or the public until this litigation began.

Defense Department Financial Management Regulation

090503 states that for bonus recoupment purposes, “the term

‘who voluntarily or because of misconduct’ includes (but is

not limited to) members separated ... upon the application

and interest of the member because of special or unusual

circumstances including, but not limited to...

overweight/obesity or lack of physical fitness.” 7A FMR

§ 090503(M\(6). The regulation is even more specific than

the statute: separation for failure to meet weight or fitness

requirements is only “voluntar[y]” if the member applies for

the separation. Under Chevron, if the Court of Appeals was

correct in finding the statute to be ambiguous, it was bound

by this “permissible construction of the statute.” 467 U.S. at

843.

The court below acknowledged that “[t]he Secretary of

Defense is granted explicit authority to implement these

provisions through regulations, and has done so.” Pet. App.

8a.” - The court justified its disregard of this explicit

regulatory language with its comment that “by themselves the

regulations are insufficient,” id at 20a. Instead of relying on

the clear language of the regulation, the court turned to a

“package” of materials and practices, “all knit together by the

affidavit of Col. Little.” Jd. at 21a. There is no need for post

hoc affidavits to make sense of the regulation, which clearly

addresses petitioners’ situation. Nor was the court’s heavy

reliance on litigation affidavits appropriate. Bowen v.

Georgetown Univ. Hosp., 488 U.S. 204, 212-13 (1988).

More important, the affidavits and memoranda on which

the Court of Appeals relied flatly contradict the regulation

rather than clarifying it. It is well established that an

administrative interpretation is not controlling if “it is plainly

erroneous or inconsistent with the regulation.” Bowles v.

Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945); see,

e.g., Shalala v. Guernsey Mem’! Hosp., 514 U.S. 87, 109

(1995) (O’Connor, J., dissenting) (“And, contrary to the

Secretary’s argument, [the interpretive rule] cannot be a valid

‘interpretation’ of the Medicare regulations because it is

clearly at odds with the meaning of [the relevant regulation]

itself.”); Massachusetts Fair Share v. Law Enforcement

Assistance Admin., 758 F.2d 708, 711 (D.C. Cir. 1985) (“It

has long been settled that a federal agency must adhere firmly

?This recognition that Congress designated regulation-making

authority underlines the implausibility of the court’s argument that the

regulations merely “codifie[d]” the intent that the court read into the

internal memoranda. Pet. App. 16a. It is clear, and the court below

recognized, that the Department of Defense issued the regulations that

were drafted by the Defense Finance and Accounting Service, id. at 13a,

those are the official, public regulations of the Department. Whatever

unspoken policies the Department meant to incorporate in the regulation,

the language of the issued regulation is effective until the agency publicly

rescinds or replaces it and, in the case of rescission, provides a reasoned

explanation. Motor Vehicles Mfrs. Ass'n of the U.S., Inc. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 41-42 (1983).

Nee

to self-adopted rules by which the interests of others are to be

regulated.”’).

The Department’s rules clearly state that a voluntary

separation for weight or fitness reasons is one that the service

member requests. Petitioners were not voluntarily separated.

Il. THE DECISION BELOW THAT AN UNPUB-

LISHED INTERNAL MEMORANDUM HAS THE

FORCE AND EFFECT OF LAW CONFLICTS

WITH THIS COURT’S PRECEDENT.

The court’s analysis of the statute and regulation, wrong on

its own terms, is predicated on a ruling that conflicts with

decisions of this Court and indeed fundamental principles of

due process: namely, that a secret internal memorandum has

“the force and effect of law.” Pet App. l1lan.11. The most

basic requirement of due process is that the law be made

public. If laws are secret, the rule of law degenerates into the

rule of those who claim to know the law.

[A] bare resolution, confined in the breast of the

legislator, without manifesting itself by some external

sign, can never be properly a law. It is requisite that this

resolution be notified to the people who are to obey

it.... [I]t is incumbent on the promulgators to do it in

the most public and perspicuous manner; not like

Caligula, who ... wrote his laws in a very small

character, and hung them up upon high pillars, the more

effectually to ensnare the people.

1 William Blackstone, Commentaries on the Laws of England

§ 2, at 45-46 (photo reprint 1979) (1765). Thus the lawmaker

must “enact and publish the law” to make it effective, and due

process requires “that ‘laws .. . give the person of ordinary

intelligence a reasonable opportunity to know what is

prohibited, so that he may act accordingly.” Texaco, Inc. v.

Short, 454 U.S. 516, 532, 535 (1982); accord Wright v.

Georgia, 373 U.S. 284, 293 (1963) (holding that due process

forbade conviction for violating park rule where “neither the

existence nor the posting of any such rule has been proved”);

cf. Torres v. INS, 144 F.3d 472, 474 (7th Cir. 1998) (“The

idea of secret laws is repugnant. People cannot comply with

laws the existence of which is concealed.”).

It is fundamentally unfair for the Department to lead

service members to believe that a statute or regulation states

its interpretation of an issue, only to deprive them of their

property (the bonuses) later, on the claim that a secret internal

policy represents its true position. Morton v. Ruiz, 415 US.

199, 236-37 (1974); Vigil v. Andrus, 667 F.2d 931, 938 (10th

Cir. 1982) (“we think the [agency] cannot rely on a

‘semisecret,’ and perhaps tentative, understanding reached

months earlier”). The government may not force parties “to

litigate with agencies on the basis of secret laws.” United

States v. Alaska, 503 U.S. 569, 591 (1992) (internal quotation

marks omitted).

The court below held that secret, unpublished memoranda

had the “force and effect of law” required to deprive

petitioners of their bonuses. The government applies the

policies embodied in those memoranda to thousands of

enlistees and reenlistees every year. Far more than most

citizens, service members must rely on the government’s

good faith in matters of pay and benefits. The Department

betrays that trust when its policies contradict governing

statutes and regulations.

ll. ENTITLEMENT TO ENLISTMENT AND

REENLISTMENT BONUSES IS AN IMPORTANT

ISSUE AFFECTING THOUSANDS OF SERVICE

MEMBERS.

The importance of enlistment and reenlistment bonuses as a

military recruiting tool cannot be disputed. In the late 1990s,

the Army, Navy and Air Force began to experience

significant recruiting shortfalls and problems retaining certain

skilled personnel. Prominent among the responses to these

problems was a significant expansion of enlistment and

reenlistment bonus programs. U.S. GAO, GAO/NSAID-00-

146, Military Personnel: Services Need to Assess Efforts to

Meet Recruiting Goals and Cut Attrition 5 (June 2000)

(“Recruiting Report’). Thus, from 1995 to 1999,

expenditures on enlistment bonuses increased more than

eightfold (in constant year 2000 dollars) from $21.7 million to

$177 million. Jd. at 7, 9, 11, 13. Similarly, between 1997 and

2002, the cost of the reenlistment bonus program more than

tripled from $235 million to an estimated $789 million. U.S.

GAO, GAO-03-149, Military Personnel: Management and

Oversight of Selective Reenlistment Bonus Program Needs

Improvement | (Nov. 2002) (“Reenlistment Report’). Some

59,000 individuals received reenlistment bonuses in 2001. /d.

at 2.

For individual enlistees, the amounts are substantial:

bonuses ranged up to $20,000 for army enlistment bonuses in

2000, Recruiting Report at 6, with $3,000 as a typical signing

bonus for a high school graduate. Reenlistment bonuses can

be as high as $60,000. Reenlistment Report at 2. Since basic

pay for a high school graduate begins at $13.465 per year,

Def. Fin. & Accounting Serv., 2003 Military Pay Rates:

Active Duty and Reserve Monthly Drill Pay Tables (Jan. 1,

2003), available at http://www.dfas.mil/money/milpay/pay/

01-2003 pdf (updated May 29, 2003), an enlistment bonus

forms a significant part of an enlistee’s compensation.

Further, an enlistee who does not intend to separate from the

military has no reason not to spend the enlistment bonus at

the time of receipt. Separation from the military alone is a

serious financial blow, without the added burden of

recoupment.

The outcome of this case will be highly significant not only

for the military but for tens of thousands of service members

who enlisted in reliance on the bonus programs. In 1994,

25,000 of the military’s 176,000 new recruits were discharged

within the first six months of their contracts. U.S. GAO,

GAO/NSAID-97-39, Military Attrition: DOD Could Save

Millions by Better Screening Enlisted Personnel 2 (Jan.

1997). Of those recruits, more than 7,200 were discharged

for failure to meet minimum performance criteria. Jd. at 5.

To help address this problem, basic training personnel

suggested that recruits be more fully informed of the services’

physical training requirements and encouraged to become

physically fit before beginning basic training. Jd. at 5-6. The

military is well aware that it is recruiting individuals who are

highly unlikely to meet fitness and weight requirements. In

turn, those recruits are entitled to know whether and under

what circumstances their enlistment bonuses will be forfeit.

The enlistment and reenlistment bonus programs are at the

very heart of military recruitment and retention efforts. Of

course, any government program should be administered in a

lawful manner. But this obligation is especially important

when the government undertakes massive commitments on

the scale of the enlistment bonus programs. The Department

of Defense has chosen to make the bonuses a centerpiece of

its recruiting and retention policy. It cannot withdraw from

those commitments based on secret policies and rules. The

importance of the issues raised, and the conflicts of authority

identified above, warrant immediate review by this Court.

CONCLUSION

For all of the foregoing reasons, the Court should grant the

netition for a writ of certiorari.

Respectfully submitted