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NATIONAL TREASURY EMPLES. UNION v. REAGAN

February 26, 1981

NATIONAL TREASURY EMPLOYEES UNION et al., Plaintiffs,
v.
Ronald W. REAGAN et al., Defendants; Melody A. TROTT, Plaintiff, v. Ronald W. REAGAN et al., Defendants; Marc R. WINE et al., Plaintiffs, v. Ronald W. REAGAN et al., Defendants; NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES et al., Plaintiffs, v. Ronald W. REAGAN et al., Defendants; Elaine M. BOUTILIER, Plaintiff, v. Ronald W. REAGAN et al., Defendants



The opinion of the court was delivered by: RICHEY

I. INTRODUCTION AND SUMMARY OF ARGUMENT

 The Court has before it complaints in five (5) cases which have been consolidated for all purposes. *fn1" All seek declaratory and injunctive relief in the form of cross-motions for summary judgment, there being no material facts in dispute growing out of President Reagan's hiring freeze signed on January 20, 1981, and by its terms made effective from November 5, 1980, forward. *fn2" The plaintiffs also seek damages in amounts less than $ 10,000.00. The Presidential action was followed by two bulletins issued pursuant thereto by Acting Director McComber of the Office of Management and Budget and David Stockman, the Director of OMB. *fn3" The President's hiring freeze and the two subsequent bulletins contained provisions for exemption from such freeze in certain limited circumstances generally on the basis of hardship and the essential character of the work to be performed. It appears that some of the class members herein have been granted such exemptions since this litigation commenced on January 28, 1981.

 The plaintiffs herein have all sought to be certified as a class within the meaning of Rule 23(b)(1) and (2) of the Federal Rules of Civil Procedure. The Court has considered this question and, by separate Order issued today, has conditionally certified the class for the reasons stated therein. Although not pertinent to the propriety of the class action, the Court notes that this action will also facilitate the processing of this litigation at the least possible cost and in the least amount of time.

 At the outset, it must be understood that the courts have a limited role in this area of federal employment relations. See Yacovone v. Bolger, Postmaster General of the United States, 207 U.S. App. D.C. 103, 645 F.2d 1028 (D.C.Cir. 1981). As long as the decision here involved was not arbitrary and capricious and did not otherwise violate the Constitution, laws of Congress or any relevant procedural requirements, the decision of the President and his inferior officers with respect to the hiring freeze must be affirmed. After careful analysis of the applicable law, including the Constitution, Congressional enactments, regulations, and judicial decisions, it appears clear that the instant claims cannot be sustained because they are based upon mere offers of jobs which do not rise to the level of "appointments" to the federal civil service between the time frame of November 5, 1980, and January 20, 1981.

 The plaintiffs also argue that the President's action was retroactive from the time he took office to the day after the 1980 Presidential Election and was, therefore, invalid. This cannot withstand legal analysis because the plaintiffs merely got "offers" or "expectations" of jobs from people with or without authority to make appointments to the federal civil service, and, since the claimants did not execute or complete the Office of Personnel Management Forms 50 or 52, and, since this was a discretionary act, it did not affect legitimate or vested rights of any claimant accruing prior to January 20, 1981.

 Next, the plaintiffs argue that even if they did not have a valid "appointment", the offers created a protected property interest based upon substantive and procedural due process considerations under the Fifth Amendment. This, again, is erroneous because, as indicated, they were not "appointed" to their jobs but at best had only an expectancy as opposed to a protected property interest.

 Lastly, the plaintiffs assert that the defendants and their agents are estopped from denying their employment, whether or not they were "appointed" (which they were not). As the defendants point out in their Memorandum in Opposition to Plaintiffs' Motion for Summary Judgment, the Supreme Court, from the very beginning of the Republic, has recognized the rule that the government cannot be estopped even though hardship to private parties might result in individual cases. Lee v. Munroe and Thornton, 11 U.S. (7 Cranch) 366, 3 L. Ed. 373 (1813). This principle is founded on the view that a contrary rule would make it "very difficult for the public to protect itself." Id. at 369.

 Plaintiffs, however, assert that this principle which exempts the government from the normal principles of equitable estoppel only applies to unauthorized acts of agency officials. Therefore, it is argued that estoppel does apply to the government when letters were sent by agents with appointment authority. However, even when applying the elements of equitable estoppel to defendants' authorized actions, the requirements are not met. The Supreme Court, in Immigration and Naturalization Service v. Hibi, 414 U.S. 5, 94 S. Ct. 19, 38 L. Ed. 2d 7 (1973), implicitly acknowledged that the government might be estopped for its "affirmative misconduct," and, subsequently, the Ninth Circuit has held that this requires a showing of an affirmative misrepresentation or affirmative concealment of material facts. See Santiago v. INS, 526 F.2d 488 (1975), cert. denied, 425 U.S. 971, 96 S. Ct. 2167, 48 L. Ed. 2d 794 (1976). See also Parker v. Sager, 174 F.2d 657, 661 (D.C.Cir.1948). It is undisputed that the government officials who notified plaintiffs of their selection for federal jobs did so in good faith and did not misrepresent the true facts or attempt to conceal a material fact. Thus, even if the doctrine of estoppel applied here, the first element of the doctrine as it relates to the party estopped is missing.

  In conclusion, the hiring freeze is neither unconstitutional nor otherwise contrary to law and it is supported by explicit statutory authority. See 5 U.S.C. § 3301(1); 31 U.S.C. § 18a. Moreover, President Reagan's action freezing federal employment at November 5, 1980 levels is addressed to the problems of efficiency and economy in the executive departments and establishments of the United States. It is in accord with the President's constitutional duty to "take care that the laws of the United States shall be faithfully executed" *fn4" as implemented by appropriate congressional enactments which authorize the President to prescribe such regulations for the admission of individuals into the civil service in the executive branch as will best promote the efficiency of that service. 5 U.S.C. § 3301(1). The President is also obliged to direct that the executive department and establishments make such changes as may be necessary to secure greater economy and efficiency in the conduct of the public service. 31 U.S.C. §§ 18 and 18a.

 In addition to the foregoing, the judiciary is legally bound to give deference to the presumption of regularity of the actions taken by a coordinate and equal branch of government (here the executive) unless it is contrary to law. Therefore, this Court cannot and should not intervene because the President's actions are not only constitutional and legally permissible, but, as asserted by the President in his capacity as Chief Executive, they are essential for the well being and general welfare of the American people at this time.

 This result reached today by the Court does not indicate any lack of concern or sympathy for those who may have thought they were about to be employed by the federal government. They and others in the civil service are essential to the general welfare and well being of this great republic. It may be difficult for those who lost and did not gain employment in the public sector this time to understand, but the Court is sure that they will agree that this is a country of law and not of men. Without that fundamental principle, our country could not survive.

 II. THE COURT HAS JURISDICTION OVER THE CLAIMS ASSERTED.

 At the February 16, 1981 hearing, this Court requested the parties to address the limitation imposed by the Tucker Act, 28 U.S.C. § 1346, which provides, in substance, that the District Courts of the United States shall have original jurisdiction concurrent with the Court of Claims of civil actions or claims against the United States not exceeding ten thousand dollars ($ 10,000.00) in amount which are "founded either upon the Constitution or upon contract with the United States ...."

 All the claims herein are either based upon the Constitution, statutes, or a contract theory. They seek declaratory and injunctive relief and have additionally requested the assessment of damages against the United States in compensation for alleged injuries sustained by them as a result of the Presidential "hiring freeze." The individual plaintiffs have amended their complaints specifically invoking the Tucker Act and limited their claims to ten thousand dollars ($ 10,000.00) or less. In this connection, it is noted that while a number of individual claims in a given case may exceed ten thousand dollars ($ 10,000.00) in the aggregate, this does not divest the Court of jurisdiction, Zahn v. International Paper Co., 414 U.S. 291, 294, 94 S. Ct. 505, 508, 38 L. Ed. 2d 511 (1973); Holloway v. Bristol-Meyers Corp., 158 U.S. App. D.C. 207, 485 F.2d 986, 1002 (D.C.Cir.1973). The Third Circuit has indicated that an individual claim of any class member for damages which would satisfy the Tucker Act is sufficient for the Court to retain jurisdiction. Pennsylvania v. National Association of Flood Insurers, 520 F.2d 11 (3rd Cir. 1975). It may later turn out that members of the class may assert claims in excess of ten thousand dollars ($ 10,000.00), in which event bifurcation would be a possibility and transfer of the claims in excess of ten thousand dollars ($ 10,000.00) to the United States Court of Claims would be another possibility. The Court will cross that bridge when it comes to it. Notwithstanding the Tucker Act, this Court is not precluded from granting declaratory and injunctive relief, even as to those persons who later take their claims for damages to the United States Court of Claims. In any event, the choice to defer to the Court of Claims is a discretionary matter. See, e.g., Carter v. Seamans, 411 F.2d 767 (5th Cir. 1969), cert. denied, 397 U.S. 941, 90 S. Ct. 953, 25 L. Ed. 2d 121 (1970).

 III. THE DEFENDANTS DID NOT UNLAWFULLY RESCIND VALID LETTERS OF APPOINTMENT.

 It is without dispute that these consolidated actions were instituted by various individuals who received offers of employment with the federal government, which were superseded by an across-the-board hiring freeze ordered by the President of the United States on January 20, 1981, to take effect from November 5, 1980. The central issue presented is whether the plaintiffs were "appointed" to positions in the federal government before the effective date of the freeze, which was November 5, 1980.

 It is also without dispute that the Office of Personnel Management is the governmental agency charged with overall responsibility for the conduct of the federal personnel management system. 5 U.S.C. § 1103. Pursuant to its properly delegated authority, OPM interprets federal statutes governing personnel matters, promulgates regulations, and otherwise advises and directs agencies regarding federal employment practices. The OPM has determined that the act necessary to effect an "appointment" is the completion of a Standard Form 50 by an "appointing official" or, in lieu thereof, of a Standard Form 52, signed by the appointing official with a selectee's entrance on duty. This obviously reflects the necessity for some form of definitive appointment action, which is the role that the Form 50 or 52 plays in triggering the prerequisites of federal employment, as well as the need to accommodate the competing federal hiring and personnel management goals and objectives of the United States. Plaintiffs contend that a letter notifying an applicant of his or her selection for federal employment is tantamount to an "appointment", regardless of whether it was sent by a person with lawfully delegated appointment authority or not. This contention is contrary to Marbury v. Madison, 5 U.S. (1 Cranch) 137, 2 L. Ed. 60 (1803). In addition, it is also contrary to the necessary framework of a workable federal personnel management system because these letters of selection do not amount to an appointment, as they may not be accepted by the individual and because the government might not have funds or authority at the time of the person's attempt to enter on duty to provide work for them or pay them as indicated. The Supreme Court of the United States in United States v. Testan, 424 U.S. 392, 402, 96 S. Ct. 948, 955, 47 L. Ed. 2d 114 (1976), held that one is not entitled to the benefit of a position with the federal government until he has been duly appointed to it; and, since the plaintiffs here cannot demonstrate a property interest in federal employment that triggers rights either under federal regulation, statute or the United States Constitution, their claim must fail. Also, the plaintiffs have failed to demonstrate a right to supplant the Office of Personnel Management as the entity whose determinations on appointments govern the civil service system. Again, no appointment can be effected absent completion of a Standard Form 50 or a Standard Form 52 with the selectee's entrance on duty.

 In summary, it appears to be undisputed that two elements are necessary to establish when an appointment has been made. First, the last act required for an appointment must have been performed. Second, the person or body who performed the last act must have possessed the power to make the appointment. If either of these elements is lacking, there can be no "appointment."

 The government, in its Memorandum, has pointed to certain unassailable facts which makes the plaintiffs' position not only untenable, but, if adopted, would create chaos in the federal personnel management system. For example, they suggest that if letters conveying offers were deemed to constitute appointments, persons who subsequently declined those offers might have to be treated as resignees, and the government might then have to hold open positions for persons who accepted the offers but failed to report for duty, pending completion of a formal removal process. Formal removal might also be required for persons who were given offers of employment but then failed to pass a required security clearance or other pre-employment investigation before entering on duty. They conclude that a system which operated in this manner would be unworkable and, as the Court noted above, create chaos. It may also create another problem in federal personnel management, namely, what was the beginning date for retirement or leave purposes if the Standard Form 50 or Form 52 were not regarded as the prerequisites for obtaining federal appointments. It also might mean, under United States v. Testan, supra, that benefits flowing from letters offering employment, if any, regardless of whether the offeree accepted the offer, would flow from the date of the issuance of the letters to the selectees, rather than from the date of entry on duty.

 This case involves a judgment by the Office of Personnel Management in determining what action by agency officials creates an "appointment." The plaintiffs seek to substitute their judgment of what is an appointment, and, if the Court were to adopt it, it would be doing so without deference required by law, which must be afforded to an agency such as OPM and its interpretation. In the face of similar challenges, the Supreme Court has repeatedly stated:

 
to sustain the commissions application of this statutory term, we need not find that its construction is the only reasonable one or that it is the result we would have reached had the question arisen in the first instance in judicial proceedings.

 Unemployment Commission v. Aragon, 329 U.S. 143, 153-54, 67 S. Ct. 245, 250, 91 L. Ed. 136 (1946). Mourning v. Family Publications Service, 411 U.S. 356, 372-3, 93 S. Ct. 1652, 1662, 36 L. Ed. 2d 318 (1972); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S. Ct. 1794, 1801, 23 L. Ed. 2d 371 (1969); Udall v. Tallman, 380 U.S. 1, 16-17, 85 S. Ct. 792, 801, 13 L. Ed. 2d 616 (1965).

 It seems appropriate to refer again to the case of Marbury v. Madison where Marbury's commission had to have the seal of the United States affixed to it by the Secretary of State. The commission was delivered to Mr. Marbury. The Court held that since the Secretary of State was not the appointing official, his duties were merely ministerial. In this case, as the government appropriately points out, it is the appointing official himself who signs the Form 50, and his action is not ministerial since the Form 50, when signed, is the last act necessary to complete the appointment. Before that time, the appointing official may revoke offers which he or his subordinates had previously made, just as the President of the United States in Marbury v. Madison, could have withheld Marbury's appointment prior to the President's signing of the commission. It should be pointed out here that the plaintiffs are correct in asserting that "the regularity of governmental process must be presumed" and that this "would mandate the assumption that those who communicated the employment commitments to the class members did so with authority." The conclusion to be drawn from this assumption is merely that those who communicated the employment offers had authority to select or nominate, not authority to appoint. Furthermore, a federal appointment to a federal job in an executive department or agency is not similar to a contract and the appointment only occurs when the last discretionary act is completed, at which time the government is then bound under traditional principles of law. Even if contract principles applied to the area of federal government employment, the letter offers here involved would be insufficient to create a contract, because it would require acceptance for them to be binding. Accordingly, whether the signatorees to the letters to the named plaintiffs or the members of their class had authority to make appointments or merely make offers of employment makes no difference, as it is well established and has been since the beginnings of this republic that the last discretionary act necessary for an appointment must be done before federal employment can be said to begin, and this includes the completion of a Form 50 or Form 52 and entry on duty by the appointee.

 IV. THE PLAINTIFFS HAVE NOT BEEN DEPRIVED OF PROPERTY WITHOUT COMPENSATION OR DUE PROCESS OF LAW UNDER THE FIFTH AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES.

 Contrary to the contention of the plaintiffs, the Fifth Amendment cannot serve as an independent basis for a liability in this case. The reason is that there is no constitutionally protected right to government employment. Coleman v. Darden, 595 F.2d 533, 538 (10th Cir.), cert. denied, 444 U.S. 927, 100 S. Ct. 267, 62 L. Ed. 2d 184 (1979). This is particularly true here because there can never be, to use the words of the plaintiffs, an entitlement to a federal job without an "appointment." As the Supreme Court has said in Greenholtz v. Inmates of the Nebraska Penal and Correctional Complex, 442 U.S. 1, 7, 99 S. Ct. 2100, 2103, 60 L. Ed. 2d 668 (1979), to obtain a "constitutionally" protectable right, " "a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.' " To repeat, although the plaintiffs may have had a unilateral expectation of a job for which they applied, absent an "appointment", they possess no "legitimate claims of entitlement" to such jobs. As Judge Henry Friendly once said, "There is a human difference between losing what one has and not getting what one wants." Friendly, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267, 1296 (1974). The plaintiffs in this action are in the latter category described by Judge Friendly, as the defendants assert.

 To put the proposition another way, the Supreme Court has also recognized in Board of Regents v. Roth, 408 U.S. 564, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972), that "property interests ... are not created by the Constitution. Rather they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law ...." 408 U.S. at 577, 92 S. Ct. at 2709. See also Bishop v. Wood, 426 U.S. 341, 345, 96 S. Ct. 2074, 2077, 48 L. Ed. 2d 684 (1976). In this case, it is federal, rather than state, law which is the "independent source" from which any relevant "rules or understandings" must stem. Because of the fact that federal law clearly provides that "orthodox federal employees ... serve by appointment to a particular position, a legitimate claim of entitlement to federal employment can only arise after "appointment" has occurred. Were this not so, as defendants assert, the necessity of adherence to the detailed federal statutory and regulatory process governing federal employment could only be determined on an ad hoc basis, and federal employment and personnel activities would be thrown into havoc. It is fundamental that plaintiffs' expectations of appointment to positions with the federal government cannot constitute legitimate claims of entitlement protectable as property under the Fifth Amendment. Even if this were not so and plaintiffs could somehow prove, absent appointment, that they had a legitimate claim of entitlement to federal employment, their Fifth Amendment claim would fail because they have already received the sole procedural due process protection which they seek, namely, to receive notice of termination containing the reason for the termination. 5 C.F.R. § 315.804. Here, they have been notified of the reason for their nonappointment to a federal job and their papers admitted such, and they have also been given the reason therefore, namely, the Presidential hiring freeze. In examining Board of Regents v. Roth, it is important to note what the Court actually held involving a university professor who was discharged. The Court noted that the professor had no property interest in continued employment when he had been hired only for a fixed term of one academic year, had no formal tenure, and could point to nothing in state law or in his employment contract which might otherwise explicitly or implicitly entitle him to contract renewal. This Circuit quoted Board of Regents v. Roth in Colm v. Vance, 186 U.S. App. D.C. 132, 567 F.2d 1125, 1128 (D.C.Cir.1977) and said that something more objectifiable than a sanguine expectation is necessary. Further, the Court in Roth said:

 
"to have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation for it ... Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law rules or understandings that secure certain benefits and that support claims of entitlement to those benefits."

 408 U.S. at 577, 92 S. Ct. at 2709. Here, there was nothing more on the part of the plaintiffs than a unilateral expectation that they would get a federal job; they had no more; they had not been appointed to a job; they had no property interest in a federal job; there are and were no rules or understandings that secured to them any benefits other than that which they already received, namely a notice of the hiring freeze and that they were not being allowed to come to work by the virtue thereof. That is all that a probationary employee would have gotten, so it follows that plaintiffs were entitled to no more under express decisions of the Supreme Court of the United States. Moreover, the claimed property interest here does not rise to the dignity of those protected by the Constitution under the Fifth Amendment or otherwise.

 The foregoing is supported by the opinions of this Circuit, where it held that "a legitimate claim of entitlement must derive from some reasonably identifiable source apart from the mere expectancy or desire of the claimant." Colm v. Vance, 186 U.S. App. D.C. 132, 567 F.2d 1125, 1128. See Sims v. Fox, 505 F.2d 857, 861-62 (5th Cir. 1974) (en banc), cert. denied, 421 U.S. 1011, 95 S. Ct. 2415, 44 L. Ed. 2d 678 (1975). In Colm v. Vance, Judge Tamm points out that "there is no such thing as a federal constitutional common law of property interests" and said that the Court of Appeals for this Circuit is "scarcely inclined to fashion one." A footnote points out that "conventional entitlement theory has not fared well in the periodical literature." See 567 F.2d at 1131, n.8.

 For the plaintiffs to claim that they had an absolute entitlement to a benefit or job to which they were deprived cannot stand scrutiny, either under the Constitution or any other theory known to this Court. The government has correctly stated that the President's decision that a freeze on employment by federal agencies is in the public interest and should not be upset, absent the most extraordinary circumstances. No extraordinary circumstances are present here, nor were any vested rights created in the letters to the selectees who are the plaintiffs in the cases at bar or the class whom they represent.

 For all of the foregoing reasons, the plaintiffs' claim to a due process right or violation is invalid and cannot withstand the scrutiny under the facts in the case at bar.

 V. THE FEDERAL AGENCIES AND DEPARTMENTS HERE INVOLVED CANNOT BE ESTOPPED FROM DENYING PLAINTIFFS' CLAIMS TO THE JOBS SUBJECT TO THIS LITIGATION.

 The doctrine of equitable estoppel generally cannot be invoked against the federal government. This is true even though, as previously stated herein, hardship to private parties might result in individual cases. Lee v. Munroe and Thornton, 11 U.S. (7 Cranch) 366, 3 L. Ed. 373 (1813). This principle, founded on the view that a contrary rule would make it "very difficult for the public to protect itself" ( id. at 369-70), has been repeatedly and consistently observed. See Hart v. United States, 95 U.S. 316, 318-19, 24 L. Ed. 479 (1877); Pine River Logging Company v. United States, 186 U.S. 279, ...


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