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SENIOR EXECS. ASSN. v. UNITED STATES

December 15, 1983

SENIOR EXECUTIVES ASSOCIATION, et al., Plaintiffs,
v.
UNITED STATES, et al., Defendants



The opinion of the court was delivered by: GREENE

 Plaintiffs, an association of federal employees most of whom are in the Senior Executive Service (SES), and six individual career appointees to the SES, brought this suit challenging the legality of statutory and regulatory restrictions which reduced the number of performance awards which federal agencies may issue to SES employees under 5 U.S.C. § 5384. The action also challenges restrictions imposed by the Office of Personnel Management (OPM) which reduced the number of incentive awards agencies may issue pursuant to 5 U.S.C. § 4503. Plaintiffs seek a judgment awarding them the performance and incentive awards they were allegedly unlawfully denied in fiscal years 1980 and 1981 or, in the alternative, an order directing the defendants to require the agencies to reconsider the issuance of the awards without regard to the Congressional and OPM restrictions. Defendants have filed a motion to dismiss or for summary judgment, and plaintiffs have filed a cross motion for partial summary judgment. For the reasons stated below, defendants' motion will be granted.

 I

 There is no genuine issue as to any material fact. In Title IV of the Civil Service Reform Act of 1978 (CSRA), Congress established the SES in order to afford federal agencies the flexibility needed to recruit and retain highly qualified executives for service in the higher management positions of the government. *fn1" Congress did not assign any federal employees to the new SES; instead, it offered employees serving in GS-16 through GS-18 level positions and those holding Executive Level IV and V positions the choice of either converting to the SES or remaining in the competitive or excepted civil service. *fn2" As an inducement to convert, Congress offered several benefits to SES employees, including opportunities for increased compensation. *fn3"

 Specifically, the statute authorized agency heads (1) to increase the basic rate of pay or salary of SES employees on the basis of their performance, 5 U.S.C. § 5383(c); (2) to recommended career appointees for the rank of Meritorious Executive for "sustained accomplishment" or the rank of Distinguished Executive for "sustained extraordinary accomplishment" and thereby to become eligible for lump sum payments of $10,000 or $20,000 respectively, 5 U.S.C. § 4507; and (3) to pay lump sum performance awards to SES career appointees whose performance rating was "fully successful" and who had been recommended for an award by a performance review board. 5 U.S.C. § 5384. With regard to the performance awards, the statute provided that the awards could not "exceed 20% of the career appointee's basic pay" and that the number of awards issued by an agency in a fiscal year could not exceed "50% of the number of [SES] positions in that agency." 5 U.S.C. § 5384(b)(3). *fn4" In its information publication of February 1979, OPM stated that "on average, the typical competent executive can expect to receive a [performance award] about twice every three years." *fn5"

 Approximately one year later, Congress reduced the percentage limitation on the number of SES performance awards an agency could issue from 50 percent to 25 percent. Section 303 of the Supplemental Appropriation Act of 1980, Pub. L. 96-304, 94 Stat. 857 (July 24, 1980). *fn6" Thereafter, OPM, which was assigned the responsibility for implementing the SES, issued a memorandum to heads of departments and agencies advising them to limit bonuses to 20 percent of the eligible career employees. *fn7" OPM elaborated that "if the agency head feels a higher proportion is essential, he or she must consult with the Director of OPM." Finally, OPM established guidelines to aid agencies in deciding the amount of the bonus to be paid. *fn8"

 In a second memorandum to heads of departments and agencies, OPM stated that agencies must not use incentive awards to circumvent the statutory restriction or OPM guidelines concerning the number and distribution of performance awards. *fn9"

 Plaintiffs allege that they had constitutionally protected property and contractual rights in the performance award system established by section 5384, including the right to compete in fiscal years 1980 and 1981 for performance awards numbering up to as many as 50 percent of an agency's SES positions, and that the limitations imposed by Congress and the OPM infringed these rights in violation of the Fifth Amendment. In response, defendants argue that (1) plaintiffs lack standing to sue because their claim of injury is too speculative; (2) plaintiffs have no vested property right or implied contractual right in the SES bonus provisions to invoke the protections of the Fifth Amendment; and (3) OPM's further limitations on the number of SES performance awards and incentive awards an agency should issue was merely guidance, and therefore did not directly affect any of plaintiffs' rights. The Court will address these issues seriatim.

 II

 One aspect of the constitutional requirement of a "case or controversy" is that plaintiff must have standing to sue. At a minimum, a party who invokes the court's jurisdiction must show that he personally suffered some actual or threatened injury as a result of the alleged illegal conduct and that the injury can fairly be traced to the challenged conduct and is likely to be redressed by a favorable decision. Valley Forge College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982); Gladstone Realty v. Village of Bellwood, 441 U.S. 91, 99, 60 L. Ed. 2d 66, 99 S. Ct. 1601 (1979); Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976). Defendants argue that, because the award of bonuses was left to the discretion fo the agency heads, plaintiffs have failed to show that they suffered any "injury in fact" when Congress and OPM subsequently reduced the number of possible awards.

 According to the defendants, the government never guaranteed plaintiffs that they would receive SES bonuses even if they were among those employees recommended by their supervisor or their agency's Performance Review Board. *fn10" From this, defendants deduce that plaintiffs' alleged injury is too remote and too speculative to establish standing; that plaintiffs have failed to show that their alleged loss of bonuses is causally connected to the percentage limitations imposed by Congress and OPM; and that in any event, it has not been shown that the alleged injury -- the diminished opportunity to compete -- would be remedied by the relief requested.

 In ruling on a motion to dismiss for want of standing, the Court must accept as true all material allegations of the complaint, and it must construe the complaint in favor of the plaintiff. Warth v. Seldin, 422 U.S. 490, 501, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975). On the basis of this standard, the Court finds that plaintiffs have alleged facts from which it could reasonably be inferred (1) that absent the limitations imposed by Congress and OPM, there is a substantial probability that the agencies would have awarded more bonuses to plaintiffs that were actually granted, and (2) that if the Court affords the relief requested, there is a substantial likelihood that at least some of the plaintiffs may receive awards for fiscal years 1980 and 1981. *fn11" Warth v. Seldin, supra, 422 U.S. at 504.

 To be sure, plaintiffs cannot demonstrate an absolute right to receive performance awards. But that is not necessary for standing purposes. The alleged injury to their right to compete for a discretionary award is sufficient injury to confer standing. *fn12" According to the complaint based on defendants' allegedly unconstitutional restrictions, the federal agencies cut back substantially on the number of performance awards actually issued, *fn13" and at least some of the plaintiffs did not receive performance awards they would otherwise have obtained. *fn14" These allegations, in the view of the Court, provide a causal connection between the ...


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