federal employees decided to convert, and over 6,300 of these joined the SES as career appointees. The decision to convert was not rescindable.
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).
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.
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.
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.
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.
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.
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.
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.
According to the complaint based on defendants' allegedly unconstitutional restrictions, the federal agencies cut back substantially on the number of performance awards actually issued,
and at least some of the plaintiffs did not receive performance awards they would otherwise have obtained.
These allegations, in the view of the Court, provide a causal connection between the challenged conduct of defendants and plaintiffs' injury sufficient for standing purposes. Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 42-43, 48 L. Ed. 2d 450, 96 S. Ct. 1917 (1976).
It is well settled that a constitutionally protected property right exists only when the person claiming such a right has a "legitimate claim of entitlement." Board of Regents v. Roth, 408 U.S. 564, 577, 33 L. Ed. 2d 548, 92 S. Ct. 2701 (1972). Moreover, in the case of government benefits, an entitlement is determined by a review of the applicable statute or regulation. Plaintiffs concede that SES employees do not have a Fifth Amendment property right to, and are not entitled to receive, performance awards. Rather they claim that SES employees have a constitutionally protected property interest in competing for performance awards which may number as many as 50 percent of their agency's SES positions.
In the view of the Court, the existence of a mere opportunity to compete for awards numbering up to 50 percent of the agency's SES positions did not create a vested property in plaintiffs which the federal government could not defeat, for the following reasons.
First. Plaintiffs argue that the opportunity to compete for performance awards numbering up to 50 percent of their agencies' SES positions was a vested form of deferred compensation guaranteed them by their employment contracts with the federal government. Plaintiffs argue that the language of the statute and the OPM representations,
promising them this opportunity to compete constituted consideration for their conversion to SES positions, and that they gave consideration on their part by accepting SES positions and giving up substantial rights and benefits associated with their civil service positions.
Because these representations, plaintiffs' alleged reliance, and the mutual exchange of benefits contain all the elements of an implied in fact contract or promissory estoppel, plaintiffs argue that their right to compete for performance awards numbering up to 50 percent of an agency's SES position protected by the Fifth Amendment.
Although this contention might have merit in the context of private employment, it is not relevant here. In Kizas v. Webster, 227 U.S. App. D.C. 327, 707 F.2d 524 (D.C. Cir. 1983), a case which is close on the governing facts to this case, FBI clerical and support employees had challenged the Bureau's modification of a program which provided preferential consideration to plaintiffs for jobs as special agents. The plaintiffs there argued that their expectation of special consideration was a property interest which could not be unilaterally revoked without compensation or procedures as required by the Fifth Amendment. In support of this argument, they suggested that the preference was an element of deferred compensation "due and owing them," and further that their legitimate expectations in receiving the preference was an indefeasible property right protected by the due process clause. The Court of Appeals rejected both arguments and held that the employees had no vested rights in the former special preference. With respect to the issue here under consideration, the Court noted, quoting Kania v. United States, 227 Ct. Cl. 458, 650 F.2d 264, 268 (Ct. Cl. 1981) that
Federal employees serve by appointment, and their rights are therefore a matter of "legal status even where compacts are made."
In short, any entitlement plaintiffs have to pay and other benefits, including the opportunity to compete for performance awards, is determined by statutes and regulations, rather than by ordinary contract principles. United States v. Larionoff, 431 U.S. 864, 869, 53 L. Ed. 2d 48, 97 S. Ct. 2150 (1977); Riplinger v. United States, 695 F.2d 1163, 1164 (9th Cir. 1983).
It also follows that any representations by OPM
or the agencies did not create enforceable property rights. This is so regardless of whether plaintiffs gave consideration for or detrimentally relied on these assurances. Kizas v. Webster, 707 F.2d at 535-36.
Second. Plaintiffs argue that they have an indefeasible property right in the opportunity to compete for awards numbering up to 50 percent of the agencies' SES positions. Again, as was the case of the plaintiffs in Kizas v. Webster, supra, plaintiffs here confuse the two separate "property interests" which are protected by the two separate clauses of the Fifth Amendment. For purposes of procedural due process guarantees, a person has a property interest in a governmentally conferred benefit if he has a "legitimate claim of entitlement" to the benefit. Kizas v. Webster, supra, 707 F.2d at 539.
This legitimate claim of entitlement does not, however, always rise to the level of "property" protected by the takings clause of the Fifth Amendment.
"The fifth amendment employes two independent clauses to address two independent issues. A claim of deprivation of property without due process of law cannot be blended as one and the same with the claim that property has been taken for public use without just compensation." A "legitimate claim of entitlement" to a government benefit does not transform the benefit itself into a vest right. Rather, due process "property interests" in public benefits are "limited, as a general rule, by the governmental power to remove, through prescribed procedures, the underlying source of those benefits."