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August 22, 1997

VICENTE J. ANDERSON, et al., Plaintiffs,

The opinion of the court was delivered by: SPORKIN


 Plaintiffs are 13 long-term employees of the Panama Canal Commission. They have brought this action pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2, as amended, and the due process clause of the Fifth Amendment to the Constitution. This matter is now before the Court on parties' cross-motions for summary judgment. The Court heard argument on the motions on June 24, 1997. For the reasons stated below, the Court denies Plaintiffs' motion for summary judgment and grants Defendant's motion for summary judgment.

 Factual Background

 In conjunction with the Panama Canal Treaty which returned the Canal to Panama in 1979, Congress amended U.S. immigration laws to make it easier for non-citizen employees of the PCC to become U.S. citizens. 8 U.S.C. § 1101(a)(27)(E)-(G). Panamanian-born Canal employees, residing in the Canal Zone, and their spouses and children, were eligible for "special immigrant" status, making them permanent residents and eligible for naturalized citizenship. Id.

 Plaintiffs are long-term, pre-1979, employees of the Panama Canal Commission and were hired locally, in the Canal Zone. With one exception, at the time they were hired, Plaintiffs were not U.S. citizens. Eleven of the thirteen Plaintiffs became U.S. citizens between 1987 and 1994, under the terms of the 1979 act. Plaintiff Richard Manning, who had served with the U.S. military in Vietnam, became a citizen in 1977. Plaintiff Boris Harley, who was born in the Canal Zone, was born a U.S. citizen because his father is a U.S. Citizen. Harley's father failed to register Harley's birth at the U.S. Embassy and Harley did not do so himself until 1991. All Plaintiffs except Plaintiff Roberto Fabrega are of West Indian national origin. Fabrega is of Hispanic national origin.

 Tropical Differential

 Historically, pursuant to the Panama Canal Act of 1912, the PCC paid U.S. citizen employees a 25 percent tropical differential to compensate them for the various sacrifices they made to work in the Canal Zone. *fn1" Those payments were not made to local-hire employees. In 1964, the differential was reduced to 15 percent.

 In 1976, the PCC, by regulation, limited the differential to citizens who were recruited outside of the Canal Zone, because it determined that the financial incentive was no longer necessary to recruit locally. The Agency grandfathered in employees who had been continuously employed since July 3, 1976 and who were previously receiving the differential. Because 12 of the 13 Plaintiffs were not U.S. citizens in 1976, and the 13th, Plaintiff Harley, was not known to be a U.S. citizen, they had not previously been receiving the differential, and were not grandfathered in.

 In 1979, Congress passed legislation in conjunction with the signing of Panama Canal treaty. Under that legislation, employees hired after October 1, 1979, regardless of citizenship, were only to receive the differential if they were hired outside of the Canal Zone. The Act allowed, but did not require, the PCC to pay a differential to employees hired prior to October 1, 1979, without regard to citizenship or place of employment. The PCC chose to retain its 1976 policy, with the effect that employees who had not received the differential before July 3, 1976 still did not get the differential.

 Equity Package

 Prior to 1977, the United States operated commissary and retail stores in the Canal Zone. In an effort to boost the Panamanian economy, the United States, as part of the Panama Canal Treaty of 1977, agreed to close the stores. As a transition measure, Canal employees who were U.S. citizens were allowed to use U.S. military commissaries and exchanges ("C&E") for a five-year period ending September 30, 1984. After that time, the Canal employees' only option was to shop in local Panamanian stores.

 To offset the cost of living increases caused by the 1984 loss of C&E services, Congress authorized, but did not mandate, a cost of living allowance ("COLA"), beginning October 1, 1984. 22 U.S.C. § 3646. The allowance could be paid, at the discretion of the Agency, to U.S. citizens who were employees as of September 30, 1979, or any person who was recruited outside of Panama after September 30, 1979. Id.

 Rather than offer a direct cash payment to employees, the PCC provides the COLA in the form of an "equity package." It consisted of free rent and electricity in PCC housing, additional home leave, and educational travel benefits for dependents attending college in the United States. Initially, such benefits were paid to all U.S. citizen employees who had been employed before October 1, 1984, regardless of whether they had received the C&E benefits before the 1984 cutoff. The result of this policy was that 23 employees, including four of the Plaintiffs, who had never previously received the C&E benefits, started to receive the equity package when they became naturalized U.S. citizens.

 On December 29, 1989, the PCC changed that policy. Reasoning that the equity package was meant only to compensate employees who had lost C&E benefits, PCC cut off the equity package for those who had never received C&E benefits. *fn2" Plaintiff Manning continues to receive the equity package because he became a citizen in 1977 and thus was receiving C&E benefits on the 1984 cutoff date. The four Plaintiffs who became citizens in the 1984-1989 time frame lost the equity package as a result of the policy change. The remaining ...

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