DUSTIN v. USA
Filing
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ORDER denying 14 Motion to Dismiss - Rule 12(b)(1) and Rule 12(b)(6) Signed by Judge Thomas C. Wheeler. (jc) Copy to parties.
In the United States Court of Federal Claims
No. 12-690C
(Filed: November 15, 2013)
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SAMUEL DUSTIN,
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Plaintiff,
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v.
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UNITED STATES,
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Defendant.
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Motion to Dismiss; Subject Matter
Jurisdiction; Failure to State a
Claim; RCFC 12(b)(1); RCFC
12(b)(6); Student Loan Repayment
Program; Back Pay Act
Ralph E. Avery, Avery Law Firm, Washington, D.C. for Plaintiff.
Michelle R. Milberg, with whom were Stuart F. Delery, Assistant Attorney General,
Jeanne E. Davidson, Director, Scott D. Austin, Assistant Director, U.S. Department of
Justice, Washington, D.C., Alfred Steinmetz, Of Counsel, Staff Attorney, Veterans
Administration, for Defendant.
OPINION AND ORDER ON
DEFENDANT’S MOTION TO DISMISS
WHEELER, Judge.
Before the Court are the Government’s Rule 12(b)(1) motion to dismiss for lack of
subject matter jurisdiction and Rule 12(b)(6) motion to dismiss for failure to state a claim
upon which relief can be granted. Plaintiff Samuel Dustin filed his amended complaint
upon which the Government’s motions are based on August 8, 2013. Mr. Dustin seeks the
award of monetary damages for the Government’s non-compliance with an employment
agreement under which the Government committed to remit student loan repayments on
Mr. Dustin’s behalf to Mr. Dustin’s loan servicer. Shortly after Mr. Dustin’s filing, the
Government moved to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6). The
motion has been fully briefed. The Court deems oral argument unnecessary.
The Government’s argument is twofold. First, the Government argues that Mr.
Dustin has failed to establish subject matter jurisdiction in this Court because neither the
Back Pay Act nor the statute underlying the Student Loan Repayment Program (“SLRP”)
is a money-mandating statute. 1 Thus, the Government submits, jurisdiction under the
Tucker Act does not exist. Second, the Government contends that even if this Court has
jurisdiction, it must dismiss this case for failure to state a claim because the Back Pay Act
does not permit the award of damages for the discontinuation of an employment benefit
that does not involve the direct payment of money to the complainant.
For the reasons set forth below, the Court agrees with Mr. Dustin that the SLRP
statute triggers the money-mandating effect of the Back Pay Act and therefore enables this
Court to exercise jurisdiction over this case under the Tucker Act. In addition, the Court
finds that Mr. Dustin has stated a claim for relief under the Back Pay Act.
Background
Samuel Dustin began working for the United States Department of Veterans Affairs
(“VA”) on September 11, 2011. Am. Comp. ¶¶ 3, 5. To participate in the SLRP, Mr.
Dustin entered into a binding Employment Services Agreement (“ESA”). Pursuant to the
ESA, Mr. Dustin committed to remain a VA employee for at least three years. In return,
the VA committed to repay up to $60,000 of his student loan debt. Id. at ¶ 5. At that time,
Mr. Dustin had a total of $53,597.80 in student loan debt. Id. at ¶ 4. The Director of the
VA medical center in Mesa, Arizona, where Mr. Dustin still works, authorized the SLRP
on September 20, 2011. Id. at ¶ 6.
The terms of Mr. Dustin’s ESA with the VA provided that the VA would remit
biweekly payments to Mr. Dustin’s loan servicer in amounts calculated to produce an
annual total payment of $10,000, the statutory maximum. If Mr. Dustin were to leave the
VA prior to the expiration of the mandatory service period, he could be required to return
the full amount of the SLRP payments he had received until his exit. But if Mr. Dustin
were to remain at the VA beyond the mandatory service period, he would continue to
receive the benefit of the biweekly SLRP payments until the exhaustion of the maximum
cumulative benefit of $60,000.
The SLRP did not go as planned. Rather than commencing the biweekly
reimbursements as stipulated, the VA made its first and only SLRP payment in early
October 2011 in a lump sum of $10,000. Id. at ¶ 7. Since February of 2012, Mr. Dustin has
unsuccessfully pursued an explanation for the cessation of the SLRP payments. Id. at ¶ 9.
For instance, Dustin has placed many calls and written many emails to VA staff, and he has
contacted the VA and Office of Personnel Management ombudsmen. Id. Although the VA
Network Director averred in September 2012 that the VA intended to pay Mr. Dustin the
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5 U.S.C. § 5379 (2012).
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arrearage in a lump sum and to quickly commence the biweekly payments under the terms
of the agreement, the VA has not acted. Id. at ¶10. Mr. Dustin submits that he has
nonetheless made his student loan payments on schedule to avoid default and has otherwise
remained in compliance with the ESA. Id. at ¶¶ 12-13.
Analysis
I.
Standard of Review
The Court must determine that a plaintiff has established subject matter jurisdiction
before proceeding to review the merits of the complaint. Fisher v. United States, 402 F.3d
1167, 1173 (Fed. Cir. 2005). The jurisdiction of this Court is limited and extends only as
far as prescribed by statute. Id. at 1172. It is the plaintiff’s burden to show by a
preponderance of the evidence that his case fits within the jurisdictional bounds of this
Court. Reynolds v. Army and Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988).
In reviewing a motion to dismiss, the Court must accept as true all factual
allegations submitted by the plaintiff. Bell Atlantic v. Twombley, 550 U.S. 544, 555
(2007). Accepting those allegations as true, for the plaintiff to survive dismissal, the Court
must conclude that “the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Aschcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombley, 550 U.S. at 556).
II.
The Court has Subject Matter Jurisdiction Over Mr. Dustin’s Claim
The first issue is whether this Court can properly exercise subject matter jurisdiction
over Mr. Dustin’s claim against the Government for the SLRP payments in arrearage. Mr.
Dustin contends that subject matter jurisdiction is established by the combined effect of the
Back Pay Act, 5 U.S.C. § 5596, the federal statute underlying SLRP, 5 U.S.C. § 5379, the
Tucker Act, 28 U.S.C. § 1491(a)(1), and the set of regulations and agency rules governing
the administration of SLRPs at the VA. Am. Comp. ¶ 1. The Government contends that no
statute cited by Mr. Dustin is “money-mandating” and so the complaint should be
dismissed under Rule 12(b)(1) for lack of subject-matter jurisdiction. Def.’s Br. at 8.
Standing alone, the Back Pay Act is insufficient to establish jurisdiction. United
States v. Connolly, 716 F.2d 882, 885, 887 (Fed. Cir. 1983). However, the Back Pay Act
“expressly provide[s] money damages as a remedy against the United States in carefully
limited circumstances.” United States v. Testan, 424 U.S. 392, 404 (1976). For instance,
the Back Pay Act can be facilitated to invoke the jurisdiction of this Court over a claim for
the remittance of a wrongfully withdrawn employment benefit conferred by a statute or
regulation “covered by the Tucker Act.” Worthington v. United States, 168 F.3d 24, 26
(Fed. Cir. 1999); see also Testan, 424 U.S. at 407. The violation of such a statute or
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regulation effectively triggers the money-mandating effect of the Back Pay Act and
permits this Court to exercise jurisdiction. Worthington, 168 F.3d at 26.
Acts of Congress and executive agency regulations which command or can be
interpreted to command the payment of money are covered by the Tucker Act and thus
trigger the Back Pay Act’s money-mandating effect. See Spagnola v. Stockman, 732 F.2d
908, 912 (Fed. Cir. 1984) (“Unless some other provision of law commands payment of
money to the employee . . . the Back Pay Act is inapplicable.”); see also Sacco v. United
States, 63 Fed. Cl. 424, 428 (2004) (collecting cases), aff’d, 452 F.3d 1305 (Fed. Cir. 2006).
In combination with the Back Pay Act and the Tucker Act, an alleged violation of the
SLRP statute suffices to establish jurisdiction because it is reasonable to interpret the SLRP
statute as independently commanding the payment of money to Mr. Dustin.
The SLRP statute permits executive agency heads to establish an SLRP “in order to
recruit and retain highly qualified personnel.” 5 U.S.C. § 5379(b)(1). Under an SLRP, an
agency may “agree to repay (by direct payments on behalf of the employee) any student
loan previously taken out by such employee.” Id. But if an agency elects to establish an
SLRP, and, pursuant thereto, undertakes to repay the debt of a participating employee, the
SLRP statute provides that “[p]ayments . . . shall be made subject to such terms . . . as may
be mutually agreed to” by the participating agency and employee. Id. at § 5379(b)(1)
(emphasis added). In ordering that payment “shall” be made in accordance with the terms
of the voluntary agreement, the SLRP statute commands the payment of money to Mr.
Dustin.
First, the language of the SLRP statute represents an implicit command. A statutory
order that a federal agency “shall” perform a function “is the language of command.”
Escoe v. Zerbst, 295 U.S. 490, 493 (1935) (Cardozo, J.); see also Alabama v. Bozeman,
533 U.S. 146, 153 (2001). Interpreted in light of this basic presumption of statutory
construction, the SLRP statute should be construed to command payments in accordance
with the terms of the agreement as structured and implemented by the participating agency
in its discretion. An interpretation that would afford an agency the discretion to arbitrarily
revoke the payments would be antithetical to the purpose of the statute, which is “recruiting
and retaining highly qualified personnel.” 5 C.F.R. § 537.101.
Second, the SLRP implementing regulations reinforce the interpretation that the
statute commands payment. While the SLRP regulations expressly empower the agency
and the employee to agree to allow for an increase in SLRP benefits, 5 C.F.R. §§
537.107(a)-(b), the regulations nowhere envision that an agency might unilaterally rescind
the SLRP agreement. While the regulations provide that an SLRP agreement is not “right
or entitlement to . . . continued employment,” id. at § 537.107(c), the regulations do not
undermine the reasonable conclusion that an ESA entitles an employee to continued
payment under the agreement. Finally, that the regulations expressly permit an agency to
include extra conditions to trigger the termination of payment indicates that an agency does
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not enjoy unfettered discretion to terminate the payments without cause.
537.107(f).
Id. at §
Accordingly, the combination of the Back Pay Act, the Tucker Act, and the SLRP
statute and regulations is sufficient to establish subject matter jurisdiction in this Court.
III.
Mr. Dustin has Asserted A Proper Claim for Relief
The Government also asks the Court to dismiss this action pursuant to Rule 12(b)(6)
on grounds that Mr. Dustin has failed to state a claim for which relief can be granted. Here,
the Government’s primary contention is that because the SLRP payments are remitted to
the servicer of Mr. Dustin’s student loan debt, and are not paid directly to Mr. Dustin
himself, the Back Pay Act is inapplicable. Def.’s Br. at 7.
To state a claim sufficient to qualify for the prospect of relief under the Back Pay
Act, Mr. Dustin must show that (1) this Court is the “appropriate authority” to determine
whether (2) he was subject to an “unjustified or unwarranted personnel action” that (3)
“resulted in the withdrawal or reduction of all or part of [his] pay, allowances, or
differentials.” 5 U.S.C. § 5596(b)(1); see also Collier v. United States, 379 F.3d 1330,
1332-33 (Fed. Cir. 2004).
Whether this Court is the “appropriate authority” to make an award under the Back
Pay Act depends on whether the personnel action at issue is one over which the Civil
Service Reform Act has deprived this Court of jurisdiction. United States v. Fausto, 484
U.S. 438, 454 (1988); Salinas v. United States, 323 F.3d 1047, 1049 (Fed. Cir. 2003);
Sacco, 63 Fed. Cl. at 428-29. A dispute arising from the unexplained withdrawal of SLRP
payments is not among the personnel actions within the purview of the Civil Service
Reform Act. 5 U.S.C. § 7512. Accordingly, this Court is an “appropriate authority” to
make a determination pursuant to the Back Pay Act.
In this case, the parties do not dispute that Mr. Dustin’s complaint satisfies the
second prong of the test for eligibility under the Back Pay Act. The Government concedes
that after disbursing the initial lump-sum payment of $10,000 in October 2011, the VA
“ceased repayment.” Def.’s Br. at 4. Notwithstanding its admission of error, and offering
no justification, the VA has since “failed to resume repayment of Mr. Dustin’s student
loans.” Id. As Mr. Dustin asserts, “[n]o interpretive gymnastics are required to see that
this [admission of error and unexplained inaction] satisf[y] the need to claim an unjustified
or unwarranted personnel action.” Pl.’s Rep. at 7.
Here, the heart of the controversy concerns whether the suspension in SLRP
payments constitutes a reduction in the “pay, allowances, or differentials” due to Mr.
Dustin. In 2000, the Office of Personnel Management (“OPM”) issued a revision of the
Back Pay Act regulations in which they redefined “pay, allowances, and differentials” to
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mean: “pay, leave, and other monetary employment benefits to which an employee is
entitled by statute or regulation and which are payable by the employing agency to an
employee during periods of Federal employment.” 5 C.F.R. § 550.803. The Government
argues with formalistic fervor that because the SLRP payments were paid to the loan
servicer, and not Mr. Dustin himself, Mr. Dustin cannot qualify for relief under the Back
Pay Act. The Court disagrees.
The “monetary benefit” of the SLRP payments goes to Mr. Dustin. This is evident
in the structure of the statute. If an employee executes an SLRP agreement, and then
absconds from employment prior to the termination of the mandatory service period, it is
the employee, not the loan servicer, who must reimburse the employer agency for every
penny paid out under the agreement. 5 U.S.C. § 5379. This is because the employee is the
beneficiary of the SLRP. The money paid to the loan servicer by the employer is the
money that the employee is duty-bound to pay if not for the SLRP agreement. Had the VA
held up its end of the bargain, Mr. Dustin would have enjoyed the benefit of the sum of the
money that was paid. The “monetary benefit” of the SLRP is thus “payable to” Mr. Dustin.
Although the SLRP payments are remitted to an entity other than the employee, in a
manner analogous to health insurance, the benefit redounds to the employee. The Ninth
Circuit has held that a public agency’s failure to provide health insurance coverage for the
spouse of an employee diminished the employee’s “pay, allowances, or differentials” so as
to justify a remedy under the Back Pay Act. In re Levenson, 587 F.3d 925, 936 (9th Cir.
2009). In Levenson, not only were the payments supposed to be made to an entity other
than the employee, the primary benefits of the payments were to be enjoyed by an
individual other than the employee. Id. Yet the court concluded that “[t]he ability to obtain
health . . . care for one’s family is a valuable benefit of employment . . .” Id. Similarly, the
ability to obtain a repayment of one’s student loans is a valuable benefit of employment.
Conclusion
For the aforementioned reasons, Mr. Dustin has stated a claim for which relief can
be granted under the Back Pay Act and has established the subject matter jurisdiction of
this Court. The Government’s motions to dismiss this case for failure to state a claim and
for lack of subject matter jurisdiction are therefore DENIED. Barring some legitimate
defense, the Court expects the United States and the VA to resolve this seemingly clerical
dispute forthwith without the need for further litigation.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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