[00:00:00] Speaker 01: Our third case this morning is number 21, 1787, Kluge versus DHS. [00:00:06] Speaker 01: Mr. Rennie? [00:00:09] Speaker 01: Yes, sir. [00:00:10] Speaker 02: May I please report? [00:00:12] Speaker 02: This is a case where the big federal bureaucracy with its finger pointing and dissembling is really grinding the little guy. [00:00:20] Speaker 02: And the little guy in this case is a class of reservists who volunteered for duty during the war [00:00:24] Speaker 02: and served as their written orders will attest, directly in contingency operations. [00:00:31] Speaker 02: USERA clearly says you can sue OPM directly. [00:00:34] Speaker 01: And the board quotes... Can I just say the history of this statute shows that the purpose is to make sure that those serving in the military don't suffer financially as a result of the service. [00:00:47] Speaker 01: But in fact, you're asking that your client be paid more [00:00:52] Speaker 01: then he would have earned if he'd remained at DHS during the period of his military service. [00:00:58] Speaker 01: How's that consistent with the purpose of the statute? [00:01:01] Speaker 02: Yes, sir. [00:01:01] Speaker 02: I understand the butterball position that Mr. Cleaver just simply states that if the government used the daily rate [00:01:09] Speaker 02: If they're going to use the daily rate, then they have to do an apples to apples comparison, and then butterball would apply. [00:01:15] Speaker 02: It basically means that you don't charge for weekends and holidays. [00:01:19] Speaker 02: That's all Mr. Fluid's proposing. [00:01:20] Speaker 01: OK, but you're not answering my question. [00:01:21] Speaker 01: How can it be that the statute is designed to create a situation [00:01:26] Speaker 01: where someone who serves in the military gets paid more than if he continued with his civilian service. [00:01:32] Speaker 02: Your Honor, it's a fair point. [00:01:33] Speaker 02: And perhaps if the government would not have used the daily rate, we wouldn't have the confusion. [00:01:37] Speaker 02: But the fact, our position is, it looks like if they're using the daily rate, they should incorporate butterball. [00:01:43] Speaker 02: And that's basically the point. [00:01:45] Speaker 02: position it's understandable there may be other ways to do it and we encourage the government to use other means to comply even when they use the pay period by pay period analysis they still devolve down to a daily rate comparison that's all our position is on that. [00:02:05] Speaker 02: On the other points on the USERRA the direct [00:02:08] Speaker 02: uh... maybe a little bit of a party uh... there clearly states that you can see opium directly in that that's the mspd shall adjudicate those cases [00:02:17] Speaker 02: When finding noncompliance, they shall enter corrective and compensatory orders. [00:02:23] Speaker 02: That didn't happen in this case. [00:02:25] Speaker 00: Can I just ask, and you'll know these statutes better than I, so I guess there is the statute that lists OPM as a potential defendant in some USERRA cases. [00:02:41] Speaker 00: USERRA certainly has some USERRA obligations about [00:02:45] Speaker 00: promulgating certain categorizations or something of classifications of positions and whatnot. [00:02:54] Speaker 00: Why, though, isn't the question whether OPM is a proper defendant in this case where the underlying violation is a non-payment action taken by a different agency, namely the specific employer? [00:03:16] Speaker 02: Because, Your Honor, the non-payment was caused by OPM's misleading definition that's still on the website as of yesterday, that this court has overturned twice in O'Farrell and in Adams. [00:03:30] Speaker 02: It's a blanket exclusion for all 12301D activations. [00:03:35] Speaker 02: And that is not only wrong, but this court has overturned it twice. [00:03:39] Speaker 02: That is what the agencies are relying on. [00:03:42] Speaker 02: As you can see in the record, appendix 571 to 576, the government admitted in the other case in federal district court that the federal agencies all rely on OPM for their guidance on how to apply the differential statute. [00:03:59] Speaker 02: Not only do they rely on it, but they said, [00:04:08] Speaker 02: had legal consequences that clearly flowed from that guidelines that came out in 2009. [00:04:14] Speaker 02: And most importantly, it affected the circumstances under which federal employees could qualify for differential pay. [00:04:20] Speaker 02: It was decisive of why this class was denied the differential pay. [00:04:27] Speaker 01: OK, but the legislative history of the statute shows that the reason that OPM is named was two for one. [00:04:33] Speaker 01: It has its own employees. [00:04:35] Speaker 01: And two, it has certain USERA obligations, for example, under 4315E to help place employees who can't return to their original jobs. [00:04:47] Speaker 01: There's no indication in there that the promulgation of guidance by OPM would make them a proper party defendant in the case. [00:04:58] Speaker 02: I understand that position, Your Honor, but I argue that they also have regulatory responsibility to ensure coordination and compliance with the statute. [00:05:09] Speaker 02: And they failed in that obligation. [00:05:12] Speaker 02: And more importantly, USERA itself determines what the standard is for liability. [00:05:23] Speaker 02: If you set the standard, it simply requires corrective orders and compensation shall be paid, quote, for any loss of benefits suffered by reason of such lack of compliance. [00:05:36] Speaker 02: When all the agencies are relying on OPM's guidance and definition, [00:05:41] Speaker 02: and that OKM guidance and definition is wrong and fails to incorporate this court's precedent, then they are the reason of such lack of compliance and the cause of the denial of benefit in this case, de facto. [00:06:02] Speaker 02: In addition, Your Honor, I just want to point out that under the broad and generous pleading standards of the NSPB, Mr. Kluge actually named as a class all federal agencies in this case in his complaint. [00:06:17] Speaker 02: It was very direct. [00:06:18] Speaker 02: And that was also never addressed by the court by the NSPB in their decision. [00:06:32] Speaker 02: I think when you look at the record in the case, it's obvious that this court's holding the settled law on whether 12301D activations do qualify for differential pay. [00:06:43] Speaker 02: And O'Farrell and both Adams said they can. [00:06:47] Speaker 02: It's settled law, but what we need in this case is settled compliance by the federal agencies. [00:06:51] Speaker 02: Even DHS. [00:06:52] Speaker 02: I mean, even if you're just setting aside the issue of whether OPM's liable, the DHS itself has failed to recognize this and implement this in their policies. [00:07:02] Speaker 02: When this case came up, the first reaction was to say, we don't owe it. [00:07:08] Speaker 02: The second reaction was to say, we don't know if we owe it or not, because we're still doing a legal review on it to see if people in that particular circumstance are owed differential pay. [00:07:18] Speaker 02: And then finally, when they were, I think, in an attempt to moot the case, they said, OK, we owe it. [00:07:23] Speaker 02: But just for him, we're not paying anybody else who's in the exact same situation, even if we do owe it. [00:07:31] Speaker 02: There's a reluctance to accept that 12301D is a valid basis for this benefit. [00:07:40] Speaker 02: And it's obviously in the case where someone is either activated in support of or directly into a contingency operation. [00:07:50] Speaker 02: Now, the distinction there, quite frankly, in practice, is not all that significant in reality. [00:07:57] Speaker 02: Because all the orders usually say, in support of, and that includes anybody who's on the front line who might have been killed in action or whatnot, or somebody in Nevada who's operating a drone and shoots lethal ammunition and kills an enemy on the battlefield. [00:08:14] Speaker 02: Everyone is activated in support of and continues the operation. [00:08:20] Speaker 02: And the key here is all the class numbers in this case will have orders that have directly activated them under 12301D in support of or directly into and will name a contingency operation like Mr. Pluge and more importantly even probably more telling [00:08:38] Speaker 02: is they will have a fund site for a contingency operation that can only be expended for personnel who are directly in a contingency operation and operating in support of that. [00:08:51] Speaker 02: They all qualify under this court's precedent and whatnot. [00:08:55] Speaker 02: And there needs to be a corrective and coordinating order to capture that. [00:09:01] Speaker 02: And so they don't have to file individual claims in this case. [00:09:07] Speaker 03: Council, I've got a question about the great brief on page nine. [00:09:12] Speaker 02: Which brief? [00:09:13] Speaker 03: The great. [00:09:15] Speaker 02: OK. [00:09:15] Speaker 03: Great. [00:09:17] Speaker 03: So on page nine, my question is about the sentence here, the in addition sentence. [00:09:24] Speaker 03: You talk about the court having an inherent authority to direct its ruling under USERRA or the Tucker Act, for that matter, to cover IC personnel. [00:09:33] Speaker 03: I'm just wondering what your [00:09:36] Speaker 03: case law support, or what your source is for that particular statement? [00:09:41] Speaker 02: Well, USERRA, case law, the USERRA statute itself clearly covers IC personnel. [00:09:46] Speaker 02: The coverage for USERRA, if I have it here, includes other federal agencies. [00:09:53] Speaker 02: And it basically defines the universe of federal agencies that are outside of Title V. You can find the [00:10:04] Speaker 02: As well, I also want to point out that's obviously relevant only in the parallel case in Federal Claims Court. [00:10:12] Speaker 02: That case involves Mr. Kluge as a plaintiff. [00:10:16] Speaker 02: It also involves Mr. Schwieger, who was an IC employee. [00:10:21] Speaker 02: Now IC employees obviously don't have MSPB jurisdiction, and so that's why that case is more of a universal coverage for all class members in this case than this one. [00:10:34] Speaker 02: But the USERA statute does directly address [00:10:40] Speaker 02: coverage for ISD personnel. [00:10:43] Speaker 02: And for that matter, so does the differential pay, because differential pay incorporates and serves jurisdiction. [00:10:54] Speaker 02: Does that answer your question, Your Honor? [00:11:01] Speaker 02: Let me jump to the class action denial. [00:11:11] Speaker 02: The board cited five grounds for denial, all of which were not supported by substantial evidence. [00:11:21] Speaker 02: The first was privacy, and it's not clear why a certification would require violating the Privacy Act. [00:11:30] Speaker 02: There's no explanation and no facts in the record to back that up. [00:11:35] Speaker 02: In fact, it misstated Mr. Kluge's claim, which is we could have the government handle the database comparisons, and that would obviate the privacy concerns. [00:11:43] Speaker 02: That's unsupported by evidence. [00:11:46] Speaker 02: The second was the monumentally wasteful notion that this case would require identifying all federal employee reservists [00:11:57] Speaker 02: and doing an individual analysis of each employment situation. [00:12:01] Speaker 02: Mr. Kluge did not propose that. [00:12:02] Speaker 02: There's no facts or any evidence to back that up. [00:12:05] Speaker 02: He proposed doing a database analysis that would determine the class and determine back pay within seconds, automated. [00:12:15] Speaker 02: It's not necessary. [00:12:15] Speaker 02: Again, that was unsupported by evidence. [00:12:19] Speaker 03: If there were a class certified, would you contend that OPM would be the appropriate defendant or would other agencies [00:12:26] Speaker 03: need to be joined as defendants. [00:12:28] Speaker 02: We contend that OPM would be a proper, would be enough, because you could order them to pay. [00:12:34] Speaker 02: But all agencies should and could be defendants as well, because I believe almost every agency is involved in following OPM guidelines and denying this class the benefit. [00:12:48] Speaker 01: Peter, into your rebuttal time, do you want to save the rest of it? [00:12:51] Speaker 02: Let me just address the commonality, sir, and then I'll save the last minute and a half for the rebuttal. [00:12:57] Speaker 02: On commonality, the AJ accused Mr. Kluge of not alleging that all agencies have acted in the same manner and based on the same actions. [00:13:06] Speaker 02: On page 30 of the opening brief, there's about 20 or 30 pages in which he made this direct allegation that OPM was the source. [00:13:15] Speaker 02: And similarly, [00:13:18] Speaker 02: The denial side of the 2013 furlough cases, which clearly are not similar to this case, it involved hundreds of different agencies that had to submit thousands of records to create separate agency administrative records by which adjudication would happen. [00:13:35] Speaker 02: That's not the case in this situation. [00:13:37] Speaker 02: There's one OPM misleading guideline that needs to be overturned, and that's the one common contention. [00:13:44] Speaker 02: And I'll stop there and save the rest of it for rebuttal. [00:13:50] Speaker 01: OK. [00:13:50] Speaker 01: Thank you. [00:13:50] Speaker 01: Thank you, Mr. Ryan. [00:13:51] Speaker 01: Mr. Long? [00:13:53] Speaker 04: Thank you, Your Honor. [00:13:54] Speaker 04: May I please record the viewpoint here that when presented with the unprofessional pay claim, DHS authorized the claim to found Mr. Kloosh eligible and proceeded to calculate [00:14:08] Speaker 04: is differential pay due. [00:14:11] Speaker 04: And so that puts the lie, I think, to a lot of the arguments here. [00:14:16] Speaker 04: When we look at the statute, section 5538, clearly DHS is the agency responsible for paying any differential. [00:14:26] Speaker 01: Wait, wait, wait. [00:14:27] Speaker 01: Did you say puts the lie? [00:14:31] Speaker 01: Yes, Your Honor. [00:14:31] Speaker 01: You shouldn't use language like that in oral arguments. [00:14:37] Speaker 04: I'm sorry, let me reformulate that. [00:14:40] Speaker 04: My point was simply that the agency that was required to pay any differential pay due was DHS. [00:14:47] Speaker 04: And so the idea that OPM would be the proper respondent simply doesn't make sense. [00:14:51] Speaker 04: It didn't have the authority to decide whether anything was due, and OPM wasn't obligated to pay any differential pay claim from its funds. [00:15:03] Speaker 04: When DHS was finally made the proper response, [00:15:05] Speaker 04: As I've said, it found Mr. Cooge eligible, and it calculated differential pain due. [00:15:13] Speaker 04: Similarly, with respect, and so it was not an abuse of discretion to make DHS the respondent. [00:15:20] Speaker 04: Similarly, with respect to the class, Adams, I think, makes clear that the decided automated legal analysis as to whether or not a given service member is entitled to differential pain. [00:15:34] Speaker 04: But inside the fact that Mr. Cluj's claim was found eligible in this instance by DHS, every differential pay claim is going to require a look at the orders. [00:15:45] Speaker 04: We see this happen in Adams, and an inquiry into what precisely the activation was for, and then a determination of whether, I'm sorry, differential pay is due. [00:15:58] Speaker 04: And so that makes class certification unwieldy, and under the board regulation, [00:16:10] Speaker 04: including that that was not the case here. [00:16:14] Speaker 04: Finally, with respect to the calculation of differential pay, I'll just address Mr. Kluge's position on this daily comparison. [00:16:25] Speaker 04: Looking at 5 USC through 538A, the pay period is the relevant period for calculation. [00:16:34] Speaker 04: And so we see that both the OPM guidance, which the board did not adopt, [00:16:40] Speaker 04: the board's calculations argued toward ensuring that there's an accurate computation of the amount of military pay earned allocated to a given pay period and that is properly matched against what the civilian pay would have been during that pay period. [00:16:58] Speaker 04: And so while I think it's fair to say that the board used the number of days in situations where the [00:17:08] Speaker 04: of civilian pay periods straddled the military pay periods, in other words, where the civilian pay period was imposed February and March, for example. [00:17:18] Speaker 04: The board used an approach that decided how many days fell within February and how many days fell within March. [00:17:23] Speaker 04: But that process of computation was focused on, again, the pay period and how much military pay was earned during the pay period so it could be paired against the civilian pay period. [00:17:36] Speaker ?: And that approach is completely consistent [00:17:38] Speaker 04: statute, and therefore lawful and appropriate. [00:17:45] Speaker 00: Mr. Long, can I ask you this question? [00:17:47] Speaker 00: Is there a forum in which there can or is being litigated the question whether the feature of the OPM guidance that's being objected to here is lawful? [00:18:09] Speaker 04: Yes, Your Honor. [00:18:10] Speaker 04: I would say as a predicate, I think you'd have to have a situation where an agency, where an employing agency pointed to that guidance as the basis for a decision, at which point the court would be in a position to make a decision. [00:18:20] Speaker 04: Now, there could be a couple of approaches. [00:18:22] Speaker 04: We saw in Butterball, as it happens, the Department of Justice relied on OVM guidance. [00:18:27] Speaker 04: And this court asked whether that guidance was lawful. [00:18:31] Speaker 04: And that was in connection with the use of airplane, obviously. [00:18:36] Speaker 04: So that could be one avenue. [00:18:37] Speaker 04: And then this court would be in a position to say, well, DOJ, or in this case, DHS, appropriately rely on unlawful guidance, or that the guidance was unlawful, and therefore the decision cannot stand. [00:18:47] Speaker 04: Mr. Kloosh has also, as it's shown in the record, has also raised APA claims in district court. [00:18:54] Speaker 04: Those claims have been out, I think, in a proper situation. [00:18:58] Speaker 04: He probably couldn't mount an APA claim. [00:19:00] Speaker 00: Do I remember correctly that in [00:19:07] Speaker 00: of filing in the district court in, yes, in Mr. Kluge's case, in the district court, you agreed that the guidance was final agency action? [00:19:20] Speaker 04: I am not recalling that statement, but we did say, and this is the statement that Mr. Kluge has sought and secured judicial admissions, or judicial notice on, is that OKTA's policy guidance was directed to and relied on by federal agencies. [00:19:37] Speaker 04: make payments to call-sign employees. [00:19:39] Speaker 04: So that statement does appear. [00:19:41] Speaker 04: Now, as I've said before, it obviously wasn't relied on here, because Mr. Plouche said it would have knocked out his claim, and DHS here accepted the claim. [00:19:52] Speaker 04: And so bar and bar, I think it's probably the clearest way that we can see how board itself would have jurisdiction to consider the agency's reliance on OKM guidance. [00:20:03] Speaker 04: And then that would be subject to this court to review. [00:20:05] Speaker 04: The district court might be another venue, and I believe Mr. Kluge's district court case has now been transferred to the Court of Federal Claims, filed as a back pay act case, I believe, also still alleging a violation of Section 5538. [00:20:22] Speaker 04: And so I don't believe that the government has not answered the complaint there, but that may be another avenue to challenge this kind of case. [00:20:31] Speaker 01: Why shouldn't the calculation here be a lot simpler than OPM has made it? [00:20:38] Speaker 01: And that is, you just take the amount that the employee earned during the period of military service and then compare that to the same amount for the pay period that it would have earned in the civilian service, and to the extent that you need to allocate [00:21:01] Speaker 01: amounts from within a pay period because there's overlap. [00:21:06] Speaker 01: You just do that based on the number of workdays. [00:21:09] Speaker 01: Why get into this complexity that the opening guideline imposes? [00:21:20] Speaker ?: A couple of points, Your Honor. [00:21:22] Speaker ?: First is that, as I said, the statute [00:21:25] Speaker ?: takes a pay period approach. [00:21:26] Speaker 01: It could be the case... Well, this is what I'm suggesting is taking a pay period approach instead of figuring out the amount that's due for each individual day, which seems not to be consistent with the statute. [00:21:39] Speaker 04: Well, I don't know how you can do that in situations where a pay period crosses month, because military pay, in this case, was different in different months for Mr. Kluge. [00:21:50] Speaker 04: So you have to find a way to take that military rate of pay for February 2011. [00:21:55] Speaker 01: You would take what he earned in the military for the period that he was in the military, and then you figure out how much he would have gotten for that same pay period in his DHS employment. [00:22:07] Speaker 01: It's not complicated. [00:22:09] Speaker 04: Because the military pay period is 30 days. [00:22:15] Speaker 04: So he's not paid on a bi-weekly pay period basis that matches up to the civilian pay periods. [00:22:22] Speaker 04: He's paid on a monthly basis for the entire month of February gross amount. [00:22:26] Speaker 04: And then you need to divide that into days, which your purchase has been used is to divide into 30 days, which is every military pay month is 30 days. [00:22:34] Speaker 04: And then you have to convert that over to that bi-weekly civilian pay period. [00:22:39] Speaker 04: That's the reason, Your Honor. [00:22:41] Speaker 04: Anything further? [00:22:43] Speaker 04: No. [00:22:43] Speaker 04: If there's nothing further, we respectfully ask [00:22:48] Speaker 01: Thank you, Mr. Long. [00:22:49] Speaker 01: Mr. Rennie? [00:22:51] Speaker 02: Thank you, Your Honor. [00:22:52] Speaker 02: Your Honor, on your point, the section in USERA is 4325 regarding enforcement on the other agencies. [00:23:00] Speaker 02: The complication here is this is USERA. [00:23:03] Speaker 02: Differential pay incorporates USERA jurisdiction. [00:23:05] Speaker 02: So the other case is Tucker Act, actually. [00:23:07] Speaker 02: That's why it applies in that case. [00:23:10] Speaker 02: On the issue of whether or not the government argued that it was final agency action, the 2009 OPM guidance, they clearly did argue that. [00:23:22] Speaker 02: And I think it was understated by counsel what the effect of that was. [00:23:28] Speaker 02: In the final admission, and it's found on the last six pages of the Joint Appendix, they admitted that [00:23:38] Speaker 02: That guidance affected the circumstances under which a federal employee could qualify for differential pay. [00:23:44] Speaker 02: I mean, you can't get any more decisive than that in finance. [00:23:48] Speaker 02: This case is also similar to Pusulowski, which was referenced in the judge's handbook, in which the board found, this court actually found that overturned the board and said you should have issued a corrective order against not just the employing agency in this case, but several other agencies, including DFAS, TSA, [00:24:07] Speaker 02: He was a DOJ employee. [00:24:09] Speaker 02: So there is precedent in this case to do this and issue the order against OPM. [00:24:14] Speaker 02: I think the court, with all respect, ought to hold OPM responsible for this as well. [00:24:21] Speaker 02: And if not, he's sued the other agencies as well. [00:24:25] Speaker 02: They can pay for it. [00:24:27] Speaker 01: OK. [00:24:27] Speaker 01: Thank you. [00:24:27] Speaker 01: Thank you, Your Honor. [00:24:28] Speaker 01: Thank you, counsel. [00:24:29] Speaker 01: Case is submitted.