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Gorgonzola v. McGettigan

United States District Court, W.D. Pennsylvania

April 21, 2017

AUDREY L. GORGONZOLA, GAIL G. HUDSON, GATHRYN DAANE, DOLORES VASSALLUZZO, MARY JANE THOMAS and THOMAS C. MARCIN, on behalf of themselves and other individuals similarly situated, Plaintiffs, [1]
v.
KATHLEEN McGETTIGAN, Acting Director of the United States Office of Personnel Management, [2] Defendant.

          OPINION

          MARK R. HORNAK, UNITED STATES DISTRICT JUDGE

         The Plaintiffs in this case are a group of retired registered nurses ("RNs") who for at least a portion of their careers worked part-time at the United States Department of Veterans Affairs ("VA"). The Defendant is the Director of the Office of Personnel Management ("OPM"), who is now Kathleen McGettigan (Acting). The dispute centers on whether and how OPM will notify these nurses of the increased annuity payments to which they are legally entitled.

         Motions practice around this dispute has been ongoing for years. Now pending before the Court is another series of motions, responses, replies, and surreplies from both parties. In its Motion for Summary Judgment, OPM takes another swing at avoiding what Plaintiffs say (and what OPM has previously admitted) is OPM's legal obligation to pay the nurses larger annuities. In their Motions to Allow Time for Discovery and to Amend Class Certification, Plaintiffs seek to stave off judgment against them, and in their own Motion for Summary Judgment and Motion to Modify Rule 23(d) Order, Plaintiffs seek to expedite the relief they seek (but not without also protecting their counsel fees). Plaintiffs have also moved to substitute parties because some of the original Plaintiffs have died. OPM opposes that Motion. The briefing is extensive. See ECF Nos. 193; 198; 206; 208; 210; 214; 216; 219; 220; 221; 224; 225; 231; 236; 248; 254; 255; 265; 266; 271; 273. After consideration of all papers and after oral argument, [3] for the reasons stated below the Court will deny OPM's Motion for Summary Judgment; grant in part Plaintiffs' Motion to Allow Time for Discovery; grant the Plaintiffs' Motion to Amend Class Certification to the extent of confirming that a class was already certified; grant the Plaintiffs' Motion to Amend Rule 23(d) Order to the extent that the Court's order will be lifted to allow OPM to contact annuitants and beneficiaries and to recalculate and pay any increased annuities and imposing certain conditions; grant Plaintiffs Motion to Substitute; and grant in part and deny in part Plaintiffs Motion for Summary Judgment.

         I. BACKGROUND

         The facts of this case have been set out extensively in the Court's two previous Opinions. See Wigton v. Berry, 949 F.Supp.2d 616 (W.D. Pa. 2013) ("Wigton I); Wigton v. Kaplan, No. 10-1768, 2014 WL 4272791 (W.D. Pa. Aug. 29, 2014) ("Wigton II). Therefore, only a recap of the most salient points will be recited here.

         The Congress passed the Department of Veterans Affairs Health Care Programs Enhancement Act of 2001 ("Enhancement Act"), Pub. L. No. 107-135, 115 Stat. 2446, which in short provided for all part-time work done by VA RNs prior to April 7, 1986 to be credited as full-time work, effectively increasing those nurses' annuities. Wigton /, 949 F.Supp.2d at 619. OPM first took the position that the Enhancement Act was not retroactive, and therefore applied it only to nurses who retired after the bill's passage on January 23, 2002. Id. But after an adjudicatory proceeding before the Merit Systems Protection Board ("MSPB"), Administrative Judge Michael Rudisill decided that Congress intended the Enhancement Act to apply retroactively, so any nurse who retired after April 7, 1986, and who fit the other criteria, was entitled to a recalculated annuity. Id. Thereafter, OPM came to the conclusion that it would apply the Enhancement Act retroactively (the so-called "Lippman concession"). Id. at 620.

         But upon OPM's realization, exemplified in that decision, that the nurses were indeed legally entitled to recalculation of their annuities, OPM seems to have had second thoughts because it decided not to tell anyone that the Enhancement Act would be applied retroactively. This meant that OPM only recalculated annuities for those nurses who somehow knew that and then happened to ask OPM to recalculate. Id. This was despite OPM's conclusion that it is statutorily required to recalculate the annuities. See Id. at 120 n.3 (cataloguing OPM's repeated statements that the nurses are entitled to recalculated annuities under Enhancement Act, e.g. "OPM does not dispute that an individual is entitled to a recalculation of his/her annuity in accordance with § 132 of Pub. L. No. 107-135, " ECF No. 104, at 2). This Court previously referred to OPM's "we'll do it if you ask" approach as OPM's own version of "double secret probation." Wigton I, 949 F.Supp.2d at 632, n.19.

         Plaintiffs filed this lawsuit seeking to harmonize OPM's stated position and its actions (or more properly, inactions) on behalf of all eligible nurses. OPM has vigorously opposed each of the Plaintiffs' claims at every turn. First, it moved to dismiss Plaintiffs' First Amended Complaint on the ground that the Civil Service Reform Act provided the exclusive avenue for adjudicatory review and precluded the Plaintiffs' claims in this Court. See ECF No. 93. This Court, in Wigton /, held that it had jurisdiction over the relief Plaintiffs seek to the extent that that relief is "notification of individuals who are arguably entitled to, but otherwise unaware of, their eligibility for a post-Lippman recalculation in light of OPM's self-stated statutory obligation to recalculate." Wigton I, 949 F.Supp.2d at 641-42. At that point, consideration of the merits of the claims, class certification, and standing issues remained. Id.

         After still more motions and more briefing, this Court issued its next Opinion, denying yet another OPM Motion to Dismiss and granting Plaintiffs' Motion for Class Certification "for the limited purpose of providing notice to the class of this lawsuit and class members' eligibility for a recalculation of their annuities in accordance with the provisions of the Enhancement Act." Wigton II 2014 WL 4272791 at *9. That brings us to where we are now: OPM for the third time asks this Court to toss the case, despite its repeated concession to this Court that the law requires what the Plaintiffs seek. The Plaintiffs in turn ask this Court to declare them the winners here and now.

         II. DISCUSSION

         The parties have filed a bevy of motions and the Court will dispose of each in turn. First up is OPM's Motion for Summary Judgment, ECF No. 192. Next at bat is Plaintiffs' Motion for Summary Judgment, ECF No, 247. Third in line is Plaintiffs' Motion to Allow Time for Discovery Under Rule 56(d), ECF No. 213. Fourth at the plate is Plaintiffs' Motion to Amend Class Certification Order, ECF No. 209. Finally, the Court will address a few remaining issues including class notice, Plaintiffs Motion to Modify the earlier Rule 23(d) Order, ECF No. 205, Plaintiffs filed Suggestion of Death, ECF No. 240, and Plaintiffs Motion to Substitute Party, ECF No. 244.

         A. The Motions for Summary Judgment

         OPM filed a Motion for Summary Judgment arguing that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law on Plaintiffs' Due Process and Equal Protection claims. See ECF No. 192. In support of that Motion, OPM submitted a Concise Statement of Material Fact[s] Not in Dispute, ECF No. 194, which contained precisely one (1) such proposed fact:

         To determine whether an individual is eligible for an additional annuity payment pursuant to the Office of Personnel Management's ("OPM") decision to apply Section 132 of the Department of Veterans Affairs Health Care Programs Enhancement Act of 2001 ("Enhancement Act"), Pub. L. No. 107-135, 115 Stat. 2466 [sic], to individuals who retired before January 23, 2002, OPM would need to undertake a review of the individual's Civil Service Retirement file and perform a recalculation. See dkt. No. 54-3 (Foelster Declaration) ¶¶ 22, 27.

         The Plaintiffs filed a dueling Motion for Summary Judgment that relies heavily on OPM's prior statements of its own position. They argue that OPM cannot now reverse field, and that they are the ones who are entitled to judgment in their favor as a matter of law. ECF No. 247. The Plaintiffs say that OPM should be judicially estopped from disavowing its earlier statements that recognized a legal obligation to identify and notice class members. They say that OPM's differential treatment of class members (paying some of the nurses, but not others, all equally situated) facially violates Equal Protection principles. Id.

         For the reasons set out below, the Court concludes that the Plaintiffs are entitled to judgment as a matter of law and that there are no material facts that remain in dispute as to the Equal Protection claim. The Plaintiffs Motion will be granted as to that claim. The balance of that Motion and OPM's Motion will be denied without prejudice.

         i. Legal Standard

         Rule 56 provides that a party is entitled to summary judgment if it can show that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). "A genuine issue of material fact is one that 'affects the outcome of the suit under the governing law' and could lead a reasonable jury to return a verdict in favor of the nonmoving party." Willis v. UPMC Children's Hosp. of Pittsburgh, 808 F.3d 638, 643 (3d Cir. 2015) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).

         Initially, the moving party bears the burden of demonstrating that the evidentiary record presents no genuine issue of material fact. Willis, 808 F.3d at 643. If it does so, the burden shifts to the nonmoving party to "identify facts in the record that would enable them to make a sufficient showing on essential elements of their case for which they have the burden of proof." Id. (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). "If, after adequate time for discovery, the nonmoving party has not met its burden ... the court must enter summary judgment against the nonmoving party." Willis, 808 F.3d at 643.

         Where, as is the case here, the court considers dueling motions for summary judgment, inferences drawn from the underlying facts "must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587(1986).

         ii. Due Process Claim

         OPM says that it is entitled to judgment as a matter of law on the Plaintiffs' due process claim because Plaintiffs cannot demonstrate a property interest being deprived without due process and, in the event that they could, they are not entitled to any notice of their right to a consideration of recalculation in any form. ECF No. 193. Plaintiffs respond primarily by asserting that OPM should be judicially estopped from now proclaiming that it does not, in fact, have a legal obligation to give notice to the retired, aging nurses and to recalculate their annuities. ECF No. 247, at 21. The Court concludes that OPM is not entitled to summary judgment on the Due Process claim and at the very least there remains a genuine issue of material fact that precludes such an Order.

         1. Property Interest

         The first step in any due process inquiry is to determine whether there has been a deprivation of life, liberty, or property. Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 59 (1999); Dungan v. Slater, 252 F.3d 670, 676 (3d Cir. 2001). OPM argues that Plaintiffs cannot demonstrate such a property interest without requiring the Court to exceed its concededly limited jurisdiction. ECF No. 193, at 15. That is because, according to OPM, the only "surviving claims pertain to 'potential, not actual, eligibility for an increased annuity." Id. at 16. And forcing a determination of individual eligibility exceeds the Court's jurisdiction in the case, the argument goes, because it would require the Court to order OPM to do the recalculation (something the Court cannot do) to determine whether a particular individual is eligible. Id.

         "Property interests ... are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law-rules or understandings that secure certain benefits and that support claims of entitlement to those benefits." Bd. of Regents of State Colls, v. Roth, 408 U.S. 564, 577 (1972). OPM insists that the independent sources here are the Civil Service Retirement Act ("CSRA") and 38 U.S.C. § 7426. ECF No. 193, at 16. And under those authorities, OPM says, Plaintiffs must demonstrate their entitlement to immediate payment. Id. at 17. Therefore, OPM says it would need to review each Plaintiffs Civil Service Retirement file and then recalculate their annuity. It would also need to determine whether they are entitled to more money under Section 132. Id. at 18. And because this Court cannot order such a recalculation, OPM maintains that the Plaintiffs don't have a property interest, at least not one that can be vindicated here. Id.

         The problem with that argument is that it rests on an assumption that OPM buries in a footnote: "while OPM has decided to apply Section 132 to individuals who retired before January 23, 2002, it has not taken the position, and does not agree, that Lippman required it to do so." Id. at 18 n.11.

         First, it is simply incorrect to say that OPM has not taken the position that it is compelled to apply Section 132 to the individuals at issue. It has done just that plenty of times. See, e.g., ECF No. 61, at 20 ("OPM does not dispute that, assuming the putative class members are determined to have the required part-time nurse service during the relevant time period, they are entitled to additional annuity and should be paid."); ECF No. 54, at 7 n.5 (arguing against the Rule 23(d) Order because it "would interfere with OPM's statutory obligations regarding annuity computations"); ECF No. 144, at 14 (describing "what [OPM] had accepted as its obligation: to pay the absent class members what they were owed"); ECF No. 150, at 7-8 ("there is ... no dispute between the parties that the Enhancement Act is retroactive, that OPM is applying it as such, and stands at the ready to notify the putative class members that they may be entitled to additional annuity benefits under the Act."). See Wigton /, 949 F.Supp.2d at 625, n.10. These are not statements of this Court. They are those of an agency of the United States Government, in and to a federal court. This federal court. The Court will take OPM at its word.[4]

         Second, while OPM may now be attempting to walk back its earlier position on whether Section 132 as a matter of law requires increased annuities, there is no question that there existed an understanding that OPM would apply Section 132 to these nurses. That understanding stemmed from OPM's own post-Lippman understanding of Section 132 as the source of a legal obligation. In the Court's view, that is sufficient to create a property interest. See Roth, 408 U.S. at 577.

         Third, Section 132 itself supports the conclusion that Plaintiffs are likely entitled to immediate payment of increased annuities, so this Court can't (and won't) dismiss OPM's stated post-Lippman position as some sort of administrative lark or governmental misstep. "In computing the annuity under the applicable provision of law specified in that subsection of an individual [who retired before April 7, 1986 and worked part-time], the service . . . shall be credited as full-time service." 38 U.S.C. § 7426. To the Court, that appears to be as clear a congressional directive as that body can give. While it is true that under the CSRA, there is no vested right in an annuity "until the particular event happens upon which the money or part of it is to be paid, " Rafferty v. United States, 210 F.2d 934, 936 (3d Cir. 1954), surely the identification of constitutionally-protected property interests does not turn on the inconsistent litigation positions of federal agencies as to their statutory mandates. This Court believes that the record amply demonstrates that OPM has persistently acknowledged that Section 132 facially applies retroactively to cover the Plaintiffs here.

         Finally, even though this Court may not have jurisdiction to order annuity recalculations, that fact does not alter the reality that Plaintiffs have a property interest. The property interest is predicated on independent sources of law, not on the scope of this Court's power to order a direct remedy. See Roth, 408 U.S. at 577.

         Therefore, the Court concludes that Plaintiffs have demonstrated the existence of a property interest sufficient to maintain their Due Process claim, and to bar summary judgment in OPM's favor.

         2. Notice

         Because the Court concludes that Plaintiffs have made out a claim that they been deprived of a protected interest (based on what OPM has repeatedly said are its legal obligations), it will now examine what process is due.

         OPM's position is that Plaintiffs are not entitled to identification or notice by or from OPM, but if they just ask OPM, then OPM will recalculate their benefits. In support of that position, OPM marshals several arguments, the first of which is that publication of the Enhancement Act in the United States Code is sufficient notice of that statute's existence and effect. ECF No. 193, at 19. But that doesn't square with what OPM now claims the Enhancement Act says more directly. Further, OPM now seems to say that it was not even clear to OPM that Section 132 of the Enhancement Act mandated that Plaintiffs are entitled to increased annuities (and it apparently took the Lippman adjudication to convince them). If the Enhancement Act's mandate was an oblique concept even to the sophisticated officials at OPM, then surely that statute can't possibly be said to have, as a matter of law, provided adequate notice to the individual retired VA nurses that they are entitled to an increased annuity.

         That argument, and OPM's next one, are premised on its self-styled "decision" to recalculate annuities being classified as a legislative act.[5] But that also is not so. OPM may try to dress this up as a policy decision, but the fact is that but for the Lippman adjudication, it would not be applying Section 132 to Plaintiffs and would not be recalculating or paying increased annuities. That the effects reach a potentially large number of people is of no moment. This is not an "across the board" legislative judgment, see United States v. Fla. E. Coast Rwy. Co., 410 U.S. 224, 244-46 (1973), rather it is the direct result of the Lippman adjudication. There was no legislative policy decision here. Interpreting and applying adjudicative decisions to discrete individuals is a traditionally judicial (not legislative) function. Further, because OPM has decided to recalculate annuities for some retired VA nurses and not others (based on who is lucky enough to have known to ask OPM), the action can fairly be conceptualized as the adjudication of individual eligibility that implicates individualized notice. See Mathews v. Eldridge, 424 U.S. 319 (1976); Goldberg v. Kelly, 397 U.S. 254 (1970); Schroeder v. Hegstrom, 590 F.Supp. 121, 128 (D. Or. 1984).

         OPM also challenges the individualized nature of the notice Plaintiffs seek. ECF No. 193, at 24. It argues that publication of OPM's Lippman plan in the Federal Register is legally sufficient in and of itself, and that OPM is willing to so publish a notice of that decision upon lifting of the Rule 23(d) Order. Id. Again, that argument is premised on OPM's action being a "formal legislative rulemaking" which it is not. The Lippman adjudication was just that-an adjudication. And OPM's applying it to Plaintiffs here was born of that adjudication, not the issuance of a legislative rule.

         Finally, whether OPM can identify and give notice to Plaintiffs without actually recalculating their annuities is a genuine issue of material fact that precludes summary judgment. OPM says that this is the state of affairs. ECF No. 104, at 3; ECF No. 54-3, at 7-8 ¶¶ 22-23. Plaintiffs, however, dispute this fact and seek discovery on it. ECF No. 214, at 8. The Court concludes there is, at the very least, a genuine dispute on what is a material fact. Importantly in Plaintiffs' favor is that there is plenty in the record to support the proposition that OPM may be able to identify most (if not all or almost all) eligible individuals without actually first recalculating their annuities. See ECF No. 193, at 13 (describing the review process undertaken before entry of the Rule 23(d) Order: "as part of its normal administrative operations, [OPM] undertook a review of the Civil Service retirement files for those individuals to determine whether they were eligible for a recalculation'") (emphasis added).

         The bottom line is that OPM's contentions in these regards are fundamentally and directly contrary to its own repeatedly stated positions, and as noted above, they also run counter to settled decisional law and the record here. At this summary judgment stage, the Court cannot conclude as a matter of law that Plaintiffs are not entitled to notice that falls within this Court's jurisdiction. OPM's Motion to Summary Judgment will therefore be denied as to the Due Process claim because Plaintiffs have demonstrated the existence of a covered property interest and they are not necessarily ...


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