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BURNS v. USPS

August 1, 1974

Dalton BURNS, President of the New York State Branch of the National Association of Postal Supervisors ("N.A.P.S."), et al., Plaintiffs,
v.
The UNITED STATES POSTAL SERVICE et al., Defendants


Metzner, District Judge.


The opinion of the court was delivered by: METZNER

METZNER, District Judge:

Before the court for decision are cross-motions for summary judgment pursuant to Rule 56, Fed.R.Civ.P.

 This is an action arising under the Postal Reorganization Act of 1970, 39 U.S.C. § 101 et seq. (Reorganization Act). Plaintiffs are sixteen supervisory employees of the United States Postal Service (Postal Service), who received certain compensation in April 1973 for which no contributions were made to the Civil Service Retirement Fund (Retirement Fund). Suing for themselves and others similarly situated, they seek a declaration that defendants have violated the Reorganization Act by refusing to treat this compensation as "basic pay," and by refusing to make contributions to the Retirement Fund. They also seek an order directing that such contributions to the Retirement Fund be made, and that basic pay be recomputed for the period from November 14, 1972 through March 3, 1973.

 As a result of wage increases granted to the rank and file employees of the Postal Service in July 1971, the supervisory personnel, like the plaintiffs, were actually earning less than these employees. Therefore, the Postal Service issued Postal Service Order 72-3 on June 16, 1972, to provide a comparable pay increase and cost-of-living adjustment for the plaintiff class. These increases were mandated by 39 U.S.C. § 1004(a).

 When this Order was issued, the nation was in the midst of Phase Two. Accordingly, any increases in compensation required prior approval of the Federal Pay Board. Postal Service Order 72-3 stated that its effective date of July 8, 1972 was conditioned on Pay Board approval of the "necessary pay adjustments" contained therein.

 Subsequently, the Pay Board rejected the Postal Service's application to pay these increases on the ground that postal supervisory employees had already received an increase during the twelve months prior to the 1972 request for approval.

 In November 1972, the Postal Service filed an application with the Pay Board for an exception to the wage ceilings then in effect for the period beginning November 11, 1972. It sought a general increase of $500 in the salary of the postal supervisors, as well as a cost-of-living adjustment of $166 per year. On February 15, 1973, the Pay Board granted the Postal Service permission to make certain "pay adjustments" not to exceed 5.9 per cent retroactive to November 14, 1972.

 On March 20, 1973, the Postal Service issued Postal Service Order 73-1 granting postal supervisors a "salary increase" of $500 per year and a cost-of-living increase of $166 per year, to be effective March 3, 1973. In addition, the Order provided that the cost of living adjustment was not to be considered "an increase in basic compensation," and was "not applicable to benefit plans determined with respect to basic salary such as life insurance and retirement benefits."

 It also provided for the lump-sum payment of compensation for the period between November 14, 1972 and March 3, 1973, which it denominated an "equalization payment," and which was not to be considered as basic pay for retirement and insurance purposes.

 Under Section 1005(d) of Title 39, supervisory employees of the Postal Service are covered by the civil service retirement provisions of Chapter 83 of Title 5. In addition, these statutes require the Postal Service to "deduct and withhold 7 per cent of the basic pay of an employee," and to contribute an equal amount out of its own funds. (Emphasis added.)

 As a result of the Postal Service's alleged improper classification of the equalization payment and the cost-of-living adjustment as nonbasic pay, plaintiffs claim that the Postal Service's contributions to the Retirement Fund for the period between November 14, 1972 and March 3, 1973 were not as much as they should have been.

 In addition to the claimed loss of retirement benefits, plaintiffs also allege that the Postal Service's refusal to treat the equalization payment as basic pay deprived them of additional "premium wages" for overtime, night differential and Sunday work. Each of these premium payments is based on an employee's annual base pay. Plaintiffs have made a random sample of work records for the period between November 14, 1972 and March 3, 1973 and have determined that, because of the holiday season, an average supervisor worked approximately 60 hours in overtime, 240 to 400 night hours, and a varying number of Sundays.

 Both parties have agreed that under the Reorganization Act, the Postal Service's authority to "set and classify the compensation and benefits of all officers and employees," is a matter of discretion. The threshold question we must consider, however, is whether the exercise of that discretion is subject to judicial review.

 In its brief, the Postal Service maintained that its decision to classify the compensation in this case as nonbasic pay was a rational exercise of discretion which is reviewable by the court. At oral argument, however, the Postal Service argued for the first time that its action is not reviewable, citing Panama ...


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