UNITED STATES v. LARIONOFF
Argument of Deputy Solicitor General Jones
Chief Justice Warren E. Burger: We will hear arguments now in 413 United Sates against Larionoff, is that correct Mr. Jones?
Deputy Solicitor General Jones: It is correct Mr. Chief Justice.
Chief Justice Warren E. Burger: You may proceed whenever you are ready.
Deputy Solicitor General Jones: Mr. Chief Justice, and may it please the Court.
The issue in this case which arises under a statute, that has since been appealed.
It's whether the Variable Re-enlistment Bonus of an enlisted man who extends his enlistment in military service.
It is computed as of the date, he signs his extension agreement or instead as of the later day which he enters in to the service of the extension period.
This issue involves approximately $60 or $70 million military pay.
This Court granted certiorari to resolve a conflict among the circuits.
In order to understand it's case, it is necessary first to understand the considerations that led to enactment of statutory authority for payment of Variable Re-enlistment Bonus.
Also to understand the manner in which the Department of Defense exercise that authority.
The statute was enacted in 1965, during the first major phase of this country's military undertaking in Vietnam.
At that time, the Department of Defense was concerned.
That enlisted men possessing critical military skills would re-enter civilian life at the end of their original enlistment periods.
Leaving the Department of Defense was the essential but expensive task of training new men in those skills.
It was determined that the offer of a large bonus in addition to the existing so called regular re-enlistment bonus not induce substantial members if enlisted men to re-enlist at the end of their original enlistment periods.
It was further determined that the size of the bonus in each case should depend upon the importance of the particular military skill to the military.
Accordingly Congress authorized the Secretary of Defense to assign to each military skill and award level ranging from 0-4 depending upon the importance of that skill to the military at that time.
These award levels were subject to annual review and modification as the military's needs changed.
The bonus called the Variable Re-enlistment Bonus was equal to Regular Re-enlistment Bonus multiplied by the award level in effect for the enlisted man skill at that skill level at the time of his re-enlistment.
The present purposes, the most significant aspects of this history or that Variable Re-enlistment Bonus statute by its terms, refers only to re-enlistment not to extensions of enlistment and that there is no indication in the legislative history, that either the Department of Defense or Congress gave consideration to have or even whether the Variable Re-enlistment Bonus Program would apply to extensions of enlistment.
Now, this is important because extensions differ from re-enlistments in two fundamental aspects.
It differs to timing and extension typically is entered in to right at the outset of the man's military service or is by contrast, a re-enlistment only takes place at the end of that original enlistment period.
Unknown Speaker: Has this been your position throughout?
Deputy Solicitor General Jones: Has fund in our position throughout Mr. Justice White?
Unknown Speaker: That is what you just said.
Deputy Solicitor General Jones: Oh yes, there is clear difference between extensions and re-enlistments.
Unknown Speaker: And -- is your --
Deputy Solicitor General Jones: Oh, I am not arguing that the statute, that the bonus program does not apply to extensions.
I am just explaining if you would give me time, how it applies.
Unknown Speaker: Would you repeat what you just said?
Deputy Solicitor General Jones: I said extensions differ from re-enlistments in two ways.
I just described one way which they differ, that is as to timing.
The extension is entered into its beginning of the period of service.
The re-enlistment is entered into only at the end of the original enlistment period.
The second difference is more important for this case.
That is the difference in motivation.
An enlisted man extends his enlistment at the outset of his military service, in order to qualify for specialized training that will lead to higher pay in the military and in some cases at least to a better career in civilian life after he leaves the military.
As a condition of eligibility for specialized training of this kind, the military requires often requires a longer minimum service commitment than the original enlistment period and the enlisted man extends his enlistment at beginning, in order to satisfy that condition of eligibility and receive a specialized training.
In contrast, a re-enlistment is entered into only at the end of the original enlistment period.
There is no built-in incentive other than the pay, allowances and other enjoyments that military life generally men afford.
Now, on view of these differences, we cannot know how Congress would have legislated with respect to extensions of enlistment.
If it had that matter, if it explicitly considered that matter.
Congress might have concluded that the incentive of specialized training was sufficient alone to induce extensions and that no additional bonus need be provided.
On the other hand --
Unknown Speaker: An extension of enlistment would be typically what from.
Deputy Solicitor General Jones: From four years to six years.
That's the extension in this case.
It could be for a lesser or greater period of time.
The original enlistment period here was four years.
I endure the differences in timing, that is if the extension is entered, if the extension agreement is signed at the beginning.
Congress had it considered the matter, might have acted to clarify the question, when Variable Reenlistment Bonus accrues in cases of extensions.
But it did neither.
The statute and a legislative history were silent as to the intended application of a Variable Reenlistment Bonus Program to extensions of enlistment.
Now, this is not to say that the program does not apply to extensions of enlistment, but it applies not by virtue of the language of the bonus statute itself former 37 U.S.C. 308(g), but rather as the consequence of the general catchall provision in 37 U.S.C. 906, which provides that a man who extends his enlistment is entitled to the same pay and allowances as are made available to a man who reenlists.
This means that when Congress passed the bonus statute, the Secretary of Defense was left with the delegated responsibility of accommodating the bonus program to a group, service members who extend their enlistments, that had not been within the explicit contemplation of Congress when it enacted the statute.
Now, the major question confronting the Secretary in this regard was whether in cases of extensions the bonus was to be measured on the basis of the award level that was in effect when the extension agreement was signed or instead on the basis of the award level that was in effect on the later date, when the extended period was entered into.
Now, the former alternative would have conceitedly had the advantage of relative certainty.
That is at the time the agreement was signed, every one would know what award level would apply.
On the other hand, relative certainty is to the award level that will apply to a bonus that will not be received for several years, might not be of major significance as compared with the basic incentive or specialized training.
But in any event several other considerations militated against measuring a bonus as of the earlier date.
That form of computation would have led to a potential disparity between the treatment of reenlistments and extensions, would have created the possibility, that a man who entered into his extension period would receive a different bonus, perhaps greater, perhaps smaller depending upon what it happened to the award level in intervening time, from that received by a man who entered into his reenlistment period on the same day possessing the same skill.
Now, this disparity in treatment could be have been expected to have led to disputes and dissatisfaction and more than that it would appear to be contrary to the statutory command of equal treatment for extensions and re-enlistments.
Further more 37 U.S.C. 308(d) provides that a man who reenlists during basic training is not entitled to the bonus.
That statute would seem to suggest in view of the requirement of equal treatment, that the bonus could not immediately vest in the case of an extension, that was entered into, the extension agreement that was signed during the period of basic training.
Unknown Speaker: Mr. Jones, if a man who dies somewhere along the line, does that make any difference at all?
Deputy Solicitor General Jones: Well, if he dies before he enters into his extension period, our position is that he is not entitled to any bonus and the matter hasn't been fleshed out in litigation but I assume that would be the respondent's position too.
There is a provision in the regulations for recruitment, if the extension period is not fully served.
That is if for some reason, the man leaves the service having finished only one of the two years of his extension period, the Navy could recruit one-half of his Variable Re-enlistment Bonus.
Unknown Speaker: There's not ever been the effect to your knowledge, if a man dies...
Deputy Solicitor General Jones: The record does not so show because the case is up on summary judgment but it's my understanding that it is common to have recruitment in situations like that.
Well, let me state further that the bonus is paid in installments so that the future installment simply wouldn't be paid.
I think that, that more than an official recruitment would be the method by which the full bonus will not be paid.
But moreover permitting the bonus divest at the time, the extension agreement was signed but also be the inconsistent with the Secretary's representation to Congress at the time the Bill is being considered that there would be no expressed or implied obligations with respect to the future payments of the bonuses.
Unknown Speaker: I suppose, there is no doubt is there -- Mr. Jones that if I enlist in the army as the private and the pay is in fact was less than $50 a month and I enlist for three years and two months later, Congress reduces the pay to $45, I have to stay in the army, three years?
Deputy Solicitor General Jones: Absolutely, and the enlistment agreements provide, and I will get to this little bit further, but they are normally provide that they are entered into in consideration of the pay the Bill accrued, whatever accrues is what the man gets under the contract.
With consideration of the contrary that I just resided presumably in mind, the secretary promulgated regulations that in his view provide for computation of the Variable Re-enlistment Bonus.
On the basis of the award level and affect on the day the man enters into the extended period of service, whether he enters into that service by way of reenlistment or extension.
Now, there can be no question under the Statute that the secretary had latitude to adopt this rule.
The only question in this case is whether the regulations have the effect that the secretary intended.
Now, with this rather extensive background in mind, I will discuss the particular facts of this case.
The respondents are Navy enlisted men who at the outset of their service, extended their enlistments from four years to six years, in order to qualify for training in the Navy's program, what was called Advanced Electronics Field.
Their extensions agreements stated that they were entered into and 'In consideration of pay, allowances and benefits which will accrue to me during the continuances of my service.'
The agreements didn't state that the respondents would be entitled at any point to a Variable Re-enlistment Bonus.
Indeed the agreements didn't mention the Variable Re-enlistment Bonus at all.
Now, presume it to these extension agreements, each respondent in fact did receive the Advanced Electronic Field training and that training led to qualification in the Naval skill rating called Communications Technician Maintenance or CTM.
Now, the problem in this case arises because at the time the respondents sign their extension agreements.
The CTM award level was set at four, the highest permissible, but by four years later when they entered into their extension period, the CTM award level had been reduced to zero.
More over by the time respondent Johnson entered into service of his extension period, Congress had already repealed the statutory authority for payment of Variable Re-enlistment Bonuses.
Accordingly, the Navy refused to pay the respondents, the bonus.
Respondents then brought this suit claiming that their right to bonus had accrued within the naming of their extension agreements at the time they signed those agreements and they requested payment of the bonus based upon an award level of four or any alternative release from service.
Some of the respondents submitted after Davidson in which they stated that they had been promised payment of the Variable Re-enlistment Bonus by a Recruiting Officer based upon the award level four.
In response, the head of the Navy's Variable Re-enlistment Bonus program submitted in after David, in which he stated and I quote ''It is not the policy of the Department of the Navy to promise specific eligibility for Variable Re-enlistment Bonus nor is any official authorized to make such a promise and counseling with the prospective enlistee'.
Government also submitted to the Court regulations requiring reenlistment interviewers to inform enlistee's, and I quote "We are the program flexibility and possibility of changes which might decrease the amount of bonus to which entitled at the time of reenlistment'.
Both sides then move for summary judgment.
The District Court granted the respondent's request for payment of the bonuses and denied their request for release from service.
Both sides appealed and the Court of Appeals affirmed.
One point should be clarified in connection with these facts.
Respondents in this Court state as a fact that they were promise bonuses based upon an award level of four but that allegation was disputed in the District Court and the Court made no findings with respect to that.
More over by granting summary judgment for the Respondents, the District Court necessarily proceeded upon the assumption that no such promise had been made.
In any of them, we take the position here that whether or not such a promise was made is legally immaterial and so, far as Respondents argue a theory of promissory of stopple and did not appear to do so, in this court, it is well established that the government is not to stop by the unauthorized representations of its agents and respondent have?
Unknown Speaker: These were alleged and oral all promise by recruiting officers.
Deputy Solicitor General Jones: That's correct, that was the allegation, it is never found as a fact.
Respondents have abandoned their request for release from service which presumably was based upon some theory of misrepresentation or mutual mistake by failing to file a cross petition from that portion of the judgment below, that was adverse to them.
Accordingly respondents claim for entitlement to the bonus, turns upon the text of the applicable military regulations.
Now, Department of Defense Instruction, 1304.15, Paragraph VI A, which we discussed in our brief, provides that 'the members will receive the award level effective on the date of their extension of enlistments'.
The term extension of enlistment is not defined in the regulation.
We are showing some details however on Pages 28 to 30 of our brief, that both the Navy regulations and the extension agreements themselves provide that an extension does not become effective until the day following the expiration of the original enlistment period and as a corollary and this is the military's constructions of its own regulations.
The extension of the enlistment occurs only when service of the extension period begins.
Now, this is a fair reading of the regulation and we submit that it should be sustained, but moreover as we point out in our reply brief, on Page 2, 'If extension of enlistment were read as the respondents suggest, as referring to the signing of the extension agreement then respondents would never have become even potentially eligible to receive a Variable Re-Enlistment Bonus".
Paragraph V.B.1.b of the regulation, which is set forth to Page 59 of the Appendix, acquires that to be eligible for a bonus.
A service member must have completed at least 21 months of continuous active service prior to extension of enlistment and respondents had not completed any substantial active service before they sign their extension agreements.
In short, under the regulations respondents were entitled at most to the award level that was in effect on the days that they entered in to service of their extension periods.
Since the CTM award level on those days was zero, the Navy properly refused payment of the Variable Reenlistment Bonus.
Now, respondents claim however that paragraph V.B.1.f of the regulation which is at Page 61 of the Appendix implies, doesn't state but implies that they are entitled to a bonus, but that paragraph has no application to respondents at all.
It is designed solely to the deal with the fact that a 90 day in advance notice is given before an award level is reduced to terminated.
There are service members so situated that upon hearing that their award level is to be reduced or terminated.
They would be able to obtain an early discharge under the regulations and re-enlist, were possibly to sign an extension agreement towards the end of their period of service and then enter into service of the extended period.
Paragraph V.B.1.f is simply designed to prevent such service members from obtaining a Variable Reenlistment Bonus based upon the older outgoing award level.
As to such service members, the purpose of this provision is to make a reduction or termination of award level effective immediately upon the issuance of the notice.
That's the only purpose in effect of this provision.
It does not apply to respondents and would not assist them even if it did.
Now, I would concede that these regulations could have been written in a manner better calculated to reveal their objectives to the nonmilitary mind.
They are not plain on their face but they are interpreted and applied in a manner that I have described.
This Court's statement in a similar context, in Immigration and Naturalization Service against Stanisic, pertains here as well, and I have a quote from that opinion.
Granting that this regulation is not free from ambiguity, we find it dispositive that the agency responsible for promulgating and administering the regulation, has interpreted it to apply.
The Navy's interpretation here is not plainly erroneous; it is not inconsistent with the language of the regulation and it should therefore be given controlling weight in this litigation.
I have one final point.
Respondents argue that if they are right and the military is wrong about the meaning of the military's own regulations, then congress acted unconstitutionally in repealing Variable Reenlistment Bonus, in a manner that deprived payments of the bonus or denied payment of the bonus to respondent Johnson.
Chief Justice Warren E. Burger: If that is correct then the illustration is hypothetical that Mr. Justice Rehnquist gave over reduction and pay would be equally unconstitutional.
Deputy Solicitor General Jones: Well, it would proceed along the same lines.
The respondent's theory is that as of the time they signed the agreement, they had a vested right to a certain amount and in so far.
Chief Justice Warren E. Burger: Well, if they join the service at $50 a month, isn't that almost.
Deputy Solicitor General Jones: Well the same.
Chief Justice Warren E. Burger: ..much vested.
Deputy Solicitor General Jones: Yes, Mr. Chief Justice, the same line of analysis could equally well be applied there.
However, we would formally resist such interpretations just as we do here.
Indeed, our point with regard to their argument of unconstitutionality, is that, that is simply one more argument in favor of the military's interpretation.
A military's construction avoids any constitutional question and therefore should be preferred even if the respondent's competing construction were otherwise equally plausible which we submit they have not shown it to be.
For these reasons, we ask that these judgments below be reversed.
Justice Byron R. White: Well, as I understand you earlier you indicated that the rescission issue had been decided adverse to them at the Court of Appeal?
Deputy Solicitor General Jones: That's correct Mr. Justice White.
Justice Byron R. White: Well, I do not understand that, was that the main opinion by Judge McGowan?
Deputy Solicitor General Jones: Yes it was.
Justice Byron R. White: On page 32(a) of the petition presort, the question is whether the rescission falls within that narrow exception.
Deputy Solicitor General Jones: Pages 31(a) to 33(a), that is correct.
Justice Byron R. White: Yes and then normally, a Court's exercise in (Inaudible) jurisdiction did not have jurisdiction over equitable matters but there are some exceptions and the Court says, we have serious doubt as to whether this case falls into that exception but the answer is we find it necessary to resolve these doubts one way or the other.
Since on the basis, the record reports, we find it impossible to sustain a judicial decree of rescission but only because they ordered that VRB to be paid.
Deputy Solicitor General Jones: Well.
Justice Byron R. White: Let's assume that they certainly don't say what their view is if the VRB is not to be paid.
Deputy Solicitor General Jones: Now, all that do, Mr. Justice White is to affirm the denial of that relief.
They say we therefore conclude that the District Court properly limited the relief in this case to the award of the bonus.
Justice Byron R. White: Exactly, but they just said that since their avoiding the VRB's they don't need to decide the rescission issue.
Deputy Solicitor General Jones: Well, the District Court may have said very much the same.
The respondents felt it necessary?
Justice Byron R. White: But let's assume the reverse, and say they are not going to get the VRB's, do you mean the rescission of -- should in a case go back and have the Court of Appeals decide them to resolve the doubts if they found it unnecessary to resolve.
Deputy Solicitor General Jones: Well, I would not think so Mr. Justice White but the question is whether the respondents had an obligation to protect their rights to rescission or finally a cross petition.
Justice Byron R. White: Well, not if the Court of Appeals has never decided it the issue?
Unknown Speaker: Let's assume they had expressly reserved the question.
Well than I suppose.
Justice Byron R. White: Which I think they did?
Unknown Speaker: Well, that is a permissible interpretation.
Deputy Solicitor General Jones: Let me point out Mr. Justice White that this is more or less an academic discussion.
Unknown Speaker: It maybe.
Deputy Solicitor General Jones: Because each of the name well, not only for the reason that I would hope but also because the -- each of these named respondents has already completed all of his extended periods so there would be no basis for a release from service, if indeed they are still in the service.
If they are in the service now, it's because they re-enlisted or further extended their agreements or their extensions and not because of the agreement they entered into in this case.
Unknown Speaker: Not, so the issue is in here or will never will be anywhere but not because they failed to file across?
Chief Justice Warren E. Burger: Mr. Keeffe.
Argument of Stephen Daniel Keeffe
Mr. Stephen Daniel Keeffe: Mr. Chief Justice, may it please the Court.
We are dealing with an act to Congress that was passed during the war and the bonuses before this Court would passed to induce these plaintiffs to extend their enlistment, and understand what happened here.
You have to look at the legislative history of Section 308(g) and you have to listen as you read to the words of Secretary McNamara when he asked for these bonuses.
He was faced with a situation where first-termers, that is 'men and women in our service who are under four year contracts were enlisting at the rate of 25% and all other enlistments in our services fell in the rate of 85%".
There was an astounding attrition rate, in that first term, and it was this findings by the Secretary, that drew him to the conclusion that something outs was needed to induce military personnel to extend their enlistments.
This coupled with the fact that the training required for these men and women is very expensive.
The testimony in the Congress is that it was over $10,000 a person.
Therefore, of course, if you lost a person in a critically undermanned skill, you have to retrain them at a substantial cost.
So, in addition to training which was offered these, men and women, they were also offered bonuses, substantial bonuses to induce them to extend their enlistments.
In critically undermanned skills, and it is this background that these plaintiffs survived in our services.
They enlisted for four years in basic training, they were told, not Justice Rehnquist and Mr. Chief Justice that their pay wouldn't be changed.
They were told that if they extended their enlistments, they would receive bonuses and the bonuses were computed of their regular re-enlistment bonuses.
Unknown Speaker: What is the difference between those two, you obviously think there is..
Mr. Stephen Daniel Keeffe: Yes Sir, I do and I think it's a fundamental difference between -- that is to say between petitioner's respondents.
That difference is there is that we do not say that the Congress could not change basic pay.
In your case, your illustration from $50 to $45.
We could see that.
We also say, the Congress has the power to provide specific bonuses to induce people to extend, something outs, basic pay one thing, these bonuses are something outs.
The Congress said and you read the testimony that moves the Congress to spend this kind of money and it says, we want to concentrate retention dollars at the decision making point.
Unknown Speaker: But hey, pay too is an inducement to enlist.
I mean, the pay that a person gets in the Armed Services at whatever level, if there were no pay, you probably wouldn't enlist.
Mr. Stephen Daniel Keeffe: That probably true.
However, the question is whether bonus is an inducement, a specific promise to pay by the congress to these persons to extend their enlistments for an additional two years.
That something outs and we said it is something outs.
Chief Justice Warren E. Burger: How is it different from an undertaking at the outset, if it is different on the part of the military that if you extend it will give you a raise in salary.
Mr. Stephen Daniel Keeffe: I suppose, the difference is that if you, there wouldn't be any difference there Mr. Chief Justice, I do not believe that you said exactly how much you are going to give them and when they were going to get it.
Other than that, I don't think there would be there much of a difference.
What we had here over Sir, was a finding by the Court below based upon an extensive review of the legislative history, that it wasn't the intent of Congress to do something very specific, at a very specific point in time.
And one that could be calculated, and I may say that when you look at the records, you are going to find that there will never be an other VRB case here, I don't believe because they were only dealing with a peculiarity of the manner in which this was administered by the Navy.
When you look at, for instance, Taschler v. United States in 204 in the court acclaims you will see said out there exactly what happened in the other services.
One of the problems here, as you know is that are they repealed or rather part of the class lost their bonuses because the Navy said that their skill was no longer critically undermanned and as a result they no longer got the bonuses and so they said, well, if we do not get the bonuses does that mean we have to serve the two years and the answer was categorically, yes.
Yes you have to serve the two years.
Unknown Speaker: Well, the answer, the Court gave in Orloff v. Willoughby too, wasn't it, that the plaintiff there said, he is entitled to a commission because he was a doctor and he had been drafted as a doctor and the government refused to commission and then he said, at least let me out and this court said, we will not let you out and you will not get a commission.
Mr. Stephen Daniel Keeffe: I appreciate that that was a finding, Sir.
The only thing, I can say is that when you look at the legislative history, it would appear that the men who are entitled to their bonuses through act of Congress and I would also say to you Sir, that the bonuses that they were entitled to, I believe, they were entitled to under the Navy regulations themselves.
It's only when you gain into this slippery interpretation that the Secretary of the Navy used which was to say, "In the first three months of your four year extension or four year contract, you extend for two years or extend for two years making it a four year obligation".
But we don't pay you the bonuses, until you start the first day of the third year.
We don't pay you the bonuses.
So, these men and women all enlist, or extend their enlistments induced by these bonuses, a whole two years and then as they approach the fifth year, the Navy says, 'These skills are no longer critically undermanned and therefore we don't give any bonuses'.
And this has a peculiar effect, if properly administered in a computerized world of never having to pay the bonuses, because you always can induced enough people presumably through your recruitments to fill the necessary need, then declare, no longer critical and you don't get your bonus.
In a majority the plaintiffs before this Court had that happen to them.
One plaintiff, in particular was denied his bonus for another reason.
That reason was a Congress in 1974, did away with the Variable Re-enlistment Bonuses and when they did that the question was raised whether or not the statute prohibited the Navy from paying that person's bonus.
That's what we refer to as the Johnson class or the Johnson I.
Justice Thurgood Marshall: Mr. Keeffe, suppose on the first day of the year, they say, we don't need your service, it is all, good bye?
Mr. Stephen Daniel Keeffe: These plaintiffs would have left.
Justice Thurgood Marshall: But that would they have any claim.
Mr. Stephen Daniel Keeffe: No sir, I have not believe so, because Congress.
Justice Thurgood Marshall: But why do they have a claim now.
Mr. Stephen Daniel Keeffe: They have a claim now because Congress said you have -- we want you to serve.
Justice Thurgood Marshall: But you said, the Congress says you should get a bonus.
Mr. Stephen Daniel Keeffe: Yes sir.
Justice Thurgood Marshall: On the first day of the fifth year, now, in my hypothetical, on first the first day of the fifth year, they said, the two things we don't do, one is give you a bonus and let you stay, you admit, you wouldn't have any case at all.
Mr. Stephen Daniel Keeffe: I don't believe we would Your Honor because, I believe the legislative history here demonstrates that Congress intended to pay these bonuses for people to serve in a critically undermanned skill.
Justice Thurgood Marshall: The Congress change its mind, did not it?
Mr. Stephen Daniel Keeffe: Yes Sir, it did but not, there is no evidence that it changed it as to VRB for these persons who had previously enlisted, extended their enlistments.
They are different class of persons.
Justice Thurgood Marshall: But why wouldn't they be entitled to the bonus?
Mr. Stephen Daniel Keeffe: On the first day?
Justice Thurgood Marshall: Yeah.
Mr. Stephen Daniel Keeffe: Because, I believe it's clear, as a matter of fact that it's because of the recruitment provisions by the way that were mentioned by the petitioners.
Justice Thurgood Marshall: Well, if the serviceman died on the first day, would he have his right of action for the bonus money?
Mr. Stephen Daniel Keeffe: I believe there would for only that which would be to due in owing them.
That is to say.
Justice Thurgood Marshall: Well then you don't agree that when -- if they let it go, the first day you say he would be entitled to bonus.
Mr. Stephen Daniel Keeffe: I don't think he would have gone in ?.
Justice Thurgood Marshall: If he died the first day, his heirs would.
Mr. Stephen Daniel Keeffe: It if I don't think,-- I think that the intent of the Congress, Justice Marshall was to have these persons extend their enlistments, fill a need and serve and the Congress is quite critical about the services that put a lot of people to extend and then let them do something outs.
Justice Thurgood Marshall: There is nothing in the record that shows that the government made any contract, deal or anything with him to pay him a bonus.
Am I right?
Mr. Stephen Daniel Keeffe: Nothing.
Justice Thurgood Marshall: When he signed for his extended period, there is nothing in that that said you get a bonus.
Mr. Stephen Daniel Keeffe: Yes, there is, as a matter of fact, it's in his contract.
Justice Thurgood Marshall: What does it say.
Mr. Stephen Daniel Keeffe: The contract says that, In consideration of paid benefit and allowances to be received.
Justice Thurgood Marshall: Well that's I don't. Do they say bonus'
Mr. Stephen Daniel Keeffe: No Sir, it doesn't.
The government stipulates however, as they did in the Court below that pay includes a Variable Reenlistment Bonus.
Justice Thurgood Marshall: But I thought I understood Mr. Jones, to say there was nothing in that, promise of the bonus.
Mr. Stephen Daniel Keeffe: Well, that is incorrect in -- we have..
Justice Thurgood Marshall: Yeah I mean, you said, he agreed to it.
Did he agree to it then, as he change his position?
Mr. Stephen Daniel Keeffe: Yes, I suppose he has.
Justice Thurgood Marshall: The Government changes.
Mr. Stephen Daniel Keeffe: Yes, it has and I think it in it's point itself up in the Carini case in the Fourth Circuit where Judge Haynesworth says in their early parted opinion, Judge Haynesworth says that ,'I find that that statement paid benefit and allowances doesn't include VRB', which I believe is the point that you are making Justice Marshall, and the act...
Unknown Speaker: In your brief, as I understand you have in the stipulation that that the VRB is pays, is that?
Mr. Stephen Daniel Keeffe: Yes, that the Government conceded that.
Unknown Speaker: And you asserted.
Mr. Stephen Daniel Keeffe: Yes, I do.
Unknown Speaker: Did I understand you to say before agreeing again which Justice Rehnquist that the department can reduce your pay during your term of enlistment.
Mr. Stephen Daniel Keeffe: Yes, I believe, it can.
Unknown Speaker: Well, if this is pay, haven't you stipulated yourself in to a precarious position to put it?
Mr. Stephen Daniel Keeffe: It would appear that way perhaps on the surface and I appreciate your curling it to my attention but I think that the answer is that this is a special kind of incentive pay, inducement pay.
It's a different kind of pay than what we refer to is is generally, pay.
Justice Byron R. White: Well, let me get this.
Are you really -- you must stand on the contract, must you do or not?
Mr. Stephen Daniel Keeffe: On the contract, yes.
Justice Byron R. White: At least that if you are supporting the judgment of Court of Appeals, you must because the Court of Appeals apparently went on the basis that this was part of the consideration.
Mr. Stephen Daniel Keeffe: Yes but.
Justice Byron R. White: Namely pay, isn't that right?
Mr. Stephen Daniel Keeffe: Yes sir.
Justice Byron R. White: Would you be here if the contract have said that but excluding VRB's.
Mr. Stephen Daniel Keeffe: Excluding VRB, no I don't think, I would.
Justice Byron R. White: So, you need the contract.
Mr. Stephen Daniel Keeffe: I need, I need that agreement between the serviceman and...
Justice Byron R. White: What if the Navy regs.
What if the contract said this but the Navy regulations were very clear that the VRB -- that he would be entitled to his part of his pay would be the VRB's that were then in effect.
What if it were perfectly clear that -- what if the regs were perfectly clear against you.
What would you say the regulation be invalid?
Mr. Stephen Daniel Keeffe: When you say perfectly clear against me, you mean it would not give us the VRB.
Justice Byron R. White: Well that's right.
Mr. Stephen Daniel Keeffe: And also the contract would exclude.
Justice Byron R. White: Well, the contract.
Mr. Stephen Daniel Keeffe: Further language.
Justice Byron R. White: The contract says exactly what it does now, in consideration of pay allowances and benefits and then there was a regulation which made it perfectly clear that you would not get the VRB.
Mr. Stephen Daniel Keeffe: If the regulation said that we wouldn't be here.
Justice Byron R. White: If you wouldn't.
Mr. Stephen Daniel Keeffe: No sir.
Justice Byron R. White: So you say then that such a regulation would a reasonable construction of the Statute?
Mr. Stephen Daniel Keeffe: Yes it would, because it left -- because statute 308(g) left to the Secretary of Defense who in turn allowed the service secretaries to regulate.
Justice Byron R. White: Well, certainly I don't understand then how you can go much farther because the Secretary interpreting his own regulation has said that under the regulations you don't get the VRB.
Mr. Stephen Daniel Keeffe: You have to.
Justice Byron R. White: And if that's the reasonable construction of Statute,
Mr. Stephen Daniel Keeffe: Obviously, we say, it is not.
First of all, obviously we say, it did not and we so, -- it was so found in the court below.
They had looked at that understanding.
You have, first of all, you have their contract and the contract says pay benefits and allowances and the government says, in the DC Circuit not in the Fourth Circuit, but in the DC Circuit it says, that includes the VRB and then we look to the question of the regulations as to the eligibility of these people under the regulations and we find that a reasonable interpretation of the regulations is that they are entitled under the Navy Regulation to the bonuses.
Now, if and that's our position now, if you say that the regulations do not best arrive or do not confer, an entitlement on these plaintiffs, then you have got to match the regulations against the intent of Congress.
Justice Byron R. White: Well, and then you say that would be all and you say such a regulation would not violate the statute.
Just a moment ago you said that in the claim perhaps you would like to reconsider that.
Mr. Stephen Daniel Keeffe: I only reconsider it to the extent that I would presume when you say in your hypothetical on the regulations that these persons would not have extended in the critically undermanned skill and had been promised there Variable Re-enlistment Bonuses.
Justice Byron R. White: But do you still say that if a regulation were perfectly clear that they would not get the VRB, that that would be consistent with the Statute?
Mr. Stephen Daniel Keeffe: I presume, you are saying that the time may extend Mr. Justice White.
Justice Byron R. White: No I am saying at the time they agree to extend, at the very time they agree to extend here, it's perfectly clear from the regulations that they will all get only the VRBs that are in effect during their period of reenlistment or of extension, that regulation is perfectly clear and they going ahead and nevertheless find it up because they want the special training.
Mr. Stephen Daniel Keeffe: Then they wouldn't be entitled it seems to me to the?
Justice Byron R. White: You would say, then such a regulation would be consistent with the Statue?
Mr. Stephen Daniel Keeffe: I believe it would because here you would have a situation where they wouldn't be paying any of the bonuses to these men, they wouldn't be asking them to extend and I presume they wouldn't be told that they were entitled to those bonuses.
But it seems to me that you have a different -- having posed that problem, you have a different case here, because we find two things, we find that they are eligible under the Statute for the bonuses and we also find that that under the regulation as found by the court below, that they were entitled to the bonuses.
So, in this instance I think you do have a different case.
Justice John Paul Stevens: Mr. Keeffe, may I ask you question, again with a concrete example, as I understand that the question is whether the right attaches the date he signs the extension agreement or at the time period begin.
Now, at the time, he signs the extension agreement, there are two variables that may affect the amount payable to; one, the amount of the regular bonus and secondly the multiple.
Mr. Stephen Daniel Keeffe: Yes.
Justice John Paul Stevens: Now, you say multiple, now, is the bonus itself fixed as of that time, or is that it could change?
Mr. Stephen Daniel Keeffe: The multiple is not varied Justice Stevens.
You have -- the only thing that you can't compute to a dollar and the cents figure is the exact amount of the bonus in dollars and cents because the bonus is a variable of your regular reenlistment bonus and your reenlistment bonus works of how much you are being paid.
For example, these were Petty officers, they might have a different rate.
There was nothing unclear in this case about what the multiple was going to be, they were promised a multiple of four, the highest possible multiple available to them.
Justice John Paul Stevens: But it is true that as of the date, they sign the extension agreement.
They could not then have computed the dollars that would have been payable to them under their theory, under your interpretation of regulations because they didn't know what they would be earning four years hence.
Mr. Stephen Daniel Keeffe: No, but they didn't know that whatever their reenlistment bonus was, it was going to be a multiple four of that, they knew that, they knew it was going to be four, because the way the services operated was they said, this is the most critically undermanned skill.
You are looking at the plaintiffs here who are persons such as the men who were in the (Inaudible) in a different period of time, highly technically trained people, very competent people, very expensively trained.
Justice John Paul Stevens: Do you think there is anything in the Statute regulations that would have prevented the military from changing during the four of period the basic reenlistment bonus by cutting it in half, say a half-a-months pay instead of a full month's pay?
Mr. Stephen Daniel Keeffe: No, I do not, I don't think so, although I have to say that if you read the legislative history of 308(g), there was very definite effort to fix a certain amount of money at a decision point and that obviously would reduce it of course, because your multiple would be going up half of what it was.
Unknown Speaker: The problem, I see is you are claiming a fixed rate, that there is bonus would be the four times x, and you are saying it's fixed rate to four but the government can change the x and as soon as he admit that, it seems to me he may be admitting they can make x zero.
Mr. Stephen Daniel Keeffe: It would appear that we would go that far, it would appear that you could do that because obviously the re-enlistment bonus, the regular reenlistment bonus was multiple of your regular pay and the logic of it would appear to go that far.
The only thing I can say in answer to that is that, the Congress of the United States had in mind, as we view it and as I stated here this morning, an intend to give a specific amount of money to induce people to extend.
Now, that certainly would frustrate that and we then would back in a position of having to design when the extensions went in to effect and if you follow the opinion below and as we suggest, the time that you decide what these men are going to get in the multiple there of, is at the time they extend, and it would seem to me that you would have to compute the bonuses at that time of what their basic pay was then, in order to effectuate a Congressional purpose.
Unknown Speaker: Does the record tell us, what -- during the period they were actually paid, I take that they were four times, whatever the was at the time, they entered in to the fifth year.
Mr. Stephen Daniel Keeffe: Yes of course, none of these plaintiffs.
Unknown Speaker: I know not these plaintiffs, but there was a practice of paying and buying.
Mr. Stephen Daniel Keeffe: Yes there was a practice of paying a multiple of four, yes?
Unknown Speaker: Yes, four times the salary of the time of the?.
Mr. Stephen Daniel Keeffe: Although, we don't know how many of them for sure because as I say the way the logic of the matter is in now stands, with sophisticated computers, you might have been able not pay anybody, anything.
You see, if you fill a critical manned skill and then go on.
Now, I may dwell on two other points.
There are two opposing cases here, one in the Fourth Circuit and the other in the Ninth Circuit and as I started to say, on the Fourth Circuit case in Carini, Judge Haynesworth says, in way that I don't understand, he said that, 'The paid benefit and allowances didn't include the Variable Re-enlistment Bonus', and he couldn't see it there and therefore that was evidence of the fact they wont promise the Variable Re-enlistment Bonus, and in the DC Circuit, the government had certified in the brief conceded that pay included the Variable Re-enlistment Bonus.
So, either that was in air, or outs they changed the position there, I don't know which.
In the other case that is the other Circuit case, is Judge Snead's(ph) opinion in the Ninth Circuit and that has to do with only one group of the plaintiffs.
It has to do with Mr. Johnson who is alleged was denied his bonus because of a change in the Statute that is to say that VRB was eliminated and there Judge Snead(ph) says that there is no evidence in the Statute itself that would indicate that there was any basis for preserving VRB for Mr. Johnson.
So, in addition to losing his bonus under the regulations, the change in the regulations, it also has alleged, he loses it under a repeal of the 308(g) where they put in a new bonus provision.
Now, we have looked at Legislative History in here, again, we say, we don't see any support for that.
Judge Snead states it but if we review it, as we have, I don't see any support for that position.
Secondly if, that is so, we still look to an operation of the bonus.
We give you an example in the brief itself where we say, we think they would be eligible.
Johnson would be eligible under the current Statute because although VRB was eliminated.
We don't see any basis for denying it to Johnson and we think that the way the Statute operates, the multiple affects Johnson in a way where he can get his bonuses.
In particular, we stated an illustration there to cover that.
In addition to that, we also said that if there was an intent, then we outthrust into the question that the Court of Appeals below saw in United States v. Lynch where it appears clearly the reason for repealing the Variable Re-enlistment Investment Bonuses which were only in effect from 65 to 74 right in the period of the war, that if that was the case, Congress was exercising its fiscal responsibility and in that to that extend, they are impairing the men's contract.
But I don't think we have to get to that position.
I think Johnson is qualified because of his extension agreement and the agreement of the Congress to pay him at the time, he made that decision.
If not, I think that he is still as eligible under the Statute, as it's amended, and lastly if that isn't the case, then it appears we have or look to the question of the conflict of the Statute and Lynch v. United States.
In the few moments I had, have left, I'd like to dwell on, I haven't touched really on the equity fee or I also haven't which I am sure the court appreciate is, all the courts below have are very much on our side.
Our people are people were induced to extend and did serve and they deserve a just consideration.
I also think it was intended that they should do so, and the Congress intended to pay them.
It is a large group, but I do think that the equities are very much on their side.
I would also say that I think that we concede, we do concede that basic pay could be change, we think that the Legislative History 308(g) indicates that Congress intended a specific amount of money be paid to these men and for that men and women and for that they serve.
Are there any another questions?
Unknown Speaker: Mr. Keeffe, I had one another, is there anything in the history of this Statute to indicate that the multiples were increased?
Mr. Stephen Daniel Keeffe: Increased?
Unknown Speaker: In other words, say a man signed an extension being on the level of two and a couple of years later went to four understand, understand of the government's version where he would be entitled to four at the time of the extension even though when he signed up he is only offered two.
Mr. Stephen Daniel Keeffe: Yes that's right and of course, that would frustrate the intent of Congress, the way they operated because of course, Congress didn't want him to spread the bonus all over, they wanted them to fix what was necessary to fill a critical need and that is the logic that the government proceeds at.
Unknown Speaker: My question is, do you know if that ever happened, that we have any history of the whether the government is enacted...
Mr. Stephen Daniel Keeffe: We don't in this case Your Honor because we moved quickly through summary judgment so, I can't say that it is here but it may be in the related cases, in particularly Saylors v. United States which is a consolidate case in the Ninth Circuit.
I presume, there were -- I am only guessing, I would only be guessing.
Unknown Speaker: Mr. Keeffe, getting back to brother Rehnquist's point, assuming Congress authorized and the Navy specifically said that in this electronic outset, we are building up, we need trained men etcetera in order to get them and keep them, we will pay them twice the basic salary, and if they come it, and as soon as they get in, they cut it back.
I understand, to me that's alright.
Mr. Stephen Daniel Keeffe: Well, in your example, they say they are going to pay them twice the basic pay, then they take them in.
Unknown Speaker: The next day they got it back.
Mr. Stephen Daniel Keeffe: No I don't agree that that would be proper?
Unknown Speaker: What should difference between -- the answer you said, they cut his basic pay, he could not do anything about it. I thought that's what you said.
Mr. Stephen Daniel Keeffe: I believe that is correct, try the facts here.
Presuming your hypothetical, what happens is that I am doing one job and I am fully qualified to do it and you say to me, I will pay you twice your basic pay to do this other job, the next day, and you immediately proceed in.
I believe that there the government would be required to pay you the double pay.
Unknown Speaker: On what basis?
Mr. Stephen Daniel Keeffe: Presumably on the basis of the Congressional intent to allow to offer.
Unknown Speaker: Congress is the one who changed it.
Congress authorized double pay and then they changed.
Mr. Stephen Daniel Keeffe: Then we have the problem of United States v. Lynch, because if they do it exercising the war power or paramount power, obviously they have the authority to do it.
But if they doing it simply for the purposes of fiscal administration, we have a separate problem and there?
Unknown Speaker: Forty and odd years ago during the depression when the pay of everyone in the government except those protected by the constitution was reduced 10-20%.
Mr. Stephen Daniel Keeffe: Yes.
Unknown Speaker: There was any barriers to that?
Mr. Stephen Daniel Keeffe: No sir I don't see that.
Unknown Speaker: I don't in active Congress simply said we're going broke, we have got a depression on, 20% reduction.
Mr. Stephen Daniel Keeffe: I presume that the court would have sustain that kind of reduction.
I don't see, I would I think you would have to fashion a maiden way to do it.
Chief Justice Warren E. Burger: Do they need to have a good reason for it, or may they just do it by exercising of making?
Mr. Stephen Daniel Keeffe: I would hope that they would have to have a good reason for it Mr. Chief Justice but they don't think?
Justice Harry A. Blackmun: But it was done, you know in 1934.
Mr. Stephen Daniel Keeffe: Yes, I do know, thank you Justice Blackmun, I knew that was the case.
What I had in concluding that question when I thought was that, in looking at what Congress promised here and then what they did it, it seemed to me that you are looking at a situation, where if there is a merely to reduce expenditures here was the to eliminate these promises to these men and women than you outthrust into that question but only as to part of process before the court, a largest number, were not denied the bonuses by act of Congress, they were denied it by a change in the regulations.
Chief Justice Warren E. Burger: Do you have anything further Mr. Jones?
Rebuttal of Deputy Solicitor General Jones
Deputy Solicitor General Jones: Yes, thank you Mr. Chief Justice.
Mr. Justice Marshall asked about the government's position as to whether pay includes bonuses and then there was a colloquy which suggested that the government had changed it's position, the government has not changed it's position.
All we ever stipulated was that the term pay includes bonuses but what the agreement states, is that, it's in consideration of the pay that will accrue and our position has been that the bonuses were form of pay that simply never accrued as to the enlisted men.
Justice Byron R. White: I just want to make clear, if we disagreed with you and held or thought that the government really did promise these VRBs contrary to your position, you are not relying on any power or you would lose them, I think, you are not relying on any power of Congress to reduce whatever they promised?
Deputy Solicitor General Jones: No we have no done so, Mr. Justice White.
Most of the respondents entered into their extension periods before Congress acted.
Mr. Justice white, I have given little further thought crux not enough to your question about the appropriate disposition of the Court agrees with our basic position as to what the regulations provide, and I would concede that the better view probably is that the petitioners did not have to protect their position by cross petitioning.
I would submit that as a matter of law, if they are not entitled to a money judgment, they are not entitled to any form of equitable relief.
Justice Byron R. White: In fact, I would thought that in essence is what the Court of Appeals seem to have said.
Deputy Solicitor General Jones: What the Court of Appeals said, it sensed there is a money judgment, they don't need any thing else.
Our submission would be in the absence of a money judgment under the Tucker Act, there's no relief available, it is outside the jurisdiction.
Justice Byron R. White: They were never, there is no basic for rescission.
Deputy Solicitor General Jones: That was correct.
Justice John Paul Stevens: Mr. Jones, I have two questions, if I might ask you.
First, is there anything in the history of the other case or in the specifically, to properly know about with respect to an increase in the award level which the government did in fact pay, would tend to confirm with these.
Deputy Solicitor General Jones: On my answer to that Mr. Justice Stevens is yes or no.
The Page 105 of the Appendix, there is a schedule of award levels which indicates that some award levels decreased, some increased and some stayed the same over a period of several years.
However, there is nothing in this record that establishes what the Navy's treatment was but it is my understanding that the Navy has consistently administered the regulation so that when the award level went up, a man was entitled to the larger bonus, when it went down, he was entitled to a smaller bonus.
Justice John Paul Stevens: Why do you understand the Court of Appeals to disagree with the Secretary's interpretation of his regulations?
Deputy Solicitor General Jones: Well I think it was a very...
Justice John Paul Stevens: Was it based at all on the Legislative History?
Deputy Solicitor General Jones: That is not -- I think the Court, the Court's allusions to the Legislative History were based upon statements that were made with respect to reenlistments and not with respect to extensions of enlistment.
There was a language in the Legislative History which indicated that the bonus would become available at the decision point, that was the decision point of reenlistment which was at the end of the original enlistment period.
There is no indication in legislative history that these Congressmen ever considered the application of the program to the extensions of enlistment which presented a very different kind of problem.
Justice John Paul Stevens: Mr. Jones, I had a second question I want to ask you.
Would you agree that if your opponent is correct and the if the right vested at the time the extension agreement is signed, it would be more or less an analogous to say earned compensation for a month of service.
On that hypothesis, the example of Mr. Justice Rehnquist gave of changing the level of pay, would really not be appropriate because that would -- you wouldn't say that the government could change the level of pay for October, some time in November.
Deputy Solicitor General Jones: Again Mr. Justice Stevens, yes and no.
Mr. Chief Justice asked me a similar question during my opening argument and I said that the same line of analysis could be argued to suggest that the level of the pay upon original enlistment was fixed, and the same while the respondents argued that there bonus was fixed.
Now, if a court accepted that argument then the same consequences would flow that is, there might be a constitutional barrier to reduction.
Now, that's first half of the answer, second half is that they are talking about vesting in a peculiar sense, they are not saying that they would be entitled to the bonus if they never serve there extension periods, that is, they are not really talking about the vesting of pay for the services already done but they are saying that they had a vested contract right for quid pro quo once they performed the service.
So, it's a little different from pay for service which has already been done but it is analogous.
Justice John Paul Stevens: I understand, but you would not rely on the analogy of the military cutting the pay.
Deputy Solicitor General Jones: Well Mr. Justice Stevens, we would argued that just as the Congress can reduce the pay, the Congress or the Navy with under delegated responsibility can reduce the award level.
Justice John Paul Stevens: Yes if that's appearing in the regulation.
Deputy Solicitor General Jones: That's correct, Your Honor.
Chief Justice Warren E. Burger: Thank you gentleman.
The the case is submitted.