Transcript

IN THE SUPREME COURT OF THE UNITED STATES

UNITED STATES, Petitioner, v. JOSEPH J. CLARK ET AL.

No. 80-1121

November 3, 1981

The above-entitled matter came on for oral argument before the Supreme Court of the United States at 11:01 o'clock a.m.

APPEARANCES:

ALAN I. HOROWITZ, ESQ., Office of the Solicitor General, Department of Justice, Washington, D.C.; on behalf of the Petitioner

JOHN I. HEISE, JR., ESQ., Silver Spring, Maryland; on behalf of the Respondent.

PROCEEDINGS

CHIEF JUSTICE BURGER: We will hear arguments next in United States against Clark.

Proceed.

ORAL ARGUMENT OF ALAN I. HOROWITZ, ESQ.,

ON BEHALF OF THE PETITIONER

MR. HOROWITZ: Thank you, Mr. Chief Justice, and may it please the Court, this case is here on a writ of certiorari to the United States Court of Claims. It involves two different pay systems for federal employees, the prevailing rate system, or WS system, which essentially covers blue collar workers, and the General Schedule or GS system which covers white collar workers.

Each pay system contains different grade levels and different steps within each grade. The steps are different gradations of pay within the grade.

The Respondents here are six employees of the Department of the Navy or their representatives who left WS blue collar jobs to accept white collar jobs covered by the General Schedule. After an administrative error that had given five of these employees a one-step pay increase, after that error was corrected, their starting salaries in their new GS jobs were correctly established under regulations promulgated by the Office of Personnel Management, issued pursuant to 5 USC 5334(a), according to the so-called highest previous rate rule, which places the employee at the nearest step above his old salary.

QUESTION: Mr. Horowitz, I want to be certain about one thing. Does the government concede that the transfer here effected a promotion of these employees?

MR. HOROWITZ: Well, promotion has been used as a term of art in some ways. There was a promotion under the regulations under the Office of Personnel Management, because such promotion is defined in terms of whether the employee receives an increase in pay when his new salary is established, and that in fact occurred here.

As to whether they were promotions in sort of the layman's sense to a position of higher responsibility, that really hasn't been developed that much in the record, but there is no reason for this Court to assume that they were not.

QUESTION: That they were not.

MR. HOROWITZ: But in our view that makes no difference for purposes of the statute.

QUESTION: The Court of Claims did go that far so to describe it, anyway.

MR. HOROWITZ: Yes, although the Court of Claims primarily relied on this regulation, 5 CFR 531.202.

Now, the question here is whether the OPM regulations that were invoked in this case are contrary to law.

QUESTION: Mr. Horowitz, let me just be sure I understand your answer to Justice Blackmun. In the Court of Claims, the opinion states that both parties had termed the actions promotions.

MR. HOROWITZ: Right.

QUESTION: Have you changed your position? You say it is arguable now whether it was a promotion.

MR. HOROWITZ: No, we don't contend that -- they are certainly classified as promotions by the Navy, and that is because of this regulation, which depends on whether they receive a salary increase. They are certainly promotions within the meaning of the regulation. And as to whether they are promotions in a more common sense matter, I don't think that has really been determined, but we don't contest that they are. We have never argued that they are not.

QUESTION: But are they then promotions within the meaning of 5334(A) and (B)?

MR. HOROWITZ: Yes, they can be. 5334(a) and (b) also refer to transfers in there, so --

QUESTION: Well, if that is the case, and I must concede that for a court of supposedly nine generalists, this is a very difficult case, because of the very technical civil service and OPM regulations, didn't the Court of Claims in effect declare invalid one of the regulations promulgated by the OPM?

MR. HOROWITZ: That's correct. There was a regulation promulgated by OPM that restricts the applicability of this Section 5334(b) to promotions within the GS system, from one GS position to another, and the Court of Claims declared that that regulation was inconsistent with the language of the statute, and that regulation was declared invalid to that extent.

QUESTION: So it gave no deference to the regulatory authority.

MR. HOROWITZ: That's correct. Perhaps I should read Section 5334(b), which is the focus of the dispute here. "An employee who is promoted or transferred to a position in a higher grade is entitled to basic pay at the lowest rate of the higher grade which exceeds his existing rate of basic pay by not less than two step increases of the grade from which he is promoted or transferred."

In other words, when an employee is subject to this section, you look at his old salary, give him what is called a two-step increase in his old salary, and then transfer that into his new grade and pick the salary that is closest to that and higher.

Now, the question here is simply whether this statutory two-step increase applies when an employee moves from the WS system to a position in the GS system, as occurred here, and as the Court of Claims held, or whether the statute applies only to promotions from one GS grade to another, as the government contends.

In our view, this question is unequivocally answered by the language of the statute. Under 5 USC 5102(a)(5), a definitional section, the term "grade" in Section 5334(b) is defined as a class of positions included, and I quote, "within one range of rates of basic pay in the General Schedule", end quote.

Section 5334(b) provides that the increase in salary is to be measured as no less than two step increases of the grade from which the employee is promoted or transferred. Because Respondents were not promoted or transferred from a grade as defined in the statute, that is to say, a grade in the GS system, they do not come within the language of Section 5334(b).

QUESTION: Mr. Horowitz, can I stop you right there? I Guess the key to it is right in what you are saying now. The definition of grade doesn't purport to be exclusive. It says it includes those in the GS schedule, and you earlier told us, as I understand you, that there are grades in the WS schedule as well. Now, is it perfectly clear that the word "grade" could not apply to a grade in the blue collar schedule?

MR. HOROWITZ: Well, I agree that the statute says includes, but I think the only reasonable reading of that is that that is the definition.

QUESTION: Well, have you not also admitted, or maybe I am wrong, that if there had been a promotion within the WS schedule, you would have been entitled to have the benefit of the statute.

MR. HOROWITZ: No. The statute --

QUESTION: The Court of Claims said that, but that is wrong?

MR. HOROWITZ: Right. The Court of Claims said that, but that is wrong. A statute clearly cannot apply to a promotion within the WS system, because blue collar workers are completely excluded from Subchapter 3, which contains the statute. This Section 5334(b) applies only to the GS system.

Now, the basis that these Respondents have for arguing that it applies to them is that now that they have moved into the GS system, they are technically GS workers, and it is their new salary, but any salary in the WS system would not be set pursuant to this provision.

QUESTION: I see.

MR. HOROWITZ: There are grades -- just to get back to your question, there are grades in the WS system, although as we pointed out in our reply brief, I think, the term "grade" did not originate in the statute in that context until 1972, 23 years after this statute was enacted.

QUESTION: Is it clear that the "General Schedule" referred to in 5102(a)(5) does not include the WS separate schedule?

MR. HOROWITZ: That's correct. Those employees are specifically included -- excluded, rather, from the General Schedule. Again, as I said, Justice Stevens, these employees are now in the General Schedule because of their new position.

Now, in order to understand the reasoning, I think, behind the restriction of a two step increase to the context of promotions within the GS system, I think it might be helpful to digress into a slightly more detailed discussion of these two pay systems and their differences.

The General Schedule is described in Subchapter 3 of Chapter 53 in the civil service statute, and as it exists today, it is derived largely from the Classification Act of 1949, and it was at that time, in 1949, when Section 5334(b) was first enacted, although it originally provided for only one step increase.

The GS system is divided into 18 different grades, most of which are divided -- further subdivided into ten steps. Now, there is an overlap between steps in the GS system. That is, while any higher grade, the same step in any two grades, the higher grade will be a higher salary, for example a Grade 14 Step 1 salary will be higher than a Grade 13 Step 1 salary, at the higher steps of a particular grade, the salary can be higher than a lower step of a higher grade, or to give in example, again, a 13 Step 6 employee would be making a higher salary than a 14 Step 1 employee.

There are two ways in which employees can move to different classifications in the system. First of all, they can be given step increases. The statute defines the waiting period for which an employee must wait to get a step increase. That is between one to three years, depending on the level he is at, but once he satisfies that waiting period, he is given a step increase as long as he has performed satisfactorily in his job.

Getting a step increase does not mean any increase in responsibility or level of difficulty.

QUESTION: If you know, has that been suspended, the in grade movement, suspended by OPM --

MR. HOROWITZ: I am not aware that it has.

QUESTION: -- for the problems?

MR. HOROWITZ: I don't think so.

QUESTION: Counsel, can you tell me, please, whether the provisions for grading within the WS system were in effect at the time that the General Schedule statute, Section 5334 was originally adopted?

MR. HOROWITZ: Well, in 1949, the only reference to the -- in that 1949 Act to the WS system was a one-sentence exclusion excluding blue collar workers from the operation of the statute, and stating that their salaries are to be determined according to prevailing rates in the industry.

Now, that was done administratively by each individual agency. Each agency ran its own WS system, so to speak, conducted its own wage surveys, and determined what the proper salary for a particular position was. The result of this was something of a hodge-podge. But as I understand it, most of the agencies did have a system that included something called grades. The number of grades varied from agency to agency, and a particular job would vary.

They did not all have steps in the sense that there is now in the statute. Some of them had three steps within a grade. Some just had grades without steps at all.

The other way that a person can move in the GS system is by getting a promotion to a job that entails more responsibility, and in this case he would move up to a higher grade. Now, the operation of Section 5334(b) comes into effect when an employee is promoted from a high step at one grade to the next grade.

For example, if an employee were promoted from a Step -- a Grade 13 Step 5 position, if he were simply promoted to the lowest step in the next grade, a 14 Step 1, he would actually get a decrease in salary. So, under Section 5334(b), what is done is, you give him a two step increase. That is, he was a 13 Step 5, you looked at what the dollar figure would be for a 13 Step 7, and that dollar figure is then plugged into the GS 14 levels, and he is given the next highest step. In this example, he would become a 14, Step 2.

Now, the Wage System, although it parallels the GS system to some degrees, is quite different. As it exists now, it is set out in Subchapter 4 of Chapter 53. These are amendments that were enacted substantially in 1972. The main difference between the two systems is that the WS system is based on prevailing rates in the industry, and varies widely over geographic areas.

An employee performing the same job in Columbus, Georgia, will be making a much lower salary than an employee who is performing the same job in Detroit, Michigan. GS salaries are uniform nationwide.

Now, as I mentioned before, at the time the Classification Act was first enacted, there was no coordinated WS system. Each agency ran its own system, and the mechanics of each system varied. Some grades had steps. Some grades did not. In the late 1960s, it was decided that the system should be coordinated, and pursuant to a directive by President Johnson, the agencies got together and developed a coordinated Wage System that extended uniformly throughout all the agencies. Again, this system is not uniform throughout the United States. There are geographical differences.

In 1972, the coordinated system was enacted into the statute, with certain changes. One of the changes is that the original coordinated system had only three steps per grade, and now the statute provides for five steps per grade.

One other difference between the WS system and the GS system is that the waiting periods for step increases in the Wage System are significantly shorter. Thus, while it would take an employee who starts at a GS Step 1 18 years to become a GS Step 10, in the Wage System it would take only six years to move from the lowest step to the highest step.

Now, I think it is the recent development of this formal WS system and its juxtaposition in the statute next to the GS system that has made plausible on a quick glance the Respondent's contention. This is a contention, I think, that could hardly have been suggested by examining the statute as it was first enacted by Congress in 1949, namely, that an employee who moves from a WS grade to a GS grade is entitled to a salary increase of two steps in his old WS grade.

To repeat what I said earlier, this contention could not possibly be squared with the express terms of the statute. Section 5334(b) specifies that the salary increase be computed based on the employee's steps in his old grade, and "grade" is defined -- and this definition is expressly incorporated into Subchapter 3, the GS section -- "grade" is defined as a rate of pay in the General Schedule. The Respondents do not have an old grade in this sense on which the salary can be based. They are newcomers to the GS system, and the statute by its terms can only be applied to GS veterans, people who are both promoted from and promoted to a GS position. The only way around this is to rewrite the statute.

Now, it is no accident that the statute has this limitation on the two step increase provision. The purposes of the two step increase are directly relevant to this context of promotions within the GS system. Because of the overlap between grades, it is a common problem in promotions within the GS system that an employee would not receive a salary increase without the two step increase provision.

QUESTION: When you say the overlap between grades, you refer back to the fact that a GS 13, Step 10, might be receiving more salary than a GS 14, Step 1?

MR. HOROWITZ: Right. That's correct. Now, the reason that Congress was concerned about this is that in many cases it would be better without the two step increase for an employee, for his own salary reasons, to stay in his previous job and refuse the promotion, and continue to get step increases in his old job rather than take a promotion and get either a lesser salary or a salary that he would not get as much of an increase in.

QUESTION: But when they enter a new grade, at or near the bottom, their step increases become more frequent.

MR. HOROWITZ: That is true. The step increases are more frequent at the bottom. Over a long period of time, he might wall be better off anyway taking the promotion, but in the short term he would be worse off.

Now, because moving from WS to the GS system is really moving into a different job, the same overlap considerations are not present. In particular, it is important to note that an employee who moves from one grade in the GS system to a higher grade is by definition receiving a promotion as we talked about earlier, that is, a promotion in the common sense notion of moving to a position of higher responsibility.

This is not necessarily so when you move from the WS system to the GS system. Many of the jobs are simply not comparable. As I said, in this case, we have not contended, it has not really been litigated whether there was an increase in responsibility here, but as far as Congress's intent in passing the statute, there was no need for them to provide an automatic two-step increase.

Similarly, looking at the 1949 statute, there is no reason to believe that Congress intended to cover WS employees. Back in 1949, Congress was not focusing at all on the WS system. It merely excluded them from the provisions of the Classification Act. Moreover, because the two step increase depends on the steps in the employee's prior grade, it would have made no sense to apply it to employees coming from the WS system.

As I said, the WS system at that time was something of a hodge-podge. Many of the grades did not have steps at all, and if Congress had applied this provision to the WS system, it really would not have known what sort of increases it was guaranteeing to the employees.

Even as the system has been refined today, it still makes little sense for this provision to apply to promotions from the WS system. I think the best illustration of how Respondent's contention diverges from Congressional intent is to notice that the steps, the gradations within the grades in the WS system are larger than the gradations within the GS system. The statute sets the steps in the WS system at 4 percent increases, so therefore the Respondents are actually asking for a greater benefit here than would be given to persons who are promoted within the GS system, which is what the statute was directly aimed at.

Now, the Court of Claims decision rests simply on its placing undue influence on the one word "promotion" in the statute, but there are several difficulties with the Court's analysis. First and most obvious, of course, is that it omits to read the rest of the statute.

More importantly, the Court of Claims itself conceded that promotions are also covered by Section 5334(a), the general provision that permits OPM to set the basic rates of pay for employees who move from one job to another. Therefore, the mere fact, the mere characterization of a personnel action as a promotion cannot in and of itself determine whether it is properly considered under 5334(a) or 5334(b).

I would like to turn away from the language of the statute now to discuss the consistent administrative construction here, which we think is also dispositive of the issue.

In this case, OPM and its predecessor, the Civil Service Commission, has consistently adhered to the position that Section 5334(b) applies only to promotions within the GS system. The regulation was first published in 1950, only one year after the statute was enacted, and it has not been altered since. Congress has apparently --

QUESTION: Counsel, let me just interrupt you again. When you say the regulation was first published in 1950, does that mean that 531.204(a)(1) as it now reads was in the same form in 1950?

MR. HOROWITZ: Well, we have quoted the exact form in our brief. It is slightly different. At that time it said that it applies to -- promotion applies to employees in Classification Act positions, I believe.

QUESTION: I see.

MR. HOROWITZ: Now, the reason that the language has been changed from employees under the Classification Act to employees in the General Schedule is that in 1949 and for a short period thereafter, the Classification Act actually set up two schedules. There was a separate schedule called a crafts protection schedule, I believe, and Section 5334(b) also applied to employees in that schedule by the terms of the statute.

In 1954, Congress decided that there was no need for this second schedule, and all those positions were converted to General Schedule positions. So, today, to talk about employees covered by the Classification Act or employees in the General Schedule, that is synonymous, but in 1950, had the regulation read in the General Schedule, that would not exactly have been accurate. I am not sure if that was clear.

The Classification Act has been amended several times since these regulations were promulgated, but Congress has never made any effort to change them. The regulations have been brought to the attention of Congress, as we pointed out in our brief, and have never been --

QUESTION: Did you say, Mr. Horowitz, when that regulation at Page 6 of your petition was adopted? The OPM --

MR. HOROWITZ: When the exact language?

QUESTION: No, when was -- yes, the one that you quoted.

MR. HOROWITZ: I think this exact language perhaps dates back to 1965. I am not sure if there have been minor changes since then. I think it goes back no earlier than 1965, but the thrust of the regulation has never changed.

QUESTION: May I ask one more question about the regulation in its pre-1965 form? Did you tell me that at that time the Classification Act included both the General Schedule people and a special kind of craft people? What were the craft people who were covered?

MR. HOROWITZ: Well, they were -- they are all people who are now covered by the General Schedule. They are not these blue collar workers who are covered by the WS system. They were janitors. It was called the crafts protection custodial schedule. So I think custodial workers, guards in federal buildings, and the craft workers, I think, were mechanics who repaired things in federal buildings, things like that.

QUESTION: And all of that category is now part of the GS schedule, and none of it is in the WS schedule?

MR. HOROWITZ: Right. In 1954 all those positions were converted to GS positions.

I think it is particularly significant that Congress made no effort to change the system in 1972, when it focused on the WS employees and enacted special provisions for WS employees. In particular, in 1972, Congress gave WS employees some benefits that had earlier been given to GS employees, such as the retained basic pay provision, which is discussed in our reply brief. Yet it did not enact any provision providing for an automatic increase, both -- either from WS to GS positions or even for promotions within the WS system.

Moreover, to the extent that there is any ambiguity in Section 5334(b), this seems to be a classic case of deferring to the agency's interpretation. It is a specialized area where the agency has developed a particular expertise. The regulations are contemporaneous with the enactment of the statute, and are long-standing and consistent. Indeed, the Classification Act of 1949 was based on bills that were submitted by the agency involved here, the Civil Service Commission, and the legislative history reflects the Commission's view that this section was in accord with its views.

It is hard to imagine a more well established interpretation. It has never seriously been challenged for 30 years, and indeed, even in this litigation, the Respondents did not allege that the two step increase applied to them until some time after their petition in the Court of Claims was filed, because if you examine the petition that is reprinted in the appendix, you will see that they at that time asked only for the one step increases that had mistakenly been given to them by the agency.

QUESTION: You don't suggest, do you, that if the court thinks a regulation is contrary to the plain range of the statute, that it must defer to the agency's view that it is not contrary to the plain range --

MR. HOROWITZ: No, not at all.

QUESTION: Then it is just a question of who is right.

MR. HOROWITZ: Well --

QUESTION: And you say the Court was wrong and the agency was right.

MR. HOROWITZ: No, we say, of course, that the plain language supports our position --

QUESTION: Exactly.

MR. HOROWITZ: -- but that There are -- there are certainly many statutes that Congress has enacted that are ambiguous and can be read either way.

QUESTION: Oh, I understand that. I understand that.

MR. HOROWITZ: And in those cases it is appropriate to --

QUESTION: I know, but you say that the plain language supports you or at least that it is ambiguous, and you disagree with the Court, but the Court needn't defer to your view.

MR. HOROWITZ: No. Only if they find it ambiguous should they be deferring to the agency.

QUESTION: Exactly.

CHIEF JUSTICE BURGER: Mr. Heise.

ORAL ARGUMENT OF JOHN I. HEISE, JR., ESQ., ON BEHALF OF THE RESPONDENT

MR. HEISE: Mr. Chief Justice, and may it please the Court, Respondents do in fact focus upon the plain language of the statute, and we contend that there is in fact no ambiguity whatsoever, that in point of fact employees promoted to a higher grade are entitled to the pay implementation provisions of 5334(b), and so the Court of Claims has found.

We suggest that we can focus upon the fact that these people are employees, we can focus upon the fact that they were in fact promoted to a higher grade position, and therefore the pay implementation provisions should follow.

Now, it is important to ascertain at the outset that each Respondent here was in fact promoted. The promotion didn't come after the pay. The promotion was in point of fact what took place. That was the event. Now, the Wage System has grades and had grades and had grades way back to immediately post-World War Two period, just as the General Schedule had grades and has had grades for an extensive period of time.

In like fashion, the Wage System has steps, and we point out in our briefing and the Court below appropriately found that each of these Respondents was in fact promoted from one position to a higher position. This was conceded below, and the mechanics of going beneath or behind the personnel action of promotion was never raised, nor does the administrative record support any position that it could have been raised, because these were in fact promotions.

QUESTION: But the promotions were from one system to another, were they not?

MR. HEISE: Yes, the mechanics of the promotion, they were from one system to another, but in point of fact, in examining the administrative record, it is clear that each of these Respondents applied under a merit promotion advertisement program for a position at a higher grade, and each was in fact selected by reason of the qualifications which the employee had demonstrated in the journeyman level as a wage scale employee or Wage System employee at the lower level. So, there was in fact an individualized treatment, if you would, for each of these individuals, and this is the critical part of the case.

We must focus upon the fact that the statute refers to two actions, promotions and transfers to a higher grade. Now, transfer, of course, involves moving from one agency to another or from one branch of the government to another, so you would be transferred to a higher grade position, but each of those types of actions which are set forth in the statute concern the individual employee, and it must be contrasted with the mass program of conversion.

If a group of jobs or positions are converted from one type to another, the statute would not be applicable, because it does not involve the individualized concept of promotion, and in this case each of these boys did in fact move from the position of ship surveyor in the Wage System up to a position of quality assurance specialist, supervisory production controller, engineering technician, and the like, and each was in fact selected following selective processes which are peculiar to the selection process, in competition with other employees, and that is why in point of fact below there was never any contention as to whether this was in fact a promotion.

Now, our position, of course, is that the Civil Service Commission regulation, now the Office of Personnel Management, is contrary to the language and intent in Congress when it limits --

QUESTION: Mr. Heise --

MR. HEISE: Yes, sir.

QUESTION: -- may I interrupt you with a hypothetical question that has troubled me? As I understand it, under the Wage System you can have different rates in different parts of the country, and supposing in one part of the country there was a very low salary scale and in other parts very high, and the same position in those two parts of the country were both transferred into the GS system. For one it meant a reduction in salary; for the other it meant an increase. Would they both be promotions?

MR. HEISE: No, they would not be, because the concept that you are referring to, Your Honor, has to do with not being selected as a result of a competitive program or not being selected because of --

QUESTION: Well, confining ourselves for the moment to the transfer to a higher grade. Say in both cases they were W system grade something or other, and they had the same title on the grades in both cases, before and after. One would still be a promotion and one would not.

MR. HEISE: No, both would -- if they are transferred to a higher grade, that would be a transfer.

QUESTION: No, transferred to a different grade with, you know, a new number and a new --

MR. HEISE: If it were a promotion, I think what we are getting at --

QUESTION: Well, how do I decide whether it is --

MR. HEISE: If it were a promotion --

QUESTION: Yes.

MR. HEISE: -- one employee coming from one area could get a higher rate of pay in the new position than the other, just as if I am a GS 11, Step 2, and I am promoted to a GS 12, and another employee is a GS 11, Step 5, and that employee is promoted to the higher grade, by reason of the fact that the first employee had one -- a lower original grade pay than the other employee, he would in fact receive or she would in fact receive a lower rate upon promotion.

It goes back to what you were receiving at the time that you were in fact promoted. Now, this whole concept of moving across the country doesn't apply here and normally wouldn't apply. It normally wouldn't --

QUESTION: No, I am not talking about moving across the country, but the GS schedules are uniform across the country --

MR. HEISE: This is correct.

QUESTION: -- so if a man in Alaska is transferred and a man in Florida is transferred, and both of them had the same job histories but had very dramatically different salaries, so that one would expect to go down and the other go up.

MR. HEISE: If it is a transfer to a higher grade, you would not go down. If you are promoted, you would not go down.

QUESTION: How do you determine whether it is a transfer to a higher grade when you move from WS to GS? That is my question.

MR. HEISE: Well, if it is a promotion, it is going to be --

QUESTION: But how do you determine whether it is a promotion?

MR. HEISE: Well, the decision of whether it is a promotion or not is made by the selecting official, the operating official in most cases, or the operating --

QUESTION: Well, can he call it a promotion or not as he chooses?

MR. HEISE: Oh, no. It is clear that if it is a promotion, it is a move to a position of higher responsibility

QUESTION: Well, but my example -- please stick with my example. The same change in responsibility is made in Alaska and in Florida, and in one case it would normally result in a lower salary and in another in a higher salary. Are they both promotions or are neither promotions, or how do I tell?

MR. HEISE: Both would be promotions, but the one individual might get a higher salary following 5334(b) than the other by reason of the salary that he started with, but in point of fact both would be promoted, and I gave the indication that this is true in the GS schedule. If one employee is at one GS level --

QUESTION: Well, I understand the GS. And what is the reason you call it a promotion?

MR. HEISE: Because the individual employee is selected for a position of greater responsibility and greater duties. That is why it is called a promotion.

QUESTION: The statute doesn't define promotion in those terms, though.

MR. HEISE: The standard --

QUESTION: Does it?

MR. HEISE: Well, yes, it does, in point of fact. The definition of promotion does in point of fact say -- talks not only from one General Schedule grade to a higher General Schedule grade, from one grade to another, but the basic concept of how you get into a promotion is, you are selected, and in point of fact you wouldn't be promoted and go into a lower salary rate. That wouldn't be a promotion. People wouldn't apply for a position to have less pay than they originally received under normal --

QUESTION: Well, they might if there were going to be a reduction in force or something. Well, anyway --MR. HEISE: Well, no -- Well, reduction in force, you don't -- you are not promoted under reductions in force. You cannot be.

QUESTION: Well, Mr. Heise, do you disagree with the statement in the government's reply brief on Page 1 in the last sentence of the first paragraph where they say, when employees are "promoted" to the GS system from lower paying positions in the wholly separate WS system, there is no comparable inherent increase in responsibility?

MR. HEISE: I disagree emphatically on the terms of the case which is here, and under the normal parlance of defining why the employee would be promoted, because, in point of fact, the positions here, they were promoted to positions of greater responsibility and duty, and this is the parlance of promotion. If in point of fact they were moving all the ship surveyors as a class or the position of ship surveyor into the General Schedule, a movement, that might be a conversion, but that would not be a promotion, and you must understand or we must understand in examining this statute the difference between conversion as a class group and promotion or transfer to a higher grade as an individualized treatment.

I therefore do take exception with the government's position, trying to equate and call promotion as a change or call promotion as a conversion when in point of fact they are different types of actions.

QUESTION: What statutory or administrative definition of promotion do you rely on?

MR. HEISE: We rely on the administrative interpretation that in point of fact these employees went through a merit promotion procedure --

QUESTION: I mean, is there either a statute or a regulation that defines the term "promotion"?

MR. HEISE: There is a regulation that is before the Court which talks about promotion, and that is found in 5 CFR 531.202(h)(2), and that, and the Court of Claims referred to it, and said promotion means a change of employ while continuously employed from one General Schedule grade to a higher General Schedule grade, or a lower rate paid under authority other than Subchapter 3 of Chapter 53, which would be a -- of Title 5, which would --

QUESTION: But that just uses the word "promotion". It doesn't define it.

MR. HEISE: Well, most of the definitions talk about what is the accomplished fact, but in point of fact, as the Congress talked about, promotions being a promotion in duties, and this has been the generally accepted criteria, when you move from one GS grade to another and you are promoted, you get higher duties. When you move from a Wage System grade to a GS system grade by a promotion, your duties are more complex, as they were here. And this is the position in the case, the more complex duties.

Now, to focus on any particular definition either in the regulations or in the statute which so defines, the answer is, I cannot per se, however, because most of the regulatory concepts deal with what happens after the selecting official has said you are better qualified.

QUESTION: And 5 USC 5102(a)(5), which I take it is the basic statute, simply says that when your responsibility increases, you get more money. It doesn't talk about promotions.

MR. HEISE: Well, but in the legislative intent which we have recited in our brief in the Court of Claims, also made reference to back in 1949, Congress said a promotion in pay, and the committee report, should accompany a promotion of duties, and that is the basic concept. You should get more money.

QUESTION: Well, an increase in pay, didn't it?

MR. HEISE: I think they used promotion, an increase in pay or a promotion in pay, more pay for increase in duties, and that is the concept that is built into this particular statute.

Now, if we test the government's case of limitation, we feel that it is conclusive that the statute itself on its face certainly doesn't limit these promotions to only within the General Schedule. As we pointed out, the legislative intent was clear that an increase in pay should accompany a promotion in duty. Under the government's theory in the case, their application of this highest previous rate rule, which is an administrative regulation, you could be promoted under the government's theory and receive no increase in pay whatsoever, because if you annualized, if you would, the Wage System salary and then matched it over under their theory to the General Schedule salary, if they matched exactly, you would get no increase, and in their brief, they even indicate -- the government even indicates that under their theory a person could receive less salary, and certainly Congress never intended that in any stretch of the imagination, and that is what the Court of Claims relied upon, that an increase, a promotion, having been selected for promotion, it necessarily follows that you should receive more pay.

QUESTION: Do you agree that the Court of Claims struck down a regulation?

MR. HEISE: We do. The Court found it inconsistent with the statute. If there is any question about how this movement back and forth has developed, we suggest that the Court can example the Proto case, which we have cited -- I believe it is at Footnote 12 on Page 13 of our brief. Mr. Proto was one of the Respondents in this case.

In 1968, he, as a Wage System employee, was promoted to General Schedule. Then he was changed back to lower grade pursuant to a reduction in force, and at that time they called it a change to lower grade. He moved from a higher grade position in the General Schedule back to the lower grade Wage System position, and the courts -- I mean, and the agency, its own personnel officials, so described it.

Then, later on, he moved back up again, and then he was demoted back, and finally the action which is before the Court now, part of it 1973, he was promoted again. So, long before 1972, the agency itself, this very agency was using the grade concept to apply Wage System -- to apply to Wage System employees.

Now, the point here is that the discretion isn't in the paying. The discretion occurs in the selecting official. The personnel official and the operating officials who call it a promotion then set up the criteria for the employee to be paid, and this necessarily follows.

Now, the point has been made that the 1972 legislation impliedly in some way gave rise to an approval of the regulations which the Civil Service Commission had promulgated, and this just isn't so, because if we contrast it with the 1954 legislation, which has been called to the Court's attention, involving the movement of these crafts, protective, and custodial employees into the General Schedule, Congress at that time specifically stated that they would not be involved or would not be construed, or these actions, I should say, this conversion, Congress said specifically shall not be construed to be transfers or promotions within the meaning of 802, which is the predecessor to 5334(b) of the Classification Act.

So, Congress, if they meant that here, in the case of the Wage System employees, could have said the same thing, but because they didn't, the obvious intent of Congress, we submit, was in point of fact to include them, and so the Court of Claims found.

Now, the point has been made that the Civil Service Commission representative, in making his remarks to the Congress, pointed out that this particular 1949 legislation involved the General Schedule, but we contend that this is not controlling because the Congress in its committee report said nothing of the sort. In point of fact, if Congress had intended to exclude this schedule of employees from any of the language of 5334(b), it has had ample opportunity to say so, over a period of time.

The 1972 legislation itself dealt with nationalizing, if you would, codifying what had previously been under executive order and previously under administrative rule, a national system of wage board or Wage System employees, so that there would be uniformity in grades, or I should say uniformity in step and uniformity in concept. Not uniformity in rate, because the rate depends on the particular area. But that particular 1972 legislation did not in any way, shape, or form address itself to the issue which we have before the Court here, namely, promotions, or namely, the transfer to a higher grade.

We feel that in examining the 1950 regulation which has been relied upon by the government in its brief, we at Page -- Footnote 20 of Page 23 of our brief did point out how this particular regulation has vacillated back and forth to recite repromotions, to talk about promotions, and talk about a number of things. Our position, of course, is that there has been an inconsistency in application of this -- of the statute by the agency below, and the inconsistency was highlighted in this very case, because in one instance they applied what they called the highest previous rate rule, and in another instance they applied 5334(b) in essence, and Respondent Libretto, who was the Respondent below that gave rise to the case which finally arose in the Court of Claims, because he said to the agency, I should be getting the benefits of 5334(b), he at all times claimed that he was entitled to the two step increase which the statute provides.

So, our position in sum is that the Court of Claims was in fact correct in its analysis of the application of the statute, that the Civil Service regulation, the Office of Personnel Management regulation now, is contrary to the intent of Congress, and we submit that the judgment of the Court of Claims should be affirmed.

Thank you.

CHIEF JUSTICE BURGER: Do you have anything further, Mr. Horowitz?

ORAL STATEMENT OF ALAN I. HOROWITZ, ESQ., ON BEHALF OF THE PETITIONER - REBUTTAL

MR. HOROWITZ: A couple of points, Mr. Chief Justice.

I think a critical point here is that there is just no way to decide what a promotion is under the Respondent's contention. To get back to Mr. Justice Stevens' question, promotions in the regulations are defined only in terms of salary levels, and comparisons between grades in the WS system and grades in the GS system are also only in terms of salary level.

Thus, in Mr. Justice Stevens' hypothetical, where an employee moved from the same job in Georgia or in Alaska, where in one case he was getting a pay increase and in one case he was getting a pay decrease, it is clear under the regulations that one of those would be characterized as promotion and one would be characterized as a demotion, and the relevant regulation here is 5 CFR 536.201.

So, the only way, really, to deal with Respondent's contention is to take a common sense view of the word "promotion", to look at whether the employee has gone to some higher responsibility in his new job, and the difficulty with that is that it leads the Courts down a path of looking at every case, whether there has been a change in responsibility. In many cases, the jobs are pretty difficult to compare.

I would also like to correct what I think is a misstatement, and that is that the agency here never applied 5334(b). It never gave these employees a two step increase. It gave them a one step increase under a misinterpretation of the regulations, not of the statute, and in fact under the Court of Claims decision, the Respondents here ended up with much higher salary increases than they had even gotten under the original mistake.

One other point as far as this conversion in 1954 of the crafts protection schedule, as I pointed out earlier, those employees were within the Classification Act, so if Congress had not specified that this mass conversion was excluded from 5334(b), 5334(b) by its terms would have applied to those employees, but as we have argued, by its terms, it does not apply and never has applied to WS employees, and that can just be seen by looking at the definition of the term "grade" as it existed back then, in 1954.

As far as Mr. Justice Stevens' earlier question to me about the use of the word "includes" in the definition of "grade", upon looking at the definition again, I think the point is that grade includes all the jobs that are classified at that particular grade, and I think the use of the word "includes" makes sense there as being a collection of all the different jobs, but in fact it is clear from the context that it refers only to grades in the General Schedule, there would be no reason for the Court -- for Congress, rather, to have implied the WS system at the same time.

CHIEF JUSTICE BURGER: Thank you, gentlemen. The case is submitted.

(Whereupon, at 11:51 o'clock a.m., the case in the above-entitled matter was submitted.)