OFFICE OF PERSONNEL MANAGEMENT v. RICHMOND
Legal provision: Article 1, Section 9, Paragraph 7: Appropriations Clause
Argument of Kenneth W. Starr
Chief Justice Rehnquist: We'll hear argument next in No. 88-1943, Office of Personnel Management v. Charles Richmond.
Mr. Starr: Mr. Chief Justice, and may it please the Court:
This is an estoppel case.
The issue is whether the Office of Personnel Management, which administers the Civil Service Disability Retirement System, is estopped from applying and enforcing a statute passed by Congress on account of misinformation, misinformation provided both orally and in writing in the form of an outdated OPM form, which was furnished and provided to Mr. Richmond in San Diego by Navy civilian personnel.
It is our position that the court of appeals erred in applying estoppel over Judge Mayer's dissent.
But more than that, it is the submission of the United States that estoppel does not and indeed properly cannot run against the government in the execution of laws passed by Congress.
Indeed, for almost two centuries this Court was clear and emphatic that the government, acting as it must through its employees and agents, cannot be estopped from asserting its rights and executing the law, subject always to the overriding demands of the Constitution.
Across the judicial generations beginning with Chief Justice Marshall's Court in 1813 in Lee against Monroe and Thornton; in the wake of the Civil War in 1868 in the Floyd Acceptances case; the turn of the century in Pine River Logging Company; at the close of World War I in Utah Power and Light; and in more modern times, Justice Douglas' opinion for the Court in United States against Stewart; and Justice Frankfurter's opinion in what has become viewed as the seminal case in this area, Federal Crop Insurance Corporation against Merrill.
Through all these generations, the Court was clear and it was consistent that in the execution of public law the government, in contrast to a private party, cannot be estopped.
And in our view there are powerful reasons, both legal and practical, why this historic principle is sound.
The legal reasons are found in basic principles of democratic theory, and the very nature of our system of divided powers among co-equal branches.
As this Court held in INS against Hibi, and then reiterated less than two years ago in INS v. Pangilinan, estoppel, a venerable judge-made doctrine, cannot override a public policy established by Congress.
That is our first point and it's our most fundamental.
That it is the primacy of the elected branches in our representative democracy in establishing the law that renders estoppel against the government inappropriate.
This basic principle of our government of the responsibility of Congress, consistent with the Presentment Clause, to enact laws that bind the people--
Unknown Speaker: May I ask a question about your theory?
I suppose it might be possible for the Executive Branch to deliberately try to thwart the policies set by Congress, for example, in a benefit program, if the Executive thought that program was unwise and unfortunate and, therefore, in their policy they would just make it a policy not to tell people about deadlines, or do anything they could to discourage people from taking advantage of the program Congress has set up.
Now, under your theory, no estoppel is possible.
And yet under those circumstances the Executive would be thwarting the will of Congress.
Mr. Starr: --Under those circumstance I would quite agree that the Executive would be actively seeking to subvert the will of Congress.
That was the view of several--
Unknown Speaker: But there would still be no estoppel.
Mr. Starr: --Yes.
In our view there would still be no estoppel.
In fact, that was the view of several members of this Court in the Hibi case.
That the Executive was deliberately not carrying out the will of Congress.
And yet this Court determined that estoppel should not lie.
And there is a reason for that.
If, in contrast to the run-of-the-mill case... and we believe this is, while very unfortunate for Mr. Richmond, a run-of-the-mill case of error... of what Justice Frankfurter in Merrill called "ignorant innocence".
There was no malevolent motive on the part of the civilian personnel in San Diego animus directed at Mr. Richmond for any reason whatever.
There was a mistake.
That is the run-of-the-mill case.
If, in fact, there were at higher levels of the Executive an effort to thwart the law, then it seems to us, and we submit to the Court, that the appropriate place for redressing that kind of grievance is in the Congress.
That Congress itself knows full well how to step in, either through public law, passing a public law to address what Congress perceives as a subversion of its will--
Unknown Speaker: And would this... the result be the same if there were an active intentional misrepresentation?
Mr. Starr: --Under our theory, that is correct.
Even if it is knowing and intentional.
That is not the run-of-the-mill case, I hasten to add.
But our theory of the case is quite right.
In fact, it is all the more odd where there is active subversion for that... for that... to be given effect by the courts.
It seems to us that the appropriate province of Congress is to address that sort of situation.
I do hasten to add that in none of the cases, save for Hibi, has that extreme example even been suggested, although there have been actions by very senior officials of the government that have been called into question, such as in the Floyd Acceptances case.
The action of the Secretary of War himself was said to give rise to an estoppel.
Unknown Speaker: Well, at some point acts... acts of government officials can deprive someone of a constitutional right then?
Mr. Starr: We certainly would agree with that, Justice White.
Unknown Speaker: Well, what do you do?
Is that... was that the situation in PICCO or the Pennsylvania case?
Mr. Starr: --That's our reading of that case.
That is a criminal case and our argument is in fact going to civil liability that is sought to be imposed upon the government in contravention.
And that is clear, that in this instance the law would in fact be violated by enforcement of the court of appeals' order to direct against--
Unknown Speaker: Well, what if that had been just a civil case that you were trying to recover from... from that... from that particular party the costs of removing some obstruction and yet the... and yet the party had been affirmatively misled by that regulation?
Do you think the result would have been different if that would have been a civil case?
Mr. Starr: --Not in a civil case.
If in fact the regulation were unlawful under governing statute, I think that would be... that would be the key question.
Unknown Speaker: Well, it was, wasn't it?
Mr. Starr: It was.
Or the interpretation... there was--
Unknown Speaker: Yes?
Mr. Starr: --in fact unlawful--
Unknown Speaker: So, the--
Mr. Starr: --I quite agree that in that instance--
Unknown Speaker: --Would the... would the result have been the same in a civil case as in a criminal?
Mr. Starr: --No.
The result would not in fact be the same in our judgment.
In our judgment, in fact the court--
Unknown Speaker: You couldn't... you couldn't fine him on the criminal case but you could make him... you could recover a large sum of money from him in a civil case?
Mr. Starr: --I think that's right.
And the reason is PICCO itself made clear that the criminal justice system carries with it fundamental notions of elementary fairness and entrapment, and that an individual should not earn entity in that case, should not be summoned to answer criminally and then convicted for a crime if the law was not in fact clear.
There are any number of doctrinal protections that the law must be clear before--
Unknown Speaker: But then are you saying--
Mr. Starr: --someone is held criminally liable.
Unknown Speaker: --if in this case there had been a misdemeanor to earn more money than the... instead of a forfeiture of the remaining pension, you couldn't have... the government would have been estopped from enforcing the criminal prohibition?
Mr. Starr: I don't think so under this circumstance because I don't think the formality of the government's representations in this instance rose nearly to the level as the formality of formal interpretations that were before the Court in PICCO.
That is to say, no, I don't think that a low-level... with all respect to the Navy civilian personnel... I don't think that a low-level civilian employee of the Navy in San Diego has the power, has the authority, to override the law.
And I don't think it is reasonable.
We presume in our system of a rule of law that individuals inform themselves of what the law is.
We also make it quite clear that individuals rely, by virtue of the venerable principle of no estoppel against the government... rely upon advise, either informal advise orally or even when it takes a written form, as happened in any number of cases.
Unknown Speaker: We'll resume there at 1:00, General Starr.
Chief Justice Rehnquist: We'll resume our argument in Office of Personnel Management v. Charles Richmond.
Mr. Starr: May it please the Court, Mr. Chief Justice:
This case, as Judge Mayer put it aptly in dissent, is strikingly similar to this Court's case in Schweiker against Hansen.
And we believe that that case controls this case in terms of erroneous advise by the government, simply cannot, as a matter of law, work or constitute the grounds for an estoppel.
And in this case it is quite clear that the court of appeals order in this case to the MSPB will require ultimately OPM to violate the law.
At page 23 of our brief we set forth the reformulated statute, the rewritten statute that now embodies the judgment of the court of appeals for the federal circuit.
Section 8377(d) it should be completely clear has been rewritten.
Beginning with the "unless" language, the law applies unless the annuitant is informed otherwise by a government official or agency.
Mr. Richmond, by virtue of his earnings in calendar year 1986, was not entitled to disability annuity payments during the six-month period... that is ultimately what is at issue, a six-month period... of payments that are in question.
And this, then, in our mind, represents one of the most intrusive forms of estoppel against the government.
And that is, an order that is corrosive of Congress' powers under the Appropriations Clause to control the appropriation and expenditure of public funds.
Unknown Speaker: General Starr, the advise in this case was obtained from the Navy Employee Relations Specialists?
Mr. Starr: That's correct.
Unknown Speaker: I... I suppose the typical employee figures that these people probably will know what they're talking about.
Mr. Starr: There's no question.
The typical employee would think that a Navy personnel officer would know what he or she is talking about.
We don't question--
Unknown Speaker: And they should know.
Mr. Starr: --the... and should know.
We don't question that, Justice Blackmun.
The Navy should have known in this instance.
I do note by way of mitigation that Mr. Richmond certainly was on notice that he was dealing ultimately in terms of his entitlement to disability benefits with the Office of Personnel Management.
Unknown Speaker: Did he lose any money?
Mr. Starr: He lost in effect... yes, he did, Justice White.
He lost in effect six--
Unknown Speaker: Well, but if he earned more than he should have before the disability.
Mr. Starr: --In 1986 he earned more than he should have.
But that resulted in his losing in calendar year 1987 six months--
Unknown Speaker: Yeah.
Mr. Starr: --of his disability payment.
He was then restored by virtue of his level of earnings during calendar year 1987.
His disability annuity was restored then, effective January 1, 1988.
We believe that there are practical reasons quite in addition to fundamental legal issues of reasons of separation of powers and sovereign immunity, as we set forth more fully in our brief.
And the basic point in this respect was made over 150 years ago by Justice Story in the Kirkpatrick case, and we cite this at page 35 of our brief.
That the government acts, as here, and as it always does, through its numerous employees... over 3 million civilian employees.
There are over 100 Navy civilian personnel offices across the country and the globe.
Justice Story's words, written in obviously a decided quieter time, have even more force today.
That the government's fiscal operations are so various and its agencies so numerous and so scattered that the utmost vigilance would not save the public fisc from the most serious losses.
And that's our point.
Unknown Speaker: But General Starr maybe that... maybe that could be your point.
Justice Story is talking about the public fisc, and this case involves the public fisc.
And the Constitution specifically says that no money shall be drawn from the Treasury, no funds shall be drawn from the Treasury except by appropriation.
Why isn't it enough for us to decide this case to simply hold that... that provision of the Constitution at least cannot be overcome by estoppel?
And we don't have to worry about criminal cases or criminal penalties or civil penalties or anything else.
Mr. Starr: --It is enough to decide this case.
I would urge the Court before it decided, to decide the case on a narrower ground.
That for 30 years it has sought to decide these cases in a restrained way on narrow grounds, leaving open various possible exceptions.
The result is, as two members of this Court noted in 1981, that there is not much guidance that has been provided by this Court, with all respect, to the lower courts.
And the federal courts, as we set forth particularly in our petition for certiorari, are frankly all over the law.
Unknown Speaker: But that wouldn't be very narrow.
I mean, I think that's a... that's a sizeable principle.
Mr. Starr: That is--
Unknown Speaker: That if you're mislead in any... in any respect that causes you to claim entitlement to some money from the Treasury, you're out of court if your only basis is the estoppel.
Mr. Starr: --I will not--
Unknown Speaker: That's not terribly narrowing.
Mr. Starr: --quarrel that that is now narrow.
Unknown Speaker: --to be greedy.
Mr. Starr: I beg your pardon?
No, I would not resist such a ruling by the Court.
Unknown Speaker: Well, but it's--
--What would be the basis--
--it's also a--
--What would be the basis for... for that ruling if you're saying those cases are different than other kinds of cases?
Mr. Starr: Because the Appropriations Clause, as this Court has noted in Schweiker against Hansen and in... in Heckler against Community Health Services, raises a specific power by Congress, a power under the Appropriations Clause.
And a number of cases of this Court hold that it's simply unlawful for the Executive Branch to expend a penny that has not been appropriated by Congress.
Unknown Speaker: But would the... would the carrying out of the federal circuit's judgment here really require the expenditure of any money that hadn't been appropriated by Congress?
Doesn't Congress appropriate kind of en bloc for these various programs?
Mr. Starr: In that sense there are federal monies, but not in a accordance with law.
That is to say, Congress has specified the conditions under which money can be expended.
And that condition in this case has to do with his eligibility, the eligibility requirements of Civil Service disability annuitants.
And he fails to live up, or to satisfy, those conditions that Congress has imposed on the expenditure of funds.
Unknown Speaker: Then you can make the argument then about some of these... about a lot of these programs would be... could be put up in constitutional terms.
Just... you're making a... you're making a claim here that's just wrong and if... you're making a claim for money that's never been appropriated.
Mr. Starr: That is the effect.
That is exactly right, and we think that the courts... the lower courts--
Unknown Speaker: So the argument--
Mr. Starr: --are at fault in this--
Unknown Speaker: --isn't that the money isn't appropriated really.
The argument is that they're just... that--
--It wasn't properly--
--Well, the money's been appropriated for a specific purpose and if they pay it out, why, that's out for that purpose.
Mr. Starr: --I accept that formulation, that it's the purpose that's involved and the purpose is identified by the specific provisions of law.
And here, the specific provisions of law are such that he, Mr. Richmond, did not satisfy those conditions or provisions.
Unknown Speaker: But... but that's always the case whenever we're challenging the applicability of a regulation under Health and Human Services, say.
It's never phrased in constitutional terms.
Mr. Starr: That's correct.
What... our basic position is that it is inappropriate for courts to order Executive Branch officials to violate the law in order to achieve what the court believes is a just result.
And that may be in the form of regulation that is promulgated pursuant to delegated power, or it may be, as here, the violation... and I want to be clear about this... this order would require OPM to violate this statute by paying monies to an individual who is not entitled to them under the statute.
Unknown Speaker: Is that your broad theory that you just enunciated or the narrow one that you would settle for?
Mr. Starr: It... it... it portends of both actually.
All of our arguments lead ultimately to the point that in our government it's up to Congress, consistent with the Presentment Clause, to determine what the law is.
And when, as here, the law is clear, it is inappropriate for courts to invoke equitable principles to prevent the execution of a law.
But more than that, to actually order the carrying out of a violation of that statute.
Unknown Speaker: But that... that presentation does not answer the question that I raised before lunch where the Executive is in effect violating the policy set by Congress.
Mr. Starr: --Where there is in fact an effort... and let me... let me accept that the agency, as opposed to an employee... I don't want to concede the point that any employee's action constitutes agency action because it may be completely unauthorized.
Let us assume, as I am taking for purposes of this argument, in your hypothetical that it's the agency at a policy-making level, at a high level, it still seems to us, Justice O'Connor, that the remedy lies with Congress, ultimately with impeachment, if there is in fact a dereliction of duty by the Executive actively to subvert the law because that Executive Branch agency, through policy-making officials, is no longer faithfully executing the law.
That is exactly what our system contemplates.
It contemplates obedience to law.
It doesn't contemplate a further violation of law in order to overcome or to remedy the problem of erroneous advise being provided.
Unknown Speaker: I... I thought you were going to say that... that recognizing estoppel against the government not only doesn't solve Justice O'Connor's problem but perhaps aggravates it because it enables the President not only to frustrate a federal program by deceiving people into believing it doesn't exist, but to create federal programs where there are none, which couldn't be done without an estoppel theory.
That is, he couldn't tell somebody, you're entitled to money, and the person would be entitled to it.
The most he could do is tell him, you're not entitled to money, and cause a person not to... not to apply.
Mr. Starr: That is correct.
I... I accept the point, that there could in fact be, under those circumstances, a new program that is Executive Branch formulated that would then be given Judicial sanction.
Unknown Speaker: Of course, the only reason this case comes up is that the... is that the... well, I guess there's plenty of reasons, but one reason that would eliminate a case like this is if the Federal Tort Claims Act covered negligent misrepresentation.
Mr. Starr: That's exactly right.
Under principles of sovereign immunity the sovereign is immune from suit, but Congress saw fit in 1946 to remedy that by providing... this does in fact sound in the nature of a tort of negligent misrepresentation--
Unknown Speaker: And so you--
Mr. Starr: --but Congress did not--
Unknown Speaker: --think that Congress could solve this xx of a problem by saying if there's a negligent misre, sentation, you can pay out money that we've never author.
Mr. Starr: --If Congress saw fit, yes, they could correct it immediately by amending the FCCA, and the Congress very frequently acts in any number of respects, as we have set forth in our brief.
Not just the private bill mechanism, which we do want to urge upon the Court as a significant device to remedy... to remedy single examples.
As opposed to Justice O'Connor's example... hypothetical... this is a situation where something went wrong in part of the operations of government at a fairly low level.
That is precisely--
Unknown Speaker: Yeah, but why is this... why is this different in terms of the absolute power of no appropriations and all the rest... different from the... as an equitable matter, tolling the statute of limitations against the government for inequitable conduct?
Why... why isn't that also flatly prohibited by the requirement that you can't spend money the government didn't authorize?
Mr. Starr: --That depends upon Congress' intent, and this Court has held typically that a statute of limitations against the government must be strictly enforced.
It may be, however, that the Court in analyzing a particular statute will determine that Congress intended for equitable tolling principles to apply.
That was the case in the City of New York v. Bowen case, that Congress in fact contemplated there that--
Unknown Speaker: Well, why couldn't the Court do the same thing with this statute and say of course they can't pay unless they're misled into having... having... you know, earned a little more money than they thought was appropriate?
Can you just... the same... the same sort of approach, just construe the statute to say it makes an exception for this kind of situation?
Mr. Starr: --I don't know the basis, Justice Stevens, of construing the statute.
The language doesn't admit of it.
There's no legislative history to which we've--
Unknown Speaker: But I suppose Congress has rejected the notion that they... that there should be some recovery for negligent misrepresentation.
Affirmatively it said so.
Mr. Starr: --By virtue of the Federal Tort Claims Act.
And then, in addition to that, I think it's important for me to note that Congress legislates against the backdrop of the law.
And the law has been very clear, as I tried to say before lunch, that there is no estoppel against the government--
Unknown Speaker: But then you're... you're asking us to overrule the Moser case, aren't you?
Mr. Starr: --I beg your pardon?
Unknown Speaker: You're asking us to overrule the Moser case, aren't you?
Mr. Starr: Oh, not at all.
We accept the Moser case.
Moser, as we read the case, is a statutory interpretation case by virtue of the regulations that were in effect there requiring a waiver by the individual seeking citizenship of his right to citizenship.
We also think that the Court was speaking in due process language.
That is to say, its reading of the statutory regime and regulatory regime there was informed by due process considerations.
Its use of elementary fairness, its use of entrapment language.
We think that is a statutory interpretation guided by due process considerations.
That has not been asserted here and I don't think it reasonably can be asserted here.
Unknown Speaker: And it didn't say estoppel?
Mr. Starr: It specifically foreswore the use or invocation of the estoppel principle.
I would like to reserve the remainder of my time, if I may.
Unknown Speaker: Very well, General Starr.
Mr. Deford... is that how you pronounce your name?
Argument of Gill Deford
Mr. Deford: Deford.
Unknown Speaker: Deford.
Mr. Deford: Mr. Chief Justice, and may it please the Court:
This is not a routine, run-of-the-mill case, as the government has described it in its briefs and before this Court.
Charles Richmond lost his vested right to a retirement annuity as a consequence of consistently inaccurate information given to him by his former employer, the Federal Government.
He made specific inquiries as to his rights and obligations under the federal retirement law and received in response the official written... written statement of the law as prepared by the federal agency responsible for administering that law, the Office of Personnel Management.
OPM's written statement, however, was over three years out of date.
And as a consequence of relying on that blatantly erroneous information, he was divested of his... of his already existing entitlement.
Unknown Speaker: Mr. Deford, I must say, even if... even if the equitable doctrine of estoppel were applicable, I'm... it's not clear to me how the equities are in this case.
It seems to me what your client is complaining about is... is that in fact his earning... his earning capacity had been restored.
He went out and was able to make as much money as the statute said would demonstrate that his earning capacity had been restored.
I don't view it to be the purpose of this statute that even though you may earn enough money to get off of the public welfare, which this statute provides, you may continue to sit at home and earn right up to the dollar next to that even though you still have the working capacity.
Do you think that that's--
Mr. Deford: Justice Scalia, I think--
Unknown Speaker: --and equitable case for your client?
Mr. Deford: --Absolutely.
Unknown Speaker: That... that he mistakenly used the... the working capacity that he had instead of sitting at home and... and collecting his... his benefits?
Mr. Deford: Justice Scalia, I don't think what Mr. Richmond was doing was anything different than what anybody else does when they try to find out what the rules are.
Unknown Speaker: You don't sue in court claiming the benefits of equity--
Mr. Deford: I think--
Unknown Speaker: --as your client--
Mr. Deford: --that something is missing.
Unknown Speaker: --They... they are adhering to the letter of the law.
You're coming in and saying, give us equity, and I don't... I don't see a very strong equitable case on the part of your client.
He can earn enough money, demonstrably, to not be entitled to... to these funds.
Mr. Deford: He had the one-time opportunity in that year, 1986, to earn a little extra money.
He had significant debts and he knew that his income would go down again in 1987.
He went into the Navy Personnel Office to find out what exactly he could earn.
He assumed that there were some limitations on what he could earn and still be eligible for a disability annuity.
And he received information which led him to believe, and which said, you can earn such and such amount of money for two years straight.
Unknown Speaker: The only complaint is... is that had he known that the law was the way it was, he would have sat at home instead of earned as much money as he could have.
That's the whole basis for the estoppel.
Mr. Deford: He would have not earned... he probably would not have earned as much as he did.
Unknown Speaker: That's right.
Mr. Deford: He was only three percent over the rule as it was.
Unknown Speaker: Well, I don't--
Mr. Deford: Congress--
Unknown Speaker: --just don't consider that a strong equitable--
Mr. Deford: --Just one more point, Justice Scalia.
Congress has set an 80 percent limit on how much the individual can earn.
So Congress obviously contemplates that most people will be earning some money.
They didn't set a five or ten percent limit, they set an 80 percent limit.
So, people can earn up to that limit and there's no suggestion that earning up to that limit is improper or inequitable.
Unknown Speaker: --It's phrased in the terms of he will be deemed to have had his earning capacity restored.
The object of the statute is that when the person's earning capacity is restored, he gets off the program.
And there's one way that he's clearly deemed to have had it restored, and that is if he's earning this much money.
But I'm not sure that it's in accord with the spirit of the statute to carefully calculate how much you earn each year so that you... even though your earning capacity is restored, it will not be deemed to have been restored.
I agree as a matter of strict law your client was... would have been entitled to the money if he had played it that way.
But he's coming into... into court now and saying, forget the letter of the law, give me equity.
If he wants equity, I'm not sure he wins.
Mr. Deford: With all due respect, Your Honor, I think your interpretation of the law's purpose is inaccurate.
The law is structured in such a way that people will get off for a time being and then they may get right back on again.
What happened to Mr. Richmond in that respect is not unusual.
He was only off benefits for six months.
And then, because his income went down again, as he had anticipated, significantly, he was able to get back on again.
There was never any suggestion that he was not disabled.
His disability has continued up to now.
His earnings went up for a very short period of time, and it happened to go over the limit by a few percent.
Unknown Speaker: How was he misled then?
The only basis for claiming he was misled is that had I known, I wouldn't have taken the job.
That's the only basis for claiming an estoppel.
Mr. Deford: No, Your Honor--
Unknown Speaker: That he would voluntarily have refrained from earning money.
Mr. Deford: --He was misled because he was led to believe that the old law was in effect, and the old law allowed him to earn 80 percent for two years in a row.
The new law said 80 percent in one year.
He earned 83 percent and then all of the sudden finds out he's subject to a law which he had not been told about.
And so he went back off--
Unknown Speaker: Then, if I had known that, I would have sat at home and been idle--
Mr. Deford: --No, Your Honor.
Unknown Speaker: --instead of getting off of this program.
Mr. Deford: He would have earned money anyhow.
He had an opportunity for temporary overtime, which he took.
He took some of it, but he probably would not have taken all of it had he known that there was a one-year 80 percent rule.
So, he would not have sat at home in any event.
Unknown Speaker: Sounds like he had a bad lawyer.
Mr. Deford: Well, Justice White, I think that's not a bad point, because I think that's absolutely one of the practical consequences of the government's position, that no one, including a Social Security recipient, would take any action now, vis-a-vis the government, without contacting a lawyer.
And I find that a very unusual public policy for this government to encourage.
In fact, even getting your own lawyer wouldn't do you any good other than it would give you somebody to sue if the information the lawyer gave you turned out to be wrong, because you still could not trust the information the government had given you.
The essence of the government's position is--
Unknown Speaker: The lawyer probably would have asked the Navy anyway, wouldn't he?
Mr. Deford: --Maybe, but I hope the lawyer would have looked it up in the statute books.
Unknown Speaker: Yeah, you don't need a lawyer just to call the same person that you would have called if you hadn't hired a lawyer.
Do you accept the explanation that the Solicitor General's Office gave of how the error occurred?
Mr. Deford: Only in the sense that it... it briefly details the facts.
In fact, here, Justice O'Connor, the information which Mr. Richmond received was in a written statement from the Office of Personnel Management.
It was not from some low-level Navy employee.
The low-level Navy employees were simply reading the information which they had been given by the Office of Personnel Management and which no one--
Unknown Speaker: Well, just out of... just out of date.
Mr. Deford: --It was, at the time Mr. Richmond received it, approximately four and a half years out of date, and I believe it remained out of date in that particular office until 1987 when finally Mr. Richmond, at their request, brought in the notice informing him that he had been taken off the disability annuity because he had violated the one-year rule.
So, it was out of date in that office for at least six years.
He did obtain relief here, as we've noted, from the court of appeals--
Unknown Speaker: Maybe this should have been a class action.
Mr. Deford: --which... which applied the traditional common law doctrine of equitable estoppel to require the government to apply the law as it was formerly in effect.
That was the result of the estoppel in this case.
To apply... to require the government to apply the law as it had been in effect and as it had been repeatedly explained to Mr. Richmond.
The government contends, however, that estoppel is precluded by another common law doctrine.
By sovereign immunity and also by separation of powers principles.
But estoppel has historically been recognized as an exception to sovereign immunity and Congress has shown no interest in altering that relationship.
Unknown Speaker: Well, has the court... has this Court ever held that the government is estopped in a situation like this?
Mr. Deford: I think it's... it's held at least twice that the government should be estopped, although it did not use that language, Your Honor.
In the Moser and PICCO cases.
And in six decisions since 1960, it has implied that the government could be estopped without actually--
Unknown Speaker: Well, it's... it's left the question open, has it not?
Mr. Deford: --I would say that it has left the question open but it has strongly hinted that estoppel might be appropriate if certain circumstances existed.
In fact, I would note that in the government's presentation the history of estoppel stops at 1947 at the so-called seminal case of Merrill, Federal Crop Insurance Corporation v. Merrill.
There has been, as I've just suggested, significant developments in the estoppel area since 1947.
I think most commentators and many lower courts assume that the Merrill case, which was a five to four decision, has since been rejected or at least seriously undermined.
Unknown Speaker: By what case?
Mr. Deford: I think the Moser case in 1951, just four years later.
Unknown Speaker: Which didn't even use the word estoppel?
Mr. Deford: It declined to use the word estoppel, Your Honor, but all of the language in that case is estoppel-like language.
And I think more important, it has exactly the same structure as this case.
Unknown Speaker: But it didn't even... Moser doesn't even cite Federal Crop Insurance.
Mr. Deford: No, it doesn't, and I think that might be a hint that perhaps the Moser court had decided to reject the strict analysis in Merrill.
Unknown Speaker: Or didn't know about it perhaps.
Mr. Deford: Well, six members of the Merrill majority were still... were on the Moser court at that time.
I would like to direct my--
Unknown Speaker: What about... what about PICCO?
Mr. Deford: --The PICCO case was a criminal case, but there's been no indication, other than the statement today in open Court, that that should make any difference.
PICCO involved a for-profit sophisticated corporation which followed exactly what Mr. Merrill... Mr. Richmond followed... followed what the agency said was the law, whereas in fact the law was otherwise.
Unknown Speaker: Well, at least the agency had said it in a regulation.
Mr. Deford: I don't think that should make any difference, Justice White, based on the government's decision.
Unknown Speaker: But... but that was the case, wasn't it?
Mr. Deford: It was a regulation and the agency's regulation was wrong, as this Court determined.
And, therefore, the Court held that the... that the corporation was not bound by what the law actually said.
It was only bound by what the agency had said the law was, which directly contradicts the extreme holding in Merrill.
This court in Merrill had held that we are always presumed to know the law and, therefore, it didn't matter what you heard from the government because it's what you are presumed to know which counts.
And PICCO directly contradicts that because in PICCO they followed the regulations and not the statute.
But despite that--
Unknown Speaker: I guess the government has never claimed in this case that the person that gave the advise wasn't seemingly authorized to give such advise?
Mr. Deford: --Well, I don't think there's any doubt about authorization.
This information came from the Office of Personnel Management.
Unknown Speaker: And it was a written--
Mr. Deford: A written document.
I believe it appears in the appendix.
There's no dispute about where the information came from.
There's never been any real factual dispute in this case at all, as to what happened and why it happened.
Unknown Speaker: --Mr. Deford, how does... how does your theory work in a case such as this?
Let's assume that this statute was passed and there's a limitation on earnings for beneficiaries of $10,000 a year, the statute is presented to the President and he vetoes it.
He thinks there shouldn't be any earnings limitations, let people earn as much as they want and still draw benefits.
That veto is overridden so the statue is enacted with a $10,000 limitation.
The President then issues a regulation that says there is no limitation on the amount of... on the amount you may earn and still draw benefits.
Mr. Deford: The veto... the President's of the law was overridden?
Unknown Speaker: The... the... the President tried to eliminate the earnings provision.
He was unsuccessful.
But he writes a regulation eliminating it.
Mr. Deford: I think in that instance you'd have some major separations of powers problems between Congress and the Executive.
Unknown Speaker: Well, I'm... I'm asking what happens in a lawsuit.
The... the people who rely on his statement would win, I assume.
Mr. Deford: I think if they had vested rights to those benefits they should win.
And that's the crucial distinction here between this and numerous other cases--
Unknown Speaker: Doesn't it strike you as odd that he can achieve by estoppel what he couldn't achieve by veto?
Mr. Deford: --I would not think that... that Congress would allow that kind of regulation to remain available for very long.
You're talking about a very public event.
This was something which was going on behind the scenes here.
Unknown Speaker: You're talking about the theory of... of what you're urging upon the Court, the theory that somehow the Executive can contradict what the Congress has said and make it stick.
Mr. Deford: Your Honor, you're talking about the Executive acting intentionally to violate the will of Congress.
That's not what happened here.
This was a mistake, a serious mistake, by the Executive agency, helped by the Judiciary in order to effectuate the ultimate will of Congress.
Unknown Speaker: I had always thought estoppel was even worse if it was intentional.
You're telling me it's not as bad if it's intentional?
Mr. Deford: No.
Your Honor, I'm simply saying--
Unknown Speaker: It turns everything upside down.
Mr. Deford: --in the intentional situation there would be much more publicity about what... about what had happened.
Estoppel is a case-by-case individualistic kind of situation.
It only arises on a case-by-case basis.
That's the very nature of it.
It's an equitable concept.
I think if the President were to violate directly the will of Congress, you'd have a somewhat different situation.
But I agree that ultimately people who relied on what the President did could achieve some sort of remedy if they had a vested right in those benefits.
Unknown Speaker: What do you mean by a vested right?
Mr. Deford: I would distinguish a vested right, Your Honor, by pointing to the Hansen case, which was a decision of this Court in 1971 involving someone who sought Social Security benefits and was told that she wasn't eligible and she shouldn't bother to apply.
She didn't apply, and as a consequence, she was deprived of a year more of Social Security benefits.
She had no vested right to those benefits until she applied.
She was not entitled to them.
That's what this Court held in effect.
That she had no substantive vested right to those benefits.
Mr. Richmond was entitled at all times.
From 1981 on, he had a vested right to the benefits.
Unknown Speaker: Well, how about... how about the hypothetical that Justice Scalia put to you where the President says by regulation that there's no earnings limitation?
Mr. Deford: If it involved people who had a vested right at that time--
Unknown Speaker: How would they... how would they have gotten the vested right?
Mr. Deford: --Well, I... the hypothetical wasn't... I did not understand the hypothetical to be explained in such detail as to involve or not involve vested rights.
Unknown Speaker: Well, Congress says that--
Mr. Deford: But somebody who was already entitled and receiving those benefits would definitely have a vested right, as did Mr. Richmond.
Unknown Speaker: --But are you... are you saying that conceivably by the President's regulation, contrary to what Congress provided, saying there are no earnings limitations, people could get money payments from a court?
Mr. Deford: I would say that if they had a vested right, if they had relied--
Unknown Speaker: Well, don't use the term vested.
Just answer the question without it, if you can.
Mr. Deford: --I think those people who relied, yes, would be able to achieve an estoppel in that respect.
Unknown Speaker: How did this case get started?
Did he apply for--
Mr. Deford: He was already eligible, Justice White.
Unknown Speaker: --Well, I know, but how did it get to the merit... the Merits Board?
What did he do?
Mr. Deford: Well, he... he... when the Office of Personnel Management--
Unknown Speaker: --This got started in an administrative proceeding?
Mr. Deford: --Yes.
It was an administrative proceeding.
The Office of Personnel Management said, we are depriving you of your annuity for six months.
He appealed that to the Merit Systems Protection Board.
A judge there turned him down.
The Board turned him down.
He then went to the federal circuit on direct appeal from the Merit Systems Protection Board.
Unknown Speaker: Well, I suppose that... that... they just notified him that they were stopping his--
Mr. Deford: That's correct.
They sent him a letter which said, you earned more than 80 percent in one year, under the law you lose your annuity for the next six months or until you no longer have that earnings record.
I think it's important to understand why in this case the traditional elements of estoppel are applicable.
In the last four or five cases that this Court has dealt with in the estoppel area, it has declined to reach the issue of whether the government could be estopped because it found that traditional elements for estoppel were not there or, also, the element of affirmative misconduct, which this Court has discussed.
In this case, all the traditional elements are there and affirmative misconduct is there.
So, this case is different than the estoppel cases which the Court has dealt with over the last 20 years.
Unknown Speaker: --How did the facts of your case differ in legal significance from the Schweiker facts?
Mr. Deford: In the Schweiker v. Hansen case?
Unknown Speaker: Yeah.
Mr. Deford: One, that involved a low-level employee giving information... giving oral... giving one oral response to an individual who was not vested in benefits.
In this case, the information came from the agency itself.
Unknown Speaker: Well, that would ordinarily go to the reasonableness of the reliance, I would think.
There was no contention in Schweiker that the... the agent couldn't speak for the agency, was there?
Mr. Deford: Well, there has been a dispute here about... about reasonable reliance.
But if you're speaking of affirmative misconduct, which is the other element that this Court has suggested must be shown for estoppel against the government, the affirmative misconduct here, as opposed to in the Schweiker v. Hansen case, is that it came from the agency.
It was the agency who gave out the wrong information, not the low-level employee.
Unknown Speaker: But I would think if... if it's affirmative misconduct to give out bad information, in one case the agency was guilty of affirmative misconduct, in the other case an employee of the agency was guilty of it.
Mr. Deford: I think the distinction, Your Honor, is that in Hansen it was one person coming in asking a question, there was some confusion as to the nature of the question, as to the issues.
The individual employee gave out an answer, the individual was not following the policy of the agency.
Affirmative misconduct has generally been interpreted by the lower courts as requiring something more than mere negligence.
And I think what took place in the Hansen case was mere negligence by one employee.
What took place in this case was something greater.
Unknown Speaker: Well, why do you say... are you... are you suggesting it was intentional misconduct here?
Mr. Deford: --No.
I'm saying that reckless... it was not intentional misconduct in this case, as far as we know.
But it at least rose to the level of recklessness behavior.
Unknown Speaker: Well, how can you--
Mr. Deford: --greater than negligence.
Unknown Speaker: --How can you tell that?
Mr. Deford: I think the distinction is that here it was the agency which misbehaved, which sent out the wrong information and which left it out there for very many years.
In Hansen, it was a one time only mistake responding to one question from one individual.
I do want to speak to the traditional elements of estoppel because that has often proven to be a problem in obtaining an estoppel from this Court.
The government admits that most of the elements of traditional estoppel are met here.
There was reliance, there was a misrepresentation, and there was detriment to the person who relied on that misrepresentation.
The only dispute here on the traditional elements is whether or not the behavior was reasonable, whether Mr. Richmond was reasonable in relying on what the OPM letter told him.
The government, in fact, does not dispute that as a matter of fact the reliance was reasonable.
Their entire argument is based on a legal fiction.
It's based on the legal fiction that everyone is presumed to know the law.
And I think even more important, it's based on a corollary to that legal fiction which is that reliance on what the government tells you is always unreasonable.
And the government as much as says that in its briefs.
That since we are all presumed to know the law, therefore, you can never rely on what the government tells you.
And that is the basis for the government's argument in this case that Mr. Richmond--
Unknown Speaker: Well, if... if estoppel is available at all, that's their argument.
Mr. Deford: --That's correct, Your Honor.
I'm... I'm speaking to that now because that has proven to be a problem in past cases before this Court.
Now, as I indicated earlier, in the Merrill case this Court did use a very strict interpretation of that presumed to know maxim.
It received a fairly sarcastic dissent from Justice Jackson, but that was the decision of the Merrill case, we are all presumed to know the law.
But since then, that has been severely undercut in several decisions by this Court.
By the Moser case, by the PICCO case... in both of those instances the law was out there, it was available to the individuals, and they were not presumed to know the law.
The Court in effect found estoppel and found that they had reasonably relied even though theoretically they could have found out what the law was.
I think more important is this Court's 1984 decision in Community Health Services.
In that decision, the Court found that the institution involved had not reasonably relied, but it did not simply say, well, you should have known what the law is and, therefore, your reliance was unreasonable.
The Court thoroughly went through the four or five factors which demonstrated in that case that that institution had not reasonably relied.
It was a totality of circumstances type of analysis.
And I think that's the appropriate type of analysis that should be used whenever we're determining whether there was reasonable reliance on a misrepresentation by the government.
I suggested earlier one problem of using the strict presumed to know rule would be that we could all be required to have lawyers every time we call up any government agency.
I think perhaps an even more important consequence of applying that strict rule would be to erode further the confidence in government.
If every citizen knew that the legal fiction is that we are all presumed to know the law and that it's always unreasonable to rely on the government, then I think confidence in government would go down somewhat.
So I think this Court has indicated since the Merrill decision that reasonable reliance is determined based on the facts on the totality of circumstances and not merely on some maxim which no longer has any validity.
In this case there should be no doubt that Mr. Richmond did reasonably rely.
He went to his former employer, he went to the division of the Navy which had always handled his retirement, which had dealt with the issue in the past.
He asked specific questions.
He asked them what... I've got this opportunity for short-term work, will it have any effect on my continued annuity?
He asked specific questions and he received a specific written explanation in response to those questions.
It was an unambiguous statement saying,
"You may earn over 80 percent for one year as long as you do not earn over 80 percent in the next year. "
And he received that from the responsible Agency, from the Office of Personnel Management.
Again, I can only emphasize enough, this was not the statement of a low-level Navy employee.
This was the written explanation of the Navy... I... of the... of the Office of Personnel Management.
I think if you put all these factors together, there should not be much doubt that Mr. Richmond was reasonable in relying on the information which he was given.
Now, the other factor which has also in the past caused this Court not to reach the ultimate issue of whether there could be estoppel against the government is what is known as affirmative misconduct.
It's not part of the traditional estoppel issues.
This Court has suggested that if there can be estoppel, there must also be affirmative misconduct.
And I think there's good logic in that.
There is some tension, as obviously this discussion has indicated, between sovereign immunity, separation of powers, and the concept of equitable estoppel.
And by adding this additional level that an individual must demonstrate, I think this Court has made it very clear that it's possible for that tension to be worked out.
People who might be able to demonstrate just the traditional elements of estoppel will not necessarily be able to show affirmative misconduct.
But those who can show affirmative misconduct, will have demonstrated that they're entitled to estoppel against the government.
Unfortunately, like many equitable terms, affirmative misconduct has not been clearly defined.
But I think that is the nature of equity in general and that is the nature of estoppel.
It's a balancing test to determine when you have affirmative misconduct.
At a minimum, as I suggested, it does require more than negligence.
The lower courts are in pretty much agreement on that.
The court below and many commentators have suggested the level of reckless... reckless behavior.
And I think that's an appropriate level.
Unknown Speaker: Does the Tort Claims Act just bar any claim of recklessness?
Mr. Deford: The Tort Claims Act I believe bars claims for misrepresentation and deceit.
Unknown Speaker: I know, but negligent misrepresentation or just--
Mr. Deford: It would include both negligent and intentional misrepresentation.
And if I could speak to that, Justice White.
The Tort Claims Act would cover if it did apply to deceit or negligent misrepresentation... would apply to much broader kinds of cases than are applicable here.
For instance, the Hansen case would be--
Unknown Speaker: --Well, I understand that.
Mr. Deford: --would be covered by that.
So I think that's a good reason why we should continue to use this narrow remedy of estoppel and not compare it to the... to the tort misrepresentation.
Again, let me emphasize on the affirmative misconduct issue.
The Agency here, Office of Personnel Management, had a special obligation and that's why their behavior is... is especially disturbing.
There was a change in law here.
It was a change in 1982.
Mr. Richmond and others had retired before that, in 1981.
They knew what the law when they retired.
They knew what they could... they knew what they had to do to continue to be eligible.
They had vested rights.
They needed information when the law changed to be able to conform their conduct in the future if they had an opportunity to gain more work.
They needed to know what the law required.
So, it's our position that OPM had a special obligation to these people to notify them that the law had changed and there was a very easy way for them to do it.
The government in its reply brief in note 12 points out that every year the Office of Personnel Management sends out forms to all its disability annuitants asking for information on their prior year's earnings.
All that OPM would have had to do was attach to that form or stuff in that envelope a little note saying the law has changed from a two year earning capacity record rule to a one year earning capacity rule.
Unknown Speaker: Well, you don't have to go that far to win your case.
Mr. Deford: No.
Unknown Speaker: I mean, OPM didn't have--
Mr. Deford: No.
Unknown Speaker: --to do anything.
Mr. Deford: They didn't have... they did not have to do that.
I'm suggesting they could have done that and it would have resolved things.
There are lots of other things they could have done.
What they didn't do, though, was to make any affirmative effort whatsoever to get the information out to people.
Unknown Speaker: Well, they didn't... are you saying that OPM had a duty to... an affirmative duty to get information out to people?
Mr. Deford: --I'm saying at a minimum they had a duty to make sure that the right information was available to anybody who sought it.
Unknown Speaker: Well, but now you're... I think you've just made two inconsistent statements.
I thought a moment ago you were saying that the OPM has an affirmative duty to notify these people of the change in the law.
Is that your position or is it not?
Mr. Deford: No.
I will... I will... if I said that, that's going too far.
They had an affirmative obligation to make sure people knew what the law was, especially people who had--
Unknown Speaker: But now you've just said it over again.
They had an affirmative obligation to make sure that people knew what the law was.
Mr. Deford: --And that could have been satisfied, Your Honor, simply by putting the information in an envelope that they were sending out anyhow.
But it could also have been satisfied by making sure that the right information was available in offices--
Unknown Speaker: So, it... it wouldn't be enough for the Navy to say, we just aren't... we're cutting our personnel department because it makes so many misrepresentations, from now on go to the statutes at large?
Mr. Deford: --I don't think the Navy... I'm not sure--
Unknown Speaker: Well, what if... what if the Navy had done that?
Mr. Deford: --Well, then Mr. Richmond presumably would have gone somewhere else.
Unknown Speaker: And what would have been the result in this case?
He wouldn't have been misrepresented?
Mr. Deford: He would have been misrepresented because the same inaccurate information was all over the country.
That's the problem we have.
Unknown Speaker: Well, so he goes to another Navy personnel office.
But that's disbanded too.
Mr. Deford: It's not... it's not necessarily the Navy we're talking about here.
OPM had that bad information out all over the country at all times and the corrected information which we've just found out about this week in the government's reply brief... that corrected information did not pull back the wrong information.
Unknown Speaker: But isn't the real gist of your complaint that OPM had misinformation out?
Mr. Deford: Yes.
Unknown Speaker: Not that it had a duty to advise them of... of a change in the law.
Mr. Deford: I'm suggesting that had they advised them, this whole problem would have been... would have been avoided.
And that would have been one simple solution.
I'm not suggesting for purposes of this case that they had to advise each person individually, although that would have been an easy way to resolve this.
Unknown Speaker: It really didn't have misinformation out.
It had out a circular dated 1976 which said what the law was in 1976.
That was accurate.
Mr. Deford: I--
Unknown Speaker: What you're complaining about is that it didn't have out a circular that said what the law was in 1986 or--
Mr. Deford: --Well, I believe it was 1981--
Unknown Speaker: --I don't know what the dates are.
Mr. Deford: --circular brief--
Unknown Speaker: Whatever the dates are.
But it was accurate--
Mr. Deford: --But they didn't have anything out--
Unknown Speaker: --as far as it went.
Mr. Deford: --They didn't have anything out to explain that that law was no longer in effect.
Unknown Speaker: Thank you, Mr. Deford.
Mr. Starr, you have four... General Starr, you have four minutes remaining.
Rebuttal of Kenneth W. Starr
Mr. Starr: Thank you, Mr. Chief Justice.
With respect factually to what OPM did, in our reply brief at pages 10 and 11, including footnote 11, we set forth in brief fashion what happened here.
OPM did, promptly after OBRA was passed in September of 1982, circulate information to the effect that the law had changed to the various civilian employers of the federal government.
Those... that information was in fact received by the Department of the Navy.
OPM, for its part, no longer has responsibility or control.
This was a Navy problem.
So, just to clarify the record in terms of OPM.
Now, we've heard a lot about the OPM form and the information that... quote... OPM is giving out.
OPM wasn't giving out this form, this was from the Navy.
Yet, Mr. Richmond knew full well he was ultimately dealing with OPM.
Every year he sent in to OPM on an OPM form a statement with respect to his eligibility.
If you look at the... if the Court looks at the Appendix, the document that has received so much attention today in the argument, the document on its face--
Unknown Speaker: Where are you--
Mr. Starr: --Attachment 4, page 1(a) of our opening brief, does not, to my reading of it, apply to Mr. Richmond.
He was given this form.
We don't quarrel with that.
We don't contest that.
He was given this form.
But this form, on its face, doesn't apply to him.
"Information to applicants for disability retirement. "
He was not that.
He was already on disability retirement.
The first sentence doesn't apply to him.
"Your agency's review of your employment record shows that you're eligible for regular... regular voluntary retirement. "
That's not so.
He wasn't eligible for voluntary retirement.
We're not quarreling with the fact that Mr. Richmond received information that was in error.
But we do want to be clear that OPM, for its part, was in fact seeking in a responsible way to furnish information to the employing agency and agencies across the country with which the employees dealt.
With respect to the law, we have heard essentially an assault on Merrill.
Merrill is good law.
This Court has cited Merrill as recently as Heckler against Community Health Services, quoted extensively from it, and in Schweiker against Hansen.
We continue to believe that this case is on practically... not entirely... all fours with Schweiker against Hansen.
The principal distinction is this piece of paper that this individual, Mr. Richmond received.
This Court has previously rejected estoppel claims where writings, including specifically tailored writings advising individuals or entities about their particular circumstances.
I cite United States v. Stewart, Justice Douglas' opinion.
I cite in addition, the Automobile Club case, and there are a variety of cases set forth in our brief where the government's erroneous information has been in writing.
My final point is that Congress has identified the situations about which Mr. Richmond complains in a variety of statutes.
At page 24 of our brief we identify a goodly number of statutes in which Congress has taken the step to identify situations in which it intends good faith reliance on administrative rulings or advise and the like to constitute a defense.
It also has provided, as we set forth in page 25, a number of statutes in which governmental recoupment of funds is not permitted if it would offend equity and good conscience.
I thank the Court.
Chief Justice Rehnquist: Thank you, General Starr.
The case is submitted.