Asociacion De Empleados Del Area Can Alera (ASEDAC), Mario Lopez v. Panama Canal Commission, The Office of Transition Administration Established by the Panama Canal Commission

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS
FILED
FOR TH E ELEV ENTH C IRCUIT
U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
MAY 07, 2003
No. 02-13789 THOMAS K. KAHN
________________________ CLERK

D. C. Docket No. 01-01154-CV-DLG

ASOCIACION DE EMPLEADOS DEL AREA
CAN ALE RA (A SED AC), M ARIO LOP EZ, et al.,

Plaintiffs -App ellants,

versus

PANAMA CANA L COMMISSION, THE OFFICE
OF TRANSITION ADMINISTRATION ESTABLISHED
BY T HE P ANA MA CAN AL C OM MIS SION , et al.,

Defen dants-A ppellees.

________________________

Appeal from the United States District Court
for the Southern District of Florida
_________________________

(May 7, 2003)
Before BARKETT and KRAVITCH, Circuit Judges, and FULLAM*, District
Judge.

BARKE TT, Circuit Judge:

The Asociacion De Empleados Del Area Canalera (“ASED AC”), an

employ ee associa tion, app eals the dis missal of its comp laint again st the Panama

Canal Commission (“PCC”) for the PCC’s alleged failure to provide back pay and

other employment benefits as required by the Panama Canal Treaty and various

United States laws. The District Court dismissed ASEDAC’s complaint pursuant

to Rule 12(b)(1) of the Federal Rules of Civil Procedure, holding that 5 U.S.C.

§7121(a ) barred it from exercising sub ject matter jurisdiction o ver AS EDA C’s

claims. Because the District Court erred in concluding that it lacked jurisdiction,

we reverse the court’s dismissal and rem and the case for further proceeding s.

BACKGROUND

In 190 3, the U nited Sta tes and th e Repu blic of P anama e ntered in to a treaty

which granted the United States occupation and control of the Panama Canal Zone,

a strip of land ten miles wide across the Isthmus of Panama, for the purpose of

constru cting the P anama C anal. See Hay-Bunau Varilla Treaty, Nov. 18, 1903,

U.S.-Panama, 33 Stat. 2234, T.S. No. 431. In 1950, Congress created the Panama

*
Honorable John P. Fullam, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation.

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Canal Company to operate the Canal and continued to exercise sovereignty over

the Canal and the Canal Zone until October 1, 1979, the effective date of the

Panam a Canal T reaty of 1 977. See Panam a Canal T reaty, Sep t. 7, 1977 , U.S.-

Panama, 193 Stat. 4521, T.I.A.S. No. 10030.

Unde r the Pan ama Ca nal Trea ty, the Un ited States and Panama ag reed to

reestablish Panamanian sovereignty over the Zone but granted the United States

the right to continue operating the Canal until December 31, 1999, under the

Panam a Canal C ommis sion (“P CC”), a U.S. g overnm ental agen cy. Id. at Art. III , ¶

3. To implement the 1977 treaty, Congress then passed the Panama Canal Act of

1979, w hich, inter alia, established the PCC as a United States government

corporation and set terms for PCC employment, including treating PCC personnel

as federal employees and subjecting them to certain provisions of the Civil Service

Reform Act of 1978, Pub. L. No. 95-454, 92 Stat. 1111 (“CSRA”), including 5

U.S.C . §7121 (a), the pr ovision at issue he re. See 22 U.S.C. §§ 3611(a),

3641-3701.

ASE DAC , an assoc iation of f ormer P CC em ployees a nd of sp ecific

Panamanian civilian employees of the U.S. Armed Forces at the Panama Canal

Zone, a ppeals th e dismiss al of its com plaint aga inst the PC C, its succ essor en tity

the Office of Transition (“OT A”), the Secretary of the Arm y of the United States,

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and the S ecretary o f the Tre asury of the Un ited States (“the De fendan ts”).

ASEDAC claims that the PCC and OTA violated the Panama Canal Treaty and

various United States laws, including the Panama Canal Act, 22 U.S.C. §3601 et

seq., the Administrative Procedure Act, 5 U.S.C. §701 et seq., and the Back Pay

Act, 5 U.S.C. §5596(b), by failing (1) to pay them an extra month’s salary for

every twelve months they worked for the PCC in accordance with Panamanian law,

(2) to provide them severance pay in accordance with Panamanian and United

States law, and (3) to make contributions on their behalf to the Panamanian social

security system.

ASE DAC sough t an orde r requirin g the Se cretary of the Arm y, in his

capacity as a member of the PCC’s supervisory board, to direct the PCC and/or the

OTA to prov ide these b enefits an d requir ing the S ecretary o f the Tre asury to

preserve and invest funds necessary to pay these benefits. The Defendants moved

to dismiss ASEDAC’s complaint pursuant to Rule 12(b)(1) of the Federal Rules of

Civil Procedure on the gro unds that it was preempted by the C SRA. Sp ecifically,

the Defendants argued that the district court was barred from considering

ASEDAC ’s claims because of 5 U.S.C. §7121(a), which, they contend, makes the

grievance procedures of collective bargaining agreements the exclusive remedy for

grievances falling within the CSRA’s coverage.

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 The District Court dismissed ASEDAC’s claims pursuant to Rule 12(b)(1),

holding that §7121(a) barred it from exercising subject matter jurisdiction over

those claims. The District Court first held that ASEDAC ’s claims for back pay and

other benefits were “grievances” within the meaning of the CSRA and were subject

to CSRA preemption, which it construed as a jurisdictional bar mandating

dismissal under Rule 12(b)(1) rather than, as ASEDAC argued, an affirmative

defense subject to avoidances such as frustration or futility. The court further

rejected A SED AC’s a rgume nt that a 19 94 ame ndmen t to §712 1(a)(1) change d its

meaning and established A SEDA C’s right to seek judicial review of its claims.

On ap peal, AS EDA C argu es (1) tha t the Distr ict Cour t erred by failing to

give meaning to the 1994 amendment to §7121(a)(1), which ASEDAC contends

limits that provision’s exhaustion requirement only to administrative, but not

judicial, remedies, and (2) that even if §7121(a)(1) is held to preclude judicial

review, ASEDA C’s asserted failure to exhaust available grievance procedures as

mandated by §7121(a)(1) should not be interpreted as a jurisdictional bar, but

rather as an affirmative defense subject to traditional avoidances such as frustration

and futility, which ASED AC contends are applicable here.

STANDARD OF REVIEW

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 We review the District Court’s determination of its subject matter

jurisdiction

de novo. See Mexiport, Inc. v. Frontier Communications Serv., Inc., 253 F.3d 573,

574 (1 1th Cir. 2 001); Milan Express, Inc. v. Averitt Express, Inc., 208 F.3d 975,

978 (11th Cir. 2000). The underlying issue on appeal, a question of statutory

interpretation, is also subject to de novo review . See United States S.E.C. v.

Vittor, 323 F .3d 930 , 933 (1 1th Cir. 2 003); Estate of Shelfer v. C.I.R., 86 F.3d

1045, 1046 (11th Cir. 1996).

DISCUSSION

The central issue on appeal is the meaning of 5 U.S.C. §7121(a)(1), which,

together with Section 7121 (a)(2), reads as follows:

(1) Except as provided in paragraph (2) of this subsection, any collective
bargaining agreement shall provide procedures for the settlement of
grievan ces, includ ing que stions of arbitrability . Excep t as prov ided in
subsections (d), (e), and (g) of this section, the procedures shall be the
exclusive administrative proced ures for resolvin g grieva nces w hich fall
within its coverag e.

(2) Any collective bargaining agreement may exclude any matter from the
application of the grievance procedures which are provided for in the
agreem ent.

5 U.S.C. § 7121(a) (2000) (emphasis supplied).

6
 The dispute between the parties centers on the word “administrative” in §

7121( a)(1). P rior to 19 94, the sta tute did n ot contain this wo rd. Instea d, §

7121(a)(1) formerly stated that the grievance procedures set forth in a collective

bargaining agreement would “be the exclusive procedures for resolving grievances

which fell within its coverage.” 5 U.S.C. § 7121(a)(1) (1988) (emphasis supplied).

In Carter v. Gibbs, 909 F .2d 145 2 (Fed . Cir. 199 0) (en b anc), cert. denied,

498 U .S. 811 (1990 ), the Fed eral Circu it interprete d the pre -1994 languag e to

preclude federal employees from resolving grievances covered by their collective

bargaining agreement in court. Relying on the “unambiguous” text of unamended

§ 7121 (a)(1), Carter held that the statute limited the resolution of such grievances

to the negotiated procedures set forth in an employee’s collective bargaining

agreem ent. Carter, 909 F.2d at 1454.

However, ASEDAC contends that by adding the word “administrative” to §

7121(a)(1) in the 1994 amendment, Congress intended to overrule Carter and to

establish a federal employee’s right to bring an action in court despite the

availability of an administrative grievance procedure. The PCC counters that the

structure of the statute, the remedial scheme established by § 7121, and the central

purposes of the CSRA all counsel against reading the 1994 amendment to allow

federal employees to press their grievances in court when they could seek an

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adminis trative rem edy und er their co llective bar gaining agreem ent.

The District Court relied on Carter to conclude that §7121(a)(1) b ars a

federal employee from bypassing the negotiated procedures contained in his or her

collective bargaining agreement. However, while this appeal was pending, the

Federal Circuit in Mudge v. United States, 308 F.3d 1220 (Fed Cir. 2002),

overruled Carter, as well as three decisions of the Court of Federal Claims on

which the District Court also relied,1 holding that Carter was “no longer

applicab le” to interp reting § 7 121(a) (1). Mudge, 308 F.3d at 1227. Instead, the

Federa l Circuit d etermine d that by a dding th e word “adminis trative” to

§7121(a)(1), Congress established a federal employee’s right to bring his or her

claims directly in federal court. Id.; see also O’Connor v. United States, 308 F.3d

1233, 1239-40 (Fed. Cir. 2002).

In Mudge, the Federal Circuit interpreted § 7121(a)(1) by applying the

1
When the District Court dismissed ASEDAC’s complaint, no federal appellate court
had interpreted the meaning of the 1994 amendment to § 7121(a)(1), and six federal trial courts
were evenly split on the issue. Compare Addison-Taylor v. United States, 51 Fed.Cl. 25 (2001)
(holding that notwithstanding the 1994 addition of the word “administrative,” §7121(a)(1)
continued to prevent courts from exercising jurisdiction of grievances falling within the scope of
the CSRA), Mudge v. United States, 50 Fed.Cl. 500 (2001) (same), and O’Connor v. United
States, 50 Fed.Cl. 285 (2001) (same), with Bailey v. United States, 52 Fed.Cl. 105 (2002)
(holding that the 1994 amendments overruled Carter by establishing a federal employee’s right
to bring an action in court despite the availability of a collective bargaining agreement remedy),
Abbott v. United States, 47 Fed.Cl. 582 (2000) (same), and Abramson v. United States, 42
Fed.Cl. 621 (1998) (same). The District Court followed Addison-Taylor, Mudge, and O’Connor
and rejected the contrary holding of Bailey, Abbott, and Abramson.

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fundamental canon of statutory construction that “statutory interpretation begins

with the language of the statute.” Mudge, 308 F.3d at 1227. Because the CSRA

does not define the word “administrative,” the court first determined that Congress

must have given that term its ordinary meaning, according to which

“administrative” is “distinguished from such functions and acts as are judicial.” Id.

Accordingly, the court held that “[t]he plain language of § 7121(a)(1) as amended

is therefore clear: while § 7121(a)(1) limits the administrative resolution of a

federal employee’s grievances to the negotiated procedures set forth in his or her

[collective bargaining agreement], the text of the statute does not restrict an

employee’s right to seek a judicial remedy for such grievances.” Id.

Havin g ascertain ed the pla in mean ing of § 7121( a)(1), the Federa l Circuit

next considered and rejected several counter-arguments to its interpretation of §

7121(a)(1) identical to those advanced by the PCC here. First, the court considered

whether the 1994 amendment was intended merely to clarify “that unless an

aggrieved employee falls within the narrowly defined class of employees covered

by new subsection (g), that employee is limited to the negotiated grievance

proced ures set fo rth in his o r her [co llective bar gaining agreem ent].” 2 Id. at 1228 .

2
In 1994, in addition to adding the word “administrative” to § 7121(a)(1), Congress
amended the CSRA by adding subsection (g) to § 7121, which gives “whistleblowers” the choice
of resolving their employment grievances through either the negotiated procedures contained in
their collective bargaining agreement or through certain administrative avenues enumerated in §

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The court determined that “there was no need for Congress to clarify § 7121(a)(1)

in this fashion . . . [because] subsections (d) and (e), neither of which was amended

in 1994, already permitted certain employees to choose between negotiated and

administrative procedures in much the same way as subsection (g)’s whistleblower

provisions later would.” Id.

Secon d, the cou rt consid ered the g overnm ent’s argu ment tha t Cong ress did

not intend to substantively change § 7121(a)(1) when it added the word

“administrative” to that subsection because it did so by means of a “Technical and

Conforming Amendment.” The court found that the “technical and conforming”

label was not dispositive and could not supplant the plain and unambiguous

languag e of the am ended s tatute. Id. at 1229.3

7121(g). See 5 U.S.C. § 7121(g) (2000). Concurrent with the creation of subsection (g),
Congress also made an additional change to subsection (a)(1) by amending § 7121(a)(1) to refer
to subsection (g) so that § 7121(a)(1)’s exclusivity provision now applies “[e]xcept as provided
in subsections (d), (e), and (g).” 5 U.S.C. § 7121(a)(1) (2000) (emphasis supplied).
3
In the case at bar, the PCC contends that technical and conforming amendments “do not
make substantive changes in the law.” Brief for Appellees, at 16. However, as Harris v. PPG
Industries, Inc., 446 U.S. 578 (1980), and Director of Revenue of Missouri v. CoBank ACB, 531
U.S. 316 (2001), illustrate, this argument is untenable. In Harris, the Supreme Court interpreted
a technical and conforming amendment to the Clean Air Act, 42 U.S.C. §7607, which added the
phrase “and any other final action of the Administrator” to a list of certain enumerated actions by
the Administrator that §7607 made reviewable in federal courts of appeal. The defendant argued
that the Administrator’s decision regarding applicability of the EPA’s “new source” performance
standards was not reviewable, in part because the catch-all “any other” language had been added
only by a technical and conforming amendment and thus could not substantively expand judicial
remedies. The Supreme Court rejected this argument because it “discern[ed] no uncertainty in
the meaning of the phrase ‘any other final action.’” 466 U.S. at 588. Likewise, in CoBank, the
PCC’s principal authority, the Court made plain its willingness to read a technical and
conforming amendment as making a substantive change in the law in appropriate circumstances.

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 Third, the court considered the government’s contention that the legislative

history surrounding the 199 4 amendments did n ot demonstrate that Congress

intended to establish a federal employee’s right to seek judicial relief for

grievances covered by his or her collective bargaining agreement. The court found

that this argument “lack[ed] merit” because it impermissibly shifted the burden of

finding addition al suppo rt in legislativ e history to plaintiffs d espite the p lain

languag e of the sta tute. Id. at 1229-30 (“[I]t is the government that must show

clear legislative history supporting its construction because it is the government

that seeks to construe the statute contrary to its plain text. The government may

not discharge this burden by pointing to what the legislative history does not

demonstrate.”).

Fourth , the cour t conside red wh ether its inte rpretation of § 71 21(a)(1 ) wou ld

render § 7121( a)(2) “su perfluo us” beca use the “th e sole fun ction of § 7121( a)(2) is

to enable a union to preserve a judicial remedy for certain types of grievances by

excluding those grievances from the coverage of the negotiated procedures” and

this exclu sion w ould be pointless “if judicial re medies remained indepen dently

See 531 U.S. at 324 (“Had Congress simply deleted the final sentence of §2134 that limited the
exemption while retaining the sentence granting the exemption, we would have no trouble
concluding that Congress had eliminated the States’ ability to tax banks for cooperatives.”). In
short, the PCC’s generalization that technical and conforming amendments never make
substantive changes in the law is simply unwarranted.

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available for employee grievances that were not so excluded.” Id. at 1231. The

court reje cted this su ggestion , observ ing that § 7121( a)(2) “do es not ex ist uniqu ely

as a means of preserving a federal employee’s right to pursue his or her grievance

in court” but achieves two further objectives: “(1) foreclosing access to negotiated

procedures; and (2) directing certain matters to alternative administrative channels,

such as an agency’s administrative process or the Office of Personnel

Management.” Id.

Finally, the court considered whether construing amended § 7121(a)(1)

according to its plain text “would disrupt the congressional preference for

collectively bargained grievance procedures expressed in the CSRA.” Id. The

court reje cted this su ggestion as well, n oting tha t policy co nsideratio ns like this

must give way to the statute’s plain language:

The government finds support for its policy-driven interpretation of
subsection (a)(1) in Carter, arguing that our decision in that case flowed
directly from the CSRA’s overall statutory purpose. We agree that a leading
purpose of the CSRA was to replace the haphazard arrangements for
administrative and judicial review of personnel action, part of the outdated
patchwork of statutes and rules built up over almost a century that was the
civil service system. We cannot agree, however, with an interpretation of §
7121( a)(1) tha t privilege s these po licy conce rns to the exclusio n of the p lain
languag e of the sta tute. Mo reover, w e disagre e with th e gover nment's
interpretation of Carter. As disc ussed ab ove, Carter based its holding on the
unambiguous language of the pre-1994 text of § 7121(a)(1). While the court
subsequently addressed the gener al purposes animating the CS RA, it did so
in order to reject appellants’ argument that an additional exception to CSRA
section 7 121(a) (1)’s exc lusivity pr ovision should be implie d. Carter

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 therefore relied on policy considerations to reject appellants’ assertion that
the court should interpret unamended § 7121(a) contrary to its clear
language; it did not, as the government urges us to do today, follow the
overall purpose of the statutory scheme in order to disregard subsection
(a)(1)’s plain text. Following Carter’s example, we interpret amended §
7121(a)(1) according to its unambiguous language and conclude that that
subsection no longer restricts a federal employee's right to pursue an
employ ment gr ievance in court.

Id. at 1228-32 (internal citations and quotations omitted).

We find the Federal Circuit’s reasoning in Mudge on all these points to be

persuasive and adopt that reasoning here. We hold that Congress’ addition of the

word “adminis trative” to § 7121( a)(1) esta blished a federal em ployee’s r ight to

seek a judicial remedy for employment grievances subject to the negotiated

grievan ce proce dures co ntained in his or he r collective bargain ing agre ement.

Accordingly, we reverse the District Court’s dismissal of ASEDAC’s claim for

lack of subject matter jurisdiction and remand the case for fu rther proceedings.

CONCLUSION

For the forego ing reaso ns, we c onclud e that the D istrict Cou rt erred in

dismissing ASEDAC’s complaint for lack of jurisdiction. We therefore REVERSE

the District Court order granting PC C’s motion to dismiss and R EMA ND the case

for further proceedings consistent with this opinion.

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