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In a landmark decision issued on Feb. 22, 2022, the U.S. Court of Appeals for the District of Columbia recognized the National Association of Postal Supervisors as entitled to represent all U.S. Postal Service supervisors, managerial personnel and postmasters in conultation with the Postal Service regarding compensation and policies. The court held that NAPS’ representation extends to all supervisory and managerial personnel, regardless whether the agency classifies them as field, area or Headquarters employees.
The court also found that the Postal Service violated the Postal Reorganization Act by failing to assure that EAS compensation is comparable to the private sector and that all supervisors are paid some differential above the employees they supervise. And it found that the Postal Service violated the law by failing to provide NAPS with its reasons for rejecting NAPS’ recommendations during pay talks for the FY16-19 pay package as required by Title 39.
NAPS President Ivan D. Butts said, “We are elated over the Circuit Court’s historic decision that finally vindicates the rights of all EAS personnel, regardless where they work, to be represented by NAPS in consultation with the Postal Service over pay and benefits. We look forward to broadening our representation in the days ahead and to the conduct of the pay consultation process that conforms to the expectations of the law.”
NAPS initiated its lawsuit in 2019 after the Postal Service rejected the unanimous findings of a fact-finding panel that the pay package for FY16-19 violated statutory requirements. The court’s decision in National Association of Postal Supervisors v. United States Postal Service and United Postmasters and Managers of America (No. 20-5280) returns the lawsuit to the U.S. District Court for the District of Columbia for further proceedings consistent with the Court of Appeal’s decision. The entire decision is available here and here.
NAPS’ attempt to achieve a fair FY16-19 pay package for its members began in 2017. It has been an arduous journey that, on Feb. 22, 2022, resulted in victory when the District of Columbia Circuit U.S. Court of Appeals agreed with the tenets of NAPS’ lawsuit, National Association of Postal Supervisors, Appellant, v. United States Postal Service and United Postmasters and Managers of America, Appellees. Following are the history and timeline of the lawsuit, as well as the reasons behind the Appeals Court’s decisions.
The principal dispute in NAPS’ July 26, 2019, case concerned the Postal Service’s proposed FY16-19 pay package for its Field EAS personnel, according to the Appeals Court’s opinion. NAPS filed a complaint in the District Court alleging the Postal Service violated the “Postal Reorganization Act of 1970” (the Postal Act) by failing to provide a pay differential between clerks and carriers and the supervisors who manage them and also failing to consider private-sector compensation and benefits. NAPS also challenged the Postal Service’s refusal to consult with it regarding pay and policies for members who are postmasters or those categorized as Area and Headquarters employees.
In response to NAPS’ complaint, the Postal Service argued that the matters in dispute were not subject to judicial review. The agency maintained that provisions in the Postal Act authorizing adoption of pay packages merely state “policy goals” that the agency “should attempt to achieve”—not mandatory and enforceable directives.
The District Court agreed and granted the Postal Service’s motion to dismiss NAPS’ complaint for failure to state a claim. NAPS then filed a timely appeal claiming that the District Court erred in dismissing its complaint.
“We agree,” the Appeals Court’s decision reads. “After carefully reviewing the record in this case … we hold that the Association [NAPS] has plausibly alleged that the Postal Service exceeded its statutory authority and failed to act in conformance with the commands of the Act.”
What Led to NAPS’ Lawsuit?
In September 2017, the Postal Service sent a proposed pay package to NAPS for its Field EAS employees for fiscal years 2016-2019. In the months that followed, the Postal Service consulted with NAPS on the pay package via meetings, letters and emails. The Postal Service rejected most of NAPS’ recommendations and, in summer 2018, issued its final decision without providing any reasons for rejecting NAPS’ recommendations.
NAPS requested the Federal Mediation and Conciliation Service convene a fact-finding panel to review the Field pay package. NAPS contended that:
The fact-finding panel held a two-day hearing in December 2018 and issued its unanimous findings in a report in April 2019. The panel found that:
In April, about two weeks after the fact-finding report was issued, the Postal Service rejected most of the recommendations and issued a final pay package adhering to the differential and comparability conclusions in the original package.
On July 26, 2019, NAPS filed a complaint in District Court alleging the Postal Service violated Section 1004(b) of the Postal Act. In response, the Postal Service filed a motion to dismiss for failure to state a claim. The United Postmasters and Managers of America (UPMA) intervened in support of the agency’s position that NAPS cannot lawfully represent postmasters and filed its own motion to dismiss.
The District Court granted the motions to dismiss, finding that NAPS failed to state a claim because it had not shown that the Postal Service had violated a “clear and mandatory” statutory directive. In September 2020, NAPS appealed the court’s decision. On Sept. 21, 2021, the case was argued before the U.S. Court of Appeals.
Review by the U.S. Court of Appeals
The court determined that judicial review is available when an agency acts outside the authority Congress granted, based on the long-standing principle that if an agency action is “unauthorized by the statute under which [the agency] assumes to act,” the agency has “violated the law” and “the courts generally have jurisdiction to grant relief.”
The Postal Service contended that, because statutory language in the Postal Act specifies “it shall be the policy of the Postal Service” to provide pay differentials and comparable compensation, Congress’ use of the word “policy” indicates these provisions are “advisory goals” that cannot be enforced.
The Appeals Court responded, “We disagree because the Postal Service’s position is directly at odds with our precedent.” The court determined that the statutory provisions at issue contain explicit language stating what the Postal Service “shall” do.
“That language is undoubtedly mandatory,” the court ruled.
The Postal Service also suggested that the fact-finding dispute resolution process supplants the need for judicial review. In response, the court ruled that “the history of the Postal Act indicates that Congress contemplated a very restricted judicial role in the Postal Service’s compensation decisions,” but “it does not present the kind of evidence necessary to foreclose review altogether.”
In summary, the court concluded, “The Postal Act’s requirements that the Postal Service ‘shall’ consult with recognized organizations, maintain ‘adequate and reasonable differentials in rates of pay’ between supervisors and clerks and carriers, and ‘achieve and maintain compensation for its officers and employees comparable to the rates and types of compensation paid in the private sector’ are clear and mandatory, enforceable provisions subject to review for ultra vires [invalid] acts.”
Pay Differential and Comparability Requirements
The court explained that the Postal Act requires the Postal Service “provide adequate and reasonable differential in rates of pay between employees in the clerk and carrier grades in the line workforce and supervisory and other managerial personnel.” Although the Postal Service contends it has satisfied the pay differential requirement, NAPS argued the method used to implement the differential is flawed and, as a result, thousands of EAS employees earn less than the craft workers they supervise.
The court said the Postal Service has broad discretion to “achieve and maintain” comparability to the private sector using the means it sees fit. The statute does not specify how similar the rates must be, the manner in which rates are compared or the method of study of private-sector rates. “However,” the court ruled, “the Postal Service cannot choose to ignore private-sector compensation rates altogether and it must demonstrate in good faith that it has achieved and maintained comparability in line with Congress’ directives.
“Here, the Postal Service has not shown that it considered private-sector compensation and benefits, nor explained how it has achieved comparability in its rates. It has not provided a justification for its conclusion that comparability has been achieved, nor explained its resolution of factors built into the comparability requirement like locality pay and market-rate increases in pay. Absent a reasoned explanation showing otherwise, the Postal Service’s belated and limited look at pay—and not total compensation or benefits—for only eight of 1,000 positions plainly fails to meet its statutory obligation to achieve comparability in good faith ‘for all officers and employees.’”
Requirement to Consult
The court concluded that the Postal Service has refused to consult with NAPS regarding compensation for most workers it deems “Area” or “Headquarters” employees, as opposed to Field employees. Additionally, it has refused to consult with NAPS about postmasters’ compensation.
The court said the Postal Service’s position of recognizing NAPS as an organization representing Field EAS employees, but not most Area and Headquarters employees, is “sparse and self-serving” and there is no evidence to support its claim.
The court said no explanation has been provided for why the Postal Service asserts that Area and Headquarters employees are not “supervisory” or “other managerial employees” under the Postal Act. As a result, “most Area and Headquarters EAS employees have been denied representation by NAPS in the pay policy process.”
The court went on, deciding that it cannot assess whether the Postal Service’s claim regarding “supervisory and other managerial employees” is plausible because the Postal Service has failed to offer any support for its position. Despite the Postal Service’s classification of any particular role, “what is clear is that the Postal Service may not arbitrarily exclude employees from representation they are entitled to under the Postal Act.
“We reject the Postal Service’s position that it may deny employees the representation rights granted by Congress by simply declaring employees not to be supervisory or other managerial personnel.”
NAPS claims it represents 7,500 employees throughout the country whom the Postal Service categorizes as “Area” or “Headquarters” employees and that such employees perform supervisory and managerial responsibilities. NAPS contended that the Postal Service failed to consult with NAPS regarding compensation for all Area and Headquarters employees and the Postal Service refuses to recognize its representation of many of these employees.
The court said for these few Area and Headquarters employees the Postal Service recognizes as represented by NAPS, the Postal Service exceeded its authority by failing to consult. During oral argument, the Postal Service claimed that, because it expressly excluded those employees from the general Area and Headquarters pay package and did not issue any 2016-2019 pay package for these employees, it did not breach its obligation to consult.
The court did not accept the explanation, commenting, “It reeks of chicanery.” The court went on, “The Postal Service may not evade its statutory obligation to consult by excluding employees from its pay packages and refusing to promulgate any pay policies for them.”
Despite the Postal Service’s view that the majority of Area and Headquarters employees are not entitled to representation by NAPS because they are not “supervisory” or “other managerial employees,” the court determined that position is an “unsupported assertion that is strongly contested by NAPS.” On remand, the District Court must determine which of these employees has been improperly excluded from the right to representation granted in Section 1004(b).
Postal Service’s Refusal to Consult with NAPS
Regarding Postmasters NAPS has long contended that it satisfies the requirements in Section 1004(b) of the Postal Act that to become a recognized group entitled to participate directly in the planning and development of compensation policies for its members, the group must prove it is either (1) a supervisory organization that represents a majority of supervisors; (2) an organization (other than an organization representing supervisors) that represents at least 20 percent of postmasters; or (3) a managerial organization (other than an organization representing supervisors or postmasters) that represents a substantial percentage of managerial employees. Once an organization has satisfied any one of these three standards, “such organization … shall be entitled to participate directly” in the development of compensation policies “relating to supervisory and other managerial employees.”
The Postal Service contends this provision mandates that separate, mutually exclusive organizations represent only supervisory employees or postmasters or managerial employees. Because NAPS represents supervisors, the Postal Service insists it cannot represent postmasters.
The court ruled that the carefully worded language of Section 1004(b) presents different requirements for supervisory organizations than it does for postmaster or managerial organizations. “In requiring that a supervisory organization represent ‘a majority of supervisors,’ Congress made clear there can be only one such organization authorized to consult on behalf of supervisors.
“However, because any given postmasters’ organization must only represent ‘at least 20 percent of postmasters,’ as many as five postmasters’ organizations could qualify under the Postal Act. Likewise, a managerial organization must only represent ‘a substantial percentage of managerial employees,’ so many managerial organizations could qualify. This distinction sets the supervisory organization apart from the start.
“While Postmasters’ organizations are expressly prohibited from also representing supervisors, and managerial organizations are prohibited from also representing supervisors or postmasters, no such restriction is placed on supervisory organizations. Supervisory organizations—beyond having to show they represent a majority of supervisors—are not limited in who else they can represent.”
The court determined that “this precisely crafted statute thus presents a ‘nested’ structure, in which Congress placed deliberate restrictions on postmasters’ organizations and managerial organizations, but conspicuously left the supervisory organization free to represent either postmasters or managers alongside supervisors.”
The court declared, “The Act does not say that a supervisory organization cannot represent postmasters. Therefore, the Postal Service’s construction of the statute would require us to write a restriction into the text that is not there. We will not do that.”
The court found the Postal Service’s position that it cannot lawfully recognize NAPS as a representative of postmasters in addition to supervisors was belied by its own practice. In the 2003 amendment to the Postal Act, the amendment confirms postmasters are managers: “‘Postmaster’ means an individual who is the manager in charge of operations of a post office, with or without the assistance of subordinate managers or supervisors.”
At oral argument, counsel for the Postal Service acknowledged it has consulted with NAPS and the United Postmasters and Managers of America on compensation policies for managerial employees and continues to do so today.
The court determined that the “parenthetical restrictions in the statute cannot both be read to permit these organizations to represent managerial employees but to deny supervisory organizations the ability to represent postmasters. The Postal Service’s proposed interpretation that these groups must be mutually exclusive presents an utterly unreasonable interpretation of the statute that contravenes Congress’ careful wording and would deny thousands of managerial employees access to the protections of the Act as Congress intended.”
In sum, the court ruled “it is undisputed that NAPS qualifies as a recognized organization under the Postal Act because it represents ‘a majority of supervisors.’ Having met this threshold requirement, it is therefore entitled to participate directly in the planning and development of pay policies … relating to supervisory and other managerial employees.
“Its postmaster members, described in the Act as ‘managers,’ plainly fall into the broad category of ‘supervisory and other managerial employees’ NAPS may represent. It follows that Section 1004(b) requires the Postal Service to consult with NAPS regarding compensation for these employees.”
Postal Service Must Give Reasons for Rejecting NAPS’ Recommendation
Regarding NAPS’ allegation that the Postal Service did not supply reasons for rejecting its recommendations on the Field pay package before issuing a final decision, the court determined that the Postal Service exceeded the scope of its statutory authority.
In summary, the Appeals Court said that, for the reasons set forth in its ruling, “we hold that NAPS plausibly alleges that the Postal Service exceeded the scope of its delegated authority on multiple counts.” First, the agency acted beyond its authority by failing to institute “some differential” in pay for supervisors and by failing to demonstrate that it sets its compensation levels comparable to the private sector.
Second, the Postal Service failed to follow the Postal Act by refusing to consult with NAPS on compensation for Area and Headquarters employees, by refusing to consult regarding postmasters and by failing to provide NAPS with reasons for rejecting its recommendations.
“Accordingly, the judgment of the District Court is reversed and the case is remanded for further proceedings consistent with this opinion.”
The court remanded two issues—supervisory differential and private-sector pay comparability—to the District Court to determine what pay is owed during the period of the 2016-2019 pay package and to order back-pay as appropriate.
The court ruled that NAPS represents supervisory and managerial postal employees who are classified as “Area” and “Headquarters,” not just “Field.” The court held that the Postal Service violated the law by not consulting with NAPS regarding Area and Headquarters employees in positions the Postal Service acknowledges are supervisory or managerial.
The court also found there is a factual dispute regarding whether some Area and Headquarters employees are “supervisory or other managerial employees.” Remanding the case to the District Court will require litigating which positions are “supervisory or other managerial employees” and which are not.