Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_06-cv-00362/USCOURTS-caed-1_06-cv-00362-4/pdf.json

Nature of Suit Code: 120
Nature of Suit: Marine Contract Actions
Cause of Action: 46:741 Shipping

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

LT. RICHARD T. GANGLER AND LT.

DANIEL S. McSEVENEY,

Plaintiffs,

v.

UNITED STATES OF AMERICA THROUGH

ITS DEPARTMENT OF DEFENSE AND

NAVY,

Defendants.

 

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1:06-cv-0362 OWW LJO

SCHEDULING CONFERENCE ORDER 

Opposition to Motion to

Dismiss Filing Deadline:

8/14/06 

Reply Filing Deadline:

8/16/06 

Hearing on Motion to

Dismiss: 8/21/06 11:00

Ctrm. 3

I. Date of Scheduling Conference.

August 9, 2006.

II. Appearances Of Counsel.

Lewis, Brisbois, Bisgaard & Smith LLP by Timothy R. Lord,

Esq., appeared on behalf of Plaintiffs.

Kimberly A. Gaab, Esq., Assistant United States Attorney,

appeared on behalf of Defendants. 

III. Summary of Pleadings. 

1. Lieutenant Daniel McSeveney and Lieutenant Richard

Gengler (hereinafter “Plaintiffs”) are Naval Officers and

Aviators who reside within the jurisdiction of this Court. 

Case 1:06-cv-00362-OWW Document 38 Filed 08/14/06 Page 1 of 9
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Defendant Untied States through its Department of Defense, Navy

and Secretary Donald C. Winters (hereinafter “Defendants”) are

also subject to this Court’s jurisdiction. Plaintiffs seek

immediate discharge from the Navy.

2. Plaintiffs filed a petition for writ of habeas corpus

in their verified complaint and it is well-established that the

federal courts have habeas corpus jurisdiction over claims of

unlawful detention by members of the military in the context of a

dispute arising from contracts for military service. Peavy v.

Warner, 493 F.2d 748, 749 (5th Cir. 1974). The Ninth Circuit has

held that the equitable remedy of specific performance is a

proper remedy in habeas corpus proceedings and stated that

“[f]ederal habeas corpus practice, as reflected by the decisions

of this Court, indicates that a court has broad discretion in

conditioning a judgment granting habeas relief. Federal courts

are authorized, under 28 U.S.C. § 2243, to dispose of habeas

corpus matters ‘as law and justice require.’” Riggs v. Fairman,

399 F.3d 1179, 1183 (9th Cir. 2005) (quoting Hilton v.

Braunskill, 481 U.S. 770, 775 (1987). It is also well

established that this court has broad discretion to frame a

judgment granting habeas relief. Riggs, 399 F.3d 1179 at 1183;

Braunskill, 481 U.S. at 775. Consequently, courts can enter a

judgment in Plaintiffs’ favor pursuant to its habeas corpus

jurisdiction based on the equitable principles of estoppel and

upon a finding of arbitrary and capricious agency conduct. There

is no dispute this Court has the jurisdiction to hear the merits

of Plaintiffs’ petition for habeas corpus.

3. In addition to seeking the remedies above by way of

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writ for habeas corpus, and in the alternative, Plaintiffs seek

the equitable relief of discharge as a remedy under applicable

contract law principles that apply the same equitable principles.

4. Finally, as a separate and distinct basis for the

relief requested, Plaintiffs also seek relief pursuant to the

Administrative Procedures Act (hereinafter “APA”), 5 U.S.C. §§

702-706 which serves to waive Defendant’s sovereign immunity,

B.K. Instrument, Inc. v. United States, 715 f.2d 713, 724 (2d

Cir. 1983), and permits judicial review of “final agency action

for which there is no other adequate remedy in a court” should a

party be “adversely affected or aggrieved” by that action. 5

U.S.C. §§ 702, 704. Id. Defendants admit that Plaintiffs have

exhausted all administrative remedies and it is undisputed that

Defendants allowed at least eight pilots early release pursuant

to Agreements identical to Plaintiffs. The facts show that in so

doing, Defendants violated the following applicable legal

standard of appropriate agency conduct as stated by the Ninth

Circuit:

The APA provides that a court, when reviewing agency

action, shall ‘hold unlawful and set aside agency

action, findings, and conclusions found to be ...

arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.” 5 U.S.C. § 706. 

An agency’s action violates this standard if the agency

has relied on factors which Congress has not intended

it to consider, entirely failed to consider an

important aspect of the problem, offered an explanation

for its decision that runs counter to the evidence

before the agency, or is so implausible that it could

not be ascribed to a difference in view or the product

of agency expertise. City of Sausalito v. O’Neill, 386

F.3d 1186, 1206 (9th Cir. 2004) (quoting Motor Vehicle

Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S.

29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).

Ranchers Cattlemen Action Legal Fund Untied Stockgrowers of

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America v. USDA, 415 F.3d 1078, 1093 (9th Cir. 2005). 

Specifically Defendants’ conduct in failing to discharge

Plaintiffs upon submission of their requests for discharge after

doing so to at least eight pilots with identical agreements was

contrary to the law, arbitrary, capricious, and without a

reasoned explanation. Donovan v. Adams Steel, Inc., 766 F.2d

804, 807 (3d Cir. 1985) (if an agency departs from its own

precedent with a reasoned explanation, the agency may be said to

have acted arbitrarily and capriciously).

5. There is no precedent on point for the proposition that

the service period term contained in Plaintiffs’ adhesion

Agreements is preempted or otherwise invalidated by a preexisting

statute requiring a longer period of service. The “stop loss”

cases cited by Defendants can be factually distinguished where

the statute itself contemplates the President’s statutorily

authorized discretionary authority to alter the terms of a

preexisting service contract. Here, the Navy is seeking to apply

a statute retroactively to alter the terms of Plaintiffs’

agreements without such statutory authorization. Further, unlike

the agreements at issue in the “stop loss” cases, Plaintiffs’

agreements do not specifically incorporate the discretionary

power to act prospectively. In fact, Plaintiffs’ agreements do

not address the issue in this case, i.e., whether a statute

containing a preexisting and conflicting period of service term

can be used retroactively by Defendants in breach of the

agreement to force Plaintiffs to serve the statutory term. 

6. the evidence will show that Defendants made

representations that the statutory period should be ignored and

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that Plaintiffs relied on these representations to their

detriment. Further, the fact that the agreements were signed

some 6 years after the statute was filed, is prima facie evidence

of intent to engender reliance.

7. Finally, the Ninth Circuit has held that when a

“provision thereof is in violation of law but has been fully

performed, the courts have variously sustained the contract,

reformed it to correct the illegal term, or allowed recovery

under an implied contract theory; the courts have not, however,

simply declared the contract void ab initio.” American Tel. &

Tel. Co. v. U.S., 177 F.3d 1368, 1375 (Fed. Cir. 1999); see Beta

Systems, Inc. v. United States, 838 F.2d 1179, 1185-86 (Fed. Cir.

1988) (“The risk of unintentional failure of a contract term to

comply with a legal requirement does not fall solely on the

contractor”). Urban Data Systems, Inc. v. United States, 699

F.2d 1147, 1154 (Fed. Cir. 1983) (contract price term contrary to

law did not invalidate fully performed contract). In this case,

Plaintiffs have fully performed their obligations under the

agreements and voiding the seven-year term to replace it with an

eight-year term would unfairly benefit Defendants who are in

breach of the agreements.

8. Plaintiffs make a number of contentions above based on

alleged undisputed facts. Defendants dispute Plaintiffs’ factual

and legal contentions in their entirety, except as expressly set

forth in paragraph 3(A) below. Defendants have a pending motion

to dismiss, in which they maintain that the Court lacks subject

matter jurisdiction over many of Plaintiffs’ claims and that the

claims otherwise lack merit as a matter of law. Defendants

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incorporate herein by reference their Motion to dismiss

Complaint, filed August 3, 2006. Under Federal Rule of Civil

procedure 12, Defendants’ answer is not yet due, and Defendants

have not yet answered the complaint. Nothing in this joint

scheduling conference statement is intended to constitute a

waiver of any defense that may be asserted by Defendants. 

Defendants specifically reserve all of their defenses in this

action, including without limitation their defenses of failure to

state a claim, lack of subject matter jurisdiction, estoppel,

waiver and laches. This is not an exhaustive list of Defendants’

defenses in this action. Defendants deny all material

allegations in the complaint. 

IV. Orders Re Amendments To Pleadings.

1. The parties do not anticipate filing any amendments to

the pleadings at this time. 

V. Factual Summary.

A. Admitted Facts Which Are Deemed Proven Without Further

Proceedings. 

1. On April 12, 1996, Plaintiff Gengler signed an

“Aviation Officer Candidate (1395) Program Service Agreement,”

which contains a paragraph stating: “I consent to serve on

active duty as a commissioned officer for a period of seven years

from date of designation as a Naval Aviator (unless sooner

released to inactive duty or discharged by the chief of Naval

Personnel.”

2. On April 18, 1996, Plaintiff McSeveney signed an

“Aviation Officer Candidate (1395) Program Service Agreement,”

which contains a paragraph stating: “I consent to serve on

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active duty as a commissioned officer for a period of seven years

from date of designation as a Naval Aviator (unless sooner

released to inactive duty or discharged by the Chief of Naval

Personnel.” 

3. Title 10 U.S.C. § 653 provides, in pertinent part:

“The minimum service obligation of any member who successfully

completes training in the armed forces as a pilot shall be 8

years, if the member is trained to fly fixed-wing jet aircraft. .

. .”

4. Plaintiffs were trained to fly fixed-wing aircraft

within the meaning of 10 U.S.C. § 653.

5. Plaintiffs requested to be discharged from the

military after serving the seven-year term referenced in the

Aviation Officer Candidate Program Service Agreements.

6. Plaintiffs’ requests to be discharged from the

military pursuant to the Aviation Officer Candidate Program

Service Agreements were denied.

B. Contested Facts.

1. All other factual matters are contested, including

whether Plaintiffs relied on alleged oral statements that they

would be discharged after seven years, whether Plaintiffs

unreasonably delayed in challenging the eight-year service

obligation set forth in 10 U.S.C. § 653, and the circumstances

under which other service personnel have been discharged from the

military.

2. Plaintiffs and Defendants entered into military

service agreements with seven-year service terms. Defendants

refuse to honor the seven-year term. Defendants have discharged

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at least eight other Navy pilots with the exact same seven-year

term. Defendants knew or should have known that the statute with

the eight year term pre-existed Plaintiffs’ agreements by six

years. Defendants discharged approximately 500 pilots in 2003

and 2004. Defendants are in the process of discharging another

300. Defendants require P3 pilots to serve seven-year terms

despite the statutory requirements of six.

VI. Legal Issues.

A. Uncontested.

1. Jurisdiction is disputed. 

2. If jurisdiction exists, venue is proper in the

Eastern District of California. 

B. Contested. 

1. Whether Plaintiffs can state a claim as a matter

of law.

2. Whether Plaintiffs’ claims are barred under the

doctrines of estoppel, waiver and/or laches.

3. The nature and extent of any equitable relief to

which Plaintiffs are entitled. 

VII. Consent to Magistrate Judge Jurisdiction.

1. The parties have not consented to transfer the 

case to the Magistrate Judge for all purposes, including trial.

VIII. Corporate Identification Statement.

1. Any nongovernmental corporate party to any action in

this court shall file a statement identifying all its parent

corporations and listing any entity that owns 10% or more of the

party's equity securities. A party shall file the statement with

its initial pleading filed in this court and shall supplement the

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statement within a reasonable time of any change in the

information. 

IX. Expedited Hearing. 

1. Plaintiffs seek expedited hearing on the merits of the

petition. 

2. The following schedule is adopted for the government’s

current pending motion to dismiss: Plaintiff shall

electronically file any opposition on or before August 14, 2006,

by 5:00 p.m. The government’s reply shall be due by 5:00 p.m. on

August 16, 2006, and shall be electronically filed and served.

3. The government’s motion to dismiss will be heard August

21, 2006, at 11:00 a.m. At that time, depending upon the outcome

of the motion, an expedited schedule for the balance of the case

will be adopted. 

4. The government will check the availability of Commander

Gunter for a deposition following August 21, 2006, in the event

the motion to dismiss is denied. That deposition shall occur if

Commander Gunter is available on the 22nd or 23rd of August. 

 Scheduling of further proceedings in this case will be

addressed after hearing the motion to dismess on August 21, 2006.

IT IS SO ORDERED.

Dated: August 10, 2006 /s/ Oliver W. Wanger 

emm0d6 UNITED STATES DISTRICT JUDGE

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