United States Court of Appeals for the Federal Circuit 

04-5012 

STEPHEN S. ADAMS and 14,302 

other similarly situated plaintiffs, 

 Plaintiffs-Appellants, 

v. 

UNITED STATES, 

 Defendant-Appellee. 

Richard P. Bress, Latham & Watkins LLP, of Washington, DC, argued for 

plaintiffs-appellants. With him on the brief was J. Scott Ballenger and Nathaniel A. 

Vitan, Of counsel on the brief were Jules Bernstein and Linda Lipsett, Bernstein & 

Lipsett, of Washington, DC; and Edgar James, James & Hoffman, of Washington, DC. 

Shalom Brilliant, Senior Trial Counsel, Commercial Litigation Branch, Civil 

Division, United States Department of Justice, of Washington, DC, argued for 

defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney 

General, and David M. Cohen, Director. 

Michael E. Malamut, New England Legal Foundation, of Boston, Massachusetts, 

for amicus curiae New England Legal Foundation. 

Lawrence Berger, Mahon & Berger, of Garden City, New York, for amicus curiae 

Federal Law Enforcement Officers Association. 

Appealed from: United States Court of Federal Claims 

Judge Lawrence J. Block 
United States Court of Appeals for the Federal Circuit 

04-5012 

STEPHEN S. ADAMS, and 14,302 other similarly-situated plaintiffs, 

Plaintiffs-Appellants, 

v. 

UNITED STATES, 

Defendant-Appellee. 

__________________________ 

DECIDED: December 9, 2004 

__________________________ 

Before MICHEL, RADER, and PROST, Circuit Judges. 

MICHEL, Circuit Judge. 

 Stephen S. Adams and 14,302 other similarly-situated individuals (collectively, 

“Appellants”) were employed between 1984 and 1995 as GS-9, GS-11, GS-12, and 

GS-13 criminal investigators in various federal law enforcement agencies, including the 

Bureau of Alcohol Tobacco and Firearms (“BATF”), the Drug Enforcement Agency 

(“DEA”), the Internal Revenue Service (“IRS”), the United States Customs Service 

(“Customs Service”), and the United States Secret Service (“USSS”).1

 They appeal 

from the order of the United States Court of Federal Claims granting the Government’s

 1 Several of those agencies or units thereof have since been renamed 

and/or merged into the United States Department of Homeland Security. See

Homeland Security Act of 2002, Pub. L. No. 107-296 § 1502, 2002 U.S.C.C.A.N. (116 

Stat. 2135, 2308 (2002)).
motion to dismiss their takings complaint for failure to state a claim upon which relief 

may be granted. Adams v. United States, No. 00-447C, 2003 U.S. Claims LEXIS 238 

(Fed. Cl. Aug. 11, 2003). Appellants received overtime compensation, apparently 

pursuant to the Federal Employees Pay Act (“FEPA”), codified at 5 U.S.C. § 5542, at a 

rate less than one-and-one-half times their regular rate of pay.2

 Appellants assert 

entitlement to overtime compensation at the rate specified under the Fair Labor 

Standards Act (“FLSA”), codified at 29 U.S.C. §§ 201-219, which is at least 

one-and-one-half times their regular rate of pay, rather than at the lower rate provided 

for in the FEPA. In other words, Appellants seek to recover as damages the difference 

between what they received under the FEPA versus the amount they would have 

received under the FLSA (“underpaid overtime compensation”). The case was 

submitted for decision after oral argument on September 7, 2004. Because Appellants 

do not have a cognizable property interest in either the underpaid overtime 

compensation or in an administrative claim thereto within the meaning of the Takings 

Clause of the Fifth Amendment, we affirm. 

I. BACKGROUND 

A. Statute of Limitations Applicable to FLSA Claims 

The FLSA provides overtime compensation to certain employees who work more 

than forty hours per week at a rate not less than one-and-one-half times the employees’ 

regular rate of compensation. This statute originally did not cover federal employees. 

In 1974, however, Congress extended it to federal employees, but exempted those 

classified as executive, administrative, or professional. Id. § 213(a)(1). 

 2

 The parties fail to analyze the specific provision under which Appellants 

received compensation for overtime work. Nevertheless, the Government cited the 

04-5012 2
To recover unpaid overtime compensation under the FLSA, a federal employee 

may file either an action at law or a claim before the General Accounting Office (“GAO”). 

Actions at law brought under the FLSA are subject to the statute of limitations provided 

in the Portal-to-Portal Pay Act, codified at 29 U.S.C. §§ 251-262, which provides for a 

two-year limitations period for cases in which the FLSA violation is 

non-willful and a three-year period where the violation is willful. Id. § 255(a). 

The statute of limitations for administrative claims before the GAO initially was 

selected, then revised by, the Comptroller General of the United States and twice 

altered by Congress. The numerous changes in the statute of limitations for claims 

before the GAO, in part, create the backdrop of the instant takings claim. Therefore, it 

is important to have a general understanding of the evolution of the limitations periods 

involved. 

In 1978, the Comptroller General ruled that the statute of limitations for FLSA 

claims before the GAO was not the statutory period specific to FLSA claims, but was six 

years as set forth in the more generally applicable Barring Act, codified at 31 U.S.C. 

§ 3702(b). In re Transp. Sys. Ctr., 57 Comp. Gen. 441 (1978). Sixteen years later, on 

May 24, 1994, the Comptroller General effectively changed the statute of limitations for 

FLSA claims before the GAO from six years to two years for non-willful violations and 

three years for willful violations, essentially recognizing as applicable the limitations 

period specifically set for FLSA claims in the Portal-to-Portal Pay Act. In re Ford, 73 

Comp. Gen. 157 (1994). 

Shortly thereafter, on September 30, 1994, Congress enacted the Treasury, 

Postal Service and General Government Appropriations Act of 1995, Pub. L. No. 

 

FEPA in its brief, a citation that was not contradicted in Appellants’ reply brief.

04-5012 3
103-329, 108 Stat. 2383, 2432 (1994). Section 640 of that act mandated that the 

Comptroller General apply a six-year statute of limitations period to any administrative 

claim under the FLSA filed prior to June 30, 1994, and a two-year statute of limitations 

period to any such claim filed after June 30, 1994. 

On November 19, 1995, Congress enacted the Treasury, Postal Service, and 

General Government Appropriations Act of 1996, Pub. L. No. 104-52, 109 Stat. 468, 

468-69 (1995), which amended Section 640 to further limit the types of FLSA claims 

that may be decided by the GAO (“amended Section 640”). Amended Section 640 

precluded, among other changes, application of the six-year statute of limitations 

originally set forth in Section 640 to employees who had received overtime 

compensation under another provision of law. Thus, those employees were limited to 

the two-year statute of limitations period. 

B. Appellants’ Status Under the FLSA 

Pursuant to 5 C.F.R. § 551.201, the BATF, the DEA, the IRS, the Customs 

Service, and the USSS independently determined, as the respective employing 

agencies, that Appellants were administrative employees exempt from the FLSA and its 

overtime provisions. In making this determination, the employing agencies evaluated 

whether Appellants’ duties met the administrative exemption criteria set forth in 

5 C.F.R. § 551.206. Significantly, Appellants were presumed to be non-exempt under 

the civil service regulations, thereby requiring the employing agencies to carry the 

burden of establishing that the Appellants met the criteria of § 551.206. Id.

§§ 551.202(a), (c). 

Dissatisfied with this exemption determination, Appellants filed an action at law 

under the Tucker Act, codified at 28 U.S.C. § 1491, against the Government in the 

04-5012 4
United States Court of Federal Claims. Simultaneously, Appellants filed identical 

administrative claims before the GAO. In both proceedings, Appellants alleged that 

they were improperly ruled exempt from the FLSA and were entitled to damages flowing 

from this misclassification. In a decision dated October 30, 1992, the Court of Federal 

Claims concluded that some of the Appellants were exempt, while others were 

non-exempt. Adams v. United States, 27 Fed. Cl. 5, 28-29 (Fed. Cl. 1992). 

On September 23, 1998, we partially reversed the Court of Federal Claims’ ruling 

in a non-precedential opinion and remanded the case for further proceedings as to 

those criminal investigators held exempted from the FLSA. Adams v. United States, 

No. 98-5011, 1998 U.S. App. LEXIS 23565 (Fed. Cir. Sept. 23, 1998) (Table). That case 

remains pending before the Court of Federal Claims. 

C. Prior Court Proceedings Leading to the Instant Appeal 

On October 27, 1995, prior to the enactment of amended Section 640, Appellants 

filed suit against the Government in the United States District Court for the District of 

Columbia, seeking mandamus, injunctive, and declaratory relief against the GAO for its 

inactivity on their administrative claims. Following the enactment of amended Section 

640, Appellants twice supplemented their complaint to challenge the constitutionality of 

original Section 640 and amended Section 640 under the Due Process and Takings 

Clauses of the Fifth Amendment. 

On October 12, 1996, the district court granted summary judgment in favor of the 

Government. Adams v. Bowsher, 946 F. Supp. 37 (D.D.C. 1996). The district court 

addressed Appellants’ due process arguments, ultimately concluding that neither 

Section 640 nor amended Section 640 violated the Due Process Clause. As to 

Appellants’ takings claim, the district court concluded that a compensable taking did not 

04-5012 5
occur, based upon the three factors set forth for regulatory takings in Connolly v. 

Pension Benefit Guaranty Corp., 475 U.S. 211, 224-25 (1986). Adams, 946 F. Supp. at 

44. Appellants appealed that decision to the United States Court of Appeals for the 

District of Columbia Circuit. 

On August 28, 1998, the District of Columbia Circuit affirmed the district court’s 

decision on the due process claim, but reversed its decision on Appellants’ takings 

claim. Adams v. Hincher, 154 F.3d 420 (D.C. Cir. 1998). The circuit court noted that 

takings claims for amounts greater than $10,000 fall within the exclusive jurisdiction of 

the Court of Federal Claims pursuant to the Tucker Act. Id. at 425-426. Consequently, 

the circuit court concluded that the district court might lack jurisdiction to entertain 

Appellants’ takings claim and remanded the takings claim to the district court to 

determine whether jurisdiction was proper under the Little Tucker Act, codified at 28 

U.S.C. § 1346(a)(2), for claims of less than $10,000, which lodges concurrent 

jurisdiction in the district courts. 

On March 30, 2000, the district court issued an opinion answering the 

jurisdictional question posed by the circuit court. Adams v. Walker, No. 95-2015 

(D.D.C. Mar. 30, 2000). The district court noted that Appellants sought to amend their 

complaint to allege an amount in controversy in excess of $10,000. The district court 

stated that the circuit court “essentially rejected [Appellants’] claim for injunctive relief 

and viewed it instead as a claim for money damages.” Id., slip op. at 5. Hence, the 

district court concluded that justice required it to allow Appellants to amend their 

complaint and, therefore, to transfer the case to the Court of Federal Claims. Id., slip. 

op. at 6. The district court thus vacated its ruling concerning Appellants’ takings claim 

04-5012 6
and ordered the case transferred to the Court of Federal Claims pursuant to the transfer 

provision in 29 U.S.C. § 1631. Id., slip. op. at 9.

D. The Court of Federal Claims Decision 

On August 4, 2000, after transfer from the district court to the Court of Federal 

Claims, Appellants’ complaint claimed that three separate governmental actions 

effected a taking of their property under the Fifth Amendment: (1) the Comptroller 

General’s Ford decision that retroactively applied a two- or three-year statute of 

limitations to their administrative claims instead of the six-year statute of limitations; 

(2) the GAO’s failure and refusal in the intervening year to apply the original Section 640 

to their administrative claims; and (3) Congress’s amendment of Section 640 in late 

1995 restricting restoration of the six-year limitations period to situations where no 

overtime was paid at all. In response, the Government asserted that Appellants’ case is 

merely a standard FLSA entitlement case disguised as a Fifth Amendment takings 

claim. Put differently, the Government argued that Appellants’ claim is one for statutory 

entitlement under the FLSA because the only property allegedly taken was FLSA 

overtime compensation. The Government also argued that a claim to FLSA overtime 

compensation is not “property” within the meaning of the Takings Clause, and 

subsequently moved to dismiss the complaint under Court of Federal Claims Rule 

12(b)(6) for failure to state a claim upon which relief can be granted and Court of 

Federal Claims Rule 12(b)(1) for lack of jurisdiction over the subject matter of the case. 

The trial court distilled the parties’ arguments to a single issue: whether 

Appellants’ claim involves “property” within the meaning of the Takings Clause of the 

Fifth Amendment. Adams, 2003 U.S. Claims LEXIS 238 at *20. To address that issue, 

the trial court considered Appellants’ claim for underpaid overtime compensation 

04-5012 7
separate from Appellants’ administrative claim. Relying on Commonwealth Edison Co. 

v. United States, 271 F.3d 1327 (Fed. Cir. 2001) (en banc), the trial court held that a 

governmental obligation to pay money pursuant to a statute is not a protected “property” 

interest under the Takings Clause. Adams, 2003 U.S. Claims LEXIS 238 at *20. In 

reaching that holding, the trial court focused its analysis on the identification of a true 

property interest but concluded that “[a]ll the [appellants] have identified is a 

run-of-the-mill claim for liability.” Id. at *27. Additionally, the court reasoned that even if 

a statutory right to payment could be considered “property,” the Government had not 

“taken” Appellants’ money for its own use; it simply did not pay them because it 

determined after analysis that they were exempt from the FLSA. Id. at *30. 

As for Appellants’ administrative claim, the court observed that the abolition of a 

cause of action may rise to the level of a taking, but only if the cause of action secures a 

“legally protected interest.” Id. at *40. For that reason, the court concluded that 

Appellants’ administrative claim also must fail, since the interest underlying this claim is 

not cognizable as a property right protected by the Takings Clause of the Fifth 

Amendment. Id. Moreover, the court noted that the district court and District of 

Columbia Circuit already had rejected Appellants’ due process claims. Id. The court 

concluded, therefore, that no cause of action to protect Appellants’ property or 

procedural rights had been unconstitutionally taken from them. Id. at *41. Accordingly, 

the Court of Federal Claims granted the Government’s motion to dismiss and ordered 

entry of final judgment in favor of the Government. 

Appellants timely appealed, arguing that the Court of Federal Claims erred in 

deciding that they did not have a property interest in either FLSA overtime 

compensation, or an administrative claim thereto, cognizable under the Takings Clause. 

04-5012 8
We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) because the appeal is from a 

final judgment of the Court of Federal Claims. 

II. DISCUSSION 

A. Standard of Review

The Court of Federal Claims did not explicitly state whether the motion to dismiss 

was granted under Rule 12(b)(1) or under Rule 12(b)(6) of the Rules of the Court of 

Federal Claims. Nevertheless, it appears that the Government did not present an 

exclusively jurisdictional argument, which would invoke Rule 12(b)(1). Additionally, the 

Court of Federal Claims focused on the merits of Appellants’ case in its opinion. 

Therefore, the Court of Federal Claims can best be described as having granted the 

motion to dismiss under Rule 12(b)(6) of the Court of Federal Claims for failure to state 

a claim on which relief can be granted.3

Dismissal for failure to state a claim under Rule 12(b)(6) of the Federal Rules of 

Civil Procedure is proper only when a plaintiff “‘can prove no set of facts in support of 

his claim which would entitle him to relief.’” Leider v. United States, 301 F.3d 1290, 

1295 (Fed. Cir. 2002) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). In 

reviewing the Court of Federal Claims’ grant of a Rule 12(b)(6) motion, we must assume 

that all well-pled factual allegations in the complaint are true and draw all reasonable 

inferences in favor of the non-movant. See Leider, 301 F.3d at 1295. Whether the 

Court of Federal Claims properly dismissed Appellants’ complaint for failure to state a 

claim upon which relief can be granted is a question of law which we review de novo. 

See id. (citing Boyle v. United States, 200 F.3d 1369, 1372 (Fed. Cir. 2000)). 

 3 Rule 12 of the Court of Federal Claims mirrors Rule 12 of the Federal 

Rules of Civil Procedure.

04-5012 9
B. The Takings Clause

The Takings Clause of the Fifth Amendment provides, in pertinent part: “nor shall 

private property be taken for public use, without just compensation.” U.S. Const. 

amend. V, cl. 4. A claimant under the Takings Clause must show that the government, 

by some specific action, took a private property interest for a public use without just 

compensation. Hodel v. Va. Surface Mining & Reclamation Ass’n, 452 U.S. 264, 294 

(1981). In evaluating a takings claim, we have developed a two-step approach. First, 

we determine whether the claimant possessed a cognizable property interest in the 

subject of the alleged taking for purposes of the Fifth Amendment, i.e., whether the 

claimant possessed a “stick in the bundle of property rights.” Karuk Tribe of Cal. v. 

Ammon, 209 F.3d 1366, 1374 (Fed. Cir. 2000) (internal citation omitted). Second, once 

we have determined that such a property interest exists, we decide “whether the 

governmental action at issue constituted a taking of that ‘stick.’” Id. (citing M & J Coal 

Co. v. United States, 47 F.3d 1148, 1154 (Fed. Cir. 1995)). 

In this case, our analysis focuses on the threshold requirement of a recognized 

property interest, i.e., whether Appellants possessed any cognizable property interests 

within the meaning of the Takings Clause in either FSLA overtime compensation or in 

an administrative claim thereto. The Constitution itself neither creates nor defines the 

property interests that if taken by the government are compensable under the Fifth 

Amendment. Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972). Rather, 

“existing rules or understandings that stem from an independent source,” such as state, 

federal, or common law, create and define the dimensions of property interests for 

purposes of establishing a cognizable right and hence a potential taking. Lucas v. S.C. 

Coastal Council, 505 U.S. 1003, 1030 (1992). We have observed: 

04-5012 10
Property interests are about as diverse as the human mind can conceive. 

Property interests may be real and personal, tangible and intangible, 

possessory and nonpossessory. They can be defined in terms of 

sequential rights to possession (present interests — life estates and 

various types of fees — and future interests), and in terms of shared 

interests (such as those of a mortgagee, lessee, bailee, adverse 

possessor), and there are interests in special kinds of things (such as 

water, and commercial contracts). And property interests play across the 

entire range of legal ideas. 

 

Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560, 1572 n.32 (Fed. Cir. 1994). In 

light of the complex nature of property interests and associated rights, we must identify 

the precise nature of Appellants’ takings claim on appeal. Appellants argue, as they did 

before the Court of Federal Claims, that two specific property interests are implicated, 

namely, an interest in payment of underpaid overtime compensation according to FLSA 

rates and an interest in an administrative claim thereto before the GAO. We consider 

each of these alleged property interests in turn. 

i. Do Appellants Possess a Cognizable Property Interest in Their 

Asserted Right to Underpaid Overtime Compensation 

According to FLSA Rates? 

Appellants argue that as of November 18, 1995, they possessed a valid claim 

against the Government for six years of underpaid overtime compensation. Appellants 

contend that when Congress amended Section 640 on November 19, 1995, reducing 

the limitations period for certain claims from six to two years, the Government 

confiscated via a per se taking four years of their claim for underpaid overtime 

compensation under the FLSA without just compensation. 

Appellants assert that vested property rights may be created by either statute or 

contract, proceeding on both theories in the alternative. Focusing first on statutory 

grounds, Appellants contend that they acquired property rights in underpaid overtime 

compensation under the FLSA for six previous years because such rights vested at the 

04-5012 11
end of each pay period during which they worked hours of overtime, and the statute of 

limitations was six years. Appellants assert that the Government was obligated as a 

matter of law to pay them for these overtime hours at the FLSA rate (i.e., at least oneand-one-half times their regular rate), not at any lesser rate under the FEPA or any 

other statute. As examples of cases that recognize property interests and derivative 

rights created by statute, Appellants cite United States v. Larionoff, 431 U.S. 864 

(1977), Zucker v. United States, 758 F.2d 637 (Fed. Cir. 1985), and Kizas v. United 

States, 707 F.2d 524 (D.C. Cir. 1983). 

We disagree that Appellants own any Fifth Amendment property interest 

pursuant to the FLSA statute. Appellants confuse a property right cognizable under the 

Takings Clause of the Fifth Amendment with a due process right to payment of a 

monetary entitlement under a compensation statute.4

 Larionoff, Zucker, and Kizas are 

inapposite because each involves enforcing a statutory entitlement to compensation for 

employment, not recognizing the predicate for a takings claim. In Larionoff, the 

Supreme Court considered a soldier’s entitlement to a reenlistment bonus under the 

statutory Variable Reenlistment Bonus Program. 431 U.S. at 866. Similarly, in Zucker, 

we decided civil servant retirees’ entitlement to cost-of-living-adjustments under the Civil 

Service Retirement Act, while in Kizas, the United States Court of Appeals for the 

District of Columbia Circuit addressed FBI agents’ entitlement to a “special preference” 

 4 Generally, entitlements are considered to be government conferred 

benefits, safeguarded exclusively by procedural due process. See Bd. of Regents v. 

Roth, 408 U.S. 564, 577 (1972). In light of this, entitlements are often referred to as 

“property interests” within the meaning of the Due Process Clause in cases decided 

under that clause, but such references have no relevance to whether they are “property” 

under the Takings Clause.

04-5012 12
as an element of compensation under Title 5 of the United States Code. Zucker, 758 

F.2d at 639-40; Kizas, 707 F.2d at 534-38. 

Appellants alternatively contend that the assertedly applicable FLSA rate of 

overtime compensation became a contractual right once the work was completed. 

Appellants rely on a passage from Fisk v. Jefferson Police Jury, 116 U.S. 131 (1885), to 

support that contention: “But after the services have been rendered, under a law, 

resolution, or ordinance which fixes the rate of compensation, there arises an implied 

contract to pay for the services at that rate. This contract is a completed contract.” Id.

at 133-34. Pursuing a contract theory, Appellants contend that they acquired vested 

property rights to the underpaid overtime compensation via an implied contract with the 

Government formed when they completed the overtime work. For support, Appellants 

cite to selected cases, such as Lynch v. United States, 292 U.S. 571 (1934), wherein 

courts have found that sometimes rights arising out of a contract can be protected by 

the Takings Clause of the Fifth Amendment. 

Appellants’ contract theory is without merit. At the outset, Appellants 

mischaracterize Fisk. The plaintiff in Fisk served as a Louisiana parish district attorney 

by appointment, and a municipal law fixed his salary. When the Parish of Jefferson 

failed to pay his salary for four years, plaintiff sued in state court for recovery, 

requesting a writ of mandamus to compel the parish to assess and collect a tax for the 

payment of his salary. The Supreme Court of Louisiana denied the writ based upon a 

provision of the Louisiana Constitution limiting the power to levy a tax. The plaintiff 

sought review in the United States Supreme Court, arguing that the Louisiana 

constitutional provision impaired the obligation of his contract as guaranteed by the 

04-5012 13
Contract Clause of the United States Constitution. Fisk, 116 U.S. at 133. The United 

States Supreme Court agreed, concluding that 

[the plaintiff’s] appointment as district attorney was lawful and was a 

request made to him by the proper authority to render the services 

demanded of that office. He did render these services for the parish, and 

the obligation of the police jury to pay for them was complete. Not only 

were the services requested and rendered, and the obligation to pay for 

them perfect, but the measure of compensation was also fixed by the 

previous order of the police jury. There was here wanting no element of a 

contract. 

Id. at 134. Thus, Fisk involved an unconstitutional provision of state law and was 

decided under the Contracts Clause, not the Takings Clause. 

Appellants cite no case law to show that either the United States Supreme Court 

or this court would view a takings claim against the United States in the same light. Like 

all federal employees, Appellants served by appointment. The terms of their 

employment and compensation, consequently, were governed exclusively by statute, 

not contract. They had not, and could not have, entered into any separate agreement 

with the Government, express or implied, for additional overtime compensation beyond 

that to which they were entitled by the applicable statute. Hence, contrary to Appellants’ 

characterization of their entitlement to underpaid overtime compensation as based on 

an implied contract, Appellants had nothing more than a unilateral expectation to 

receive FLSA, rather than FEPA, overtime compensation for their hours of overtime 

work. Indeed, the District of Columbia Circuit previously recognized that 

federal workers serve by appointment, and their rights are therefore a 

matter of legal status even where compacts are made. In other words, 

their entitlement to pay and other benefits must be determined by 

reference to the statutes and regulations governing [compensation], rather 

than to ordinary contract principles. Though a distinction between 

appointment and contract may sound dissonant in a regime accustomed 

to the principle that the employment relationship has its ultimate basis in 

contract, the distinction nevertheless prevails in government service. 

04-5012 14
Applying these doctrines, courts have consistently refused to give effect to 

government-fostered expectations that, had they arisen in the private 

sector, might well have formed the basis for a contract or an estoppel. 

These cases have involved, inter alia, promises of appointment to a 

particular grade or step level, promises of promotion upon satisfaction of 

certain conditions, promises of extra compensation in exchange for extra 

services, and promises of other employment benefits. 

Kizas, 707 F.2d at 535 (citations and internal quotations omitted). 

Furthermore, Appellants’ reliance on Lynch is misplaced. In Lynch, despite the 

government having duly issued the insured a lawful insurance policy, Congress 

abrogated by legislation all such policies in force. Here, unlike in Lynch, the 

Government did not enter into any private agreement with Appellants regarding the 

terms or rates of Appellants’ overtime compensation, and Congress did not abrogate 

any such contract. The Government, in fact, could not have contracted to pay 

Appellants for overtime work at a rate of at least one-and-one-half their regular rate of 

pay because, like all government employees, Appellants’ compensation is governed 

exclusively by statute. Consequently, as previously stated, Appellants cannot be 

contractually entitled to overtime compensation at the rate specified under the FLSA or 

any other pay statute. When the Government and private parties contract, as in Lynch, 

the private party usually acquires an intangible property interest within the meaning of 

the Takings Clause in the contract. The express rights under this contract are just as 

concrete as the inherent rights arising from ownership of real property, personal 

property, or an actual sum of money. Here, no contract established in Appellants a 

property interest in overtime compensation at a particular rate under the FLSA. 

Because Appellants cannot show that they had a contract with the Government, they 

are not entitled to Takings Clause protection under Lynch. 

04-5012 15
Extending its contract theory, Appellants particularly equate the Government’s 

alleged statutory obligation to pay them overtime compensation at the FLSA rate with a 

debt owed by a debtor to a lender. They use the word “debt” repeatedly, but they distort 

the meaning of this word. That is, Appellants claim that when they performed the 

overtime work, the Government incurred a debt commensurate with paying them for 

their labor at the FLSA rate, not a lesser rate under an alternative overtime pay statute. 

Appellants contend, in turn, that paying this “debt” is akin to paying the insurance policy 

proceeds in Lynch or the gold standard bonds in Perry v. United States, 294 U.S. 330 

(1935). 

 Appellants’ argument is wholly unpersuasive. In Lynch, an insured purchased a 

war insurance policy from the United States, effectively lending money to the 

Government in exchange for future payment on the value of the policy at the time of the 

insured’s death. 292 U.S. at 574-75. Likewise, in Perry, the bond owner purchased a

gold bond from the United States, also in effect lending money to the Government in 

exchange for payment of the principal amount of the bond plus interest in gold coins. 

294 U.S. at 346-47. In both cases, the Government agreed with the lenders, i.e., the 

insured and the bond owner, to make future payment of either the policy amount in the 

case of a war insurance policy or the bond principal plus interest in the case of the gold 

bond in exchange for the immediate use of their money. Also, the Government’s “debt” 

to the insured and the bond owner was evidenced in a legal instrument issued by the 

Government to acknowledge and create the debt, respectively an insurance policy and 

a bond certificate. Here, as stated above, the Government and Appellants did not, and 

could not have, agreed that the Appellants would “loan” their underpaid overtime 

compensation to the Government in exchange for a “debt” owed by the Government to 

04-5012 16
them. Additionally, the Government issued no underlying legal instrument evidencing 

the Government’s agreement to a loan. The only legal instrument, the Form 50, rather 

than acknowledging Appellants’ right to be paid for overtime at the rate specified in the 

FLSA, instead indicated that the FLSA did not apply to them. Thus, Appellants are not 

in the same position as the insured and bond holder in Lynch and Perry, but instead are 

in the opposite position. Accordingly, as the Government argues, Appellants are not 

owed a debt; they have nothing more than a bald allegation that they are owed 

underpaid overtime compensation by the Government. 

Lastly, Appellants argue that the Court of Federal Claims misunderstood and 

misapplied our Commonwealth Edison decision. Appellants assert that this court in 

Commonwealth Edison did not intend to suggest by using the phrase “specific fund of 

money”5

 that the Takings Clause applies only when a particular sum or account is at 

stake. Rather, Appellants contend that this court used the phrase merely to distinguish 

between an obligation imposed by the Government to pay money to achieve a 

regulatory objective, as in that case, and confiscation of specific money by the 

Government, as in a classic per se taking, which Appellants argue occurred here. 

 5

 The phrase “fund of money” as used in Commonwealth Edison derives 

from Justice Breyer’s dissent in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998). 

Justice Breyer stated: “But the monetary interest at issue there [referring to Webb’s 

Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980)] arose out of the operation 

of a specific, separately identifiable fund of money.” E. Enters., 524 U.S. at 555 

(emphasis added). 

04-5012 17
New England Legal Foundation (“NELF”), as amicus curiae,6

 advances a similar 

argument, going so far as to assert that the alleged underpaid overtime compensation is 

a “fund of money.” NELF reaches this position by advocating that “[t]he key to 

a ‘fund of money’ is that it must be ‘specific’ and ‘separately identifiable,’ not that it be 

kept in a separate account.” In other words, NELF appears to claim that as long as the 

money allegedly owed is both “specific” and “separately identifiable,” then it qualifies as 

a protected “fund of money.” NELF contends that Appellants theoretically could 

calculate the amount of underpaid overtime compensation by multiplying the total 

number of overtime hours by the applicable overtime rate under the FLSA. Accordingly, 

NELF asserts that the amount of underpaid overtime compensation due to Appellants is 

both “specific” and “separately identifiable,” even if it is not maintained in a separate 

account by the Government. 

The Government seeks to refute Appellants’ and NELF’s positions, arguing that 

the Court of Federal Claims was correct that an ordinary statutory obligation to pay 

money can never constitute property for purposes of the Takings Clause. The 

Government asserts that Appellants and NELF plainly ignore the holding in 

Commonwealth Edison and attempt to distinguish that case based on differences 

between the facts there and those here that are immaterial. Additionally, the 

Government claims that NELF fails to explain how the alleged underpaid overtime 

compensation is any more a “fund of money” than the obligation to pay money in 

Commonwealth Edison. Indeed, the Government further contends the allegedly 

 6

 The Federal Law Enforcement Officers’ Association (“FLEOA”) also 

presented an amicus curiae brief in support of Appellants’ position. However, the 

FLEOA did not address the substance of a takings analysis, but instead focused 

primarily on the unfairness of not granting Appellants’ relief. 

04-5012 18
underpaid overtime compensation here is even less a “specific” and “separately 

identifiable” fund than the monetary obligation in Commonwealth Edison. 

Like the Government, we do not read Commonwealth Edison in the same light as 

either Appellants or NELF. In Commonwealth Edison, Congress imposed a monetary 

assessment in the Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776 

(codified as amended in various sections of 42 U.S.C.), on all domestic utilities such as 

Commonwealth Edison that used uranium re-processing facilities operated on their 

behalf by the United States Department of Energy. Under the Energy Policy Act, the 

Government was to use the revenue generated by the assessment to fund part of the 

cost of environmental remediation of its contaminated re-processing facilities. We held 

that Congress did not effect a taking within the meaning of the Fifth Amendment by 

imposing a statutory obligation to pay money on the utility companies. Commonwealth 

Edison, 271 F.3d at 1340. In reaching this conclusion, we followed the views of a 

majority7

 of the justices of the Supreme Court in Eastern Enterprises. Id. at 1338. In 

that case, the Supreme Court addressed the constitutionality of the Coal Industry 

Retiree Health Benefit Act of 1992, codified at 26 U.S.C. §§ 9701-9722 (the “Coal Act”). 

The Coal Act required certain coal mine operators to fund future health benefits 

of former coal mine employees of defunct companies, even though the paying, extant 

companies never employed them. Writing for the plurality, Justice O’Connor, joined by 

Chief Justice Rehnquist and Justices Scalia and Thomas, concluded that the retroactive 

impact of the Coal Act as applied to Eastern Enterprises was an unconstitutional taking 

 

7

 Notably, there was not a majority opinion of the Supreme Court in Eastern 

Enterprises. By referring to “a majority” view herein, we mean those views expressed in 

04-5012 19
because it placed a “severe, disproportionate and extremely retroactive burden” on the 

extant coal operators. E. Enters., 524 U.S. at 538. While concurring in the result, 

Justice Kennedy disagreed with the plurality’s conclusion that an obligation to pay 

money can support a taking, because 

[the Coal Act] does not operate upon or alter an identified property 

interest, and it is not applicable to or measured by a property interest. The 

Coal Act does not appropriate, transfer, or encumber an estate in land 

(e.g., a lien on a particular piece of property), a valuable interest in an 

intangible (e.g., intellectual property), or even a bank account or accrued 

interest. The law simply imposes an obligation to perform an act, the 

payment of benefits. 

Id. at 540. Indeed, the four dissenters, namely, Justices Stevens, Souter, Ginsburg, 

and Breyer, specifically “agreed that the Takings Clause was not implicated because 

‘the private property upon which the [Takings] Clause traditionally has focused is a 

specific interest in physical or intellectual property. . . . This case involves not an interest 

in physical or intellectual property, but an ordinary liability to pay money.’” Id. at 554. 

We thus held in Commonwealth Edison that “the mere imposition of an obligation to pay 

money, as here, does not give rise to a claim under the Takings Clause of the Fifth 

Amendment.” Commonwealth Edison, 271 F.3d at 1340. Given the precise language 

found in Justice Kennedy’s concurrence and the dissent, we premised our holding in 

Commonwealth Edison not on whether the statutory obligation was imposed for 

purposes of regulation or confiscation as suggested by Appellants, but rather on the 

nature of the interest in dispute (i.e., a legally-recognized property interest such as one 

in real estate, personal property, or intellectual property, versus an ordinary obligation to 

 

the concurring opinion of Justice Kennedy together with those expressed in the 

dissenting opinion of Justices Stevens, Souter, Ginsburg, and Breyer.

04-5012 20
pay money). The former is protected as property under the Takings Clause, whereas 

the latter is not because it lacks any foundation in property law. 

We also took care in Commonwealth Edison to distinguish the specific funds 

implicated in Phillips v. Washington Legal Foundation, 524 U.S. 156 (1998), and Webb’s 

Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980), as legitimate property 

interests from statutory obligations to pay money. 271 F.3d at 1338. Particularly, we 

noted that each contributor’s share of interest income generated by funds held in a 

specific, consolidated Interest on Lawyers Trust Account, commonly known as an 

IOLTA account, is the private property of that contributor for purposes of the Takings 

Clause. See Phillips, 524 U.S. at 160. Similarly, we observed that each contributor’s 

share of interest generated from deposits into a specific, consolidated interpleader 

account is a property interest of that contributor within the meaning of the Takings 

Clause. See Webb’s Fabulous Pharmacies, 449 U.S. at 164-65. In light of our use of 

the term “specific” to mean an actual sum of money representing interest derived from 

ownership of particular deposits in an established account, as opposed to some 

abstract sum of money capable of being calculated, NELF’s argument cannot stand. 

While it may be debatable to what extent the precise holding in Commonwealth 

Edison controls the instant case, this decision certainly provides the principle for 

determining how to treat the instant claim of a statutory entitlement to money under the 

Takings Clause. Both the Government and the Court of Federal Claims correctly noted 

that Commonwealth Edison clearly suggests that no statutory obligation to pay money, 

even where unchallenged, can create a property interest within the meaning of the 

Takings Clause. Here, in Appellants’ claim that the Government is obligated to pay 

underpaid overtime compensation under the FLSA, we are faced with a statutory 

04-5012 21
obligation to pay money, just as was implicated in Commonwealth Edison. Hence, 

based upon the principle of Commonwealth Edison, Appellants do not possess a 

property interest under the Takings Clause. 

What is more, we conclude that a statutory right to be paid money, at least in the 

context of federal employee compensation and benefit entitlement statutes, is not a 

property interest for purposes of the Takings Clause. Appellants have neither cited, nor 

are we independently aware of, any appellate court decision recognizing a statutory 

obligation to be paid money as a property interest grounded in property law. We decline 

to treat a statutory right to be paid money as a legally-recognized property interest, as 

we would real property, physical property, or intellectual property. Instead, we view it as 

nothing more than an allegation that money is owed. We thus conclude that Appellants 

cannot prove any set of facts that could support granting their requested relief. 

ii. Do Appellants Possess a Cognizable Property Interest in an 

 Administrative Claim to Underpaid Overtime Compensation 

 Before the GAO? 

Appellants argue, but only in a cursory fashion, that as of November 18, 1995, 

they owned a valid administrative claim before the GAO to recover their unpaid overtime 

compensation.8

 They contend that when Congress amended Section 640 on November 

19, 1995, the Government entirely extinguished their administrative claim to underpaid 

overtime compensation, effecting a per se taking of their private property without just 

compensation. Appellants rely on Alliance of Descendants of Texas Land Grants v. 

United States, 37 F.3d 1478 (Fed. Cir. 1984), to support their argument that their GAO 

claim, like certain causes of action, is “property” within the meaning of the Takings 

04-5012 22
Clause. What is more, Appellants maintain that it was immaterial that their claim had 

not yet been decided by the GAO when Section 640 was amended. 

Although we agree with Appellants that sometimes a cause of action may fall 

within the definition of property recognized under the Takings Clause, we observe, like 

the Court of Federal Claims, that precedent has limited the application of the Takings 

Clause to cases in which the cause of action protects a legally-recognized property 

interest. See, e.g., Cities Serv. Co. v. McGrath, 342 U.S. 330 (1952) (holding that 

seizure by Alien Property Custodian of interest represented by bond or debenture 

without seizure of instrument itself is unconstitutional taking of obligor's property unless 

he is assured that he has claim against United States for recoupment in the event of 

subsequent recovery against him in foreign court by holder in due course of debenture). 

Such is not the case here because, as discussed in detail above, the underlying subject 

matter of Appellants’ alleged administrative claim fails to qualify as a recognized 

property interest under the Takings Clause. Appellants’ reliance on Alliance of 

Descendants is utterly misplaced because the cause of action there was to recover 

compensation for an interest in land, a property interest cognizable under established 

takings jurisprudence because land is, beyond question, property under state and 

common law. Alliance of Descendants, 37 F.3d at 1481. Appellants have not cited any 

precedent finding such a property interest in a claim of Government liability before an 

administrative agency. Hence, we conclude that Appellants do not possess a 

cognizable property interest in any part of their administrative claim before the GAO. 

iii. Per Se Takings Argument 

 8 Appellants devoted little attention to this issue, discussing it only in a 

handful of paragraphs in their opening and reply briefs. Consequently, we view it as a 

secondary argument and treat it accordingly in this opinion.

04-5012 23
Because we agree with the Court of Federal Claims that Appellants do not 

possess any cognizable property interest within the meaning of the Takings Clause, we 

necessarily hold that the Government could not commit a per se taking without just 

compensation any more than it could commit a regulatory or any other kind of taking.

III. CONCLUSION 

The order of the Court of Federal Claims granting the Government’s motion to 

dismiss and the resulting judgment for the Government are 

AFFIRMED.

04-5012 24