## 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. Wi th 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, Commerc ial Litigation Branch, Civil Division, United States D epartment of Justice, of Washington, DC, argued for defendant-appellee. With hi m 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 i ndividuals (collectively, “Appellants”) were employed between 1984 and 1995 as GS-9, GS-11, GS-12, and GS-13 criminal investigators in various f ederal 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 Unit ed 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 fo r 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 rece ived overtime compensation, apparently pursuant to the Federal Employees Pay Act (“F EPA”), 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 co mpensation at the rate spec ified under the Fair Labor Standards Act (“FLSA”), codified at 29 U. S.C. §§ 201-219, whic h 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, Appellant s 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 meani ng of the Takings Clause of the Fifth Amendment, we affirm.
I. BACKGROUND
A. Statute of Limitations Applicable to FLSA Claims The FLSA provides overtime compensati on to certain employees who work more than forty hours per week at a rate not le ss than one-and-one-half times the employees’ regular rate of compensation. This statute originally did not cover federal employees. In 1974, however, Congress ex tended it to federal empl oyees, but exempted those classified as executive, admin istrative, or professional. Id. § 213(a)(1).

2 The parties fail to analyze the specif ic provision under which Appellants received compensation for overtime work. Nevertheless, the Government cited the

04-5012 2To recover unpaid overtime compensati on under the FLSA, a federal employee may file either an action at law or a claim before the General Acc ounting Office (“GAO”). Actions at law brought under the FLSA are subject to the stat ute of limitat ions provided in the Portal-to-Portal Pay Act, codified at 29 U.S.C. §§ 251-262, wh ich provides for a two-year limitations period for case s in which the FLSA violation is non-willful and a three-year period w here the violation is willful. Id. § 255(a). The statute of limitations for administr ative claims before the GAO initially was selected, then revised by, the Comptroller General of the Unit ed 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 t he instant takings clai m. Therefore, it is important to have a general understanding of the evolution of the limitations periods involved. In 1978, the Comptroller General ruled t hat 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 effect ively 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, essentia lly recognizing as applic able 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 enact ed the Treasury, Postal Service and General Go vernment Appropriations Act of 1995, Pub. L. No.

FEPA in its brief, a citation that was not contradicted in Appellants’ reply brief. 04-5012 3103-329, 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 stat ute 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 furt her limit the types of FLSA claims that may be decided by the GAO (“am ended 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 provis ion 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 BA TF, the DEA, the IRS, the Customs Service, and the USSS independently determi ned, as the respective employing agencies, that Appellants were administrativ e employees exempt fr om the FLSA and its overtime provisions. In making this det ermination, the employing agencies evaluated whether Appellants’ duties met the administr ative exemption criteria set forth in 5 C.F.R. § 551.206. Signifi cantly, Appellants were presumed to be non-exempt under the civil service regulations, thereby r equiring the employing agencies to carry the burden of establishing that the Appell ants met the criter ia of § 551.206. Id. §§ 551.202(a), (c). Dissatisfied with this exemption determinat ion, Appellants fil ed an action at law under the Tucker Act, codified at 28 U.S.C. § 1491, against the Government in the

04-5012 4United States Court of Feder al 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 decisi on dated October 30, 1992, the Court of Federal Claims concluded that some of the Appell ants 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 reve rsed 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. L EXIS 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 enactm ent of amended Section 640, Appellants filed suit against the Government in the Unit ed States District Court for the District of Columbia, seeking mandamus, injunctive, and declaratory relief agai nst the GAO for its inactivity on their administrative claims . Following the enactment of amended Section 640, Appellants twice supplement ed 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 proc ess arguments, ultimately concluding that neither Section 640 nor amended Secti on 640 violated the Due Process Clause. As to Appellants’ takings claim, the district c ourt concluded that a compensable taking did not

04-5012 5occur, based upon the three factors se t 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 t he United States Court of Appeals for the District of Columbia Circuit. On August 28, 1998, the District of Columb ia Circuit affirmed the district court’s decision on the due process claim, but reve rsed 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 gr eater than $10,000 fall wit hin 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 ta kings 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 le ss 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 cour t 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 reje cted [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 requi red 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 6and 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 t hat three separate governmental actions effected a taking of their property under t he Fifth Amendment: (1) the Comptroller General’s Ford decision that retroactively applied a two- or three-year statute of limitations to their administrat ive claims instead of the six-y ear statute of limitations; (2) the GAO’s failure and refusal in the interv ening year to apply the original Section 640 to their administrative claims; and (3) Congr ess’s amendment of Se ction 640 in late 1995 restricting restoration of the six-year limitations per iod to situations where no overtime was paid at all. In response, the Go vernment asserted that Appellants’ case is merely a standard FLSA entitle ment 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 t he meaning of the Ta kings Clause, and subsequently moved to dismiss the compla int under Court of Federal Claims Rule 12(b)(6) for failure to st ate a claim upon which relief can be granted and Court of Federal Claims Rule 12(b)(1) for lack of jurisd iction over the subject matter of the case. The trial court distilled the parties’ arguments to a singl e issue: whether Appellants’ claim involves “property” withi n the meaning of the Ta kings Clause of the Fifth Amendment. Adams , 2003 U.S. Claims LEXIS 238 at * 20. To address that issue, the trial court considered Appellants’ cl aim for underpaid overtime compensation

04-5012 7separate from Appellants’ admin istrative 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 ident ification of a true property interest but concluded that “[a] ll the [appellants] hav e 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 cons idered “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, t he court observed that the abolition of a cause of action may rise to the level of a ta king, but only if the c ause 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 protec ted by the Takings Clause of the Fifth Amendment. Id. Moreover, the court noted that the district court and District of Columbia Circuit already had reject ed Appellants’ due process claims. Id. The court concluded, therefore, that no cause of action to protect Appellants’ property or procedural rights had been unconstitu tionally taken from them. Id. at *41. Accordingly, the Court of Federal Claims granted the Go vernment’s motion to dismiss and ordered entry of final judgment in favor of the Government. Appellants timely appealed, ar guing that the Court of Federal Claims erred in deciding that they did not have a property interest in either FLSA overtime compensation, or an administrat ive claim thereto, cognizable under the Takings Clause.

04-5012 8We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) because the appeal is from a final judgment of the C ourt of Federal Claims. II. DISCUSSION
A. Standard of Review The Court of Federal Claims di d not explicitly state whet her 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 woul d 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 de scribed as having granted the motion to dismiss under Rule 12(b)(6) of the C ourt 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 t he 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 Claim s 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 Cla ims mirrors Rule 12 of the Federal Rules of Civil Procedure.
04-5012 9B. The Takings Clause The Takings Clause of the Fifth Amendment provides, in pertinent part: “nor shall private property be taken for public use, wit hout 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 pr operty 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 clai mant 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 in terest exists, we decide “whether the governmental action at issue constitu ted 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 ei ther FSLA overtime compensation or in an administrative claim thereto. The Constitu tion itself neither creates nor defines the property interests that if taken by t he government are com pensable 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 fr om an independent source,” such as state, federal, or common law, create and define t he dimensions of property interests for purposes of establishing a cognizabl e right and hence a potential taking. Lucas v. S.C. Coastal Council , 505 U.S. 1003, 1030 (1992). We have observed:

04-5012 10Property interests are about as divers e 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 (pres ent 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). A nd 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 associat ed rights, we must identify the precise nature of Appellants’ takings cl aim on appeal. Appellants argue, as they did before the Court of Federal Cla ims, that two specific proper ty interests are implicated, namely, an interest in payment of underpaid overtime compensation according to FLSA rates and an interest in an administrative cl aim thereto before the GAO. We consider each of these alleged property interests in turn.
i. Do Appellants Possess a Cognizabl e Property Interest in Their Asserted Right to Underpai d 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 under paid 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 vest ed property rights may be creat ed by either statute or contract, proceeding on both theories in the al ternative. Focusing first on statutory grounds, Appellants contend that they acquir ed property rights in underpaid overtime compensation under the FLSA for six previous years because such rights vested at the

04-5012 11end of each pay period during which they wo rked hours of overtime , and the statute of limitations was six years. Appellants asse rt that the Government was obligated as a matter of law to pay them for thes e 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 ex amples 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 proper ty right cognizable under the Takings Clause of the Fifth Amendment wit h 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 stat utory entitlement to compensation for employment, not recognizing the predi cate for a takings claim. In Larionoff , the Supreme Court considered a soldier’s entit lement 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-adj ustments under the Civil Service Retirement Act, while in Kizas , the United States Cour t of Appeals for the District of Columbia Circuit addressed FBI agent s’ entitlement to a “special preference”

4 Generally, entitlements are consi dered 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 re ferences have no relevance to whether they are “property” under the Takings Clause.
04-5012 12as an element of compensation under Ti tle 5 of the United States Code. Zucker , 758 F.2d at 639-40; Kizas , 707 F.2d at 534-38. Appellants alternatively contend that t he 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 t he services have been rendered, under a law, resolution, or ordinance which fixes the rate of compensation, t here arises an implied contract to pay for the services at that rate . This contract is a completed contract.” Id. at 133-34. Pursuing a contra ct theory, Appellants contend that they acquired vested property rights to the underpaid overtime com pensation via an impli ed 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 arisi ng 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 hi s 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 t he parish to assess and collect a tax for the payment of his salary. The Supreme C ourt 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 S upreme Court, arguing that the Louisiana constitutional provision impaired the obligat ion of his contract as guaranteed by the

04-5012 13Contract Clause of the Unit ed States Constitution. Fisk , 116 U.S. at 133. The United States Supreme Court agr eed, concluding that [the plaintiff’s] appointment as distri ct attorney was lawful and was a request made to him by the proper aut hority 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 render ed, and the obligation to pay for them perfect, but the measure of co mpensation 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 pr ovision 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 St ates Supreme Court or this court would view a takings claim agains t 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 entitl ed by the applicable stat ute. Hence, contrary to Appellants’ characterization of their ent itlement 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 appointmen t, and their rights are therefore a matter of legal status even where com pacts are made. In other words, their entitlement to pay and other benefits must be determined by reference to the statutes and regulat ions governing [compensation], rather than to ordinary contract princi ples. Though a distinction between appointment and contract may sound di ssonant 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 14Applying these doctrines, courts have consistently refused to give effect to government-fostered expectations tha t, 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, promis es of promotion upon satisfaction of certain conditions, promises of extr a compensation in exchange for extra services, and promises of other employment benefits. Kizas , 707 F.2d at 535 (citations and in ternal 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 polic ies in force. Here, unlike in Lynch , the Government did not enter into any priv ate agreement with Appe llants regarding the terms or rates of Appellants’ overtime compensation, and Congr ess 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 governm ent employees, Appellants’ compensation is governed exclusively by statute. Consequently, as previously stated, Appellants cannot be contractually entitled to overtime compensat ion at the rate spec ified under the FLSA or any other pay statute. W hen the Government and private parties contract, as in Lynch , the private party usually acqui res an intangible property interest within the meaning of the Takings Clause in the contract. The expr ess rights under this c ontract are just as concrete as the inherent ri ghts 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 compensati on 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 15Extending its contract theory, Appellant s particularly equate the Government’s alleged statutory obligation to pay them overtime compensat ion at the FLSA rate with a debt owed by a debtor to a lender. They use t he word “debt” repeatedl y, but they distort the meaning of this word. That is, Appe llants claim that w hen they performed the overtime work, the Government incurred a debt commensurate wit h 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 St ates, effectively lending money to the Government in exchange for future payment on t he 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 e ffect 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 pay ment 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 thei r money. Also, the Government’s “debt” to the insured and the bond owner was evidenc ed in a legal instrument issued by the Government to acknowledge and create the deb t, 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 16them. 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 fo r 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. A ccordingly, 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 Cour t of Federal Claims misunderstood and misapplied our Commonwealth Edison decision. Appellants asse rt that this court in Commonwealth Edison did not intend to suggest by us ing the phrase “specific fund of money” 5 that the Takings Clause applies only w hen 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 Gove rnment 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: “B ut the monetary interest at issue there [referring to Webb’s Fabulous Pharmacies, Inc. v. Beckwith , 449 U.S. 155 (1980)] aros e out of the operation of a specific, separately i dentifiable fund of money .” E. Enters. , 524 U.S. at 555 (emphasis added).

04-5012 17New 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 pos ition by advocating that “[t]he key to a ‘fund of money’ is that it must be ‘specific’ and ‘separatel y identifiable,’ not that it be kept in a separate account.” In other word s, NELF appears to claim that as long as the money allegedly owed is both “spec ific” and “separately identifiabl e,” then it qualifies as a protected “fund of money.” NELF cont ends that Appellants theoretically could calculate the amount of under paid overtime compensation by multiplying the total number of overtime hours by t he 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,” ev en if it is not maintained in a separate account by the Government. The Government seeks to refute Appell ants’ and NELF’s posit ions, arguing that the Court of Federal Claims was correct t hat an ordinary statutor y 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 t hose here that are immateri al. 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 furt her contends the allegedly

6 The Federal Law Enforcement Office rs’ 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 18underpaid overtime compensation here is even less a “specific” and “separately identifiable” fund than t he 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 D epartment of Energy. Under the Energy Policy Act, the Government was to use t he revenue generated by the asse ssment to fund part of the cost of environmental remediat ion of its contaminated re-pro cessing facilities. We held that Congress did not effect a taking wit hin the meaning of t he Fifth Amendment by imposing a statutory obligation to pay money on the utility companies. Commonwealth Edison , 271 F.3d at 1340. In reaching this c onclusion, we followed the views of a majority 7 of the justices of the Supreme Court in Eastern Enterprises

. Id. at 1338. In that case, the Supreme Cour t 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 mi ne operators to fund future health benefits of former coal mine employees of defunct companies, even though t he paying, extant companies never employed them. Writing for the plurality, Justic e O’Connor, joined by Chief Justice Rehnquist and Justices Scalia and Thomas, concluded that the retroactive impact of the Coal Act as applied to East ern Enterprises was an unconstitutional taking

7 Notably, there was not a majority opinion of the Supreme Court in Eastern Enterprises . By referring to “a majo rity” view herein, we mean those views expressed in

04-5012 19because it placed a “severe, disproportionat e and extremely retroactive burden” on the extant coal operators. E. Enters. , 524 U.S. at 538. While c oncurring 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, transfe r, or encumber an estate in land ( e.g. , a lien on a particular piece of proper ty), a valuable interest in an intangible ( e.g. , intellectual property), or ev en 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 “agr eed 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 pr operty. . . . 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 t he dissent, we premised our holding in Commonwealth Edison not on whether the statutor y 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 intellect ual property, versus an ordinary obligation to

the concurring opinion of Justice Kennedy together with those expressed in the dissenting opinion of Justices Stev ens, Souter, Ginsburg, and Breyer.
04-5012 20pay 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 inte rest income generated by funds held in a specific, consolidated Interest on Lawye rs Trust Account, commonly known as an IOLTA account, is the private property of t hat contributor for pur poses of the Takings Clause. See Phillips , 524 U.S. at 160. Similarly, we observed that each contributor’s share of interest generated fr om deposits into a specific, consolidated interpleader account is a property interest of that c ontributor within the m eaning 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 es tablished account, as opposed to some abstract sum of money capable of being ca lculated, NELF’s argument cannot stand. While it may be debatable to what extent the precise holding in Commonwealth Edison controls the instant case, this decisi on certainly provides the principle for determining how to treat the instant claim of a statutory entitlem ent to money under the Takings Clause. Both the Government and t he Court of Federal Claims correctly noted that Commonwealth Edison clearly suggests that no stat utory obligation to pay money, even where unchallenged, can cr eate a property interest within the meaning of the Takings Clause. Here, in Appellants’ clai m that the Government is obligated to pay underpaid overtime compensat ion under the FLSA, we ar e faced with a statutory

04-5012 21obligation to pay money, ju st 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 hav e neither cited, nor are we independently aware of, any appellate court decision recognizing a statutory obligation to be paid money as a property inte rest 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 U nderpaid Overtime Compensation Before the GAO? Appellants argue, but only in a cursory fash ion, 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 Congre ss amended Section 640 on November 19, 1995, the Government entirely extinguis hed 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 suppor t their argument that their GAO claim, like certain causes of action, is “property” within the meaning of the Takings

04-5012 22Clause. What is more, Appellants maintain t hat it was immaterial that their claim had not yet been decided by the GAO when Section 640 was amended. Although we agree with Appell ants that sometimes a cause of action may fall within the definition of proper ty recognized under the Takings Clause, we observe, like the Court of Federal Claims, that precedent has limited t he application of the Takings Clause to cases in which the cause of ac tion 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 repr esented by bond or debenture without seizure of instrument itself is unconstitutional taki ng of obligor's property unless he is assured that he has claim against Unit ed States for recoupment in the event of subsequent recovery against him in foreign c ourt by holder in due co urse of debenture). Such is not the case here because, as di scussed 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 caus e of action there was to recover compensation for an interest in land, a pr operty interest cognizable under established takings jurisprudence because land is, bey ond 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 conc lude 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 th is 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 23Because we agree with the Court of F ederal Claims that Appellants do not possess any cognizable property interest withi n 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 judgm ent for the Government are
AFFIRMED.

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