A. The Postal Service’s Ultra Vires Argument Is New And Should Not Be
Considered

First, the Postal Service’s ultra vires argument should not be considered because the Board
will not entertain an argument raised for the first time on appeal absent a showing that it is based on
new and material evidence not previously available despite the party’s due diligence. Banks v.
Dep't of the Air Force, 4 M.S.P.R. 268, 271 (1980). Without doubt, the Postal Service could have
raised its ultra vires argument long before August 24, 2011.

Second, the Postal Service’s belated ultra vires argument is a distinct issue from the
question of the scope of the Board’s jurisdiction than what the Board raised in its notice of oral
argument. The question of the Board’s jurisdiction is a question of the scope and meaning of the
regulation. And the scope of 5 C.F.R. § 353.301(d) depends only on the meaning of “arbitrary and
capricious.” On the contrary, the Postal Service’s ultra vires argument hinges on the statutory
interpretation of 5 U.S.C. § 8151 and an analysis of FECA and its legislative history. This issue is,
without doubt, different from what the Board identified as the basis for oral argument. See 76 Fed.
Reg. 44,373. Moreover, the D.C. Circuit has previously explained the distinct nature of these two
arguments, In summarizing Railway Labor Executives Ass'n v. National Mediation Board, 29 F.3d
655 (D.C. Cir. 1994) (en banc), the D.C. Circuit explained that “[t]he issue before the court was not
whether the agency’s regulations were reasonable—which is a hallmark of traditional arbitrary and
capricious review—but rather, whether the agency had any authority to promulgate regulations in
the area in which it sought to act.” Arent v. Shalala, 70 F.3d 610, 615 (D.C. Cir. 1995).

Indeed, as noted at oral argument, the Board added two questions to its “issues presented”

when the Board issued its order concerning oral argument procedure. The two additional questions

11

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Second, the “operational necessity” standard abolishes restoration rights afforded under the
ELM. For example, under ELM § 546.222, “[a] partially recovered current or former employee
reassigned or reemployed to a different craft to provide appropriate work must be assigned to
accommodate the employee’s job-related medical restrictions.” The reassignment of the partially
recovered employee “may be to a residual vacancy or to a position uniquely created to fit those
restrictions.” ELM § 546.222.

The new NRP standard has denied restoration to the five appellants—five employees who
had been granted restoration pursuant to the Federal Employees’ Compensation Act (“FECA”), the
ELM, and other applicable Postal Service rules governing restoration. As one example, James.
Latham became a casualty of the NRP in April 2010. At that time, Mr. Latham was working at the
Armarillo Post Office, maintaining edit books, installing case labels, answering phones, processing
address management information, assisting management with reports, and assisting Postal Service
customers in the lobby. Agency’s Jurisdiction Br. at 4. The Postal Service assigned him this work
pursuant to ELM § 546.142 and other applicable agency rules. The Postal Service has not
contended that the work Mr. Latham was doing has since disappeared. Instead, under the NRP’s
new standard, the Postal Service characterized the same work as not “operationally necessary” and
thus concluded that Mr. Latham, a partially recovered employee and a preference eligible veteran
of the U.S. Army, did not have a right to be restored to perform this work.

In the present appeals, the Postal Service has not disputed the conflicting obligations of
ELM § 546.142 and the NRP. Moreover, the Postal Service did not challenge that the NRP is
inconsistent with the agency obligations set forth in EL-505. In fact, a fair reading of the Postal
Service’s briefs establishes the merits of appellants’ appeal. First, the Postal Service admits that it
is bound to follow its rules, supra. Second, the Postal Service in its briefs has never challenged the

appellants’ assertion that the NRP conflicts with the restoration rights set forth in the ELM. These

5

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employees have restoration rights. In Booker v. Merit Systems Protection Board, 982 F.2d 517,
519 (Fed. Cir. 1992), the court held that, under 5 C.F,R. § 353.304(a) and (c), an employee,
“having been restored to duty after partial recovery, may not appeal the details or circumstances of
her restoration to the board.” In Gallo v. United States, 529 F.3d 1345, 1352 (Fed. Cir, 2008), the
court held that Mr. Gallo, a partially recovered FAA employee, could not bring a claim under

5 U.S.C. § 8151 (a) in the Court of Federal Claims “[b]ecause an action under section 8151(a) is
within the Board’s appellate jurisdiction under the [Civil Service Reform Act] and the Board’s
regulations.” In other words, the Court of Federal Claims lacked jurisdiction precisely because the
Board had jurisdiction over an appeal involving a partially recovered employee. See id.

In New v. Department of Veterans Affairs, 142 F.3d 1259 (Fed. Cir. 1998), the court ruled
on a denial of restoration claim brought by a partially recovered DVA employee. The court denied
the claim because the employee refused to return to work based on the lack of a suitability
determination by OWCP. The court stated that “a partially disabled employee who refuses to work
after suitable work is offered to her is not entitled to compensation under FECA.” Jd. at 1261-62
(citing 5 U.S.C. § 8106(c)(2)). Inherent in the decision was the understanding that, had she not
refused the offer of suitable work, the employee would have been entitled to return to work. Ta*

The Federal Circuit is not alone in this understanding of the scope of restoration rights for
partially recovered employees. For instance, in Meester v. Runyon, 149 F.3d 855 (8th Cir. 1998),
the Eighth Circuit decided a case involving a partially recovered Postal Service employee with
carpal tunnel syndrome. The Postal Service had created several different limited duty positions for
Meester. /d. at 856. The outcome was premised on the understanding that the partially recovered

Postal Service employee had certain restoration rights under FECA. Jd.

* See also Palmer v. Merit Sys, Prot. Bd., 550 F.3d 1380, 1381-82 (Fed. Cir. 2008) (adjudicating appeal of partially
recovered Postal Service employee who had accepted an offer of a modified job assignment but finding no jurisdiction
because employee was appealing the details of the restoration and not the denial of restoration).

15

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TABLE OF CONTENTS

TABLE OF AUTHORITIES iseeivsticiisisccssessensivecssrnnenaesaiesasveaessnesersceoeenees eoseaneceees i
ARGUMENT .......scssssssssssssevssnsnsnsssnsessnesssctnesenenstesnssensnsguonsnecneneyereavensneneansnanenesonensenessnenegseaeneenrates 1
L THE BOARD HAS JURISDICTION BECAUSE THE NATIONAL
REASSESSMENT PROCESS IS ARBITRARY AND CAPRICIOUS .....sceeecseseeteesnee 1
A. An Agency’s Conduct Is Arbitrary And Capricious When It Disregards Its
Own Rules

B. The NRP Is Arbitrary And Capricious Because It Violates ELM § 546.142........ 4
ic The NRP Is Arbitrary and Capricious To The Extent It Violates EL-505,

EL-307, And Any Other Applicable Postal Service Rules .......c:sscesseseeeeeeen 8
D. Under State Farm, The NRP Is Arbitrary And CapriciOus.........cscccseeeereien 8
Il. THE POSTAL SERVICE’S ULTRA VIRES ARGUMENT IS NOT PROPERLY
BEFORE THE BOARD
A. The Postal Service’s Ultra Vires Argument Is New And Should Not Be
Considered = seeteeseseseesesseenens well
B. The Postal Service’s Ultra Vires Argument Is Classic Post Hoc
Rationalization ...ccccsesssssessssesessecsesseeessssssssesecssscenseseasereeesrecnereeeeeeasensensneens 12
Cc. The New Ultra Vires Argument Was Not Presented To OPM.......:cscsseeeeees 14
Til. EVEN IF CONSIDERED, THE POSTAL SERVICE’S ULTRA VIRES
ARGUMENT REQUIRES A TORTUOUS VIEW OF 5 U.S.C. § 815 Leceeseseeeseene 14
A. Courts Understand That § 8151 Covers Partially Recovered Employees ........... 14
B. OPM Understands That § 8151 Covers Partially Recovered Employees............ 16
c. The Postal Service’s New Interpretation Conflicts With Its Own Settled
View of § 8151 And Therefore Warrants Little, If Any, Deference...........:00 17

D. Congress Has Ratified The Long-Accepted Understanding of § 8151...
E. Under Chevron, The Common Understanding of § 8151 Is Reasonable

F, The Legislative History Confirms The Error In The Ultra Vires Argument 219
CONCLUSION.....cecsessessessseeseesscnsssssessveosonsscsssssssssecnecavesscessseaseusssisanseanenscansensensussavonsconsens tenses 20
CERTIFICATE OF SERVICE

Pleading Number : (b)(6) Submission date : 2012-01-06 19:31:25 Confirmation Number: (b)(6) page 5 of 34


were directed to the ultra vires issue, whereas the two original questions focused on the scope of
the Board’s jurisdiction as defined in 5 C.F.R. §§ 353,301 (d) and 353.304(c).?

Third, judicial estoppel “generally prevents a party from prevailing in one phase of a case
on an argument and then relying on a contradictory argument to prevail in another phase.” New
Hampshire v. Maine, 532 U.S. 742, 749 (2001). Here, the Postal Service is judicially estopped
from claiming that § 8151 does not authorize OPM to promulgate the rules. The Postal Service
affirmatively adopted during the hearings the position that § 8151 authorizes the rules at issue. See,
e.g., Agency Jurisdiction Br. at 8 (Postal Service arguing that “[a]n individual who is physically
disqualified from the former position or an equivalent one because of a compensable injury [i.e., is
partially recovered] has certain agency-wide placement rights for a one-year period after his
eligibility for compensation begins” (citing 5 C.F.R § 353.301(d))). For the Postal Service to make
this statement, it must necessarily agree that § 8151 authorizes certain restoration rights for
partially recovered employees. To allow the Postal Service the change course and disavow its
earlier acceptance of restoration rights for partially recovered employees would cast asunder the
doctrine of judicial estoppel.

B. The Postal Service’s Ultra Vires Argument Is Classic Post Hoc Rationalization

“{1]t is elementary that if an agency’s decision is to be sustained in the courts on any
rationale under which the agency’s factual or legal determinations are entitled to deference, it must
be upheld on the rationale set forth by the agency itself.” Fort Stewart Schs., 495 U.S. at 651-52.
Courts may not accept counsel’s post hoc explanation of agency action. Burlington Truck Lines,

Inc. v. United States, 371 U.S. 156, 168-69 (1962) (“The courts may not accept appellate counsel’s

> At oral argument, the Postal Service’s witra vires argument became another moving target. Vice Chairman Wagner
pointed out that the Board does not have “the general APA jurisdiction to declare OPM’s action to be ultra vires,” to
which agency counsel replied, “I’m not asking you to do that.” Tr. 40:23-41:1. Later, agency counsel conceded that
the agency’s argument depends on the theory that “OPM doesn’t have authority to have issued th[e] substantive
regulation creating [the] right.” Tr. 44:3-12. As Vice Chairman Wagner explained, the Board does not have “authority
to tell OPM whether it could or couldn’t create that right.” Tr. 44:13-15; see also Tr. 46:12-14.

12

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unexplained departure from prior agency determinations is inherently arbitrary and capricious in

violation of APA § 706(2)(A).” (quotation and citation omitted)),

D. Congress Has Ratified The Long-Accepted Understanding of § 8151

Yet another reason to reject the Postal Service’s new interpretation is the doctrine of
congressional ratification. That is, an agency’s interpretation of a statute may be confirmed or
ratified by subsequent congressional failure to change that interpretation. E.g., Bob Jones Univ. v.
United States, 461 U.S. 574 (1983). Section 8151 has been in force for over thirty years. During
that time, the consistent understanding of both courts and federal agencies, including the Postal
Service, has been that § 8151 covers partially recovered employees. Congress has accepted this

understanding. There is no reason for the Board to upset this settled law.

E. Under Chevron, The Common Understanding of § 8151 Is Reasonable

The Postal Service makes no attempt to conduct a proper analysis under the controlling
paradigm. See Chevron U.S.A. Inc. v Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984).
Under the two-step Chevron process, the first step is to determine if “Congress has directly spoken
to the precise question at issue.” Jd. at 842. If so, the unambiguous text of the statute controls. Id.
at 842-43. If, however, “if the statute is silent or ambiguous with respect to the specific issue, the
question for the court is whether the agency’s answer is based on a permissible construction of the
statute.” Id. at 843,

“The objective of Chevron step one is not to interpret and apply the statute to resolve a
claim, but to determine whether Congress’s intent in enacting it was so clear as to foreclose any
other interpretation.” Grapevine Imports, Ltd. v. United States, 636 F.3d 1368, 1377 (Fed. Cir.
2011); see also Nat'l Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 982-83
(2005) (“Only a judicial precedent holding that the statute unambiguously forecloses the agency’s

interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency

18

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Cc. The New Ultra Vires Argument Was Not Presented To OPM

Another reason to pass on the ultra vires argument is that the issue was not presented to
OPM, Prior to briefing, the Board sought the view’s of OPM but only on the following question:
“Does an agency act arbitrarily and capriciously under 5 C.F.R. § 353.301(d) in denying restoration
to a partially recovered individual when such denial violates the agency’s internal rules, such as the
[U.S. Postal Service’s Employee and Labor Relations Manual]?”

OPM had no reason to opine on the interpretation of § 8151 and whether that section
authorized the promulgation of 5 C.F.R. §§ 353.301(d) and 353.304(c). And because OPM is the
agency delegated the authority to administer § 8151, OPM’s interpretation of § 8151 can be
particularly relevant and insightful. As explained below, however, OPM’s understanding of § 8151
is apparent based on its implementation of § 353.301(d) and 353.304(c) . For this reason, if the
Board addresses the Postal Service’s ultra vires argument, it should consider the only reasonable
conclusion from OPM’s implementation of § 8151.

Wl. EVEN IF CONSIDERED, THE POSTAL SERVICE’S ULTRA VIRES ARGUMENT
REQUIRES A TORTUOUS VIEW OF 5 U.S.C. § 8151

A. Courts Understand That § 8151 Covers Partially Recovered Employees

The Postal Service’s ultra vires argument ignores the numerous courts that have adjudicated
restoration cases for partially recovered employees under 5 U.S.C. § 8151. Most recently, the
Federal Circuit decided a case of particular relevance. In Bledsoe v. Merit Systems Protection
Board, 659 F.3d 1097, 1104 (Fed. Cir. 2011), a unanimous panel held that the “arbitrary and
capricious” element in 5 C.F.R. § 353.304(c) means that a denial of restoration is “arbitrary and
capricious by agency failure to perform its obligations under 5 C.F.R. § 353.301(d).” In Walley v.
Department of Veterans Affairs, 279 F.3d 1010, 1014-15 (Fed. Cir. 2002), the Federal Circuit held
that a partially recovered employee who was still in the probationary period has restoration rights
under FECA. To arrive at this holding, the court must have understood that partially recovered

14

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Despite the explicit incorporation, the Postal Service continued to argue that an ELM violation is
merely a contractual matter. See Tr, 50:10-12.

Second, the Postal Service has overlooked other legal obligations precluding the NRP’s
implementation. Postal union contracts require enforcement of the various provisions of the ELM
and EL-505 and provide reasonable options for addressing reductions in force. For example,
Article 13 of one such agreement” governs the “assignment of ill or injured regular workforce
employees.” The Postal Service’s violation of contractual agreements renders the NRP even more
arbitrary and capricious under a State Farm analysis.

Third, the litigation costs for the Postal Service appear to be mounting, and it is unclear
whether the Postal Service considered this cost when implementing the NRP. What is plainly
obvious is that the Postal Service’s increasing costs in defending the NRP in multiple fora.
Displaced employees are, to some extent, succeeding in arbitration proceedings based on wrongful
denials of restoration, In addition, the Postal Service is defending a class action EEOC complaint
based on the NRP and its removal of employees. McConnell v, Potter, Appeal No. 0720080054,
Agency No. 4B-140-0062-06 (filed Jan. 14, 2010).

Fourth are the unanswered question of how the Postal Service’s unique interpretation of §
8151 will affect other federal agencies. Based on the record before the Board, there is no indication
that the Postal Service ever considered whether its unique interpretation of § 8151 was contrary to
the goals and objectives of other federal agencies. It appears that at least some other federal
agencies have adopted the understanding that partially recovered employees have restoration rights

under FECA. See, e.g., New v. Dep't of Veterans Affairs, 142 F.3d 1259, 1260 (Fed. Cir. 1998).

? 2006-2011 National Agreement, between the National Association of Letter Carriers & the United States Postal
Service. See also Article 6 titled “No Layoffs or Reduction in Force.”

9

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ARGUMENT

The U.S. Postal Service’s implementation of and post hoc justifications for the National
Reassessment Process (“NRP”) epitomize arbitrary and capricious conduct by an administrative
agency. The NRP violates the Postal Service’s long-established rules governing the restoration
rights of partially recovered employees. The NRP further disregards standards established in the
Employee Labor Manual (“ELM”) and other agency rules. The Postal Service has never disputed
this conflict-—at least until oral argument.

Moreover, during oral argument, the Postal Service’s position became a moving target. The
Postal Service’s counsel asserted, without support, that the restoration standard under the NRP is
the same as under the Employee Labor Relations Manual (“ELM”). Yet moments later, agency
counsel conceded that “there might be a difference between the ELM and ELM plus NRP.” Not
only is the latter correct, but the former is a new argument absent from the Postal Service’s briefs.
The agency’s shifting explanations are further evidence of capriciousness.

This case presents a classic agency blunder. Faced with a competitive business
environment, the Postal Service sought a new means for eliminating employees. But it failed to
consider applicable rules and contractual obligations. The Postal Service instituted the NRP, which
imposes a new “operational necessity” standard lacking any basis in the Postal Service’s rules and
agreements with the unions. Rather than abide by its long-standing rules, the Postal Service
targeted loyal employees who had partially recovered from on-the-job injuries. Whatever the
financial pressures, the Postal Service should not be permitted to terminate loyal employees in
complete disregard of its regulations.

I. THE BOARD HAS JURISDICTION BECAUSE THE NATIONAL
REASSESSMENT PROCESS IS ARBITRARY AND CAPRICIOUS

The primary issue before the Board is whether, under 5 C.F.R. §§ 353.301(d) and
353.304(c), the Board has jurisdiction over the present appeals. The answer is yes because the

1

Pleading Number : (b)(6). Submission date : 2012-01-06 19:31:25 Confirmation Number: (b)(6) page 10 of 34


Pleading Number : OG)

Certificate Of Service

e-Appeal has handled service of the assembled pleading to MSPB and the following Parties.

ame & Address

Documents

IMethod of Service

IMSPB; Office of the Clerk of the

IResponse to Order dated

le-Appeal / e-Mail

Board 12/13/2011
Marcella Albright IResponse to Order dated —_je-Appeal / e-Mail
Appellant 12/13/2011

[Thomas William Albright
\Appellant Representative

IResponse to Order dated
12/13/2011

le-Appeal / e-Mail

|Andrew C. Friedman, Esq.

[Agency Representative

Response to Order dated
12/13/2011

le-Appeal / e-Mail

Joshua T. Klipp, Esq.
|Agency Representative

Response to Order dated.
12/13/2011

je-Appeal / e-Mail

Earl L. Cotton, Sr., Esq.
|Agency Representative

Response to Order dated
12/13/2011

fe-Appeal / e-Mail

[Theresa M. Gegen
\Agency Representative

Response to Order dated
12/13/2011

je-Appeal / e-Mail

|William D. Bubb, Esq.
|Agency Representative

Response to Order dated
12/13/2011

fe-Appeal / e-Mail

|Ayoka Campbell
Agency Representative

[Response to Order dated
12/13/2011

le-Appeal / e-Mail

agree to send a printed copy of the electronic pleading with attacl
end of next business day, as follows:

hments to non-efilers by the

IName & Address [Documents Method of Service
James C. Latham Response to Order dated JUS Postal Mail
Appellant 12/13/2011

66
Ruby N. Turner [Response to Order dated [US Postal Mail
Appellant 12/13/2011

bS:

Submission date :

2012-01-06 19:31:25

Confirmation Number: (b)(6)

page 33 of 34


CERTIFICATE OF SERVICE

I CERTIFY (1) a true and correct copy of the foregoing APPELLANTS’ JOINT POST-
ARGUMENT BRIEF is being filed with the Board’s e-Filing system and served on January 6,
2012, on the following and (2) for any non-e-Filers, a printed copy of the electronic pleading will
be sent by the end of the next business day:

U.S, Mail

U.S. Mail

USS. Mail

Electronic Mail

U.S. Mail

U.S. Mail

USS. Mail

U.S. Mail

Pleading Number : [BBFESTG)

APPELLANTS

Arleather Reaves

b6

Cynthia E. Lundy

James C, Latham

Marcella Albright

Ruby N. Turner

bs

APPELLANTS’ REPRESENTATIVE

Geraldine Manzo
7700 Edgewater Drive
Suite 656

Oakland, CA 94621
Fax (510) 834-9902

JR. Pritchett

Postal Employee Advocates
86 East Merrill Road
McCammon, ID 83250

Fax (208) 254-9197

James A. Penna
3212 Villa Pl.
Amarillo, TX 79106

Submission date : 2012-01-06 19:31:25 Confirmation Number:

page 30 of 34


629 F.2d 1191 (7th Cif. 1980) scoresnerasnsinesrioseaeremnssntaamasatansnenskeatsntnennsentsonunbennesnruennenstenten 4

Gallo v. United States,
529 F.3d 1345 (Fed. Cir. 2008)

Gose v. United States Postal Service,
451 F.3d 831 (Red. Cir. 2006) ... isssisissussnecsasssninsvsveneveraseavecevesnsesstinsaneesszavsaewssneswasuswsuscouveseves 13

Grapevine Imports, Ltd. v. United States,
636 F.3d 1368 (Fed. Cir. 2011) ....... .cninsininivinnannanmarmonnnnanniaINNemIAITN 18, 19

Griffin v. Oceanic Contractors, Inc.,
458 US. 564 (1982) .......ssevennssubsewssnsnaiissiansreadionteospendestasanvedibesanestevassibisensenssbeskbacsteonusseomieas 20

Huntington Hospital v. Thompson,
319 F.3d 74 (2d Cir. 2002)..... .ccssnsninirn inna manammnanenanneimamnaninamnnannanne 10

INS v, Cardoza-Fonseca,
480 U-S,4211-(1987), asisinsineennntaieaeenastear aca meenancnemeammecmreiteriessmeemeemeatermmeres 20

Investment Company Institute v. Camp,
401 U.S. 617 (1971) ...

K Mart Corp. v. Cartier, Inc.,
486 U.S. 281 (1988) ...

Kachanis v. Department of the Treasury,
212 F.3d 1289 (Fed. Cir, 2000) ....... isssssscaeanarsnsnracaeecannseconcenncevonsnannemuesaedssskenneonkeinananiiite 16

Kester v. Horner,
778 F.2d 1565 (Bed. Cir. 1985). ssccwssusssuvsssaruevenssssnuvevsvavarevessuvsavavonswuan sveveenaciweswvesavesncetsowivs 16

Leslie v. Attorney General of the United States,
611 F.3d 171 (Gd Cir. 2010)... ....c1ce...:<ssesssabsnnasancesnavancunanazesyusveeupubagte abansuaseumuusacesaiesilianessvs 3

Lopez v. FAA,
318 F.3d 242 (D.C. Cir, 2003) isisssssvisssssassvsisnoveesonivansusssvsvststonsnssnsiestissupatanea oenistentaieos ieee 3

Meester y. Runyon,
149 F.3d 855 (8th Cir, 1998) sccssscassnarsaxsssnsccupassocamsarepsyspnapancnnssestanastengenseasmamananonnnseia 15,17

Morton v, Ruiz,
415 US. 199 (1974)

Motor Vehicles Manufacturers Association v. State Farm Automobile Insurance Co.,
463 U.S. 29 (1983)

ii

Pleading Number : WS) Submission date : 2012-01-06 19:31:25 Confirmation Number: COME © page 7 of 34


TABLE OF AUTHORITIES

4——E—eE__—_——_—eyeE—eEeeeeee——

Page
FEDERAL CASES
American Farm Lines v. Black Ball Freight Service,
397 U.S. 532 (1970) cossssssssssoseesernnsnseeessennasseececnnanicensinsnnanneangnensnnnes genet eee 3

Arent v. Shalala,
70 F.3d 610 (D.C. Cir. 1995)

Auer y. Robbins,
519 U. S. 452 (1997)

Banks v. Department of the Air Force,

4M.S.P.R. 268 (1980) wll
Bledsoe v. Merit Systems Protection Board,

659 F.3d 1097 (Fed. Cir. 2011) 2,14
Bob Jones University v. United States,

461 U.S. 574 (1983) 18
Booker v. Merit Systems Protection Board,

982 F.2d 517 (Fed. Cir, 1992)ossssssssssessssssssssessssnnnssecersenunnnnnersgqnnnnnersggsssssnerss essere ee 15
Bowen v, Georgetown University Hospital,

ABS U.S. 204 (1988) seesvevsssssssssssseesernnsonennnsssnsssenneannosnceenssennnranaensnsnnengggeeneee eet 13
Burlington Truck Lines, Inc. v. United States,

371 U.S. 156 (1962) .... 12
Chase Bank USA, N.A. v. McCoy,

131 S, Ct. 871 (2011) 7

Chevron U.S.A. Inc. v Natural Resources Defense Council,
467 U.S. 837 (1984)

Dodson v. Department of the Army,
988 F.2d 1199 (Fed. Cir. 1993)...

Fort Stewart Schools v. FLRA,
495 U.S. 641 (1990) ....

Gaballah v. Johnson,

i

Pleading Number A ty6) _| Submission date : 2012-01-06 19:31:25 Confirmation Number: NGYOM © page 6 of 34


Fifth, the Postal Service has provided no explanation as to why the NRP was abruptly halted
in January 2011. Such agency flip-flopping is a classic sign of arbitrary and capricious conduct.
See, e.g., Huntington Hosp. v. Thompson, 319 F.3d 74, 79 (2d Cir. 2002) (“While an agency is not
locked into the first interpretation of a statute it embraces, it cannot simply adopt inconsistent
positions without presenting ‘some reasoned analysis.””); Mr. Sprout, Inc. v. United States, 8 F.3d
118, 129 (2d Cir. 1993) (noting that, when an agency departs from “its own settled precedent, as
here, it must present a ‘reasoned analysis’ that justifies its change of interpretation so as to permit
judicial review of its new policies”).

As demonstrated above, the NRP is arbitrary and capricious on its face because it violates
the Postal Service’s rules and regulations. For that reason, the Board need not address whether the
NRP is arbitrary and capricious under State Farm. But if it does, the Board should similarly hold
that the Postal Service’s NRP is arbitrary and capricious because, inter alia, the Postal Service
entirely failed to consider important aspects of the problem.

Il. THE POSTAL SERVICE’S ULTRA VIRES ARGUMENT IS NOT PROPERLY
BEFORE THE BOARD

In its briefs, the Postal Service’s only articulated defense to the NRP’s arbitrary and
capricious nature is that OPM lacked the statutory authority under 5 U.S.C. § 8151 to promulgate
the rules at 5 C.F.R. §§ 353.301(d) and 353.304(c). Aside from the legal error in that argument, see
infra, the Board should decline to entertain the Postal Service’s eleventh-hour ultra vires argument.
The issue was not raised at any time prior to the Postal Service’s brief filed on August 24, 2011.
The argument represents nothing more than post hoc rationalization by agency counsel.
Furthermore, the Postal Service should be judicially estopped, as the agency had affirmatively
adopted an opposite stance before the administrative judges. Most importantly, OPM was not
asked its opinion on scope of § 8151. As the agency designated by Congress to administer FECA,

OPM’s interpretation of § 8151 is particularly relevant.
10

Pleading Number : JOY) Submission date ; 2012-01-06 19:31:25 Confirmation Number: CNGMME © page 19 of 34


Vitarelli v. Seaton,

Voge v. United States,
B44 F.2d T76 (Beas Cik: 1988) cincousssnsearcersennsencsnwnacconvesnerecavsoenumninanienrsnnsinensvoniaatsenadeetseaenenses 3

Wilson v. Commissioner of Social Security,
3718: F.3d:S41 (6th Cie. 2004) ieisiessossswsiscisnsssvecsasecasvsavsrscsmvacesancusissswesuavcarccacssarvoncvancenerskesseveen 3

Walley v. Department of Veterans Affairs,
ZIV'E.3d LOL! (Fed, (Cit: 2002) isisiscissscvicscescasavscsaascssecicavecuwvavscssvassercivesssicesveewatevisety 14

Yuni v. Merit Systems Protection Board,
784 F.2d 381 (Fed. Cir. 1986),

FEDERAL STATUTES
SHULSEC. SS TST... nssennnennnnsinnctennsanssesssensninnunnsnevanesianneaonnnernconarenencmamngrsnmavarenmmianenn ated passim
FEDERAL REGULATIONS
Si CBR § FS33OUG) scossissivcrsssivesccvcevcenserisacssosasepararvaseenvtreasivevasevarvavesciacaversictyvavwaciwanscns passim
S'CBR§ 353.3046) covssicnensiwcriscnnsannaunnnrcinencivaverarsivassveansnniancvenisenwwenesssreneiweneas passim
39 CAPR. § 211.2(a)(Q) cscssscscsssssessssessvsonvsnssnnsccencesecesesesinnusasanensnngneseeceegensuinsuansnsssseereesesequsetee 8
OTHER AUTHORITIES
EES 07 sissssisevsasstecciensusnunuaneoneninadenusinunaa nein nnuannts tm ImNEneNNATeRa TT TECeineTTTCEET 8
EBL-505  wsssusssoninssscvssnvosnavisvosvosueavaoavaenesksuvavceesovsasveavenaswesvewsssoncorvevannbakeswasvenosieonenianenneenoeonsonent passim
Employee Labor Relations Manual) ...soxcsossrsersrernnsrsonecnsceaeanennrenannnessennstnseroronsvanvonneetnnneyen passim

2006-2011 National Agreement, between the National Association of
Letter Carriersi& the United States: Postal Servicti..,...csviessosnssssvessosssaseonsesnsernsensssseennsesesenenD

Senate Report No. 93-1081 (1974).......rncssecserssrorsesroencossnvensencessanennensessansnesesennansansenoneraenensennenns 20

iv

Pleading Number : TONG Submission date ; 2012-01-06 19:31:25 Confirmation Number: ONG ME page 9 of 34


B. OPM Understands That § 8151 Covers Partially Recovered Employees

Although OPM did not directly address the Postal Service’s ultra vires argument, the only
logical conclusion from OPM’s advisory opinion is that OPM would disagree with the Postal
Service’s argument. The Postal Service’s argument requires the Board to conclude that § 8151
does not authorize restoration rights for partially recovered employees. OPM, of course, has not
come to that conclusion. If it had, OPM would not have issued—and kept in force for until this
day—a regulation not authorized by the statute.

OPM’s view is of particular importance for interpreting the statute. Congress delegated to
OPM the authority to issue regulations implementing the statute. See 5 U.S.C. § 8151(b) (“Under
regulations issued by the Office of Personnel Management . . . .”); see also Kachanis v. Dep’t of the
Treasury, 212 F.3d 1289, 1295 (Fed. Cir. 2000) (noting that § 8151(b)’s directive “is evidence of
Congress’s intent to let OPM decide how agencies should satisfy the statute’s requirements.”), As
the agency charged with administering § 8151, OPM’s interpretation is entitled to deference. See,
e.g., Udall v. Tallman, 380 U.S. 1, 16 (1965) (“When faced with a problem of statutory
construction, this Court shows great deference to the interpretation given the statute by the officers
or agency charged with its administration.”); accord K Mart Corp. v. Cartier, Inc., 486 U.S. 281,
291 (1988); United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 131 (1985).

The Postal Service’s error is further underscored by its contention that OPM’s opinion “is
most deficient because: a) it assumes that 5 C.F.R. 353.301 (d)’s coverage of partially recovered
employees is authorized by FECA.” Agency Reply Br. 7. OPM’s “assumption” is best viewed as a
manifestation of its reasonable understanding of § 8151, namely that the statute confers restoration
rights on partially recovered employees. Cf Kester v. Horner, 778 F.2d 1565, 1569 (Fed. Cir.

1985) (“To sustain an agency’s construction of its authority, [a court] need not find that its

16

Pleading Number : RROYOS Submission date ; 2012-01-06 19:31:25 Confirmation Number: page 25 of 34


JAMES C, LATHAM vy. UNITED STATES POSTAL SERVICE
Docket # DA-0353-10-0408-I-1
Response to Order dated 12/13/2011
Summary Page
Case Title : JAMES C. LATHAM v. UNITED STATES POSTAL SERVICE
Docket Number : DA-0353-10-0408-I-1
Pleading Title : Response to Order dated 12/13/2011

Filer's Name : Matthew J. Dowd, Esq.

Filer's Pleading Role : Private Attorney

Details about the supporting documentation

N/A

Pleading Number : ‘Submission date : 2012-01-06 19:31:25 Confirmation Number: SMERTOYSMMM © page 1 of 34



procedures are possibly more rigorous than otherwise would be required.” Jd.; see also Fort
Stewart Schs. v. FLRA, 495 U.S. 641, 654 (1990) (“It is a familiar rule of administrative law that an
agency must abide by its own regulations.”).

The Supreme Court has been particularly cognizant of agency rules protecting employment
rights. See Vitarelli v. Seaton, 359 U.S. 535, 545 (1959) (reversing removal of employee because
agency had not complied with internal rules, even though agency was free to discharge employee);
Service v. Dulles, 354 U.S. 363, 388 (1957) (same). Agency action amounts to arbitrary and
capricious conduct when action contravenes rules “intended primarily to confer important
procedural benefits upon individuals in the face of otherwise unfettered discretion as in Vitarelli.”
See Am. Farm Lines v. Black Ball Freight Sery., 397 U.S. 532, 538-39 (1970).

The Federal Circuit agrees, observing that “[i]t has long been established that government
officials must follow their own regulations, even if they were not compelled to have them at all.”
Voge v. United States, 844 F.2d 776, 779 (Fed. Cir. 1988); see also Yuni v. Merit Sys. Prot. Bd.,
784 F.2d 381, 388 (Fed. Cir, 1986) (“The procedures governing federal employment, by statute and
regulation, represent a careful balance of employer and employee needs.”); Dodson v. Dep’t of the
Army, 988 F.2d 1199, 1204 (Fed. Cir. 1993) (“Although the Secretary was not required to
promulgate the . . . regulations, having done so he is bound to follow them.”).

Other circuits agree. See, e.g., Leslie v. Att'y General of the United States, 611 F.3d 171,
175 (3d Cir. 2010) (noting “the long-settled principle that rules promulgated by a federal agency
that regulate the rights and interests of others are controlling upon the agency”); Wilson v. Comm'r
of Soc. Sec., 378 F.3d 541, 545 (6th Cir. 2004) (“It is an elemental principle of administrative law
that agencies are bound to follow their own regulations.”); Lopez v. FAA, 318 F.3d 242, 247 (D.C.
Cir. 2003); Sameena Inc. v. U.S. Air Force, 147 F.3d 1148, 1153 (9th Cir. 1998) (“The Supreme

Court has long recognized that a federal agency is obliged to abide by the regulations it

3

Pleading Number : (b)(6) Submission date : 2012-01-06 19:31:25 Confirmation Number: (b)(6) page 12 of 34


appellants’ removals under the NRP constitute arbitrary and capricious conduct. The NRP itself is
arbitrary and capricious because it violates the Postal Service’s rules, including ELM § 546.142.
Because the NRP is arbitrary and capricious, each appellant has not only satisfied her or his
obligation to offer a non-frivolous allegation under 5 C.F.R. § 353.301(d), but each appellant has
also proven this element of their claim of restoration denial.

Board jurisdiction lies for a partially recovered employee’s restoration claim when the
employee non-frivolously alleges that

(1) [s]he was absent from her position due to a compensable injury;
(2) she recovered sufficiently to return to duty on a part-time basis, or
to return to work in a position with less demanding physical
requirements than those previously required of her; (3) the agency
denied her request for restoration; and (4) the denial was arbitrary
and capricious.

Bledsoe v. Merit Sys. Prot. Bd., 659 F.3d 1097, 1103 (Fed. Cir. 2011) (quotation omitted). As
recently explained by the Federal Circuit, arbitrary and capricious means “agency failure to
perform its obligations under 5 C.F.R. 353.301 (d).” /d. at 1104. Here, if the Postal Service has not
made “every effort” to restore the appellants, the Postal Service’s restoration denial is arbitrary and
capricious. And there is no reasonable dispute that the Postal Service has not made “every effort”

because the NRP’s “operational necessity” standard conflicts with the ELM and EL-50S.

A. An Agency’s Conduct Is Arbitrary And Capricious When It Disregards Its
Own Rules

A federal agency must follow its own rules. This requirement is no secret and dates back at
least some sixty-five years. See SEC v. Chenery Corp., 318 U.S. 80, 87-88 (1943), In United
States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 268 (1954), the Court rejected the agency’s
action based on its “alleged failure to exercise its own discretion, contrary to existing valid
regulations.” In Morton vy. Ruiz, 415 U.S. 199, 235 (1974), the Court explained that, “[w]here the
rights of individuals are affected, it is incumbent upon agencies to follow their own procedures.”

Importantly, this requirement for an agency to abide by its rules “is so even where the internal
2

Pleading Number : EMIT) Submission date : 2012-01-06 19:31:25 Confirmation Number: page 11 of 34


Electronic Mail Keith E. Secular, Esq.
Claire Tuck, Esq.
Cohen, Weiss & Simon LLP
330 West 42nd Street
New York, NY 10036
Fax (646) 473-8232

January 6, 2012

apt

Matthew | Dowd

13392781.3

Pleading Numbor : SYNE) = Submission date : 2012-01-06 19:31:25 Confirmation Number: IUYGMEN © page 32 of 34


Electronic Mail Thomas William Albright

AGENCY REPRESENTATIVE

Electronic Mail Andrew C. Friedman, Esq.
United States Postal Service Law Department
222 South Riverside Plaza
Suite 1200
Chicago, IL 60606-6105

Electronic Mail Ayoka Campbell
United States Postal Service
2901 Scott Futrell Drive
Charlotte, NC 28228

Electronic Mail Earl L. Cotton, Sr., Esq.
United States Postal Service Law Department
3980 Dekalb Technology Parkway
Suite 840
Atlanta, GA 30340-2778

Electronic Mail Joshua T. Klipp, Esq.
United States Postal Service Law Dept., Pacific Area Office
1300 Evans Avenue, Room 217
P.O. Box 883790
San Francisco, CA 94188-3790

Electronic Mail Theresa M. Gegen
United States Postal Service
Law Department - Southwest Office
P.O. Box 227078
Dallas, TX 75222-7078

Electronic Mail William D. Bubb, Esq.
United States Postal Service
475 L'Enfant Plaza, SW
Washington, DC 20260-1150

AMICUS

Electronic Mail Darryl J. Anderson, Esq.
O'Donnell, Schwartz & Anderson, P.C.
1300 L Street, NW, Suite 1200
Washington, DC 20036
Fax (202) 682-9276

Pleading Number : ‘Submission date : 2012-01-06 19:31:25 Confirmation Number: page 31 of 34


Mr. Sprout, Inc. v. United States,
8 F.3d 118 (2d Cir. 1993) ..

National Cable & Telecommunications Association v. Brand X Internet Services,
S45 U.S. 967 (2005) weceecssessessecssessveseeeseesvessesssssseeseessussusasecsnsesessnsessesesssessesssscentensssseeanseneesses 18

National Treasury Employees Union v. FLRA,
404 F.3d 454 (D.C. Cir, 2005) ..cssecsssssseessessrneersssssssecnssensnsccsveesssecsnecssvecsueccansecsnecsarecsnneesnnaes 17

New v. Department of Veterans Affairs,
142 F:3d 1259 (Red: Cir: 1998) .cnceennanaemaen ania Ree 9, 15

New Hampshire v. Maine,
532 U.S: 742 (2001) serrmrmmeictcansennentloStaPens¥unnovsnannnnssisesonaneikeancnanne TieneaBeasensaet@aanecdlsaaustatan 12

Palmer v. Merit Systems Protection Board,
550 F.3d 1380 (Red. Cir. 2008) ...........assarsnraannanennenttnanenneresansnmonenstonennnernunannenmmenan baci, 15,17

Railway Labor Executives Association v. National Mediation Board,
29 F.3d 655 (D.C. Cir. 1994)

Rolland v. Potter,
492 F.3d 45 (1st Cir. 2007)

Sameena Inc. v. U.S. Air Force,
147 F.3d 1148 (9th Cir. 1998) ssssssnsesicvsancassavscausesusesinvcovssossussrtecscaunsausssicossaversasbetassscuvassesuanzess 3

SEC v. Chenery Corp.,
318 US, 80 (1943) sssssssscsnsversiguraseconsstesavecasbevsivsupebinsonsassusuausteabieteseinseadaitenaivinnseavensiisessess 2, 13

Service v. Dulles,
354 U.S. 363 (1957) .. .casgnsssvaaayacsvenpsnossnsqsaseayenassenannstusnsanesngusstennasouseempansaeeusvapaageseketaacsacettin 3,8

Thomas Jefferson University v. Shalala,
512 U.S2,504:(1993) ...0:...sv.isseiss+s00shepnst tteensasnieemsazsneness®Stedveee Manes rea NTE 17

Udall v. Tallman,
380 U:S: 1 (1965) sernsnscnssereanrennessonronsnnensansastian aed naaneesSékoareeananeiiben neal teamed steense snnainasunesaee 16

United States v. Riverside Bayview Homes, Inc.,
474 USS. 121 (1985)

United States ex rel. Accardi v. Shaughnessy,
347 U.S. 260 (1954) ...sscsssssssrssssseeonessseoessssnicessavonvorenneoatssoveseonsosesseontevennsennternanernneonnccensnsnoncorty 2

iii

Pleading Number : OOM Submission date ; 2012-01-06 19:31:25 Confirmation Number: OOM page 8 of 34


post hoc rationalizations for agency action; Chenery requires that an agency’s discretionary order
be upheld, if at all, on the same basis articulated in the order by the agency itself.”).
When considering an agency’s interpretation of a statute:

the interpretation must truly be one that had been applied by the
agency, either prior to or, at the latest, during the exercise of its
administrative powers in the present matter. An “interpretation” is
therefore not a position advanced by the agency for the first time
before the Board or in a court of review. Such an “interpretation” is
then no more than a litigation position to which no deference is due.

Gose v. U.S. Postal Serv., 451 F.3d 831, 838 (Fed. Cir. 2006); see also Bowen v. Georgetown Univ.
Hosp., 488 U.S. 204, 213 (1988) (“Deference to what appears to be nothing more than an agency's
convenient litigating position would be entirely inappropriate.”); Inv. Co. Inst. v. Camp, 401 U.S.
617, 628 (1971) (“It is the administrative official and not appellate counsel who possesses the
expertise that can enlighten and rationalize the search for the meaning and intent of Congress.”).

Here, the Postal Service ignores settled precedent and asks the Board to condone the Postal
Service’s NRP based on an argument that epitomizes “post hoc rationalization . . . seeking to
defend past agency action against attack.” Auer, 519 U.S. at 462. There is no evidence in the
record that a single Postal Service official implemented the NRP because the agency believed that
5 C.F.R. §§ 353.301(d) and 353.304(c) were ultra vires. The first time the agency offered this
argument in these appeals was on August 24, 2011, when it submitted its brief. At oral argument,
when Chairman Grundmann asked whether “the Agency ever made this argument . . . during the
several years of litigation that we’ve had with the National Reassessment Program,” the Postal
Service responded, “Not as far as I’ve been able to find... .” Tr. 48:7-12.

For this reason, any additional new arguments that the Postal Service submits in its post-
argument brief are even more suspect. The Board should carefully scrutinize the Postal Service’s
post-argument brief. At this late stage, the Postal Service should not be permitted to create yet
further explanations for the NRP, and any new rationale must be disregarded.

13

Pleading Number : (b)(6) Submission date ; 2012-01-06 19:31:25 Confirmation Number: 'b)(6) page 22 of 34


construction.”). “If room exists for more than one reasonable interpretation of Congress’s intent,
then the agency, not the judiciary, has the interpretive mandate.” Grapevine Imports, 636 F.3d at
1378.

Here, during oral argument, the ambiguity and silence in § 8151 became self-evident. For
instance, the statute does not define the term “overcome.” The statute also does not define
“equivalent position.” As counsel for NALC noted, the statuté does not explicitly refer to “full
recovery.” Tr, 22:6-13, Vice Chairman Rose identified yet another ambiguity: the difference
between the phrase “if the injury or disability is overcome,” 5 U.S.C. § 8151(b)(2), compared to the
phrase “where the injury or disability has been overcome,” id. § 8151(b)(1). Tr. 12:24-13:8. Of
course, identifying all the relevant statutory ambiguities is difficult because the Postal Service did
not raise its u/tra vires argument prior to August 24, 2011. There may exist other relevant
ambiguities which the parties and perhaps the agency have not yet identified.

Tellingly, the Postal Service does not address Chevron step two, i.e., whether the agency’s
interpretation of § 8151 is reasonable. The Postal Service limited its w/tra vires argument to
contending that the statue is unambiguous. But that position is wrong because the statute is
undoubtedly ambiguous and silent on the question of whether § 8151 grants restoration rights for

partially recovered employees.

F The Legislative History Confirms The Error In The Ultra Vires Argument

Finally, FECA’s legislative history is yet a further reason to reject the Postal Service’s
belated ultra vires argument. The legislative history of § 8151 confirms Congress’s intent:

The Committee does not intend to lessen any protection now
available to injured or disabled Federal employees with regard to
their reemployment rights.

The Committee also wishes to make clear that the Civil Service
Commission is authorized to promulgate regulations covering the
rights of employees whose injuries or disabilities are partially
overcome, as well as those who have fully overcome their
disabilities.

19

Pleading Number : [iASYC) Submission date : 2012-01-06 19:31:25 Confirmation Number: page 26 of 34


UNITED STATES MERIT SYSTEMS PROTECTION BOARD

JAMES C. LATHAM,
RUBY N. TURNER,
ARLEATHER REAVES,
CYNTHIA E. LUNDY, and
MARCELLA ALBRIGHT,

Appellants,
v.
U.S. POSTAL SERVICE,

Agency.

Docket Numbers

DA-0353-10-0408-I-1
SF-0353-10-0329-I-1

CH-0353-10-0329-I-1
AT-0353-11-0369-I-1
DC-0752-11-0196-I-1

APPELLANTS’ JOINT POST-ARGUMENT BRIEF

Matthew J. Dowd
WILEY REIN LLP

1776 K Street NW
Washington, D.C. 20006
(202) 719-7343
mdowd@wileyrein.com

Counsel for Appellants

Pleading Number : OVC Submission date : 2012-01-06 19:31:25 Confirmation Number: {ISTO

page 4 of 34


two points being established, the appellants have satisfied their obligation to allege arbitrary and
capricious agency action. Furthermore, the regulatory and rules violations by the Postal Service are
conclusive evidence that the denial of restoration of each of the appellants was arbitrary and
capricious within the meaning of § 353.301(d).

During oral argument, and faced with the realization that the “operational necessity”
standard is not included in the ELM, agency counsel offered yet another new justification for the
NRP—that the “operational necessity” standard was “always an implication under the ELM.”

Tr. 50:24, When pressed, agency counsel conceded that he did not know of any “objective
evidence that the ELM, in fact, incorporates this concept of meaningful work or operational
necessity in terms of the modified assignments question.” Tr. 57:18-24, The unsupported
inherency argument--absent even from the Postal Service’s briefs to this Board—does not merit the
epithet “attorney argument.” It is nothing more than attorney speculation.

Vice Chairman Wagner pinpointed the precise nature of agency counsel’s speculation.
Responding to counsel’s assertion that “operational necessity” was implicitly incorporated into the
ELM, Vice Chairman Wagner asked, “But if that were the case, then why did the Postal Service
feel the need to create the NRP to begin with?” Tr. 56:20-22. Postal Service counsel had no
answer. Tr. 57:2 (“I don’t know. I don’t know.”). The only logical and reasonable answer is that
“operational necessity” has never been implicit in the ELM. Instead, the NRP narrowed restoration
tights of partially recovered employees by instituting the stricter “operational necessity” standard.

Indeed, the Postal Service’s own brief to this Board belies the disingenuous nature of the
Postal Service’s position at oral argument. The Postal Service has argued that “the provisions of
ELM 546 and Handbook EL-505 afford FECA claimants the right to be considered for assignments
other than to regular positions. In doing so, they exceed FECA’s promise of restoration—or

priority consideration for restoration—only to regular positions.” Agency’s Opening Br. 4. Thus,

6

Pleading Number : RSG Submission date : 2012-01-06 19:31:25 Confirmation Number: JBBOYGM © page 15 of 34


approach is wrong. It is without any support in the case law. None of the cases discussed above
require a showing of malicious intent by the agency in order to prove that an agency’s violation of
its own rules cannot stand. See, e.g., Vitarelli, 359 U.S. at 545; Service, 354 U.S, at 388.

Most erroneous with the APWU’s approach—and the agency’s approach—is the lack of
recognition that a violation of ELM § 546.142 is a regulatory violation and not simply a contractual
violation. As explained at oral argument, the Postal Service has incorporated the ELM into its
regulations, as set forth in the Code of Federal Regulations. See 39 C.F.R. § 211.2(a)(2) (“The
regulations of the Postal Service consist of: , ., the Employee and Labor Relations Manual . .. .”).
Because the ELM is explicitly incorporated into the Postal Services governing regulations, a

violation of the ELM is a violation of a Postal Service regulation,

c The NRP Is Arbitrary and Capricious To The Extent It Violates EL-505,
EL-307, And Any Other Applicable Postal Service Rules

The NRP is arbitrary and capricious for similar reasons because it violates restoration rules
set forth in EL-505, EL-307, and any other applicable Postal Service rules.

D. Under State Farm, The NRP Is Arbitrary And Capricious

In Motor Vehicles Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co.,
463 U.S, 29, 43 (1983), an agency rule is generally arbitrary and capricious when the agency
“entirely failed to consider an important aspect of the problem” or “offered an explanation for its
decision that runs counter to the evidence before the agency.” The present record suggests that,
when instituting NRP, the Postal Service “entirely failed to consider an important aspect of the
problem.” In fact, the Postal Service has apparently overlooked several important issues.

First, as noted above, the Postal Service has ignored the regulatory significance of the ELM.
By express regulation, the ELM is incorporated into the Postal Service’s regulations. 39 C.F.R.

§ 211.2(a)(2). A violation of the ELM is therefore a violation of a Postal Service regulation.

8

Pleading Number : BOSCO ia Submission date : 2012-01-06 19:31:25 Confirmation Number: OVOME © page 17 of 34


JAMES C. LATHAM v. UNITED STATES POSTAL SERVICE
Docket # DA-0353-10-0408-I-1
Response to Order dated 12/13/2011
Online Interview

1. Would you like to enter the text online or upload the file containing the pleading?

See attached pleading text document

2. Does your pleading assert facts that you know from your personal knowledge?

Yes

3. Do you declare, under penalty of perjury, that the facts stated in this pleading are true and correct?

Yes

Pleading Number : OOM ‘Submission date : 2012-01-06 19:31:25 Confirmation Number: GNOME page 3 of 34


construction is the only reasonable one, or even that it is the result [the court] would have reached
had the question arisen in the first instance in judicial proceedings.”).

(on The Postal Service’s New Interpretation Conflicts With Its Own Settled View of
§ 8151 And Therefore Warrants Little, If Any, Deference

“[A]n agency’s interpretation of a statute or regulation that conflicts with a prior
interpretation is ‘entitled to considerably less deference’ than a consistently held agency view.”
Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 515 (1993) (quotation omitted)). Even if the
Postal Service’s unique interpretation of § 8151 were properly at issue, the Board should give it
little, if any, consideration because it represents an unexplained, stark departure from the Postal
Service’s well-settled interpretation of § 8151.

The record is unambiguous: The Postal Service has long considered § 8151 as authorizing
the restoration rights embodied in 5 C.F.R. §§ 353.301(d) and 353,304(c). See, e.g., Rolland v.
Potter, 492 F.3d 45, 46 (1st Cir. 2007) (noting that appellant had been awarded a rehabilitation
position, which is “one that the [Postal Service] provides to an employee who has permanent
restrictions resulting from an on-the-job injury”); Palmer v. Merit Sys. Prot. Bd., 550 F.3d 1380,
1381 (Fed. Cir. 2008) (describing how Postal Service had offered modified job assignment for
partially recovered Postal Service employee); Meester v. Runyon, 149 F.3d 855, 856 (8th Cir. 1998)
(describing how Postal Service “offered to create several different limited duty positions” for
partially recovered employee).

Putting aside the fact that Postal Service’s current interpretation of § 8151 does not warrant
any deference because the Postal Service is not the administering agency of the statute, the Postal
Service’s new interpretation should be disregarded because it is an unexplained departure from the
agency’s decades-long understanding of restoration rights for partially recovered employees. See

Nat’! Treasury Employees Union v. FLRA, 404 F.3d 454, 457 (D.C. Cir. 2005) (“Any agency’s

17

Pleading Number : YO) Submission date : 2012-01-06 19:31:25 Confirmation Number: page 26 of 34


Table of Contents

Pleading Interview 3
Uploaded Pleading Text Document 4
Certificate of Service 33

Pleading Numb [RISBITY@S Nana! Submission date : 2012-01-06 19:31:25 Confirmation Numb ROTO page 2 of 34


Arleather Reaves
Appellant

Response to Order dated
12/13/2011

|US Postal Mail

(Cynthia E. Lundy
Appellant

b6

Response to Order dated
12/13/2011

|US Postal Mail

J.R. Pritchett
Appellant Representative

Postal Employee Advocates 86 East
Merrill Road

McCammon, ID 83250

USA

[Response to Order dated
12/13/2011

IUS Postal Mail

Geraldine Manzo
Appellant Representative

7700 Edgewater Drive Suite 656
Oakland, CA 94621
USA

Response to Order dated
12/13/2011

|US Postal Mail

James A. Penna
Appellant Representative

3212 Villa Pl.
Amarillo, TX 79106

Response to Order dated.
12/13/2011

[US Postal Mail

Hanover Park, IL 60133

USA

Barton Jay Powell Response to Order dated [US Postal Mail
Other 12/13/2011

7559 Waterford Drive

Pleading Number : 1 (bye) |

Submission date : 2012-01-06 19:31:25

Confirmation Number: (b)(6)

page 34 of 34


S. Rep. No. 93-1081, at 4 (1974), reprinted in 1974 U.S.C.C.A.N, 5341, 5344.

One would be hard-pressed to find a more explicit expression of Congress’s intent—in this
case, to provide restoration rights to partially recovered employees. When textual ambiguity is
viewed in the context of Congress’s express purpose of the 1974 amendments to FECA, OPM was
well within its statutory mandate to promulgate 5 C.F.R. §§ 353.301(d) and 353.304(c).

The Postal Service errs in contending that, “as a matter of law,” the legislative history must
be ignored. Even if a unambiguous statute, a court “look{s] to the legislative history to determine
only whether there is ‘clearly expressed legislative intention’ contrary to that language, which
would require us to question the strong presumption that Congress expresses its intent through the
language it chooses.” /NS v. Cardoza-Fonseca, 480 U.S. 421, 433 n.12 (1987). Courts should
reject a statute’s literal interpretation “demonstrably at odds with the intentions of its drafters.”
Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982).

CONCLUSION

For at least the above reasons, the Board has jurisdiction over the appeals because the Postal

Service’s NRP is arbitrary and capricious. The decisions of the administrative judges should be

reversed,

January 6, 2012 a dt /) 7 /

Matthew J. Dowd
Wivey Rein LLP

1776 K Street, NW
Washington, DC 20006
T: 202.719.7343

F: 202.719.7049
mdowd@wileyrein.com
Counsel for Appellants

20
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promulgates.”); Gaballah v. Johnson, 629 F.2d 1191, 1202 (7th Cir. 1980) (recognizing that agency
rules governing promotions “confer important procedural benefits upon individuals”).

Faced with this settled precedent, the Postal Service does not dispute its obligation to follow
its rules as set forth in the ELM. Indeed, the Postal Service affirmatively states that requiring an
agency to its own rules is “axiomatic and unassailable in general.” See Agency Reply Br. 4!
Therefore, with this agreement, Appellants need only demonstrate a violation of those rules to

prove arbitrary and capricious conduct by the Postal Service.

B. The NRP Is Arbitrary And Capricious Because It Violates ELM § 546.142

The agency has explained that the NRP was instituted “to review all rehabilitation and
limited duty assignments to ensure that such employees were performing operationally necessary
tasks within their medical restrictions.” Latham v. U.S. Postal Serv., No. DA-0752-10-0408-I-1
(Agency’s Amended and Supplemental! Narrative Response and O[b]jections to Jurisdiction, at 2,
filed June 7, 2010) (emphasis added) (“Agency Jurisdiction Brief”). As explained in the multiple
briefs to the Board, the NRP violates ELM § 546.142 for several reasons.

First, the NRP’s most significant departure from the agency’s rules is the “operational
necessity” standard. This “operational necessity” standard is not found anywhere in ELM
§ 546.142. Instead, ELM § 542.142 sets forth the “must make every effort” standard. The Postal
Service has not disputed that these two standards are materially different, instead arguing the Board

that ELM § 546 provides greater restoration rights. See Agency’s Opening Br. 4.

' The Postal Service inexplicably contends that the issue of whether an agency follows its rules “is unrelated to the
issue here.” Agency’s Reply Br. 4; cf Merit Systems Protection Board, Notice of Opportunity to File Amicus Briefs,
76 Fed. Reg. 44,373, 44,374 (July 25, 2011) (identifying an issue as: “[M]ay the Board have jurisdiction over a
restoration appeal under that section merely on the basis that the denial of restoration violated the agency’s own
internal rules”).

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the Postal Service has affirmatively argued that ELM provides restoration rights broader than what
the agency is obligated to provide.

Aside from this direct analysis, the Postal Service overlooks the deference the Board should
afford to the Office of Personnel Management’s (“OPM”) interpretation of § 353.301(d). Under
established precedent, the Board must “defer to an agency’s interpretation of its own regulation,
advanced in a legal brief, unless that interpretation is ‘plainly erroneous or inconsistent with the

regulation[s]’” or there is any other “reason to suspect that the interpretation does not reflect the
agency’s fair and considered judgment on the matter in question.” Chase Bank USA, N. A. v.
McCoy, 131 S. Ct. 871, 880-81 (2011) (quoting Auer v. Robbins, 519 U.S. 452, 461-62 (1997)).

Here, OPM concluded that “if the Postal Service established a rule that provided the
partially recovered employees with greater restoration rights than the ‘minimum’ described in the
OPM regulations, the Postal Service is required to meticulously follow that rule.” OPM Advisory
Op. 4. It so concluded because “[t]o do otherwise would be arbitrary and capricious within the
meaning of OPM’s regulation conferring jurisdiction on the Board at section 353.304(c).” Id.

OPM’s interpretation of 5 C.F.R. § 353.304(c) must be given deference because it is “the
agency’s fair and considered judgment on the matter in question.” Auer, 519 U.S. at 462. OPM’s
advisory opinion concerning the scope of 5 C.F.R. § 353.304(c) is well-reasoned, and the Postal
Service has identified no basis to disagree with OPM’s advisory opinion. The Postal Service has
not contended that OPM’s interpretation of 5 C.F.R. § 353.304(c) is “plainly erroneous or
inconsistent with the regulation{s].” Auer, 519 U.S. at 461 (quotation omitted). For this reason
alone, the Board hold that it has jurisdiction over the present appeals.

At oral argument, counsel for the American Postal Workers Union (“APWU”) attempted to
limit the scope of restoration rights by suggesting that an agency’s violation of its rules is not

arbitrary and capricious unless there is some element of bad intent on the part of the agency. This

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