Elgin v. Dept. of the Treasury: Supreme Court Precludes District Court Jurisdiction from Federal Employees Challenging Constitutionality of Workplace Statutes

The Supreme Court recently clarified confusion over whether federal employees may bring suits in a district court when they challenge the constitutionality of federal employment statutes. In Elgin v. Dept. of the Treasury, 132 S.Ct. 2126 (2012), the Supreme Court held that district courts are precluded from hearing such challenges, thus limiting their general federal-issue jurisdiction. Instead, federal employees must rely on the administrative and judicial forums described in the Civil Service Reform Act.

Background

The federal Civil Service Reform Act of 1978 (“CSRA”) established an administrative and judicial review process for certain federal employees protesting adverse employment actions.  The CSRA specifies procedures for such actions, mandating an administrative hearing before the Merit Systems Protection Board (“MSPB”) and appeals to the Federal Circuit Court of Appeals.  The MSPB has the power to reinstate employees, order backpay, attorneys fees, and other remedies.  However, in mandating the use of the administrative/Circuit Court forums, the CSRA does not explicitly remove federal-issue jurisdiction from the district courts, thus allowing the current dispute to arise.  Id. at 2130.

Petitioners are former federal employees who fell under the CSRA.  The employees did not register for the United States Selective Service, running afoul of the Military Selective Service Act and 5 U.S.C. § 3328, which forbids Executive agencies from hiring anyone who knowingly and willfully failed to register for the Selective Service.  Petitioners were discharged from federal employment due to this violation.  Id. at 2131.

Petitioner Elgin appealed to the MSPB, alleging that § 3328 was an unconstitutional bill of attainder and unconstitutionally discriminated on the basis of sex in light of the Selective Service’s male-only registration requirement.  Id. An administrative law judge dismissed Elgin’s claims, holding that employees who are absolutely barred by statute from federal employment are not entitled to MSPB review.  The ALJ also found that the MSPB lacked jurisdiction to hear the case because as an administrative body, it lacked authority to determine the constitutionality of a statute. Id.

Lower Courts Disagree on Proper Forum

Elgin did not appeal to the Federal Circuit under the CSRA, but filed suit with other claimants in the District Court of Massachusetts.  Petitioners raised the same constitutionality challenges to § 3328. The District Court held that the CSRA did not preclude district court jurisdiction because the MSPB was unable to adjudicate constitutional challenges and thus left no other judicial forum for such claims.  The District Court thus held that it retained jurisdiction under federal-question jurisdiction, but subsequently dismissed the constitutional claims on the merits. Id.

On appeal, the First Circuit disagreed with the jurisdiction issue and vacated the District Court’s holding.  Specifically, the First Circuit remanded to dismiss for lack of district court jurisdiction because the CSRA provided for jurisdiction in the Federal Circuit and that petitioners “were obliged to use it.”  Id. at 2132. 

Supreme Court Decides CSRA’s Forums are Exclusive to the Preclusion of the District Courts

The issue before the Supreme Court was whether the CSRA’s use of the MSPB and Federal Circuit provided the exclusive means of judicial review when a qualifying employee disputed an adverse employment action by challenging the constitutionality of the controlling federal statute, thus precluding petitioners’ use of the district court. Id. at 2130.

Court Utilizes “Fairly Discernible” Standard; Rejects “Heightened Showing”

The Court first sought the appropriate standard for determining whether a statutory scheme of administrative and judicial review provides the exclusive means of review for constitutional claims.  Id. at 2132.  Petitioners argued that a district court’s general federal-question jurisdiction survives unless Congress explicitly says otherwise.  Petitioners pointed to the “heightened showing” standard in Webster v. Doe, which mandates that a statutory scheme with its own adjudicative procedures must explicitly preclude district court jurisdiction. Id.  However, the Court rejected the applicability of “heighted showing”, saying that it is only valid when the statutory scheme purports to deny any judicial forum for constitutional claims. Id.  The Court noted that here, the CSRA does not deny all judicial forums, but “simply channels judicial review of a constitutional claim to a particular court,” the Federal Circuit. Id.

In rejecting the need to find an explicit exception, the Court chose to apply the “fairly discernible” standard found in Thunder Basin Coal vs. Reich.  Id. at 2132-33.  Under “fairly discernible”, the Court asks whether “Congress’ intent to preclude district court jurisdiction was ‘fairly discernible in the statutory scheme.’”  Id. at 2132.  In both this case and Thunder Basin, the Court considered whether a statutory scheme of administrative and federal circuit court review precluded district court jurisdiction of constitutional claims.  Id. at 2133.

Court Finds It “Fairly Discernible” that CSRA Provides Exclusive Means

The Court then asked whether it was “fairly discernible” that Congress, in drafting the CSRA’s provisions mandating the use of the MSPB and Federal Circuit, also intended to preclude district court jurisdiction.  The Court pointed to Fausto, where the Court previously interpreted that the CSRA’s right of review procedures could not be expanded, and thus the CSRA precludes extrastatutory review to those employees which it grants administrative and judicial review.  Id.  The Court pointed to this and the “painstaking detail” the CSRA offers generally in describing its adjudicative procedures, thus finding that “it is fairly discernible that Congress intended to deny such employees an additional avenue of review in district court.”  Id. at 2133-34.

The Court buttressed this holding by finding that Congress made express exemptions within the CSRA that allowed some types of actions to be filed in a district court, but did not include exceptions for constitutional claims that were involved in this case. Id. at 2134.  Further, the Court was concerned that allowing district court jurisdiction would lead to problems of parallel litigation and inconsistent handling of like cases.  Id. at 2135.  Thus, the Court found these reasons also supported its holding to exclude district court jurisdiction.

Court Rejects Petitioners’ Additional Concerns about the MSPB’s Inability to Hear Constitutional Issues

Petitioners raised three additional considerations for the Court: 1) the CSRA review scheme provided no meaningful review of a constitutional claim; 2) wholly collateral issues, such as the constitutional ones in this case, are not precluded by the CSRA; and 3) the MSPB has no expertise to adjudicate or even hear the constitutional challenges present in this case.  The Court rejected all three. Id. at 2136.

Petitioners first argued that the CSRA provided no meaningful review, as the MSPB itself found that it did not have the authority to determine the constitutionality of a statute and the Federal Circuit lacked the ability to develop a factual record.  Id.  The Court answered that the MSPB can take evidence and create a record for the Federal Circuit, which has the authority to adjudicate constitutional issues.  Id.  at 2137-38.  More generally, the Court noted that the MSPB should not dismiss an otherwise proper claim just because it lacks authority to decide a constitutional issue.  Id. at 2139.

Second, petitioners argued that “wholly collateral” claims are not precluded under the CSRA.  Id.  Petitioners spoke that the bill of attainder and sex discrimination claims raised in this case had nothing to do with the fact-heavy employment matters usually adjudicated by the MSPB. Id.  However, the Court seemed to view the issue more broadly, saying that petitioner’s basic issue of a challenge to removal of employment was “far from a suit wholly collateral to the CSRA-scheme.”  Id. at 2140.

Third, petitioners claimed that the constitutional issues in this case were outside the MSPB’s expertise, and thus not the type of issues that Congress intended the MSPB to handle.  Id.  However, the Court responded that there may be threshold issues that the MSPB can apply its expertise to and otherwise dispose of a case before it reaches constitutional issues, thus leaving the MSPB as the exclusive forum to initiate a claim.  Id.

In the end, the Court affirmed the First Circuit and held that it was fairly discernible that Congress intended the CSRA to preclude district court jurisdiction over the petitioners’ claims.  Id.

Dissent Finds MSPB Unequipped For Constitutional Challenges; Argues for District Court Jurisdiction

Justice Alito authored the dissent and Justices Ginsburg and Kagan joined.  Id.  In pushing to allow district court jurisdiction for constitutional challenges, the dissent argued that petitioners’ constitutional claims were a “far cry” from the type of claims Congress intended the MSPB to handle. Id. at 2141.  First, the MSPB lacked authority to adjudicate constitutional challenges such as these.  Second, the dissent categorized the challenges as “wholly collateral,” unlike the majority.  Third, the dissent noted the procedural problems in regards to the MSPB and the Federal Circuit trying to develop a factual record to adjudicate.  Id.

The dissent utilized the same “fairly discernible” test found in Thunder Basin, but additionally focused on two factors found in Free Enterprise Fund that came subsequent.  Id. at 2142.  The first factor is whether the claim falls within an agency’s area of expertise, which is supported by the agency’s greater understanding of an issue over a general court.  Id.  The second factor is whether the claim is legally or factually related to the type of dispute the agency is authorized to hear, thus separating out “wholly collateral” issues.  Id.

Under these factors, the dissent deemed that the issues in this case were “wholly collateral” to the factual, employment-related issues that the MSPB usually handles.  Id. at 2143.  The dissent analogized to Free Enterprise Fund, where in both cases, “petitioners are challenging the facial validity of a law that the Board is bound to apply to them, and so it makes little sense for them to seek review before the Board.” Id. at 2144.  The dissent distinguished this case from Fausto and others, saying in that line of cases, the issues involved may have involved constitutional principles but did not challenge the very constitutionality of the statutes invoked. Id.

The dissent was also concerned with the “odd sequence of procedural hoops” under the Majority’s view of the CSRA.  Under the majority’s interpretation, a constitutional challenge would involve numerous back-and-forth steps between the MSPB and the Federal Circuit: initiate the claim in the MSPB, initiate the constitutional claims in the Federal Circuit, and then develop a factual record in the MSPB, which would then send the record back to the Federal Circuit for adjudication.  Id. at 2146.

Moreover, the dissent did not share the same claim-splitting and parallel litigation concerns as the majority, arguing that, “the district courts are well equipped to guard against piecemeal litigation without any help from the majority’s holding.”  Id. at 2147.  Instead, the dissent proposed that district courts already have the discretion to refrain to hear cases such as this one until all other non-constitutional matters are disposed of by the MSPB, thus limiting the problems of multiple adjudications.  Id.

Thus, the Dissent believed that the district courts should have retained its jurisdiction over the constitutional claims in this case. Id.

Conclusion

The Supreme Court has clearly limited federal employees’ ability to mount constitutional challenges to federal employment statutes by removing the district court’s jurisdiction from these cases.  Federal agencies and employees alike should contact experienced employment counsel to see how Elgin may affect your case.

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Jeremy Gray

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