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Bacon v. Department of Housing and Urban Development

March 15, 1985


Appealed from: Merit Systems Protection Board

Before Rich and Nies, Circuit Judges, and Re, Chief Judge.*fn** Nies, Circuit Judge.


This appeal is from the decision of the Merit Systems Protection Board (MSPB or board) in Case No. DC03518310188 upholding the reduction-in-force (RIF) by the Department of Housing and Urban Development effected in late 1982. We affirm.


Petitioners are 54 individuals affected by the 1982 RIF in the Department of Housing and Urban Development (HUD or agency). The agency issued a general RIF notice on August 20, 1982, informing employees that "To resolve workload and skills imbalances, the Department has decided to conduct a Reduction-in-Force (RIF)." On September 29, 1982, specific RIF notices were issued to several hundred central office employees, including petitioners, setting the effective dates of the RIF, and again stating that the reason for the RIF was "workload and skills imbalances."

Arguing that the RIF effected a "reorganization" of the department, the employees' union, the American Federation of Government Employees, filed suit in the U.S. District Court for the District of Columbia, in enjoin the RIF on the ground that the HUD action was in violation of the Appropriations Act of 1983, Pub. L. 97-272, which forbade the expenditure of agency funds for a reorganization without Congressional approval. The district court enjoined the proposed RIF action. On appeal, the D.C. Circuit held that the prohibition was unconstitutional. American Federation of Government Employees v. Pierce, 225 App. D.C. 61, 697 F.2d 303 (D.C. Cir. 1982). The department immediately proceeded with the RIF as proposed.

Petitioners then appealed the agency action to the MSPB, contending, inter alia, that the agency did not invoke RIF procedures for a proper reason. More particularly, petitioners argue that the stated reason, "workload and skills imbalances" is not one of the purposes authorized for a RIF by the controlling regulation, 5 C.F.R. § 351.201(a). The cited regulation provides as follows:

(a) Each agency shall follow this part [Part 351 - Reduction-in-Force] when it releases a competing employee from his/her competitive level by separation, demotion, furlough for more than 30 days, or reassignment requiring displacement, when the release is required because of lack of work, shortage of funds, reorganization, reclassification due to change in duties, or the exercise of reemployment rights or restoration rights. [Emphasis added.]

The agency argued that "workload and skills imbalances" were "umbrella" terms referring to a combination of the circumstances set out in the regulation.

The presiding official ruled against petitioners, noting that "There is no requirement . . . that RIF notices and agency discussions use only those specific terms of 5 C.F.R. § 351.201(a) to describe a RIF [or] that the agency only identify one of the reasons as the basis for a RIF." Relying on internal agency memoranda listing "Reduction in ceiling levels", "Gradual decrease in duties" and "Elimination of specific functions" as the reasons for abolishment of positions, the presiding official found "that the agency had demonstrated by a preponderance of the evidence that there was a shortage of funds (reductions in budget and ceiling) and a lack of work "*fn1 (emphasis added) and that there was "no error in characterizing this as a workload and skills imbalance." The presiding official also rejected petitioners contention that the RIF was politically motivated and that the stated reason was only a pretext.

The full board, in a lengthy opinion, denied a petition filed by petitioners seeking to overturn the initial decision. Since the agency had not relied on shortage of funds as a reason for the RIF, the board assumed arguendo that the presiding official had exceeded her authority in her finding in this respect. However, the board found no error in her conclusion that the agency's reasons for the RIF were valid under 5 C.F.R. § 351.201(a), stating:

The Board finds that the evidence supports the agency's contention that, given the ceiling reductions and the fact that excess positions or vacancies did not always exist in the areas where they were needed, the imbalances formed a proper RIF reason since they equated to a lack of work or a reorganization. . . .

It is true that the agency did not advance reorganization as a reason for the RIF before the actions were effected. As noted above, it was then Congressionally prohibited from expending funds for a reorganization. That prohibition, however, was later found unconstitutional. . . . Appellants assert that the Board cannot justify the RIF on a basis other than that invoked by the agency. We find, however, that the phrase workload and skills imbalances cited by the agency was broad enough to encompass lack of work or a reorganization. . . . [Emphasis added; citations omitted.]

On the merits, the board found that substantial evidence supported the stated reason for the RIF.

The board also addressed, inter alia, petitioners' contentions, raised again on appeal to this court that: (1) the presiding official had erred in not requiring the Honorable Samuel R. Pierce, then Secretary of HUD, to testify as a witness; (2) the presiding official had improperly denied their request for class action treatment; and (3) the Secretary's decision to cut budget and ceilings was a violation of the Impoundment Control Act of 1974.

With respect to the denial of the request for Secretary Pierce to testify, the board noted that petitioners sought to elicit from the Secretary testimony that the RIF was conducted for an invalid reason, i.e., that he had reduced the agency's budget and ceiling because it was in keeping with the "philosophy of the administration." The board declined to "second-guess" the Secretary's authority to set those levels and, hence, found no abuse of discretion in the presiding official's denial of the Secretary's appearance. The board refused to consider petitioner's argument that the Secretary's action violated the Impoundment Control Act, since that issue had not been raised before the presiding official.

With respect to the class action argument, the board held that petitioners had shown no harm from the presiding official's denial of class certification.


We are presented with the following issues in this appeal:

(1) Was the RIF conducted for proper reasons under 5 C.F.R. § 351.201 (a)?

(2) Did the presiding official abuse her discretion in not requiring Secretary Pierce to testify as to his reasons for the RIF?

(3) Did the board correctly decline to consider whether the Secretary's action was a violation of the Impoundment Control Act?

(4) Did the presiding official properly deny class action certification?


Reasons for the RIF

The standard of review of an MSPB decision by this Court is set forth at 5 U.S.C. § 7703 (c). The court must sustain the board's decision unless it is found to be:

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(2) obtained without procedures required by law, rule, or regulation having been followed; or

(3) unsupported by substantial evidence. Phillips v. United States Postal Service, 695 F.2d 1389, 1390 (Fed. Cir. 1982); Kochanny v. Bureau of Alcohol, Tobacco & Firearms, 694 F.2d 698, 700 (Fed. Cir. 1982). In applying this standard to a RIF case, this court has held:

An agency is accorded wide discretion in conducting a reduction-in-force; absent a clear abuse of that discretion, a substantial departure from applicable procedures, a misconstruction of governing statutes, or the like, we do not upset a final agency decision . . . . Cooper v. Tennessee Valley Authority, 723 F.2d 1560, 1562 (Fed. Cir. 1983) (quoting Dancy v. United States, 229 Ct. Cl. 300, 668 F.2d 1224, 1226 (Ct. Cl. 1982)). See also Grier v. Dept. of Health & Human Services, 750 F.2d 944, 946 (Fed. Cir. 1984).

If an agency establishes that a RIF was undertaken for any of the five reasons set forth in 5 C.F.R. § 351.201 (a), the action must be upheld. Petitioners do not contend that the "magic words" in the regulation need to be used in the agency's RIF notice. Rather, they maintain that the stated reason for the subject RIF, "workload and ...

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