Army & Air Force Exchange Service v. Sheehan

PETITIONER: Army & Air Force Exchange Service
LOCATION: Lee Residence

DOCKET NO.: 80-1437
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 456 US 728 (1982)
ARGUED: Feb 23, 1982
DECIDED: Jun 01, 1982

Samuel A. Alito, Jr. - on behalf of the petitioner -- rebuttal
Ira E. Tobolowsky - on behalf of Respondent

Facts of the case


Media for Army & Air Force Exchange Service v. Sheehan

Audio Transcription for Oral Argument - February 23, 1982 in Army & Air Force Exchange Service v. Sheehan

Warren E. Burger:

We will hear arguments next in Army and Air Force Exchange against Sheehan.

I think you may proceed whenever you're ready, Mr. Alito.

Samuel A. Alito, Jr.:

Mr. Chief Justice, and may it please the Court:

This case is here on Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit.

The issue in this case is where a former employee of a military exchange who was appointed to his position and subsequently discharged may sue for money damages under the Tucker Act based upon an alleged contract, the existence of which is inferred solely from personnel regulations in effect at the time of his separation.

The basic facts in this case are as follows.

In 1962 the respondent, Arthur Sheehan, was appointed to a position with the Army and Air Force Exchange Service, an instrumentality of the United States.

The regulations governing Mr. Sheehan's employment by the Army and Air Force Exchange Service, AAFES as it is called, were the very same regulations considered by this Court in United States versus Hopkins in 1976.

In 1967, five years after his initial employment, Mr. Sheehan was designated by the Commander of AAFES for participation in a special program for AAFES executives, called the Executive Management Program.

Under that program, he obtained certain special benefits, but also incurred certain special obligations; principally, the possibility of transfer to any AAFES facility.

He was required to sign a written acknowledgement of the special conditions of Executive Management Program participation.

By 1975, the respondent had achieved an AAFES rank equivalent to a Lieutenant Colonel.

In November of that year he was arrested on drug charges and subsequently pleaded guilty.

The Service then began administrative proceedings which resulted in his discharge.

He appealed the discharge but the appellate authority, the Commander of AAFES, denied the appeal.

Mr. Sheehan then sought reconsideration claiming that he had been denied a fair appeal because the Commander of AAFES who acted as the appellate authority had given prior approval for the initial discharge notice.

As a result of that complaint, Mr. Sheehas was, in effect, granted a new appeal to the next higher authority in the Service, the Chairman of the Board of Directors of AAFES.

His appeal, however, was once again denied.

In the meantime, he had initiated suit in the Northern District of Texas seeking reinstatement as well as compensatory and punitive damages.

He claimed that AAFES had violated its own regulations because of the dual role played by the Commander.

He also claimed that his discharge was arbitrary and capricious, an abuse of discretion, unwarranted by the facts and in violation of various, unspecified statutory and constitutional provisions.

Notably, his complaint did not allege that he had ever been employed pursuant to any contract with AAFES, whether express or implied.

He invoked the court's jurisdiction under the Tucker Act and various other statutes not now at issue.

The Service moved to dismiss his complaint noting that he had been an appointed, non-contract employee.

In response, he did not seek to amend his complaint to allege the existence of a contractual relationship, nor did he adduce any proof whatsoever that he had ever been employed pursuant to contract.

The district court granted the motion to dismiss but the court of appeals reversed.

The court held that jurisdiction existed with respect to his claims for monetary relief under the Tucker Act because AAFES personnel regulations in effect at the time of his discharge were by themselves sufficient to give rise to what the court called a collateral implied-in-fact contract between the Service and respondent.

The court also held that there was jurisdiction with respect to his claims for non-monetary relief, but that question is not at issue here.

In our view, the decision of the court of appeals with respect to respondent's claims for monetary relief is clearly wrong.

It is inconsistent with this Court's decisions in Hopkins and Testan.