Loeffler v. Frank – Oral Argument – January 11, 1988

Media for Loeffler v. Frank

Audio Transcription for Opinion Announcement – June 13, 1988 in Loeffler v. Frank

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William H. Rehnquist:

Ms. Van Amburg, you may proceed whenever you’re ready.

Lisa S. Van Amburg:

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

For over 75 years since this Court’s decision in National Home v. Parrish, it’s been the general rule that an agency authorized by Congress to sue and be sued is liable for prejudgment interest in the same way and under the same circumstances as a private enterprise would be.

The Government today seeks an exception to this general rule to deny interest to employees of sue and be-sued agencies who have been the victims of employment discrimination.

We believe that the issue in this case, that is, whether or not an employee may recover prejudgment interest in a Title VII case against the Postal Service is flatly resolved by the application of a longstanding principle governing resolution of claims against sue and be-sued agencies.

And that principle is one first articulated by this Court in a 1940 case, FHA v. Burr known as the “liberal construction rule”.

And that rule is that a sue and be-sued clause in the charter of a Federal agency effects a broad waiver of immunity and subjects that agency to suit and the natural incidence of suit which a private enterprise would be liable for in the same circumstances.

That rule was more recently reaffirmed by this Court in a suit against the Postal Service, the Franchise Tax Board case in 1984 interpreting the scope of the waiver of immunity in the charter of the Postal Service.

The no-interest rule, which is another longstanding rule which is to the effect that interest cannot be recovered against the Government absent an express statutory waiver, is not applicable to the Postal Service.

This Court, in another Title VII case the last term, Library of Congress v. Shaw, noted that the no-interest rule doesn’t apply to agencies which have assumed the status of a private commercial enterprise.

And typically Congress has waived the immunity of the agency by inserting into its charter, a sue and be-sued clause.

We believe that the Postal Service is one such agency noted by this Court in footnote 5 of the Shaw opinion.

The no-interest rule doesn’t apply to it because it does not have the status of a sovereign for these purposes.

The Government’s position is that there is not one agency which fits within the footnote 5 exception of the Shaw decision to the no-interest rule.

We don’t believe that footnote 5 is superfluous; we think it’s a reflection of this Court’s understanding of the 75-year-old rule that interest is recoverable against a sue and be-sued agency.

Is the Postal Service a footnote 5 agency?

Clearly, the Franchise Tax Board case answers that question squarely.

It is such an agency.

Congress intended the Postal Service, when it chartered it in the 1970 Postal Reorganization Act, to operate as much like a private business as possible.

In Franchise Tax Board, this Court stated that because of the Charter of the Postal Reorganization Act, because of the legislative history, we must assume that the Postal Service’s liability is the same as a private business.

And we must also assume that Congress did not intend to preserve sovereign immunity for the Postal Service.

Byron R. White:

Well, if this weren’t a Title VII case, don’t you think that the Government would agree with you, with everything you’ve said so far?

Lisa S. Van Amburg:

I don’t know if they’d admit it, that interest is recoverable against a sue and be-sued agency, but I would think they’d have to.

Byron R. White:

What about the Postal Service, would they agree with you in the Postal Service if this were an ordinary lawsuit, rather than a Title VII case?

Lisa S. Van Amburg:

I would hope they would because there’s so many consistent court decisions to the effect that interest is recoverable against a sue and be-sued agency.

Those decisions have followed in the breach of contract actions, other back pay actions.

Their position is based upon an inference, Justice White, that under section 717, Congress intended to impose equal liability upon all Federal Agencies regardless of whether it’s a sue and be-sued agency.

John Paul Stevens:

I think their argument follows from Title VII in Shaw.

Lisa S. Van Amburg:

That’s right.

But they don’t acknowledge that the Postal Service is a footnote 5 agency where the no-interest rule doesn’t apply.

Lisa S. Van Amburg:

Because all Section 717 does is lays out a statutory scheme for processing charges for Federal employees.

But once that employee gets to the Federal courtroom, the remedies are the same.

The only thing that prevents an employee of the Federal Government from getting interest is the no-interest rule.

And that rule simply doesn’t apply to the Postal Service.

Sandra Day O’Connor:

Well, Ms. Van Amburg, I suppose at bottom, we’re dealing with waiver of sovereign immunity and the extent to which it’s been waived.

And I suppose you can take the position that when Congress enacted Section 717 in Title VII, that it was adopting a more limited waiver of sovereign immunity, and that that more limited waiver should be read as limiting the more general waiver enacted in the sue and be-sued clause for the Postal Service.

Lisa S. Van Amburg:

That’s correct.

That’s what the Postal Service’s position is.

However, Congress is experienced in legislating against the backdrop of liberal construction rule, and Congress knows how to express in a statute what it wants to do if it wants to delimit the general waiver of a sue and be sued agency.

It did that in the Federal Tort Claims Act back in 1945.

Section 2679 of the Federal Tort Claims Act explicitly states that the authority of any Federal agency to sue and be sued in its own name shall not be construed to authorize suits against such agency on claims cognizable under the Federal Tort Claims Act.

And the remedies provided by the Federal Tort Claims Act shall be the exclusive remedies.

So here Congress in the Federal Tort Claims Act acknowledges that a sue and be sued clause in the charter of a Federal agency can be a separate source of authority for proceeding under suit or for certain remedies.

And Congress did not do that in Title VII.

Not that it wouldn’t have known how to, but it simply is silent in Title VII about how to treat sue and be sued agencies.

So I think that we have to defer to Congress’ experience in legislating against this long-standing liberal construction rule which tells us that it’s up to Congress to draw the line on these delimitations of a general waiver effected by a sue and be sued clause.

It shouldn’t be the Court’s inferring any delimitations absent plain evidence of Congress’ intent to delimit the general waiver, or absent a grave interference with a Governmental function, which I don’t think we have in this case.

There’s certainly no policy reason for drawing the line on interest here.

This Court’s recognized in General Motors v. Devex that interest can be a catalyst to avoiding prolonged litigation.

The Postal Service is one of the most frequently sued employers under Title VII.

Making them liable for prejudgment interest might further earlier settlement of meritorious claims.

I might note that this case was appealed on the merits to the United States Court of Appeals on issues of credibility findings of the trial judge.

If Federal Express takes interest into consideration as to whether to settle a claim, why shouldn’t the Postal Service.

I think that Congress intended the Postal Service to bring its management decisionmaking as nearly as possible up to the level of private enterprise.

And so there really is no policy reason to draw the line by inference here.

And Justice O’Connor’s point about Section 717 is correct; that’s the Government’s argument.

The Government wants the Court to infer a delimitation on the general waiver from the language of Section 717, but all that that language does is tell us how to process the charges for the employee.

Once that employee gets into the Federal courtroom, that employee’s entitled to the same remedies as a private employee would be.

Antonin Scalia:

As the Government points out, you sued the Postmaster General by name, rather than the Post Office, and had 717 not spoken to what happens in the courtroom, that was incorrect.

Lisa S. Van Amburg:

Well, that is a procedural distinction, and–

Antonin Scalia:

Well, you acknowledge 717 has some bearing in the courtroom, then?

Lisa S. Van Amburg:

–It does.

Antonin Scalia:

Or maybe you made a mistake.

Lisa S. Van Amburg:

More by what it doesn’t say than what it does say.

I think its silence on the issue of whether interest is recoverable is not particularly instructive, because as this Court noted in the Shaw case, interest is an element of damages that’s historically been viewed as separate from damages on a separate claim.

But its silence on the exclusiveness of the damages or the remedy for sue and be sued agencies is more instructive, given what Congress had done in the Federal Tort Claims Act.

So if we are to conclude that the no-interest rule applies to the Postal Service, we would be doing so undermining this liberal construction rule which has been in place for 48 years now.

The fact that it’s in different names is, I think, an irrelevant procedural distinction.

John Paul Stevens:

May I ask you a different question.

The sue and be sued clause for this entity was enacted in 1970, is that right?

Lisa S. Van Amburg:

Yes, that’s correct.

John Paul Stevens:

And the Title VII amendment was 1972.

Lisa S. Van Amburg:

1972.

John Paul Stevens:

Now, in 1971 say this lawsuit had been brought, could your client have recovered from the Postal Service, and I guess the answer is, no.

Lisa S. Van Amburg:

In 1971, if we had brought an action under Title VII?

John Paul Stevens:

Yes.

Lisa S. Van Amburg:

I would have to say the answer is, no, because we didn’t have a right to proceed under Title VII at that time.

John Paul Stevens:

And is the reason that you had no right, did that have anything to do with sovereign immunity?

Lisa S. Van Amburg:

No.

John Paul Stevens:

Your position is the only relevant sovereign immunity was waived in 1970?

Lisa S. Van Amburg:

That’s correct.

John Paul Stevens:

And what happened in ’72 was you got a cause of action you didn’t previously have.

Lisa S. Van Amburg:

That’s right.

It added a cause of action against the Federal Agencies that did not previously exist.

But the Postal Service comes into the 1972 law as a private enterprise, with the status of a private enterprise for the purposes of interest and damages.

John Paul Stevens:

Why couldn’t they have been sued as a private enterprise under Title VII in 1971?

Lisa S. Van Amburg:

Well, because of what we know of the legislative history of the Postal Reorganization Act, Congress expressly listed those Federal labor laws applicable to the Postal Service in its charter and left out Title VII.

And there was some debate about it.

The debate was not over sovereign immunity; it was a debate whether to leave the employees of the Postal Service under the Executive Order or to put them under Title VII.

Which shows, I think, that Congress is viewing Title VII as a different kind of agency, the fact that they even talked about putting them under Title VII.

Lisa S. Van Amburg:

But the issue was where would the employees be better off, under the Executive Order or under Title VII, and that was the debate.

But they later changed their mind about where they’d be better off.

The issue of sue and be sued in the official name versus the name of the Postmaster’s the exact kind of issue that was raised in FHA v. Burr, and dismissed by the Court.

Courts have been reluctant to draw procedural distinctions that would sabotage this rule construing sue and be sued clauses broadly.

I think that this Court rejected a similar procedural distinction in the Franchise Tax Board case when you said we’re really not going to say that a suit in an administrative proceeding is not covered under the sue and be sued clause versus a suit in the courtroom.

That’s the kind of procedural distinction the courts have rejected.

Antonin Scalia:

Why do you say that in 1972, Congress created a cause of action, rather than eliminate the cause of action?

Lisa S. Van Amburg:

I didn’t mean to say that if I did.

Antonin Scalia:

Well, I thought you did.

Lisa S. Van Amburg:

The right of proceeding into the courtroom.

Antonin Scalia:

Well, Justice Stevens made you do it.

That’s the question he asked and you agreed with that.

Lisa S. Van Amburg:

I don’t think so.

I think that there was a cause of action for employment discrimination back then.

Antonin Scalia:

Against the Post Office?

Lisa S. Van Amburg:

It’s certainly debatable, however, under Title VII whether an employee could have gotten back pay.

An employee could have complained through the Executive Order administrative process back then.

John Paul Stevens:

Was there a cause of action for damages by an employee who was discriminated against by the Postal Service in 1971?

Lisa S. Van Amburg:

Possibly under 1981, possibly under 42 U.S.C. 1981 there might have been.

John Paul Stevens:

Against the Federal Government?

Lisa S. Van Amburg:

Against the Postal Service.

John Paul Stevens:

Well, I mean the Postal Service as stated, I mean, how would you sue the Postal Service under 1981?

Lisa S. Van Amburg:

Well, in the same way you would sue a private enterprise if you assume that the Postal Service occupies the status of a private commercial enterprise, which has not really been decided by this Court.

But in that two years, I don’t think we know the answer to that question.

John Paul Stevens:

What’s your position on whether they were suable in 1971?

I’m really not quite clear.

Lisa S. Van Amburg:

Well, there were some cases that went into the Court of Claims under the Executive Order for back pay, and I would say that they were suable back then, at least in the Court of Claims.

Although this Court has, in Brown v. GSA settled that in terms of forums, that Title VII would be the exclusive remedy.

So, yes, I think they were suable back in 1971,–

John Paul Stevens:

In other words, you say the Executive Order created a duty not to discriminate and a violation of that duty, since the sovereign immunity had been waived, gave rise to a cause of action in 1971.

Lisa S. Van Amburg:

–That’s right.

John Paul Stevens:

All that Title VII did was change the procedure a little bit and make it a statutory duty instead of an administrative duty?

Lisa S. Van Amburg:

That’s correct, that’s our position.

And really all Title VII is is an exclusive administrative scheme for getting into the Federal courtroom, but once the employee’s there, the damages are the same against a sue and be sued agency.

If there are no further questions, I’ll reserve some time for rebuttal.

William H. Rehnquist:

Thank you, Ms. Van Amburg.

Mr. Rothfeld, we’ll hear now from you.

Charles A. Rothfeld:

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

Both sides in this case agree that the so-called no interest rule or the aptly named no-interest rule prevents the award of interest to virtually all Federal employees who obtain Title VII judgments against the United States.

The only question in this case is whether Congress created a special exception to this limitation on Title VII for the benefit of the Federal workers who are employed by the Postal Service, a benefit that gives those workers, in contrast to all other Federal employees, a right to interest on a Title VII awards.

Byron R. White:

Well, if this weren’t a Title VII suit, say it was a contract action against the Postal Service.

Charles A. Rothfeld:

We don’t disagree with the petitioners as a general matter a sue and be sued clause in that sort of proceeding, a contract-type proceeding is a waiver of sovereign immunity which may entitle it to–

Byron R. White:

So your submission is that the Title VII 717 really took away that waiver to some extent?

Charles A. Rothfeld:

–Well, I wouldn’t say that it took away the waiver.

We think that Section 717 is a separate waiver and it is the dispositive waiver in this case.

Also I think the way in which Congress created the Postal Service and the way in which it regulated the relationship between the Postal Service and its employees provide an independent reason.

Byron R. White:

So you should look at this 717 just as a waive with respect to Title VII suits?

Charles A. Rothfeld:

We think that’s right.

We think this is a case about Title VII, it was brought under Title VII, it is a Title VII case.

Now, obviously before anyone obtains any kind of judgment against the United States, there must be two things; there must be a waiver of sovereign immunity and there must be a cause of action.

To resolve this case, the Court must do two things; it must find a waiver of sovereign immunity and decide if the waiver which is controlling here is broad enough to allow for awards of interest.

John Paul Stevens:

I really am puzzled because if the sue and be sued clause enacted in 1970 was a general waiver of sovereign immunity for any claims for which there was a cause of action and a remedy, why wasn’t, to the extent that sovereign immunity would otherwise bar the recovery of interest, why hadn’t that been waived?

There just simply, there was no cause of action, but you don’t really contend that in ’72, they cut back on the waiver?

Charles A. Rothfeld:

No, not at all.

John Paul Stevens:

You’re saying that all they did in ’72 was create a cause of action which hadn’t been created.

Charles A. Rothfeld:

Well, I don’t think that’s a proper characterization.

John Paul Stevens:

At least that’s one… isn’t that an argument, at least?

Charles A. Rothfeld:

That is the argument that petitioner makes.

John Paul Stevens:

Well, she waivers a little on it, but I guess that’s her argument.

Charles A. Rothfeld:

Well, I think that was the final landing place for the petitioner.

Charles A. Rothfeld:

And I think that there are two responses to that.

One involves the nature of the waiver which is controlling here.

The other involves the nature of the Postal Service and its relationship to its employees.

Answering your question now, in particular, we think that that analysis that it was the sue and be sued clause which was the waiver here and that Title VII simply created a cause of action is not the proper way to view this case.

And the relationship between the two statutes makes that quite clear.

Congress passed Title VII in 1964 and at the time, it preserved the sovereign immunity of the United States by excepting from the definition of employer, the Federal Government including the old Post Office Department.

Therefore, no part of the Federal Government could be sued under Title VII after its enactment in 1964.

Six years later in 1970–

Antonin Scalia:

Well, you could regard that as reserving sovereign immunity, or you could regard that as not creating a cause of action.

And I don’t know how to–

Charles A. Rothfeld:

–Well, I think it was both, Justice Scalia.

Congress typically waives the sovereign immunity of the United States as we think it did in this case by enacting a cause of action.

The cause of action waives the sovereign immunity to the extent that the cause of action has been created, and therefore they are two sides of the same coin.

The Court, in Shaw, for example, characterized the 1972 provision of Title VII as a waiver of sovereign immunity.

It was those provisions which created the cause of action.

In the usual case, there’s no point in distinguishing between the waiver and the cause of action.

Antonin Scalia:

–Yes, but there, there had been no preceding waiver of sovereign immunity for the Library of Congress.

Isn’t there a difference when the sovereign immunity’s already been waived, you don’t need a second waiver.

But you did need the first waiver there.

Charles A. Rothfeld:

Well, I think there are two answers to that, Justice Stevens.

First, let me just spell out a little bit how the system worked from 1964 to 1972.

In 1970, when Congress created the Postal Service it preserved, we think, the sovereign immunity as to employment discrimination claims.

Congress specifically considered extending to the Postal Service the existing private sector provisions of Title VII.

It decided not to do that.

So in 1970, it was quite clear that a Postal employee could not sue the Federal Government under Title VII.

John Paul Stevens:

But can’t you describe that in either of two ways: one, as you do now, they were preserving a portion of sovereign immunity; or simply say, they just didn’t create the cause of action?

Charles A. Rothfeld:

Well, I think they were doing both.

John Paul Stevens:

Supposing you had a statute passed today that created a cause of action against the Postal Service for late delivery of mail?

Say there’s an implied promise that the mail be delivered within a week, and if it’s over 30 days late, well, you get a dollar a day or something.

Could you get interest on that?

Charles A. Rothfeld:

I think you might if you’re suing under the sue or be sued clause.

But again, we think it’s–

John Paul Stevens:

Brand new cause of action, you just waived sovereign immunity as to late delivery of mail.

Charles A. Rothfeld:

–That’s quite right, Justice Stevens, but the crucial point is not when the cause of action was created.

We certainly agree that causes of action created after the enactment of the sue and be sued clause may be brought under that clause.

But there are two reasons why the clause here is not the waiver of sovereign immunity.

First, Congress in 1972 when it enacted the Federal sector provisions of Title VII which grant a remedy for employment discrimination to all Federal employees, Congress viewed that as you say, as creating a cause of action.

It also clearly said at the time, and the Court has since recognized that that was a blanket waiver of sovereign immunity.

It is that blanket waiver of immunity that allows all Title VII actions against the Government, including this one, to proceed.

Now, the fact that Title VII was extended to an agency like the Postal Service that already had a sue and be sued clause in its charter, I think, is a matter of happenstance.

It doesn’t affect the identity of the waiver of the statute that’s waiving immunity.

Congress viewed that blanket waiver as the waiver which made these suits possible.

And I think there is clear textual evidence of that, and that is the second reason for saying that it is Title VII and not the sue and be sued clause that is the waiver here.

Those two provisions actually authorize suits against different named defendants, as Justice Scalia noted.

Section 717(c) of Title VII waives the Government’s immunity in suits brought against the head of the defendant’s agency.

That is why this case is captioned, Loeffler v. Tisch, Postmaster General.

In contrast, the sue and be sued clause makes the Postal Service amenable to suit in its official name.

And that is why a typical suit that is brought pursuant to the clause in which the clause is the waiver is captioned something like, Freed v. U.S. Postal Service.

Now, this obviously is a technical distinction but it has real significance.

The courts will uniformly dismiss Title VII actions that are brought against the agency rather than against the agency head.

That means that this case can proceed only because it is Title VII that makes the Postmaster General amenable to process.

And if it is Title VII that makes the defendant amenable to suit, it must be Title VII itself that provides the relevant waiver of immunity here.

Now, in turn, the Court has made it quite clear repeatedly that it is the statute waiving immunity that sets out the conditions under which the Government has agreed to be sued.

And Shaw held clearly that one of the conditions under the Title VII waiver is that it does not authorize awards of interest to employees suing any part of the Federal Government.

John Paul Stevens:

Mr. Rothfeld, who pays the judgment if your client loses?

Charles A. Rothfeld:

Well, the short answer is that the judgment comes out of the U.S. Treasury.

John Paul Stevens:

It does come out of the Treasury, not out of the Postal Service?

Charles A. Rothfeld:

Well, the judgment comes in particular out of something called the “Postal Service Fund” which is a fund created in the Postal Reorganization Act in which Postal revenues are placed and Postal expenditures are made.

That fund, in turn, is specifically labeled by the Postal Reorganization Act as part of the United States Treasury.

John Paul Stevens:

If it were a non-discrimination suit that arose in 1971 for something that you could sue the Post Office for then, maybe rent, would it come out of the same source?

Charles A. Rothfeld:

Yes, it would–

John Paul Stevens:

It would.

So it’s money basically allocated to this particular entity, and obviously the Postmaster General doesn’t pay it individually?

Charles A. Rothfeld:

–No, that’s correct.

John Paul Stevens:

And neither does the United States generally?

Charles A. Rothfeld:

Well, again, it comes out of the United States Treasury.

John Paul Stevens:

Yes, in the same sense that a rent payment might, or a suit for rent might?

Charles A. Rothfeld:

Well, that’s true.

That’s true.

But I mean, I should emphasize that the Postal budget is part of the budget of the United States.

The Postal Service in allocating expenditures from the Postal fund, which as I said is part of the Federal Treasury, will send its budget to the President.

The President, through the Office of Management and Budget, will send it on to Congress.

Congress approves that budget as part of the United States’ budget.

The money comes out of the Federal Treasury, out of the Postal Service comes out of the Federal Treasury and therefore adds to the Federal budget deficit, one reason why Congress is now tinkering with the Postal budget.

In fact, in Section 409 of the Postal Reorganization Act which deals with suits against the Postal Service, Congress specifically categorized judgments paid from the Postal fund as judgments against the United States which are paid out of the Postal fund.

So I think the money that’s at stake here must be characterized as Federal money, money coming out of the United States Treasury.

Certainly, without a waiver of sovereign immunity, an express waiver somewhere, petitioner could not sue and get its hands on that cash.

And that we think is the first dispositive reason for ruling for the Postal Service here.

The waiver of sovereign immunity in this case is Title VII.

That waiver does not allow for awards of interest.

Therefore, the express waiver of sovereign immunity, the only waiver that allows the suit to proceed, is not broad enough to allow them to obtain awards of interest under this Court’s holding in Shaw.

And there is also, as I suggested, a second independent reason for ruling for the Postal Service in this case, which is not at all technical or sophisticated.

It’s a simple matter of Congressional intent.

Even if it is true that the sue and be sued clause is the source of the waiver here… and we don’t think that it is… but even if that were true, all that would mean is that the clause allows petitioner to bring the Postal Service into court.

It would remain Title VII that provides the cause of action.

It would remain Title VII that defines the scope of the relief here.

And there’s nothing controversial about this point.

If Congress had said expressly in Title VII that Federal employees could not obtain interest under that statute, it is quite clear that nothing in the sue and be sued clause could change that outcome.

But that is essentially this case.

The Court has already held in Shaw that Title VII does not authorize awards of interest to Federal employees.

Charles A. Rothfeld:

Therefore… it did that of course not by expressly withholding interest, but by omitting any mention of interest from the statute… that means that petitioner is not entitled to interest, simply because his cause of action does not provide interest as part of the relief.

Now, Ms. Van Amburg’s response to that point this morning has been to suggest that the Federal sector provisions of Title VII have a split personality.

That those same provisions should be interpreted to withhold interest from other Federal employees, while granting interest to employees of the Postal Service.

And her rationale for that assertion is the suggestion that Congress viewed the Postal Service as being just like a private commercial corporation and that it therefore must have wanted Postal employees to be treated just like private sector workers under Title VII.

Now, we think there are several fundamental problems with that approach.

First, it oversimplifies the nature of what is a very complicated Federal Agency.

It is certainly true that, as petitioner effectively lays out in its brief, that there are many ways in which the Postal Service is like a private corporation.

But it is equally true, as we point out in our brief and in an enormously long footnote on pages 19 and 20, it is equally true that there are a great many ways in which the Postal Service is nothing like a private corporation.

Among many other things, the Postal Service exercises power of eminent domain, and enters into international agreements, and investigates criminal violations.

Obviously it’s represented by the Solicitor General when it appears in this Court.

And in a variety of other ways, the Postal Service is just like all other Federal agencies.

Now, the second more fundamental problem with petitioner’s suggestion that the Postal Service is very much like a private corporation is that we think it is beside the point here.

We think that petitioner’s list of Postal Service characteristics and our competing list are essentially irrelevant.

It would not be a sensible approach for the Court to add up the number of statutes cited by each brief and decide on the basis of who has the longer list that for all time and all purposes, the Postal Service is more like a private corporation or is more like a Government agency.

The question here is a much narrower one.

It concerns how Congress wanted Postal employees to resolve their complaints of employment discrimination.

On that we think the answer is quite clear; Postal employees are Federal employees.

They are in the Postal Service which is expressly made by statute, a part of the Civil Service.

In particular, and of dispositive importance here, Congress has always treated Postal Service employees identically to all other Federal employees for purposes of equal employment opportunity.

In 1970, Congress specifically considered protecting Postal Service employees by the private sector provisions of Title VII.

It decided not to.

It decided to extend the existing Federal sector antidiscrimination provisions.

In 1972 of course Congress placed the Postal Service in the Federal sector and not in the private sector provisions of Title VII.

Thurgood Marshall:

The employees, did they get the two percent raise?

Charles A. Rothfeld:

Well, for purposes of equal employment opportunity they are treated identically to Federal employees.

As I suggested,–

Thurgood Marshall:

They are or they are not?

Charles A. Rothfeld:

–Well, they clearly are Federal employees.

They were–

Thurgood Marshall:

But do they get the two, the raise?

Charles A. Rothfeld:

–Well, the Labor Relations section of the Postal Service is modeled to a certain extent on the private sector, and therefore their pay is not awarded under the same standards as that used for other Federal employees.

But as I say, Congress was quite clear that they were Federal employees.

They were characterized repeatedly as Federal employees in the Congressional debates and particularly for purposes of equal employment opportunity, as well as for many other public rights and obligations of Federal employees.

John Paul Stevens:

May I ask, following up on Justice Marshall’s thought, do you suppose it would be permissible as a matter of Federal law for their collective bargaining agent to negotiate an agreement which authorized the award of prejudgment interest in all litigation against their employer?

Charles A. Rothfeld:

As far as I’m aware–

John Paul Stevens:

Or would they say they couldn’t do it because sovereign immunity would preclude it?

Charles A. Rothfeld:

–Well, to the extent that that was being done to redress employment discrimination claims which are cognizable now under Title VII, I think that would be appropriate because–

John Paul Stevens:

Well, the question wasn’t whether it was inappropriate, the question was would there be as a matter of Federal law, would it be prohibited.

I think that’s your position.

Charles A. Rothfeld:

–I think it would be prohibited if it was something which is cognizable under Title VII, because the Postal Service clearly cannot by its own action waive sovereign immunity when Congress has declined to do so, and Congress has declined to do so.

As I suggested, Congress has treated Postal employees identically to other Federal employees for purposes of equal employment opportunity.

And Postal employees must bring their claims of employment discrimination under the Federal sector provisions of Title VII.

John Paul Stevens:

For most other terms and conditions of employment, they’re treated differently from Federal employees?

Charles A. Rothfeld:

Well,–

John Paul Stevens:

They do have collective bargaining rights that are different.

Charles A. Rothfeld:

–Well, there are a long list of ways in the Postal Reorganization Act and in Title V which we set out in our brief, in which they are treated identically to other Federal employees.

The Civil Service Reform Act of 1978, which was the basic charter of rights of Federal employees, applies to most to Postal employees who are veterans preferences, and applies to other Federal Postal Employees except to the extent that it’s displaced by a collective bargaining agreement.

There are also as I say a wide variety of independent provisions of personnel laws that apply to Postal employees.

And in particular, in the Title VII contracts, the differences between Postal Service employees and Federal employees on the one hand, and private sector employees on the other, will remain whether or not the Postal Service is viewed as being like a private corporation, and whether or not the rights of Postal employees are otherwise viewed as being similar to the rights of private as opposed to public sector employees.

And there’s no answer to this, we think, to suggest as petitioner does, that Congress’ inclusion of the sue and be sued clause in the Postal Charter can somehow change that and signal a Congressional intention that Postal employees should be treated identically to private sector workers under Title VII.

Sandra Day O’Connor:

What do you suppose the Court had in mind in its footnote 5?

Are there some agencies that would fall under that?

Charles A. Rothfeld:

Well, I think that the Court had two things in mind, Justice O’Connor.

First, it clearly had in mind the long line of cases cited by the petitioner in which a cause of action is brought pursuant to a sue and be sued clause in a setting in which the relationship between the agency being sued, and the person bringing the suit is the same as one in the private sector.

That was the case, for example, in the Franchise Tax Board case where the Postal Service’s relationship to the Franchise Tax Board was the same as that of any other employer.

I think the best example of what the Court had in mind is the illustration provided in Footnote 5, a case called Standard Oil Company v. United States, in which the Federal government had essentially gone into the insurance business, into the rural risk insurance business in competition with private insurers using contracts identical to those used by private insurers.

And the Court said in that case, the relationship between an insured party and the Government was identical to the relationship between an insured party and a private insurer, and therefore the terms of the lawsuit should be the same.

Now, that is clearly not true in the case of a Title VII suit which as been brought against the Postal Service.

It must be brought pursuant to the Federal sector provisions of Title VII, which differ in a variety of significant ways from the private sector provisions of Title VII.

Federal employees, including Postal workers, for example, must use the administrative mechanism set out in the Federal sector provision.

Charles A. Rothfeld:

Federal employees including Postal workers, unlike private sector workers, must use Title VII exclusively as their remedy for employment discrimination.

Those differences will remain however the nature of the Postal Service is characterized.

And as I suggested, the existence of the sue and be sued clause can’t change that.

It can’t magically move the Postal Service from one provision of Title VII, the Federal sector provision, to another provision, the private sector provision.

That means that Postal employees must bring their employment discrimination claims pursuant to the Federal sector provision, using Federal sector administrative remedies against the Federal defendant like other Federal employees, but unlike workers in the private sector.

They must use Title VII exclusively as their remedy for employment discrimination.

Now, we think the clearest indication of how Congress wanted to treat Postal employees under Title VII is how it actually did treat them.

It treated them identically to all other Federal workers.

Those Federal workers cannot get interest under Title VII.

Now, by giving petitioner the special benefit of interest, it will introduce an incoherence into the statutory scheme which is now nicely symmetrical dividing private sector and Federal sector workers.

It would also give employees in the Postal Service a special benefit and distinction which is not awarded to any other Federal sector employee, any other employee of the Executive Branch.

Now, the Court of Appeals properly declined to give this special and unique benefit to Postal Service employees, and we think that this Court should affirm that decision.

If there are no further questions?

John Paul Stevens:

I have a question.

Maybe it’s too far off in left field, but there are a lot of sue and be sued agencies and a lot of them are not mentioned in Section 717.

I guess Federal Housing Agency, aren’t there?

Am I not right, there are quite a few of these agencies?

Charles A. Rothfeld:

That’s correct.

John Paul Stevens:

What requires them, if anything, to obey non-discrimination laws, most of those?

I’m just wondering if whatever we decide in this case would apply to a lot of other agencies, or is it really pretty unique to the Postal Service?

Charles A. Rothfeld:

Well, I think that this case would apply essentially to any component of the Federal Government which is sued pursuant to Section 717(c).

We think that that is (a) the dispositive waiver of sovereign immunity, and (b) clearly embodies the Congressional intention that all employees of the Federal Government should be treated in one way for purposes of employment discrimination.

John Paul Stevens:

But does this statutory provision apply to all these other sue and be sued agencies in much the same way?

Charles A. Rothfeld:

Well, I’m actually not sure of the answer to that question.

John Paul Stevens:

I don’t think… it doesn’t seem to on the face of the statute.

I was just puzzled by it as I was just looking at it.

Charles A. Rothfeld:

Well, that would be a difficult question of interpretation for the Court, because the way in which the private sector provision of Title VII is written, it specifically excludes, as I said from the definition of employer,–

John Paul Stevens:

All Federal agencies.

Charles A. Rothfeld:

–all, not only the United States, itself, but all Federally-owned corporations and instrumentalities, and therefore, it is quite clear that an employee of the Federal Government cannot bring a Title VII action pursuant to the private sector provision.

William H. Rehnquist:

Thank you, Mr. Rothfeld.

William H. Rehnquist:

Ms. Van Amburg, you have fourteen minutes remaining.

Lisa S. Van Amburg:

Thank you.

Mr. Rothfeld suggests that this Court must make a decision between the two waivers, the waiver in the Postal Service Charter, or Title VII, which one applies.

I don’t agree that the two are mutually exclusive.

I think that the Court can take into consideration and give effect to each waiver.

The waiver that occurs in the Postal Reorganization Act is a waiver of the status of the agency as the sovereign.

The waiver that occurs in Title VII concerns a substantive right to proceed.

Both can be taken into consideration.

Title VII doesn’t tell us anything, however, regarding interplay of these two waivers.

Congress has expressed interplay in the Federal Tort Claims Act, but has not done so in Title VII.

So then we are left to infer a wavy line as to what the Postal Service is immune to and what it isn’t by Mr. Rothfeld’s argument.

Under the longstanding liberal construction rule, no inferences to that broad waiver of the Postal Reorganization Act should be lightly drawn.

And it’s clearly a rule that’s very functional for the courts in the sense that if you assume that Congress is experienced in legislating against this liberal construction rule, they you really don’t have to draw wavy lines.

Maybe they’re liable for punitive damages, maybe they’re liable for costs, for interest.

That’s up to Congress to draw the line.

Congress knows how to do it, it’s done it before.

It’s expressed it before.

And Congress understands that a sue and be sued clause can be a separate source of authority for proceeding even as to certain damages, elements of damages which interest theoretically is an element of damages.

So the Government’s position is based upon a mere inference, not upon any express statutory language.

And the fact that interest is not articulated in Title VII isn’t particularly instructive.

It doesn’t mean that Congress did not want sue and be sued employees to get interest.

It’s a function of the fact that interest has historically been viewed as an element of damages separate and apart from the substantive claim.

So a as a natural incident of Title VII suits, interest should be recoverable against the Postal Service because it occupies the status of a private commercial enterprise for these purposes.

I don’t think that the Court needs to make a broad decision that would affect over 124 sue and be sued agencies because of the unique character of the Postal Service.

It’s clearly one of those agencies the Court had in mind in footnote 5 of the Shaw opinion.

Congress when it created it, removed the cloak of sovereign immunity and launched it into the world of private commercial enterprise.

There are a lot of sue and be sued agencies.

The first interest case was against the National Home for Disabled Volunteer Soldiers which I don’t think was a commercial enterprise.

But this Court need not define the holding so broadly because of the unique character of the Postal Service.

I would like to just for one moment note something I found in the legislative history of the Postal Reorganization Act, which I think is an indication of Congress’ understanding that there would be new causes of action created in the future which would affect the Postal Service in the same way as a private enterprise would be affected.

Lisa S. Van Amburg:

In discussing the applicability of the National Labor Relations Act to the Postal Service, which is correct, the National Labor Relations Act applies to the Postal Service except for the right to strike.

Congress discussed the applicability of right to work laws of the various States and recognized that these laws applied to the Postal Service in the same way as they would a private enterprise.

And then it said, in the legislative history, if the National Labor Relations Act should be further amended at some future time,–

Antonin Scalia:

What are you quoting, you said it said, Congress said in what?

What are we talking about?

It is a floor statement or?

Lisa S. Van Amburg:

–Committee Report, the Conference Committee Report in the United States Congressional and Administrative News, Vol.

2, page 3664.

If the National Labor Relations Act should be further amended at some future time either to extend or to restrict right to work provisions, that amendment presumably would apply to the Postal Service in the same way that it applies to other Federal entities.

I think Congress understood that there would be changes in the future and the Postal Service would be affected by these changes in the same way as a private business would be.

And that’s the key there, that the Postal Service came into Title VII effectively as a private business.

Thank you.

William H. Rehnquist:

Thank you, Ms. Van Amburg.

The case is submitted.