OFFICE OF PERSONNEL MANAGEMENT, PETITIONER V. CHARLES RICHMOND No. 88-1943 In the Supreme Court of the United States October Term, 1988 The Solicitor General, on behalf of the Office of Personnel Management, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case. Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit TABLE OF CONTENTS Question Presented Opinions below Jurisdiction Statutory provision involved Statement Reasons for granting the petition Conclusion OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-19a) is reported at 862 F.2d 294. The decision of the Merit Systems Protection Board's administrative judge (App., infra, 20a-24a) and the denial of review by the Board (App., infra, 32a-33a) are unreported. JURISDICTION The judgment of the court of appeals (App., infra, 30a) was entered on December 2, 1988. A timely petition for rehearing was denied on February 3, 1989 (App., infra, 31a). On April 25, 1989, the Chief Justice extended the time for filing a petition for a writ of certiorari to and including June 3, 1989. The jurisdiction of the Court is invoked under 28 U.S.C. 1254(1). STATUTORY PROVISION INVOLVED Section 8337(d) of Title 5, United States Code, as amended by Omnibus Budget Reconciliation Act of 1982, Pub. L. No. 97-253, Section 302(a), 96 Stat. 792, provides: If an annuitant receiving disability retirement annuity from the Fund, before becoming 60 years of age, recovers from his disability, payment of the annuity terminates on reemployment by the Government or 1 year after the date of the medical examination showing the recovery, whichever is earlier. If an annuitant receiving disability retirement annuity from the Fund, before becoming 60 years of age, is restored to an earning capacity fairly comparable to the current rate of pay of the position occupied at the time of retirement, payment of the annuity terminates on reemployment by the Government or 180 days after the end of the calendar year in which earning capacity is so restored, whichever is earlier. Earning capacity is deemed restored if in any calendar year the income of the annuitant from wages or self-employment or both equals at least 80 percent of the current rate of pay of the position occupied immediately before retirement. QUESTION PRESENTED Whether the Office of Personnel Management can be equitably estopped from applying the requirements of 5 U.S.C. 8337(d), which mandate discontinuance of a disability annuity when the annuitant's earned income exceeds the maximum amount allowed under the statute. STATEMENT The Court of Appeals for the Federal Circuit in this case estopped the Office of Personnel Management (OPM) from applying the terms of 5 U.S.C. 8337(d). That Section provides that a disability annuitant who earns more than a certain statutory limit on income in any one year is deemed restored to "earning capacity," and therefore loses his or her disability annuity. In 1986, respondent earned more than the statutory limit, and OPM discontinued his annuity. The court of appeals ordered the payments withheld to be released because two Navy employees incorrectly had told the respondent that his disability annuity would not be discontinued unless he earned more than the statutory limit during two consecutive years, and also had given the respondent an outdated circular reflecting the incorrect information. The court ruled that this behavior constituted sufficient "affirmative misconduct" to warrant an exception to the general rule that the government may not be estopped from enforcing the laws. 1. Congress has provided that federal employees who complete at least five years of service and become disabled may retire and receive a disability annuity. 5 U.S.C. 8337(a) (Supp. IV 1986). If an annuitant under 60 years of age recovers from a disability, or is "restored to an earning capacity fairly comparable to the current rate of pay of the position occupied at the time of retirement," the annuity terminates. 5 U.S.C. 8337(d). An individual is deemed restored to "earning capacity" if his or her wages for a given period of time exceed a specified statutory cap. Prior to 1982, the statute provided that an individual retired for disability was deemed "restored to earning capacity," and thus no longer eligible for a disability annuity, if in each of 2 succeeding calandar years the income of the annuitant from wages or self-employment * * * equals at least 80 percent of the current rate of pay of the position occupied immediately before retirement. 5 U.S.C. 8337(d) (1976 ed.) (emphasis added). The provision was amended in 1982 by the Omnibus Budget Reconciliation Act, Pub. L. No. 97-253, Section 302(a)(1), 96 Stat. 792, to provide that if the statutory cap on earnings is exceeded in any one year, the annuity is to be terminated: Earning capacity is deemed restored if in any calendar year the income of the annuitant from wages or self-employment or both equals at least 80 percent of the current rate of pay of the position occupied immediately before retirement. 5 U.S.C. 8337(d) (emphasis added). 2. Respondent retired from his position as a welder with the Navy in 1981, after OPM had approved his application for disability retirement. In January 1986, respondent asked a Navy Employee Relations Specialist at the Navy Public Works Center in San Diego, California, for information about how much he could earn without exceeding the statutory limit. The Specialist erroneously told respondent about the provisions of the pre-1982 version of Section 8337(d) -- that his annuity would not be discontinued unless, in each of two succeeding years, he earned at least 80 percent of the current rate of pay for the position he held prior to retirement. App., infra, 2a. The Specialist also gave respondent a copy of Federal Personnel Manual Letter No. 831-64 (1981), a publication of the Office of Personnel Management that, while correct when written, was out-of-date. It too explained the two-year rule of the pre-1982 statute. App., infra, 2a & n.4. In January 1987, respondent again went to the Navy seeking advice on earnings. Another Employee Relations Specialist erroneously gave respondent the same incorrect information. 3. From 1982 through 1986, respondent earned an average of $12,494 by working as a school bus driver. App., infra, 21a. Based on the erroneous information he received from the Navy and the OPM circular, respondent, in the year 1986, earned $19,936 -- more than the amount permitted by statute. /1/ Ibid. As a result, OPM discontinued his annuity as of June 30, 1987. App., infra, 25a-29a. However, because respondent earned less than the statutory cap on earnings in 1987, his disability annuity was restored as of January 1, 1988. Respondent, therefore was without his annuity payments for a period of six months. App., infra, 1a n.1. Respondent sought review of the OPM decision by the Merit Systems Protection Board (MSPB). He contended that OPM was equitably estopped from discontinuing his annuity payments because he had received misinformation from Federal Personnel Manual Letter No. 831-64, the circular given him by the Navy. An MSPB administrative judge rejected the estoppel claim, holding that "OPM cannot be estopped from enforcing a statutorily imposed requirement for retirement eligibility." App., infra, 22a. In addition, the adminitrative judge found that respondent had demonstrated by virtue of his income that he had been restored to earning capacity in 1986 and "that he was not entitled to a continuation of the retirement annuity for that year." Ibid. After the MSPB denied his petition for review (App., infra, 32a-33a), respondent sought further review in the Federal Circuit pursuant to 28 U.S.C. 1295(a)(9). 4. A divided panel of the Federal Circuit reversed. It acknowledged as "a long-established rule" the traditional reluctance of courts to apply estoppel against the government. But in its view this Court's decision in Heckler v. Community Health Services, 467 U.S. 51 (1984), indicated that the government may be estopped upon a finding that the traditional elements of estoppel are present and that the government has engaged in "affirmative misconduct." App., infra, 3a-10a. Applying this approach, the court first found the traditional elements of estoppel: it concluded that the government knew the facts; that the government gave misinformation to the respondent with the intent that he rely on it; and that the respondent, in good faith, did reasonably rely on it to his detriment. App., infra, 9a, 12a. Second, the court ruled that the government, by providing the respondent "with an OPM letter which summarized a law which had been changed some 4 years earlier" had engaged in "sufficient '(affirmative) misconduct' for estoppel to apply." App., infra, 10a. The court then rejected the argument that estoppel could not be used to award benefits to one ineligible for them, holding that where an individual would have been eligible "but for" the conduct of the government, it is "no bar" to an estoppel "(t)hat a statutory requirement is thereby effectively nullified." App., infra, 13a. The court concluded that estoppel was warranted in this case. Judge Mayer dissented. In his view, the case was controlled by this Court's decisions in Schweiker v. Hansen, 450 U.S. 785 (1981), and Heckler v. Community Health Services, supra, because the government agents' negligence here was no worse than in those cases. App., infra, 15a-19a. In addition, the dissent found estoppel inappropriate because the respondent had suffered no "irreparable injury" but rather had demonstrated that his earning capacity was, in fact, "restored." App., infra, 17a, 19a. Judge Mayer concluded that, while this Court may have left open the question whether the government might be estopped upon a showing of "at least some form of egregious misconduct," "(o)urs is not that kind of case." App., infra, 18a. REASONS FOR GRANTING THE PETITION On the ground that government agents negligently gave respondent written misinformation about the applicable law, the court below estopped the government from enforcing the requirements of 5 U.S.C. 8337(d). That conclusion cannot be reconciled with this Court's prior rulings refusing, for reasons both of constitutional dimension and sound policy, to estop the government from executing the laws as written by Congress because of the errors of government agents. There are millions of such employees; their mistakes should not determine how the law is applied, or which claims will drain the public treasury. Moreover, if a court can ever estop the government, a threshold requirement is a proper finding of the traditional elements of estoppel. Heckler v. Community Health Services, 467 U.S. at 61. Two such elements -- reasonable reliance and sufficient detriment -- are lacking here. And, even assuming that these threshold elements of estoppel are present, no estoppel against the government is warranted in this case. This Court has left open the question whether the government may be estopped if the traditional elements are coupled with the "affirmative misconduct" of its employees. See, e.g., Schweiker v. Hansen, 450 U.S. at 788-790. The conclusion of the court below that affirmative misconduct may serve as a basis for estoppel, and its clearly erroneous determination that the ordinary negligence of the employees here was sufficient to satisfy such a standard, sharpens existing conflicts within the courts of appeals over whether, and under what circumstances, the government may be estopped. Given the importance of this question to the efficient and lawful operation of the government, this Court's review of the holding below is warranted. 1. The court of appeals' decision cannot be reconciled with the decisions of this Court. Since its earliest cases, this Court has repeatedly ruled that the government may not be estopped from enforcing the laws. /2/ Indeed, to our knowledge, the Court has never held the government estopped, whether the party seeking an estoppel has relied on a misrepresentation of fact (Lee v. Munroe & Thornton, 11 U.S. (7 Cranch) 366 (1813)), or of law (Heckler v. Community Health Services, supra,); an oral misrepresentation (Utah v. United States, 284 U.S. 534 (1932), or a written one (Lee, supra); an off-hand remark by a federal employee (Montana v. Kennedy, 366 U.S. 308 (1961)), or a course of conduct by a federal agency or department (INS v. Hibi, 414 U.S. 5 (1973)). a. The Court's rule is based on the principle that, despite hardship in individual cases, the government cannot be "bound (or) estopped by acts of its officers or agents in entering into an arrangement or agreement to do or cause to be done what the law does not sanction or permit." Utah Power & Light Co. v. United States, 243 U.S. 389, 409 (1917). That precept is grounded in the constitutional doctrines of separation of powers and sovereign immunity, as well as in pragmatic considerations of the public interest. The effect of estopping the government by treating as true the misrepresentations of its agents is to give the words of Executive Branch officials the force of law, while suspending implementation of the conditions established by Congress. Estoppel of the government thus can confer on government employees the status of legislators, and effectively override the mandates of Congress. See Merrill, 332 U.S. at 383. That result is beyond the proper authority of the courts. See INS v. Pangilinan, 108 S. Ct. 2210, 2216 (1988) ("(I)t is well established that '(c)ourts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law"). The rule that the government cannot be estopped is like those providing that the sovereign is exempt, absent contrary provision by Congress, from the consequences of its laches or the operation of statutes of limitations. Utah Power & Light, 243 U.S. at 409. "(I)ndependently of the royal prerogative once thought sufficient to justify it," the source of the rule's continuing vitality "is to be found in the great public policy of preserving the public rights, revenues, and property from injury and loss, by the negligence of public officers." Guaranty Trust Co. v. United States, 304 U.S. 126, 132 (1938); see also Costello v. United States, 365 U.S. 265, 281 (1961); United States v. Hoar, 26 F.Cas. 329, 330 (C.C.D. Mass. 1821) (No. 15,373) (Story, Circuit Justice). Where Congress has imposed certain conditions on eligibility and has not provided for their waiver, "(a) Court of equity cannot, by avowing that there is a right but no remedy known to the law, create a remedy in violation of law." Pangilinan, 108 S. Ct. at 2216. The rule prohibiting estoppel is critical to the government's effective operation. It is unfortunately impossible for the government to prevent every instance in which one of its millions of employees may give out erroneous information. /3/ To bind the government in each case to the representations of its employees would uncontrollably drain public revenues and resources. See Hansen, 450 U.S. at 789-780; Hansen v. Harris, 619 F.2d 942, 949 (2d Cir. 1980) (Friendly, J., dissenting), rev'd sub nom. Schweiker v. Hansen, 450 U.S. 785 (1981). Moreover, it would prompt needless litigation, much of it founded on allegations of misrepresentation by a government employee that could not be documented or otherwise verified. /4/ Finally, for both constitutional and pragmatic reasons, the rule that the government cannot be estopped from enforcing a lawful statute or regulation applies with special force when a party seeks to require the expenditure of public funds in circumstances that do not meet the express conditions established by Congress. See U.S. Const. Art. 1, Section 9, Cl. 7 ("No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law"); Community Health Services, 467 U.S. at 51. b. The facts of this case do not differ in any material respect from those in this Court's earlier cases refusing to estop the government. Indeed, this case is a textook example of why the government should not be barred from enforcing the laws. Respondent properly drew a disability annuity, but that annuity was subject to the constraints of 5 U.S.C. 8337(d). When respondent earned more than the statutory limit set by that Section, he lost his annuity, as the law provides. Although the annuity was later reinstated, respondent sued, claiming that the Navy's misinformation about the terms of 5 U.S.C. 8337(d) entitled him to the six months of annuity withheld. This is precisely the situation in which this Court has repeatedly applied its strictures against estopping the government, denying the claims of those who, asserting that a government employee made a negligent misrepresentation to them, seek to receive government benefits without meeting the legal conditions that would make them eligible for those benefits. See, e.g., Community Health Services, 467 U.S. at 64 (Medicare reimbursement); Hansen, 450 U.S. at 785 (Social Security benefits); Miranda, 459 U.S. at 15 (permanent resident status); Hibi, 414 U.S. at 8 (naturalization); Merrill, 332 U.S. at 384-385 (federal crop insurance). The Court has emphasized that this result is especially indicated when an estoppel would force the expenditure of public funds contrary to the express mandate of Congress. See Community Health Services, 467 U.S. at 51; Hansen, 450 U.S. at 788; Merrill, 332 U.S. at 385. 2. Although this Court has declined to rule that "there are no cases" in which the government might be estopped, it has directed that "the private party surely cannot prevail without at least demonstrating that the traditional elements of an estoppel are present." Community Health Services, 467 U.S. at 60-61. Those elements include both reliance that is reasonable ("in that the party claiming the estoppel did not know nor should * * * have known" of the misrepresentation) and reliance that is detrimental (in that it caused the relying party "to change his position for the worse"). Id. at 59, 61. Neither element is present in this case. Moreover, the Federal Circuit's failure properly to require reasonable reliance conflicts with the holdings of other courts of appeals. a. Reliance on the words of a government employee that contradict those of a published statute or regulation can never be reasonable: "those who deal with the Government are expected to know the law and may not rely on the conduct of Government agents contrary to law." Community Health Services, 467 U.S. at 63. In particular, this Court has consistently held that those seeking public benefits must act with "scrupulous regard" for the requirements of law. Respondent and others are on notice of the administrative regulations controlling the funds they seek. See Merrill, 332 U.S. at 384-385; Community Health Services, 467 U.S. at 63. A fortiori, such persons "(are) charged with knowledge of the United States Statutes at Large." Merrill, 332 U.S. at 384. /5/ Nor does the fact that the government official gave respondent an out-of-date government circular affect his duty "to know the law." Although this Court in Community Health Services did point to the oral nature of the advice given there as a factor in its analysis of the reliance element, see 467 U.S. at 65, it did not suggest that reliance is reasonable whenever advice is in writing. Indeed, this Court and the lower federal courts have regularly declined to estop the government despite the fact that some misrepresentation was committed to paper. /6/ By abandoning this precedent, the court below has conferred estoppel claims on any number of individuals who may have picked up or negligently been given out-of-date circulars. /7/ In addition, the Federal Circuit's broad finding of reasonable reliance conflicts with the decisions of the Seventh and Tenth Circuits. The Seventh Circuit has held that, except in narrow circumstances not relevant here (see generally, pp. 22 & n.22, infra), a party claiming a misrepresentation by a government official is "charged with knowledge of the law" and thus cannot demonstrate the reliance traditionally required to support estoppel. See In re Larson, 862 F.2d 112, 114-115 (1988); Crown v. United States Railroad Retirement Board, 811 F.2d 1017, 1020-1021 (1987). Similarly, the Tenth Circuit has held that a party relying on an erroneous interpretation of a regulation by an administrative agency "assumes the risk" that the interpretation is erroneous. See Emery Mining Corp. v. Secretary of Labor, 744 F.2d 1411 (1984); United States v. Browning, 630 F.2d 694, 702-703 (1980), cert. denied, 451 U.S. 988 (1981). /8/ b. Respondent's claim of detriment also dissolves upon examination. "To analyze the nature of a private party's detrimental change in position, we must identify the manner in which reliance on the Government's misconduct has caused the private citizen to change his position for the worse." Community Health Services, 467 U.S. at 61. At the heart of this lawsuit is respondent's complaint that he missed the opportunity to manipulate the law for his personal gain -- that he should have been given correct advice so that he could have received both a government disability annuity and the highest attainable level of wages from his employment as a bus driver. This desire to work the system as close to the edge as possible, while not illegal, is surely not the type of detriment that traditionally supports an estoppel. As Judge Mayer correctly observed, "Congress certainly did not intend that beneficiaries gerrymand their earnings to get extra money from the taxpayers." App., infra, 19a. The statute in this case reflects Congress's judgment that earned wages of at least 80 percent of the current rate of pay of a retiree's former position indicate a restored capacity to earn and hence, a loss of disability. Respondent did in fact demonstrate that he had the "capacity" to earn more than 80 percent of his former job's salary. Given the purpose of Section 8337(d) to measure "earning capacity," respondent thus was not substantively entitled to his disability annuity. He cannot claim that the detriment he faces because the government ascertained his actual capacity "is so severe or has been imposed in such an unfair way that (the government) ought to be estopped from enforcing the law in this case." Community Health Services, 467 U.S. at 66. 3. Despite the general rule that estoppel should not be applied to obstruct enforcement of the law, and the fact that not even the elements traditionally required to estop a private party were present here, the court of appeals estopped the government on the ground that its agent had engaged in "affirmative misconduct." /9/ Its action illustrates the need for guidance: the absence of a clear standard for the application of estoppel to the government has led to anomalous results like that in the present case and has prompted the development of conflicting standards among the courts of appeals. a. The court of appeals' application of an affirmative misconduct "exception" to the rule against estopping the government is based on language in this Court's opinions but is incompatible with the principles enunciated there. The Court has left open the question whether "affirmative misconduct" by government agents may in some cases justify estoppel of the government. Community Health Services, 467 U.S. at 60-61; Miranda, 459 U.S. at 17-18; Hansen, 450 U.S. at 788; Hibi, 414 U.S. at 8-9; Montana, 366 U.S. at 314-315. But as explained above (see pp. 8-10, supra), the reason this Court has declined to estop the government is to protect the public interest from the consequences of error or misconduct by government employees. In particular, the doctrine ensures that the actions of those in the Executive Branch do not interfere with the proper execution of the laws written by Congress. Estoppel of the government undermines these purposes, whether a government representative's actions are merely negligent or rise to some unspecified higher level of misconduct. It would be inconsistent with the theoretical underpinnings of the general rule for courts to hold that agencies are bound by the actions of their representatives in those situations -- and only those situations -- in which there can be no doubt that the responsible agency officials did not approve, and never would have approved, of the representatives' actions. b. Were this Court to decide that the estoppel doctrine warranted an affirmative misconduct exception, the exception would not in any event apply here. The misrepresentations made by the Navy employees in this case cannot be distinguished from the behavior of other government agents that the Court has found to fall "'far short'" of affirmative misconduct. Hansen, 450 U.S. at 790 (quoting Montana, 366 U.S. at 314). In Schweiker v. Hansen, a Social Security Administration claims representative incorrectly informed a claimant that she could not qualify for benefits and failed, contrary to the agency's claims manual, to recommend that she file a written application. 450 U.S. at 786. Because a written application was required under agency regulations (id. at 790), the claimant lost her entitlement to approximately 12 months of benefits for which she was otherwise eligible. In Montana v. Kennedy, an American consular official erroneously advised the petitioner's mother that she could not travel to the United States because she was pregnant. Consequently, the petitioner was born abroad and could not claim American citizenship by birth. In these cases, as in a number of others, the Court found that conduct of government agents at least as blameworthy as that here was far less than would warrant estoppel of the government. /10/ The court of appeals sought to distinguish the present case on the ground that the respondent was given written, not only oral, misinformation. While this Court has noted that written information may induce greater reliance than oral information (Community Health Services, 467 U.S. at 65; see pp. 12-13, supra), it has never suggested that a government agent commits "affirmative misconduct" whenever he or she negligently passes on misinformation in writing. To the contrary, the Court has made clear that any concept of "affirmative misconduct" requires more egregious behavior. /11/ Indeed, the employees' actions here fit into the same category of behavior that this Court determined to fall "'far short'" of affirmative misconduct in Hansen: like the claims representative there, the employees in this case negligently provided outdated information; they did not deliberately mislead the respondent, make false promises, or otherwise defraud him. See 450 U.S. at 790 (quoting Montana, 366 U.S. at 314); cf. Scime v. Bowen, 822 U.S. 7, 9 (2d Cir. 1988) (case in which erroneous advice about eligibility for benefits was conveyed in writing is indistinguishable from Hansen). The presence of written misrepresentation no more rationalizes the application of estoppel to the government than the presence of other forms of misconduct. In each case, the errors of Executive officials are compounded, not resolved, by a judicial requirement that the mandates of Congress be violated. Further, to the extent that the court of appeals' decision turns on the receipt of an out-of-date government publication, it opens the door to potential government liabilityon every claim that a duly enacted law does not apply to one who has solicited and received, or simply taken home from a government office, a circular containing out-of-date, and therefore inaccurate, information. /12/ c. The uncertain state of the law in this area has generated a confusion of approaches to estoppel in the courts of appeals. See Hansen, 450 U.S. at 792 (Marshall, J., dissenting) (chiding Court for failure to give guidance to lower courts); Home Savings & Loan v. Nimmo, 742 U.S. 585, 586 (10th Cir. 1984) (requesting Court to clarify estoppel standard). In particular, the lower courts are sharply divided over whether, and in what circumstances, an affirmative misconduct exception applies. See, e.g., Akbarin v. INS, 669 F.2d 839, 842-843 (1st Cir. 1982) (reviewing confusion over meaning of "affirmative misconduct"). i. In sharp contrast to the Federal Circuit, three circuits (the Tenth, the Eleventh, and the District of Columbia) have declined to recognize an "affirmative misconduct" exception to the general rule and have instead constructed a circuit-specific approach. Thus the Eleventh Circuit, eschewing the "hypothetical" question whether such an exception applies, /13/ has declared estoppel to be appropriate only where the traditional elements are present, the government is acting in its "proprietary" capacity, and the government agent was acting within the scope of his or her authority. /14/ The District of Columbia Circuit has held that when the traditional elements of estoppel are combined with "a showing of injustice," estoppel will lie against the government providing there is no "undue damage to the public interest." /15/ And the Tenth Circuit has held that the application of estoppel against the government is justified only when "it does not interfere with underlying government policies or unduly undermine the correct enforcement of a particular law or regulation." /16/ Contrary to the practice of the Federal Circuit, the government cannot be estopped in the Tenth Circuit solely on the ground that an agent without authority to bind the government has misled an individual. /17/ ii. A number of circuits have applied an affirmative misconduct standard, but have done so in varying ways. Thus the Ninth Circuit requires affirmative misconduct "going beyond mere negligence," but permits estoppel only if the government's act has caused a serious injustice and the public's interest will not suffer "undue damage." /18/ And the Eighth Circuit, without defining the term, has rejected estoppel in circumstances analogous to those here. /19/ The First Circuit similarly has rejected the claim that statutory requirements should not be enforced because of the misrepresentations of a government agent, /20/ but has occasionally recognized an exception, including the possibility of estoppel on the basis of a misrepresentation where deportation is at stake. /21/ Finally, the Second and Seventh Circuits have developed estoppel approaches that include narrow and conflicting exceptions, although both generally require the presence of affirmative misconduct. /22/ 4. The holding in this case is of great importance to OPM and other government agencies. The Federal Circuit's exclusive jurisdiction includes, inter alia, important cases under the Contract Disputes Act of 1978 (28 U.S.C. 1295(a)(10)), most matters involving the Merit Systems Protection Board (28 U.S.C. 1295(a)(9)), and claims for money damages brought against the government under the Tucker Act (28 U.S.C. 1295(a)(2) and (3)). The facts in this case are unexceptional; if the Federal Circuit can estop the government on the basis of the type of negligence that occurred here -- unfortunate and improper but hardly egregious -- it will regularly obstruct proper execution of the laws. In addition, the holding below further accentuates existing conflicts among the courts of appeals: the success of an estoppel claim now varies widely depending on the federal court in which it is heard. Review by this Court is therefore warranted. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. KENNETH W. STARR Solicitor General STUART E. SCHIFFER Acting Assistant Attorney General DAVID L. SHAPIRO Deputy Solicitor General CHRISTINE DESAN HUSSON Assistant to the Solicitor General WILLIAM KANTER RICHARD OLDERMAN Attorneys JUNE 1989 /1/ In order to continue to receive his disability annuity, respondent was required to earn less than $19,016.74 (80 percent of the base salary ($23,771) for a WG-10, Step 4 welder as of December 31, 1986). App., infra, 21a. /2/ See, e.g., Lee v. Munroe & Thornton, 11 U.S. (7 Cranch) 366 (1813); Gibbons v. United States, 75 U.S. (8 Wall.) 269, 274 (1868); Hart v. United States, 95 U.S. 316, 318-319 (1877); Pine River Logging Co. v. United States, 186 U.S. 279, 291 (1902); Utah Power & Light Co. v. United States, 243 U.S. 389, 408-409 (1917); Sutton v. United States, 256 U.S. 575, 578-580 (1921); Utah v. United States, 284 U.S. 534, 545-546 (1932); Wilber Nat'l Bank v. United States, 294 U.S. 120, 123-124 (1935); United States v. Stewart, 311 U.S. 60, 70 (1940); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947); Automobile Club v. Commissioner, 353 U.S. 180, 183 (1957); Montana v. Kennedy, 366 U.S. 308, 314-315 (1961); INS v. Hibi, 414 U.S. 5 (1973); Schweiker v. Hansen, 450 U.S. 785 (1981); INS v. Miranda, 459 U.S. 14 (1982); Heckler v. Community Health Services, Inc., 467 U.S. 51 (1984). See also id. at 68 (Rehnquist, J., concurring) (distinguishing, as non-estoppel cases, Moser v. United States, 341 U.S. 41 (1951), and United States v. Pennsylvania Industrial Chemical Corp., 411 U.S. 655 (1973)). /3/ Over a century ago, when the government was a fraction of its present size, Justice Story observed that the government's "fiscal operations are so various, and its agencies so numerous and scattered, that the utmost vigilance would not save the public from the most serious losses," if equitable doctrines applicable to private parties were to govern. United States v. Kirkpatrick, 22 U.S. (9 Wheat.) 720, 735 (1824). /4/ We note in this connection that Congress has precluded claims against the government for misrepresentation by its employees under the Federal Tort Claims Act. 28 U.S.C. 2680(h). /5/ Indeed, even between private parties, estoppel cannot be applied "(i)f, at the time when he acted, (the party seeking estoppel) * * * had knowledge of the truth, or had the means by which with reasonable diligence he could acquire the knowledge so that it would be negligence on his part to remain ignorant." 3 J. Pomeroy, Equity Jurisprudence Section 805, at 192 (S. Symons ed. 1941), quoted in Community Health Services, 467 U.S. at 59. /6/ See, e.g., Automobile Club v. Commissioner, 353 U.S. at 183-184 (IRS not estopped from retroactively enforcing corrected administrative rulings despite earlier rulings to contrary); United States v. Killough, 848 F.2d 1523, 1526 (11th Cir. 1988); Crown v. United States Railroad Retirement Board, 811 F.2d 1017 (7th Cir. 1988); Scime v. Bowen, 822 F.2d 7 (2d Cir. 1987); Dorl v. Commissioner, 507 F.2d 406 (2d Cir. 1974); see also United States v. San Francisco, 310 U.S. 16, 31-32 (1940) (government not estopped from enforcing statute in manner contrary to earlier administrative rulings by Interior Department); Lee v. Munroe & Thornton, 11 U.S. (7 Cranch) 366 (1813) (government not estopped where city commissioners recorded in journal a promise of conveyance of land, which they were without authority to implement). /7/ The court also held that respondent relied "not on incorrect advice from 'government agents'" but "on incorrect advice from the government itself." App., infra, 13a. To the extent respondent argues that "the government itself" published the OPM letter, the rule against estoppel in government cases plainly is not limited to situations in which an individual employee acts in a manner that adversely affects a party's application for benefits. For instance, the delay in processing a petition for adjustment of immigration status at issue in INS v. Miranda was not attributable to any employee's conduct, but was considered on the premise that it was the act of the Immigration and Naturalization Service as a whole. 459 U.S. at 18 & n.3. Similarly, the suspension within the Philippines of the special overseas naturalization program in INS v. Hibi was ordered by the Attorney General, in consultation with the Commissioner of Immigration, and reflected the official policy of the United States. See 414 U.S. at 10-11 (Douglas, J., dissenting). /8/ Without making explicit findings that reasonable reliance was lacking, a number of circuits have declined to allow estoppel on the basis of an unauthorized misrepresentation of law. See, e.g., Goldberg v. Weinberger, 546 F.2d 477, 481 (2d Cir. 1976). We discuss these holdings in more detail below (see pp. 19-22, infra). /9/ As noted above (see pp. 11-12, supra), the Court in Community Health Services made clear that a claim of "affirmative misconduct" cannot succeed in any case if the traditional elements of estoppel are not met. In Community Health Services, a fiscal intermediary charged with administering the receipt, disbursement, and accounting of funds granted a nonprofit health care provider under the Medicare program repeatedly gave misinformation to that organization. This negligence pushed the health care provider into severe financial turmoil when it led to a $71,480 overpayment determination. 467 U.S. at 62. This Court's holding clarified that even an agent's sustained negligence does not warrant an evasion of the traditional requirements of estoppel, including reasonable reliance and detriment. /10/ See also Hibi, 414 U.S. at 8-9 (no affirmative misconduct where government failed fully to publicize rights under statute and to station authorized naturalization representative in the Philippines); Miranda, 459 U.S. at 19 (no affirmative misconduct where INS failed to act on visa petition for 18-month period); Automobile Club v. Commissioner, 353 U.S. 180, 183-184 (1957) (facts insufficient to support estoppel where IRS Commissioner, who had followed erroneous interpretation of tax law, sought to apply corrected ruling retroactively); Merrill, supra (same, where government agent erroneously advised farmers that their crop was insurable and aided their application to government); United States v. San Francisco, 310 U.S. 16, 31-32 (1940) (same, where government sought to enforce provisions of Raker Act in manner contrary to earlier administrative rulings by Interior Department). /11/ See, e.g., Miranda, supra (no estoppel on the basis of an 18-month delay by the INS which cost an immigrant his residency rights); Hibi, 414 U.S. at 8-9 (no estoppel despite failure by Executive officials to give full publicity to naturalization rights or to make personnel available to those wishing to effectuate those rights). /12/ The weight accorded the circular by the court below also brings its holding into conflict with the decisions of a number of other courts of appeals. In Crown, supra, Railroad Retirement Board employees repeatedly misinformed a railroad employee about the amount of annuity he could expect to receive upon retirement, and a district manager confirmed the mistaken estimates in a letter; the misrepresentations induced the employee to retire. The Seventh Circuit did not consider that the existence of writing (which reflected far greater deliberation than the "writing" did here) affected the rule that estoppel should not be applied to force the government to pay benefits to one not statutorily entitled to them. 811 F.2d at 1021-1022. The Second Circuit also has declined to give written communications such dispositive weight. See Scime v. Bowen, 822 F.2d 7, 9 (1987) (finding no affirmative misconduct despite erroneous written advice regarding eligibility for benefits); Dorl v. Commissioner, 507 F.2d 406, 407 (1974) (no estoppel despite misrepresentation contained in letter from I.R.S. agent). Accord United States v. Killough, 848 F.2d 1523, 1526-1527 (11th Cir. 1988). /13/ Deltona Corp. v. Alexander, 682 F.2d 888, 892 (1982); see also Lyden v. Howerton, 783 F.2d 1554, 1558-1559 (1986). /14/ See United States v. Killough, 848 F.2d 1523, 1526 (1988); United States v. Vonderau, 837 F.2d 1540, 1541 (1988); Federal Deposit Ins. Corp. v. Harrison, 735 F.2d 408, 410-411 (1984); see also George v. Railroad Retirement Board, 738 F.2d 1233, 1236 (1984) (declining to determine whether "affirmative misconduct" can estop government acting in "sovereign" capacity on ground that misrepresentation of government agent concerning eligibility for benefits did not amount to such misconduct). The Eleventh Circuit's attention to the "proprietary" nature of government activity is contrary to this Court's determination in Merrill, 332 U.S. at 383, that the government does not become "another private litigant * * * whenever it takes over a business * * * or engages in competition with private ventures." The Circuit's approach has been rejected by a number of other courts. See, e.g., Wagner v. Director, Federal Emergency Management Agency, 847 F.2d 515 (9th Cir. 1988); Phelps v. Federal Emergency Management Agency, 785 F.2d 13, 17 (1st Cir. 1986). /15/ See ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (1988); see also GAO v. GAO Personnel Appeals Board, 698 F.2d 516, 526 (1983) (requiring misrepresentation by government agent that would cause "egregiously unfair result"). /16/ See Emery Mining Corp. v. Secretary of Labor, 744 F.2d 1411, 1416 (1984); see also United States v. Wingfield, 822 F.2d 1466, 1476 (1987) (estoppel requires establishing traditional elements and attention to "additional consideration" that it may undermine "interest of citizenry * * * in obedience to the rule of law"), cert. dismissed sub nom. County of Boulder v. United States, 108 S. Ct. 1762 (1988). /17/ See United States v. Browning, 630 F.2d 694, 702 (1980), cert. denied, 451 U.S. 988 (1981); Emery, 744 F.2d at 1416. /18/ See Morgan v. Heckler, 779 F.2d 544, 545 (9th Cir. 1985); Watkins v. United States Army, No. 85-4006 (May 13, 1989) (en banc), slip op. 15. Perhaps because the Ninth Circuit has "no single test for detecting the presence of affirmative misconduct" but decides each case "on its own particular facts and circumstances" (Watkins, slip op. 15-16), its application of the standard has not been uniform. Compare Mukherjee v. INS, 793 F.2d 1006, 1008-1009 (1986) (no estoppel where vice-consul negligently misrepresented exemption from residency requirement) with Watkins, supra (in view of prior practice of allowing reenlistment of homosexual soldier, army is estopped from enforcing regulations prohibiting his reenlistment). /19/ See Leimbach v. Califano, 596 F.2d 300, 305 (1979) (government not estopped from denying benefits where agents repeatedly gave misinformation about eligibility); see also United States v. Manning, 787 F.2d 431, 436-437 (1986) (no estoppel on ground of misleading statements). The Eighth Circuit has abstracted the meaning of "affirmative misconduct" from this Court's decisions "by negative implication." Chien-Shih Wang v. Attorney General, 823 F.2d 1273, 1276 (1987). A similar approach -- defining affirmative misconduct by determining what this Court has declined to label as such, and then noting that the case before it falls "far short" of such behavior -- marks the decisions of several circuits. See, e.g., Zimmermann v. Heckler, 774 F.2d 615, 617 (4th Cir. 1985). /20/ See Phelps v. Federal Emergency Management Agency, 785 F.2d 13, 17 (1986) (disallowing estoppel defense raised by claimant who failed to comply with procedural prerequisites for obtaining government flood insurance payments). /21/ See Akbarin v. INS. 669 F.2d 839 (1982); see also Best v. Stetson, 691 F.2d 42 (1982) (applying estoppel standard "closer to that involved in ordinary cases" to government where regulations with which party did not comply were later found unconstitutional). /22/ See, e.g., Scime, 822 F.2d at 9; Corniel-Rodriguez v. INS, 532 F.2d 301, 306-307 (2d Cir. 1976); Edgewater Hospital, Inc. v. Bowen, 857 F.2d 1123, 1137-1139 (7th Cir. 1988); Portmann v. United States, 674 F.2d 1155, 1167 (7th Cir. 1982). In the Second Circuit, the government cannot be estopped from enforcing legal requirements determining entitlement to benefits (see Scime, 822 F.2d at 9; Goldberg, 546 F.2d at 480-481), except in certain circumstances where it has failed to perform a legally required task in the immigration context (see Corniel-Rodriguez, 532 F.2d at 306-307; Scime, 822 F.2d at 9 (limiting Corniel-Rodriguez)). The Seventh Circuit, by contrast, has held more generally that reliance on the misrepresentation of a government agent cannot form the basis of an estoppel that forces payment of statutory benefits to which a party is not entitled. See In re Larson, 862 F.2d 112, 114 (1988); Crown, 811 F.2d at 1021. But that circuit has estopped the government in certain limited circumstances involving "proprietary" or similar activities (see, e.g., Portmann, supra; United States v. Fox Lake State Bank, 366 F.2d 962 (1966)), upon occasion doing so without requiring the presence of affirmative misconduct (see Azar v. United States Postal Service, 777 F.2d 1265 (1985)). See generally Crown, 811 F.2d at 1021 (limiting cases). APPENDIX