UNITED STATES OF AMERICA, PETITIONER V. GEORGE SQUILLACOTE, ET AL. No. 84-1284 In the Supreme Court of the United States October Term, 1984 The Solicitor General, on behalf of the United States, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Seventh Circuit in this case. Petition For a Writ of Certiorari To The United States Court of Appeals For The Seventh Circuit PARTIES TO THE PROCEEDING In addition to the parties named in the caption, Martin M. Arlook, Louis V. Baldovin, Jr., Harold A. Boire, Michael M. Dunn, Arthur Eisenberg, Emil C. Farkas, Robert S. Fuchs, Bernard Gottfried, Roger W. Goubeaux, Thomas C. Hendrix, Peter W. Hirsch, Wilford W. Johansen, Bernard Levine, William T. Little, Thomas W. Seeler, Henry Shore, Daniel Silverman, Joseph H. Solien, Robert J. Wilson, and Glenn A. Zipp are named as plaintiffs and as representatives of the plaintiff class, and were appellants in the court of appeals. TABLE OF CONTENTS Opinions below Jurisdiction Statutes involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E OPINIONS BELOW The opinion of the court of appeals on denial of rehearing (App., infra, 1a-19a) is reported at 747 F.2d 432. The initial opinion of the court of appeals (App., infra, 20a-44a) is reported at 739 F.2d 1208. The opinion of the district court (App., infra, 45a-67a) is reported at 562 F. Supp. 338. JURISDICTION The judgment of the court of appeals (App., infra, 68a-69a) was entered on July 13, 1984, and a petition for rehearing was denied on November 2, 1984 (App., infra, 1a-19a, 70a). On January 17, 1985, Justice Stevens extended the time within which to file a petition for a writ of certiorari until March 2, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1) STATUTES INVOLVED Section 127(a) of the Federal Courts Improvement Act of 1982, 28 U.S.C. 1295(a), provides in pertinent part: The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction -- * * * * * (2) of an appeal from a final decision of a district court of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, the District Court of the Virgin Islands, or the District Court for the Northern Mariana Islands, if the jurisdiction of that court was based in whole or in part, on section 1346 of this title, except that jurisdiction of an appeal in a case brought in a district court under section 1346(a)(1), 1346(b), 1346(e), or 1346(f) of this title or under section 1346(a)(2) when the claim is founded upon an Act of Congress or a regulation of an executive department providing for internal revenue shall be governed by sections 1291, 1292, and 1294 of this title; * * * Section 129(a) of the Federal Courts Improvement Act of 1982, 28 U.S.C. 1346(a), provides in pertinent part: The district courts shall have original jurisdiction, concurrent with the United States Claims Court, of: * * * * * (2) Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort, except that the district courts shall not have jurisdiction of any civil action or claim against the United States * * * in cases * * * which are subject to sections 8(g)(1) and 10(a)(1) of the Contract Disputes Act of 1978. * * * Section 301(a) of the Federal Courts Improvement Act of 1982, 28 U.S.C. 1631, provides: Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred. QUESTION PRESENTED Whether the court of appeals erred in refusing to vacate its judgment for want of subject matter jurisdiction, where appellate jurisdiction lies exclusively with the United States Court of Appeals for the Federal Circuit under 28 U.S.C. 1295(a)(2), on the grounds that the government had waived its jurisdictional objection by first presenting it in its rehearing petition and that transferring the action after rendering a decision on the merits would be inefficient. STATEMENT This is an action for back pay brought by a class of federal employees in the United States District Court for the Eastern District of Wisconsin pursuant to the "little Tucker Act," 28 U.S.C. 1346(a)(2). The district court rules in favor of the government, and plaintiffs appealed to the United States Court of Appeals for the Seventh Circuit. That court affirmed in part and reversed in part. Shortly after its decision was announced, government counsel noticed for the first time that jurisdiction over the appeal lies exclusively with the United States Court of Appeals for the Federal Circuit under 28 U.S.C. 1295(a)(2). The government's timely petition for rehearing raising this issue was denied with an opinion. 1. Congress created the Senior Executive Service (SES) in 1978 to attract and retain highly qualified executive managers. See Title IV of the Civil Service Reform Act of 1978 (CSRA), Pub. L. No. 95-454, 92 Stat. 1154 et seq. The SES comprises at least five pay levels, with SES-1 the lowest. Pay rates for members of the SES are set and periodically adjusted by the President (5 U.S.C. 5382(a)). The rates so established supersede all prior SES pay rates (5 U.S.C. 5382(d)). When the SES became effective on July 13, 1979, positions formerly within two other federal pay systems -- the Executive Schedule /1/ and the General Schedule /2/ -- were converted to SES positions; incumbent employees had the option of converting or remaining under their prior system. The highest rate paid to members of the SES may not exceed the rate for level IV of the Executive Schedule (5 U.S.C. 5832(b)). See App., infra, 22a-23a, 47a-49a. Congress froze salaries for fiscal year 1979, the first year that the SES was in existance, at the rates payable on September 30, 1978, for those federal employees whose salaries were fixed at or limited to rates equal to or greater than the rate payable for level V of the Executive Schedule (EL-V). See Pub. L. No. 95-391, Section 304(a), 92 Stat. 788 (5 U.S.C. 5318 note). /3/ Although Section 304(a) was enacted prior to the CSRA, the government determined that its provisions applied to the SES, and therefore limited SES pay for fiscal 1979 to the 1978 pay rate for EL-V. See App., infra, 24a-25a, 49a-50a. The President issued an order pursuant to 5 U.S.C. 5382 adjusting SES rates of pay for fiscal year 1980 on October 9, 1979. The government continued to limit SES pay to the rate established for level EL-V. The level V rate was raised by 5.5% on October 12, 1979, pursuant to Section 101(c) of Pub. L. No. 96-86, 93 Stat. 657 (5 U.S.C. 5318 note). /4/ Section 101(c) limited salary increases to 5.5% for executive employees "who under existing law are entitled to approximately 12.9% increase in pay." See App., infra, 34a-36a, 50a-51a The President adjusted SES pay rates for fiscal year 1981 pursuant to 5 U.S.C. 5382 on October 16, 1980. The government again limited SES pay during the year to the EL-V ceiling, relying on three Joint Resolutions passed by Congress between October 1980 and June 1981, which froze federal salaries at the rates payable on September 30, 1980. /5/ See App., infra, 43a-44a, 51a-52a. The cap for SES salaries was raised to level IV of the Executive Schedule, the maximum amount permitted by 5 U.S.C. 5382(b), beginning January 1, 1982 (App., infra, 52a-53a). 2.a. Respondents brought this action in 1981 in the United States District Court for the Eastern District of Wisconsin on behalf of themselves and similarly situated members of the SES, challenging the pay caps on the salaries they received during fiscal years 1979, 1980, and 1981. Jurisdiction was based on the so-called little Tucker Act, 28 U.S.C. 1346(a)(2), which provides for concurrent jurisdiction in the district courts and the Claims Court over certain claims against the government not exceeding $10,000. /6/ On cross-motions for summary judgment, the district court ruled in favor of the government on all counts (App., infra, 45a-67a). With respect to fiscal year 1979, the district court rejected respondents' argument that the CSRA had created "new positions which would enable (respondents), by converting to those positions, to move out from under the fiscal 1979 pay cap" (App., infra, 55a). Similarly, the district court concluded that the subsequent statutory pay caps applied to SES positions, noting that "(t)here can be little doubt that Sec. 101 (of Pub. L. No. 96-86, 93 Stat. 656) was meant to limit the pay of SES employees" (App., infra, 65a), and citing a conference report confirming Congress's intent to limit the 1980 pay raise of SES employees to 5.5% (App., infra, 66a). Finally, the district court found that, because the three Joint Resolutions capping federal pay for fiscal 1981 were tied to the salary rates payable for fiscal 1980, the government had acted properly in limiting SES pay rates to level V of the Executive Schedule during the final period at issue in the complaint (App., infra, 66a-67a). b. Respondents appealed to the United States Court of Appeals for the Seventh Circuit. The court of appeals affirmed the district court's order with respect to fiscal 1979, but reversed with respect to the remaining counts (App., infra, 20a-44a). With respect to fiscal 1980, the court of appeals held that Section 101(c) of Pub. L. No. 96-86, 93 Stat. 657, the pay limitation in question, applied only to federal employees "who under existing law are entitled to approximately 12.9 percent increase in pay." The court of appeals held that this limiting description did not apply to SES employees because the 12.9% figure had apparently been derived from increases authorized under another statute that was not applicable to the SES and because SES employees would not otherwise have been entitled to a 12.9% increase (App., infra, 37a-41a). The court of appeals concluded that the Conference Report relied upon by the district court, despite the clarity of its statements regarding the applicability of the pay limitation to the SES, was not a basis for "redraft(ing) the provision" (App., infra, 43a). Based on its conclusion with respect to fiscal 1980, the court of appeals also held that respondents' salaries had been frozen at an incorrect level for 1981 (id. at 43a-44a). 3. Upon receiving the court of appeals' decision, government counsel realized for the first time that respondents had taken their appeal to the wrong court. Under 28 U.S.C. 1295(a)(2), the United States Court of Appeals for the Federal Circuit has exclusive jurisdiction over appeals in little Tucker Act suits, except for tax cases. Congress established the Court of Appeals for the Federal Circuit in the Federal Courts Improvement Act of 1982 (FCIA), by merging the former Court of Claims and the Court of Customs and Patent Appeals (see 28 U.S.C. 41, 1295). The FCIA also created a new Article I trial forum, the United States Claims Court, which inherited the trial jurisdiction of the Court of Claims (see 28 U.S.C. 171 et seq., 1491 et seq.). The Senate Report stated the purpose of these provisions of the Act as follows: to fill a void in the judicial system by creating an appellate forum capable of exercising nationwide jurisdiction over appeals in areas of the law where Congress determines there is a special need for nationwide uniformity; to improve the administration of the patent law by centralizing appeals in patent cases; and to provide an upgraded and better organized trial forum for government claims cases. S. Rep. 97-275, 97th Cong., 1st Sess. 2 (1981). Section 127(a) of the FCIA provides that the Federal Circuit shall have "exclusive jurisdiction * * * of an appeal from a final decision of a district court * * * if the jurisdiction of that court was based, in whole or in part, on section 1346 of this title" (28 U.S.C. 1295(a)(2)). The district court's jurisdiction here was founded on the little Tucker Act, 28 U.S.C. 1346(a)(2) (see page 7, supra). A proviso in Section 1295(a)(2) excepts from the Federal Circuit's jurisdiction appeals from the district courts in little Tucker Act cases "when the claim is founded upon an Act of Congress or a regulation of an executive department providing for internal revenue." The FCIA also provides that, if an action is filed in or an appeal is taken to the wrong forum, "the court shall, if it is in the interest of justice, transfer such action or appeal" to the court with jurisdiction over it, and the case "shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for" the transferor court (28 U.S.C. 1631). In view of these provisions, the government timely filed a petition for rehearing with suggestion for rehearing en banc advising the court of appeals "that although most unfortunate in terms of now being so belatedly raised, (the) court was simply without jurisdiction to entertain this appeal in the first instance" (U.S. Reh'g Pet. 5). The government requested that the court vacate its judgment and transfer the appeal to the Federal Circuit (id. at 6). 4. The court of appeals denied the government's rehearing petition in a lengthy opinion (App., infra, 1a-19a), /7/ concluding that, although "the United States Court of Appeals for the Federal Circuit normally would have had exclusive jurisdiction of this appeal," the court could refuse to vacate its judgment and transfer the case where the government had "presented the jurisdictional argument for the first time after losing the case on the merits" (id. at 1a-2a). a. The court of appeals began its analysis of the jurisdictional issue by examining the exception to the Federal Circuit's jurisdiction in favor of the regional courts of appeals "when the claim is founded upon an Act of Congress or a regulation of an executive department providing for internal revenue" (28 U.S.C. 1295(a)(2)). Respondents had contended, in response to the government's rehearing petition, that the phrase "providing for internal revenue" modifies only "regulation of an executive department" and not "Act of Congress." The court rejected respondents' reading as illogical, noting that it "makes no sense" to require "a dispute over an executive regulation not pertaining to internal revenue to go on appeal to the Federal Circuit, while mandating that a dispute over the statute on which the regulation is based go on appeal to one of the regional circuits" (App., infra, 3a). The court also reasoned that respondents' position "seems too anomalous * * * to allow" in view of the narrow scope of the other exceptions to the Federal Circuit's jurisdiction contained in Section 1295(a)(2) (App., infra, 4a). Thus, the court "d(id) not question that this is, in general, the kind of case Congress intended for review by the Federal Circuit" (id. at 6a). b. Despite its conclusion that 28 U.S.C. 1295(a)(2) vested exclusive jurisdiction over the appeal in the Federal Circuit, the court of appeals held that the circumstances of the case justified its refusal to vacate its judgment and transfer the case to that forum. The court noted that one of Congress's purposes in enacting the FCIA was to insure "efficiency in the appeals process" and stated that this goal would be "sabotage(d)" by transferring the case after it had rendered a decision on the merits (App., infra, 5a). The court also pointed to the fact that the government did not, in its rehearing petition, challenge the merits of the court's decision (App., infra, 5a-6a) and stated that granting the petition "would in fact condone the very forum-shopping repudiated by Congress" in the FCIA (App., infra, 6a). The court of appeals therefore concluded that, notwithstanding its statutory lack of jurisdiction, it need not transfer a case that "has been fully argued and decided in a situation in which both the statutory meaning is ambiguous /8/ and allowing transfer would defeat the purpose of that statute" (ibid.). The court of appeals rejected the argument that defects in subject matter jurisdiction are not waivable, concluding that "subject matter jurisdiction assumes the same footing of other issues a party may raise when statutory competence rather than federalism and Article III power is at issue" (App., infra, 13a), and that "28 U.S.C. Section 1295 both lacks the absolute quality the government would give it and lacks the import of statutes regulating federal-state relations" (App., infra, 18a). The court also relied on "(c)ases involving estoppel," stating that they "provide a clear example with some relevance for the issue" (id. at 14a). In this regard, the court criticized the government for what it characterized as "unconscionabl(e) delay()" in raising the jurisdictional question and "deceptively handl(ing)" the issue by not discussing the tax exception to the Federal Circuit's jurisdiction in the rehearing petition (id. at 15a). Finally, the court expressed doubts about its ability to transfer the case to the Federal Circuit pursuant to 28 U.S.C. 1631 (App., infra, 16a-18a). REASONS FOR GRANTING THE PETITION The court of appeals' refusal to vacate its judgment notwithstanding its statutory lack of subject matter jurisdiction represents an unwarranted and fundamental departure from well established principles. If left unreviewed, the Seventh Circuit's holding that objections to subject matter jurisdiction may be waived and that, depending on the equities, a court may "ignore the otherwise clear dictates of a (jurisdictional) statute" (App., infra, 14a) will stand as a dangerous and troublesome precedent for courts construing a wide range of jurisdictional provisions. Moreover, the decision below represents a significant interpretation of the Federal Courts Improvement Act of 1982. The court's conclusion that the Act's jurisdictional provisions "lack() the absolute quality" (App., infra, 18a) normally attributed to jurisdictional statutes contravenes both the language of the Act and Congress's express intent. For these reasons, review by this Court is warranted, and summary reversal may be appropriate. 1. As a preliminary matter, the court of appeals plainly was correct in concluding (App., infra, 2a-4a) that 28 U.S.C. 1295(a)(2) vests exclusive jurisdiction over this appeal in the United States Court of Appeals for the Federal Circuit. There is no basis for reading the statute to produce the "anomalous" (App., infra, 4a) result that all statutory little Tucker Act cases must be appealed to the regional courts of appeals, while all regulatory little Tucker Act claims are appealable to the Federal Circuit except for those founded on tax regulations. /9/ Such a reading would eviscerate the Federal Circuit's nationwide jurisdiction over contract and many other claims against the government. Although the Federal Circuit has not directly addressed the issue, it has noted that it has "exclusive jurisdiction * * * of appeals from District Court cases brought, in whole or in part, under 28 U.S.C. Section 1346(a)(2) (except for tax cases)." Spagnola v. Stockman, 732 F.2d 908, 909 n.2 (1984) (emphasis supplied). /10/ Other cases have been heard by the Federal Circuit or transferred there that apparently would not be within its jurisdiction if all statutory claims brought under the little Tucker Act were appealable to the regional courts of appeals. See Oliveira v. United States, 734 F.2d 760 (11th Cir. 1984) (per curiam); Corwin v. Lehman, 724 F.2d 1577 (Fed. Cir. 1984), cert. denied, No. 83-1761 (June 4, 1984); Heisig v. United States, 719 F.2d 1153 (Fed. Cir. 1983). /11/ The court's description of Section 1295(a)(2) as "ambiguous" (App., infra, 4a) in this regard is simply without fundation. Even if such a characterization were accurate, however, any ambiguity is completely unrelated to the issue at hand -- whether defects in a court's subject matter jurisdiction, once identified, may be waived. 2.a. The court of appeals' refusal to vacate its judgment notwithstanding its conceded lack of jurisdiction threatens to undermine a longstanding line of precedent regarding the absolute and nonwaivable nature of subject matter jurisdiction. Since this Court's earliest decisions, the law has been clear: (T)he rule, springing from the nature and limits of the judicial power of the United States, is inflexible and without exception, which requires this court, of its own motion, to deny its jurisdiction, and, in the exercise of its appellate power, that of all other courts of the United States in all cases where such jurisdiction does not affirmatively appear in the record, on which, in the exercise of that power, it is called to act. On every writ of error or appeal, the first and fundamental question is that of jurisdiction * * * . Mansfield, C. & L.M. Ry. v. Swan, 111 U.S. 379, 382 (1884); see also, e.g., Capron v. Van Noorden, 6 U.S. (2 Cranch) 125 (1804). As this Court has more recently observed: Subject matter jurisdiction * * * is an Art. III as well as a statutory requirement; it functions as a restriction on federal power, and contributes to the characterization of the federal sovereign. Certain legal consequences directly follow from this. For example, no action of the parties can confer subject-matter jurisdiction upon a federal court. Thus, the consent of the parties is irrelevant, principles of estoppel do not apply, and a party does not waive the requirement by failing to challenge jurisdiction early in the proceedings. Insurance Corp. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982) (citations omitted). See also, e.g., Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 379 (1981) ("(i)f the appellate court finds that the order from which a party seeks to appeal does not fall within the (jurisdictional) statute, its inquire is over"); Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. 737, 740 (1976); Philbrook v. Glodgett, 421 U.S. 707, 721 (1975). The doctrine is enshrined in Rule 12(h)(3) of the Federal Rules of Civil Procedure (emphasis added): Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action. This rule applies with full force to the jurisdiction of the United States Court of Appeals for the Federal Circuit. Nothing in the language of the Federal Courts Improvement Act of 1982 implies that its jurisdictional provisions are potentially waivable or otherwise less demanding than those found elsewhere in Title 28. Indeed, Congress reaffirmed in the strongest terms the absolute nature of the jurisdictional provisions it enacted with respect to the Federal Circuit: Before discussing the court's jurisdiction, it needs repetition here that the Federal courts are courts of limited jurisdiction. There is no presumption in favor of jurisdiction, and the basis for jurisdiction always must be affirmatively shown. It is not sufficient that jurisdiction merely be inferred argumentatively. * * * The defendant in a civil proceeding may, at any time, assert a court's lack of jurisdiction over the subject matter. Furthermore, even though the defendant has not so moved, Rule 12(h)(3), Federal Rules of Civil Procedure, expressly provides that a court "shall dismiss the action" "whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter." What this all amounts to is that a court's jurisdiction is not something that is easily manipulated. S. Rep. 97-275, supra, at 18-19. /12/ Although it is unfortunate that neither the parties nor the court noticed the jurisdictional defect earlier in the proceedings, the court was obliged to vacate its judgment after the issue was presented to it in the government's rehearing petition. See, e.g., United States v. New York, N.H. & H. R.R., 276 F.2d 525, 543-544 (2d Cir.) (Friendly, J.) (vacating on suggestion of want of jurisdiction made for first time after denial of rehearing), cert. denied sub nom. Tri-Continental Financial Corp. v. Glenmore, 362 U.S. 964 (1960); Cummings v. Redeeriaktieb Transatlantic, 242 F.2d 275 (3d Cir. 1957). /13/ Not only does the decision below conflict with these cases, it is plainly at odds with this Court's own practice of addressing the existence of subject matter jurisdiction even when the question has not been addressed below. See, e.g., Andrus v. Charlestone Stone Products Co., 436 U.S. 604, 607 n.6 (1978); Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 278 (1977); Gutierrez v. Waterman Steamship Corp., 373 U.S. 206, 209 (1963); Louisville & N R.R. v. Mottley, 211 U.S. 149, 152 (1908). b. The court of appeals' stated reasons for disregarding the firmly established principles just described do not withstand scrutiny. First, the court's argument (App., infra, 13a) that defects in subject matter jurisdiction are waivable "when statutory competence rather than federalism and Article III power is at issue" is erroneous. Even a "statutory grant of jurisdiction * * * reflects the constitutional source of federal judicial power" (Insurance Corp. v. Compagnie des Bauxites de Guinee, 456 U.S. at 701). The presence of direct federal-state concerns in a particular case, moreover, is not necessary to the treatment of subject matter jurisdiction as a nonwaivable requirement. Questions regarding the appealability of orders under 28 U.S.C. 1291, for example, implicate not federalism but Congress's policies regarding the orderly division of business between the federal courts -- just as does 28 U.S.C. 1295(a)(2). /14/ See, e.g., Flanagan v. United States, No. 82-374 (Feb. 21, 1984), slip op. 4-5. Yet questions arising under Section 1291 and other such statutes have consistently been treated under the same absolute jurisdictional doctrines that the court of appeals refused to apply here. See, e.g., Donovan v. Richland County Ass'n for Retarded Citizens, 454 U.S. 389 (1982) (per curiam) (vacating judgment and opinion of court of appeals for lack of jurisdiction under 28 U.S.C. 1252, 1291); Liberty Mutual Insurance Co. v. Wetzel, 424 U.S. at 740 (dismissing for want of an appealable order under Section 1291 "(t)hough neither party ha(d) questioned the jurisdiction of the Court of Appeals to entertain the appeal"); United States v. New York, N.H. & H. R.R., supra (dismissing for want of jurisdiction under Expediting Act of 1903); Cummings v. Redeeriaktieb Transatlantic, supra (dismissing for want of jurisdiction under 28 U.S.C. 1292). /15/ The court of appeals' reliance on principles of "fairness" and "(c)ases involving estoppel" (App., infra, 14a) is plainly incorrect. As this Court stated in Insurance Corp. v. Compagnie des Bauxites de Guinee (456 U.S. at 702), "principles of estoppel do not apply" to questions of subject matter jurisdiction, and "no action of the parties can confer subject-matter jurisdiction upon a federal court." In American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951), for example, the Court vacated a judgment for want of jurisdiction in a removed case on the motion of the party that had removed the action and subsequently lost on the merits. See also Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 377 n.21 (1978) ("asserted inequity * * * is irrelevant" where court lacks subject matter jurisdiction). In any event, the court of appeals' criticism (App., infra, 6a, 15a) of the government for forum-shopping and delaying in raising the jurisdictional bar is unwarranted. /16/ While the government was undeniably late in raising the issue, it was the respondents, not the government, who noticed the appeal to the wrong court. And the court of appeals failed in its own obligation to inquire into its jurisdiction, "the first and fundamental question" raised "(o)n every writ of error or appeal" (Mansfield, C. & L.M. Ry. v. Swan, 111 U.S. at 382). Moreover, by seeking transfer to the Federal Circuit, we are giving up a favorable judgment from the court of appeals with respect to fiscal year 1979. Finally, the court of appeals relied (App., infra, 4a-6a) on the goal of judicial efficiency. This policy cannot override Congress's unmistakable command that this appeal be heard only by the Federal Circuit. Cf. Patsy v. Board of Regents, 457 U.S. 496, 512 n.13 (1982) (burden imposed on federal courts by absence of exhaustion requirement in Section 1983 actions "is not sufficient to justify a judicial decision to alter congressionally imposed jurisdiction"). Indeed, if generalized notions of judicial efficiency could defeat limitations on a court's jurisdiction, no appellate court would ever be justified in vacating a lower court's decision on the merits of a controversy for want of subject matter jurisdiction. Cf. Board of License Commissioners v. Pastore, No. 83-963 (Jan. 8, 1985) (dismissing writ of certiorari as moot after case had been briefed and argued); Donovan v. Richland County Ass'n for Retarded Citizens, 454 U.S. at 390 & n.2 (vacating for want of jurisdiction where court of appeals had entered two separate decisions and appellate review on remand was time-barred). Whatever the role of Congress's policies in enacting the FCIA, it is clear that they would be furthered, not thwarted, by the transfer of this action. Congress intended cases such as this to be adjudicated in a nationwide appellate forum in order to provide for uniform decisions. The refusal of the court below to transfer could create different results in similar cases, since other federal employees with claims analogous or related to those of respondents will be required to litigate in the Federal Circuit, which will not be bound by the Seventh Circuit's resolution of the merits. /17/ 3. The court of appeals also concluded that it might not be able to transfer the appeal to the Federal Circuit pursuant to 28 U.S.C. 1631 and that transfer would be futile because the Federal Circuit would come to the same result as it had on the merits (App., infra, 16a-18a). Neither point is well taken. Section 1631, which was enacted as Section 301(a) of the FCIA, applies to appeals as well as to the filing of civil actions, a point overlooked by the court below. Hence, Congress could not have intended the statute to apply only to actions that had not yet been resolved on the merits. /18/ The "interest of justice" language is no bar to transfer here -- as between transfer and dismissal, the only choices legitimately open to the court, the former will obviously be more fair. /19/ Nor would transfer be futile. Our decision not to include the merits as a separate issue in the rehearing petition stemmed not from our acquiescence in the court's opinion on the merits, but rather from our conviction that the jurisdictional argument was dispositive. It would therefore have been both inappropriate and unnecessary to burden the court of appeals with a request for reconsideration of the merits. Although we similarly do not present the merits in this petition, to forestall misunderstanding we note briefly that we have strong arguments that the court of appeals erred in concluding that Congress did not intend Section 101(c) of Pub. L. No. 96-86, 93 Stat. 657 (covering fiscal year 1980) to apply to SES positions. /20/ The court of appeals concluded that the Section 101(c) pay cap (see note 4, supra) was inapplicable because it found that the Section's reference to employees "who under existing law are entitled to approximately 12.9 percent increase in pay" did not describe SES employees and therefore excluded them from the pay cap (App., infra, 37a-39a). The Office of Personnel Management estimates that SES employees paid at rates SES-4 through SES-6 (approximately 82% of SES members at the start of fiscal year (1980) were due an 11.3% raise (see id. at 38a-39a). The statute's use of "approximately 12.9 percent increase" therefore does not clearly exclude the SES. Moreover, it is not at all clear that the language relied on by the court of appeals was intended to limit the class of executive employees subject to the pay cap. Thus, given the statute's less than precise language, the court of appeals erred in refusing to defer to Congress's clearly expressed intention in the Conference Committee report to include SES employees within the pay cap: The conferees wish to note that by continuing the application of section 304 of the Legislative Branch Appropriation Act, 1979 (Pub. L. No. 95-391, 92 Stat. 788), the joint resolution ensures that many individuals in positions which were transferred to the new Senior Executive Service (SES) may not receive pay increases of more than 5.5 percent. Although under the Civil Service Reform Act the maximum rate of pay for the SES is set at level IV of the Executive Schedule, those positions transferred into the SES earlier this year which on September 30, 1978, were subject to the level V ceiling will continue to be subject to the level V ceiling. H.R. Conf. Rep. 96-513, 96th Cong., 1st Sess. 3 (1979) (emphasis supplied). See, e.g., Train v. Colorado Public Interest Research Group, Inc., 426 U.S. 1, 9-10 (1976). 4. The court of appeals' ruling that Congress's grant of exclusive jurisdiction to the Federal Circuit is subject to waiver represents a significant interpretation of the Federal Courts Improvement Act that is both incorrect as a matter of law and worthy of review by this Court. To our knowledge, the court below is the first court of appeals to hold that dispositive objections to a court's subject matter jurisdiction may be waived if not presented before the court's decision on the merits. Review of the decision below is, therefore, necessary not only to implement Congress's intent in enacting the FCIA, but also to ensure that the fundamental principles of subject matter jurisdiction established by this Court and founded on the Constitution continue to possess the "absolute quality" (App., infra, 18a) that the court found lacking in Section 1295(a)(2). The court of appeals' determination that the jurisdictional language of Section 1295(a)(2) is more pliable than other jurisdictional provisions is directly contrary to Congress's intent and will have an impact on the subsequent interpretation of the Act, particularly with regard to the proper limitations on the Federal Circuit's jurisdiction. The principles espoused by the court below in reaching its decision are in direct conflict with the teachings of this Court and the other courts of appeals. The Seventh Circuit's reliance on generalized notions of judicial efficiency as a basis for waiving objections to a court's subject matter jurisdiction and its consideration of the parties' equities at the expense of the statute's language are potentially of great significance, as they could be applied to virtually every jurisdictional statute. Finally, respondents' claims total well over $30 million. The government is entitled to have these claims decided in the forum that Congress intended to be the exclusive appellate arbiter, short of this Court, of the dispute. CONCLUSION The petition for a writ of certiorari should be granted. The Court may wish to consider summary reversal. Respectfully submitted. REX E. LEE Solicitor General B. WAYNE VANCE Acting Assistant Attorney General CHARLES FRIED Deputy Solicitor General BRUCE N. KUHLIK Assistant to the Solicitor General WILLIAM KANTER MARGARET E. CLARK Attorneys FEBRUARY 1985 /1/ The Executive Schedule covers executive-level employees. It includes five pay levels, with level I the highest and level V the lowest. See 5 U.S.C. 5311 et seq. /2/ Most civilian federal employees are paid and classified under the General Schedule. See 5 U.S.C. 5101 et seq., 5331 et seq. /3/ Section 304(a) provided: No part of the funds appropriated for the fiscal year ending September 30, 1979, by this Act or any other Act may be used to pay the salary or pay of any individual in any office or position in the legislative, executive, or judicial branch, or in the government of the District of Columbia, at a rate which exceeds the rate (or maximum rate, if higher) of salary or basic pay payable for such office or position for September 30, 1978, if the rate of salary or basic pay for such office or position is -- (1) fixed at a rate which is equal to or greater than the rate of basic pay for level V of the Executive Schedule under section 5316 of title 5, United States Code, or (2) limited to a maximum rate which is equal to or greater than the rate of basic pay for such level V (or to a percentage of such a maximum rate) by reason of section 5308 of title 5, United States Code, or any other provision of law or congressional resolution. /4/ Section 101(c) provided in pertinent part: For the fiscal year 1980, funds available for payment to executive employees, which includes Members of Congress, who under existing law are entitled to approximately 12.9 percent increase in pay, shall not be used to pay any such employee or elected or appointed official any sum in excess of 5.5 percent increase in existing pay and such sum if accepted shall be in lieu of the 12.9 percent due for such fiscal year. Provided, further, that for the purpose of carrying out this provision and notwithstanding the provisions of the Federal Pay Comparability Act of 1970, the Executive Salary Cost-of-Living Adjustment Act, or any other related provision of law, which would provide an approximate 12.9 percent increase in pay for certain Federal officials for pay periods beginning on or after October 1, 1979, * * * the provisions of section 304 (of Pub. L. No. 95-391), which limit the pay for certain Federal offices and positions, shall apply to funds appropriated by this joint resolution or any Act for the fiscal year 1980, except that in applying such limitation the term "at a rate which exceeds by more than 5.5 percent the rate" shall be substituted for the term "at a rate which exceeds the rate" where it appears in subsection (a) of such section for the purpose of limiting pay increases to 5.5 percent. /5/ Pub. L. No. 96-369, 94 Stat. 1351 et seq.; Pub. L. No. 96-536, 94 Stat. 3166 et seq.; Pub. L. No. 97-12, Tit. III, 95 Stat. 95. /6/ No member of the respondent class has a claim in excess of the jurisdictional amount. Cf. Zahn v. International Paper Co., 414 U.S. 291 (1973); Snyder v. Harris, 394 U.S. 332 (1969); see also Fitzgerald v. Staats, 429 F. Supp. 933 (D.D.C. 1977), aff'd, 578 F.2d 435 (D.C. Cir.), cert. denied, 439 U.S. 1004 (1978). The class is composed of 5,000-6,000 members (App., infra, 21a), most with claims of more than $5,000. /7/ The suggestion for rehearing en banc was also denied (App., infra, 70a). /8/ The reference to ambiguity concerned the coverage of the "providing for internal revenue" exception. See page 11, supra; App., infra, 4a. /9/ The source of the court of appeals' concern (App., infra, 3a) appears to be the lack of punctuation setting off the entire exception, which would have left no doubt that the qualifying language referred to statutes as well as regulations. In the brief discussions of the exception in the legislative history, however, commas do set off the exception as a whole. See S. Rep. 97-275, 97th Cong., 1st Sess. 20 (1981); H.R. Rep. 97-312, 97th Cong., 1st Sess. 42 (1981). Nothing in the legislative history suggests that the absence of such clarifying punctuation in the statute itself has substantive significance. /10/ Cf. S. Rep. 97-275, supra, at 39 (additional views of Sen. Leahy) (noting opposition to specialized court for hearing tax appeals). /11/ Milburn v. United States, 734 F.2d 762 (11th Cir. 1984), relied on by the court below (App., infra, 18a), contains no discussion of the jurisdictional question. The court of appeals' speculation as to the decision's significance is wholly conjectural. /12/ Although Congress was largely concerned with the possibility that the Court of Appeals for the Federal Circuit might read its jurisdiction in an unduly expansive fashion, it nowhere suggested that the settled doctrine of nonwaivability, which it expressly endorsed, would not apply where, as here, a regional court of appeals has departed from the statutory limits on its jurisdiction. /13/ As the court stated in Cummings (242 F.2d at 275-276): The appellee now suggests, with apologies for raising the question now for the first time (in his petition for rehearing), that the court had no jurisdiction. He need not apologize; the jurisdictional point is always open and the court should be alert to it whether counsel notes it or not. We are constrained to agree that there is no jurisdiction in this case. * * * * * The opinion will be withdrawn, therefore, and the appeal dismissed for lack of jurisdiction. /14/ In fact, Section 1295(a)(2) implicates much more than simply details regarding the business of the courts of appeals. In conjunction with the little Tucker Act, it is part of the government's waiver of sovereign immunity and as such must be carefully respected and strictly construed. See generally United States v. Mitchell, 463 U.S. 206 (1983); United States v. King, 395 U.S. 1 (1969). The government's consent to suit in little Tucker Act cases does not extend to allowing appeals to be heard in the regional courts of appeals, but only in the Federal Circuit. /15/ The reliance placed by the court of appeals on the cases it cites (App., infra, 9a-13a) in support of the notion that "a more flexible approach to subject matter jurisdiction (applies) when federal-state relations are not at stake" (id. at 9a) is misplaced. In Estate of Watson v. Blumenthal, 586 F.2d 925 (2d Cir. 1978), the court inquired into the relationship between the Tucker Act and the Administrative Procedure Act because the statutes did not unambiguously resolve the jurisdictional issue. Here, as we have noted (page 15, supra), any possible ambiguity in the FCIA is unrelated to the question presented. In any event, the Watson court did not suggest that the jurisdictional question was waivable; to the contrary, it addressed the issue even though the district court "did not discuss the jurisdictional aspects of the case" (id. at 927). In Transcontinental Gas Pipe Line Corp. v. FERC, 659 F.2d 1228 (D.C. Cir. 1981), the court concluded that the "straightforward language (of the Natural Gas Act) command(ed) (it) to accept jurisdiction" (659 F.2d at 1237); again, there is no hint that subject matter defects may be waived. Finally, in Port of Boston Marine Terminal Ass'n v. Rederiaktiebolaget Transatlantic, 400 U.S. 62 (1970), the Court noted legislative history in support of its reading of a jurisdictional provision (id. at 70), and went on to vacate the decision rendered on the merits by the court of appeals even though there was no opportunity on remand for review by another court (id. at 72). Nothing in the Court's opinion suggests that a court may enter a judgment where it lacks the statutory power to do so. /16/ The court of appeals' criticism (App., infra, 15a) of the government for failing to address the tax exception to the Federal Circuit's jurisdiction (see pages 13-15, supra) is wholly uncalled for and is in any event completely irrelevant. /17/ There are a number of executive personnel systems that are modeled after the SES and that follow similar salary rules, such as the General Accounting Office Senior Executive Service, the Senior Foreign Service, and the Veterans Administration's non-physician medical center directors. Persons in these positions are not within the respondent class, but they may have similar claims. /18/ Had Congress wished, it could have provided for subject matter jurisdiction in the regional courts of appeals where their jurisdiction is not challenged until rehearing. But Congress did not do so: its enactment of Section 1631 is further proof of its intent that a court without jurisdiction under the FCIA must dismiss or transfer the appeal. The one course a court cannot take is to refuse to vacate a judgment that it lacked jurisdiction to enter. /19/ The court of appeals appeared to recognize as much (see App., infra, 18a n.9). /20/ Because of the relationship between the pay cap statutes governing fiscal years 1980 and 1981 (see page 8, supra), a decision in favor of the government for 1980 would compel the same result with respect to 1981. APPENDIX