Raymond G. Lackhouse, Petitioner, v. Merit Systems Protection Board, Internal Revenue Service,and Office of Personnel Management, Respondents, 773 F.2d 313 (Fed. Cir. 1985)

We face a reprise of petitioner Raymond Lackhouse's claim that, as a veteran preference eligible, he was illegally refused selection for a post by the Internal Revenue Service (IRS). In our first decision, we held the then record too sparse and inadequate for us even to consider the position of the Merit Systems Protection Board (MSPB or Board) that it lacked jurisdiction over this case, and therefore we vacated the Board's initial decision and remanded for full further proceedings. Lackhouse v. Merit Systems Protection Board, 734 F.2d 1471 (Fed. Cir. 1984). On remand, the Board's presiding official held a hearing and concluded again that the Board had no jurisdiction.¹  (The presiding official did, however, also consider the merits to some extent.) Petitioner has appealed, once again, to this court. We now hold that the MSPB did have jurisdiction but that the presiding official correctly held in his decision that petitioner was entitled to no relief from the MSPB.

The facts are undisputed. In 1981 the IRS requested from the Office of Personnel Management (OPM) a civil service certificate for 78 Revenue Officer, GS-7 positions, at 11 Southern California locations. OPM issued a certificate with 378 names, and after an availability questionnaire to those individuals IRS determined that 77 were available for at least one of the desired locations. Using those individuals, and their civil service rankings, IRS created a "spreadsheet" listing each available certified eligible in rank order, and showing the locations for which he or she was available. IRS then proceeded to make appointments at the various desired locations, each time considering the then top three eligibles (available for the particular location) who had not previously been selected. But IRS also utilized 5 C.F.R. Sec. 332.405 (the "rule of three"), permitting an appointing officer to drop from consideration "an eligible who has been considered by him for three separate appointments from the same or different certificates for the same position." That is, an eligible who had been considered three separate times, but was not selected during those three considerations, was dropped from further consideration.

Lackhouse (who claims preference eligibility) was in 17th place out of the 77 names, and he had listed himself for each of the 11 locations. He was properly considered, in order, for three appointments at three different places, but was not selected. In none of these three selections was he passed over in favor of a lower-ranked non-preference eligible. After petitioner had been considered and non-selected those three times, IRS eliminated him from further consideration (just as it did with other comparably situated listees). After IRS had made 20 appointments from the OPM certificate, it was returned to OPM without making any more Revenue Officer appointments.

Petitioner then appealed to the MSPB, urging inter alia that (1) the so-called "rule of three" which IRS applied to him pursuant to the explicit OPM regulation was invalid because in conflict with the Veterans' Preference Act, and (2) IRS' use of the "spreadsheet" was improper. Those two claims are still pressed before us, but before we consider them we shall discuss the MSPB's determination that it lacked jurisdiction of Lackhouse's case.

The Board's appellate jurisdiction is, as has been repeatedly held, limited to those actions made appealable to it by law, rule or regulation. 5 U.S.C. § 1205(a) (1); Cowan v. United States, 710 F.2d 803, 805 (Fed. Cir. 1983). In this instance Lackhouse's claim is that he was the victim of improper employment practices--the use of the "spreadsheet" and application of the "rule of three."²  The MSPB's jurisdiction over that type of appeal stems from 5 C.F.R. Sec. 300.104(a) which provides:

A candidate who believes that an employment practice which was applied to him or her by the Office of Personnel Management violates a basic requirement in Sec. 300.103 [including any employment practice discriminatory in a "non-merit" factor] is entitled to appeal to the Merit Systems Protection Board under the provisions of its regulations.

See Dowd v. Office of Personnel Management, 745 F.2d 650, 651 (Fed. Cir. 1984).

The presiding official below held that neither the use of the "spreadsheet" nor use of the "rule of three" was applied to Lackhouse by the Office of Personnel Management --but rather by the IRS alone--and accordingly that there is no jurisdiction in the MSPB under 5 C.F.R. Sec. 300.104(a), supra. We differ with this result (as to the "rule of three" regulation) because OPM promulgated the "rule of three"--5 C.F.R. Sec. 332.405, supra --which directly and specifically authorized IRS to refuse to consider further any civil service eligible previously considered by the same appointing officer from the same or a different certificate for the same position. Without doubt OPM's unqualified adoption of the regulation expressly allowed IRS to follow the allegedly improper employment practice of disregarding Lackhouse's veterans' employment preference. It was OPM's explicit authorization that impelled IRS to act as it did.³ 

It follows that the MSPB presiding official erred in saying that the Board lacked jurisdiction over the question of the validity of the "rule of three" (5 C.F.R. Sec. 332.405) as applied to veteran preference eligibles. MSPB did have that precise authority.⁴ III.

There is, of course, a plain difference between the existence of jurisdiction in the tribunal and a petitioner's failure to state a claim on which relief can be granted. "As frequently happens where jurisdiction depends on subject matter, the question whether jurisdiction exists has been confused with the question whether the complaint states a cause of action." Montana-Dakota Utilities Co. v. Northwestern Public Service Co., 341 U.S. 246, 249, 71 S. Ct. 692, 694, 95 L. Ed. 912 (1951). See also Ralston Steel Corp. v. United States, 340 F.2d 663, 667-69 (Ct. Cl.), cert. denied, 381 U.S. 950, 85 S. Ct. 1803, 14 L. Ed. 2d 723 (1965). In this case, we must likewise hold that, though the Board did have jurisdiction, Lackhouse has no remediable claim because the "rule of three" was validly adopted under the Civil Service Reform Act and preexisting legislation, clearly survived the Veterans' Preference Act, and was lawfully applied to petitioner.

There is, first of all, no facial conflict between the "rule of three," now embodied in 5 C.F.R. Sec. 332.405, and the portions of the Civil Service Reform Act dealing with veterans' preference in the civil service. In particular, Sec. 3318(b) (1) prohibits only the passing over of preference eligibles in favor of lower ranked non-preference employees--an action which did not occur here--and deals with no other interrelation of veterans' preference and job selection. Similarly, Sec. 3317(b) treats only with discontinuance of certification of a preference eligible who has been three times passed over for a lower-ranking non-preference eligible (which, as we have already observed, also did not happen here)--a process which is quite distinct from the historic "rule of three" for all civil service applicants.⁵ 

Second, the long history of the "rule of three" (or its analogue) shows that it has always co-existed with veterans' preference in the civil service. The civil service rules contained in the First Annual Report of the Civil Service Commission provided that " [n]o person upon any register shall be certified more than four times to the same office in the customs or postal service, or more than twice to any department in Washington, unless upon request of the appointing officer...." United States Civil Service Commission, First Ann. Rpt., Appendix No. 2, Rule XVI(4) (1884). In 1886 this was reduced to three considerations. United States Civil Service Commission, Third Ann. Rpt., Appendix No. 2, Rule XVI(4) (1886). These specific rules coexisted with contemporary recognition of veterans' preference. Id., Rule XI; First Ann. Rpt., supra, Rule XI.

Nor did the Veterans' Preference Act of 1944, 58 Stat. 389, alter this coexistence.⁶  The former Civil Service Commission, which administered the Veterans' Preference Act (with respect to the civil service), contemporaneously promulgated a regulation which was substantially the same as current 5 C.F.R. Sec. 332.405. See 5 C.F.R. Sec. 18.4(c) (1944). This early and continued Commission (and OPM) interpretation of the Act should be given great deference (United States v. Clark, 454 U.S. 555, 565-66, 102 S. Ct. 805, 811-12, 70 L. Ed. 2d 768 (1982)), especially since there is no contrary indication in statute, regulation, legislative history, or practice.

We have to conclude, therefore, that 5 C.F.R. Sec. 332.405--the current "rule of three"--is lawful and was rightly applied to petitioner Lackhouse.

The end-result is that we reverse the Board's holding that it lacked jurisdiction over Lackhouse's appeal but we need not remand because the only issue we find within MSPB jurisdiction is purely legal and the presiding official discussed and correctly decided that very issue (though he erroneously thought he had no jurisdiction to do so). As to that aspect of the MSPB decision, we affirm.

REVERSED AS TO LACK OF JURISDICTION, AFFIRMED AS TO THE MERITS.