LOEFFLER v. FRANK, POSTMASTER GENERAL OF THE UNITED STATES
No. 86-1431
Supreme Court of the United States
Argued January 11, 1988—Decided June 13, 1988
486 U.S. 549
Lisa S. Van Amburg argued the cause and filed briefs for petitioner.
Charles A. Rothfeld argued the cause for respondent. With him on the brief were Solicitor General Fried, Deputy
JUSTICE BLACKMUN delivered the opinion of the Court.
This case presents the question whether prejudgment interest may be awarded in a suit against the United States Postal Service brought under Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended,
I
Petitioner Theodore J. Loeffler was discharged from his position as a rural letter carrier for the United States Postal Service.1 Petitioner appealed his termination to the Merit Systems Protection Board and, when his discharge was affirmed there, sought administrative relief from the Equal Employment Opportunity Commission. This, also, was without success. Contending that his discharge resulted from
The United States Court of Appeals for the Eighth Circuit affirmed the denial of prejudgment interest. Loeffler v. Carlin, 780 F. 2d 1365, 1370-1371 (1985). Concluding that the District Court‘s reliance on Cross was “understandable and proper,” id., at 1370, the court stated: “If the question of prejudgment interest is to be reconsidered, it should be reconsidered by the Court en banc.” id., at 1371.
Subsequently, the Eighth Circuit undertook that en banc reconsideration, and, by a 6-to-5 vote, affirmed the judgment of the District Court. Loeffler v. Tisch, 806 F. 2d 817 (1986). The majority adopted the reasoning of the majority of the original panel in Cross, 733 F. 2d 1327, which concluded that Congress had not waived the sovereign immunity of the Postal Service with regard to prejudgment interest in a Title
The 5-judge dissent adopted the reasoning of the dissent in the Cross panel submission. That dissent had concluded that “limits on prejudgment interest have been imposed solely because of the barrier of sovereign immunity,” 733 F. 2d, at 1332, and that the sue-and-be-sued clause in the Postal Reorganization Act had eliminated that barrier in actions against the Postal Service. The dissent noted this Court‘s observation in Shaw: “The no-interest rule is . . . inapplicable where the Government has cast off the cloak of sovereignty and assumed the status of a private commercial enterprise.” 806 F. 2d, at 822, quoting Shaw, 478 U. S., at 317, n. 5. In the dissent‘s view, the Postal Service fits within this exception and, therefore, “an award of prejudgment interest against the Postal Service under Title VII is not barred by sovereign immunity.” 806 F. 2d, at 823.
II
A
The question of statutory interpretation here presented, involving the interaction of the Postal Reorganization Act and Title VII, lends itself to straightforward resolution. Absent a waiver of sovereign immunity, the Federal Government is immune from suit. United States v. Sherwood, 312 U. S. 584, 586 (1941). Congress, however, has waived the sovereign immunity of certain federal entities from the times of their inception by including in the enabling legislation provisions that they may sue and be sued. In FHA v. Burr, 309 U. S. 242, 245 (1940), the Court explained:
“[S]uch waivers by Congress of governmental immunity should be liberally construed. . . . Hence, when Congress establishes such an agency, authorizes it to engage in commercial and business transactions with the public, and permits it to ‘sue and be sued,’ it cannot be lightly assumed that restrictions on that authority are to be implied. Rather if the general authority to ‘sue and be sued’ is to be delimited by implied exceptions, it must be clearly shown that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the ‘sue and be sued’ clause in a narrow sense. In the absence of such showing, it must be presumed that when Congress
launched a governmental agency into the commercial world and endowed it with authority to ‘sue or be sued,’ that agency is not less amenable to judicial process than a private enterprise under like circumstances would be.” (Footnote omitted.)
Accord, Franchise Tax Board of California v. USPS, 467 U. S. 512, 517-518 (1984); Reconstruction Finance Corporation v. J. G. Menihan Corp., 312 U. S. 81, 84-85 (1941); see also Keifer & Keifer v. Reconstruction Finance Corporation, 306 U. S. 381 (1939). Encompassed within this liberal-construction rule is the principle “that the words ‘sue and be sued’ normally include the natural and appropriate incidents of legal proceedings.” J. G. Menihan Corp., 312 U. S., at 85.
In accord with this approach, this Court has recognized that authorization of suits against federal entities engaged in commercial activities may amount to a waiver of sovereign immunity from awards of interest when such awards are an incident of suit. For example, in Standard Oil Co. v. United States, 267 U. S. 76 (1925), the Court reviewed a suit brought under § 5 of the Act of September 2, 1914, ch. 293, 38 Stat. 711, on insurance claims issued by the Bureau of War Risk Insurance. The Court concluded: “When the United States went into the insurance business, issued policies in familiar form and provided that in case of disagreement it might be sued, it must be assumed to have accepted the ordinary incidents of suits in such business.” 267 U. S., at 79. Accordingly, interest was allowed. id. See also National Home for Disabled Volunteer Soldiers v. Parrish, 229 U. S. 494 (1913) (interest allowed against eleemosynary agency that Congress had authorized “to sue and be sued“). Cf. Library of Congress v. Shaw, 478 U. S., at 317, n. 5.
When Congress created the Postal Service in 1970, it empowered the Service “to sue and be sued in its official name.”
Our unanimous view of the Postal Service expressed in Franchise Tax Board is controlling here. By launching “the Postal Service into the commercial world,” and including a sue-and-be-sued clause in its charter, Congress has cast off the Service‘s “cloak of sovereignty” and given it the “status of a private commercial enterprise.” Shaw, 478 U. S., at 317, n. 5. It follows that Congress is presumed to have waived any otherwise existing immunity of the Postal Service from interest awards.
None of the exceptions to the liberal-construction rule that guides our interpretation of the waiver of the Postal Service‘s immunity operates to overcome this presumption. Subjecting the Service to interest awards would not be inconsistent
Accordingly, we conclude that, at the Postal Service‘s inception, Congress waived its immunity from interest awards, authorizing recovery of interest from the Postal Service to the extent that interest is recoverable against a private party as a normal incident of suit.
B
Respondent concedes, and apparently all the United States Courts of Appeals that have considered the question agree, that Title VII authorizes prejudgment interest as part of the backpay remedy in suits against private employers.5 This
III
A
In order to address respondent‘s arguments, it is necessary to explain briefly the manner in which Title VII provides a cause of action to federal employees. As originally enacted in 1964, Title VII, by excluding federal entities from its definition of employer, see § 701(b) of Title VII,
Based on this background, respondent channels his attack into two principal arguments. First, respondent contends that the waiver of sovereign immunity effected by the “sue-and-be-sued” clause of the Postal Reorganization Act,
B
In support of his argument that the sue-and-be-sued clause of the Postal Reorganization Act,
Respondent would find further support for his argument that the sue-and-be-sued clause is irrelevant to this case in the manner in which Congress extended a Title VII cause of action to federal employees in 1972. Specifically, respondent relies on a distinction between causes of action that may be asserted against commercial entities generally, as, for example a state garnishment statute, see Franchise Tax Board of California v. USPS, 467 U. S. 512 (1984), and causes of action, such as § 717 of Title VII, that contain special procedures and limitations applicable only to federal defendants. Respondent contends that while a sue-and-be-sued clause may apply to a suit against a federal entity in the former class of actions, it has no bearing in the latter. We are not persuaded by this argument for two reasons.
First, this is an argument for an implied exception to the waiver of sovereign immunity effected by a sue-and-be-sued clause. Yet respondent offers no reason for concluding that Congress intended his implied exception to be added to those that this Court articulated in FHA v. Burr, 309 U. S., at 245, and we see no reason why we should do so.
Second, when Congress intends the waiver of sovereign immunity in a new cause of action directed against federal entities to be exclusive, —in effect, to limit the force of “sue-and-be-sued” clauses—it has said so expressly. Congress’ waiver of the sovereign immunity of the United States for certain torts of federal employees, in the Federal Tort Claims
“The authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under section 1346(b) of this title, and the remedies provided by this title in such cases shall be exclusive.”
28 U. S. C. § 2679(a) .
In contrast, neither the language of § 717 of Title VII nor its legislative history contains an expression that the waiver of sovereign immunity it effected was intended also to narrow the waiver of sovereign immunity of entities subject to sue-and-be-sued clauses. Accordingly, we reject respondent‘s contention that
C
Respondent next argues that, even if the waiver of sovereign immunity effected by § 401(1) is controlling, an award of prejudgment interest is inappropriate because the statute that provides petitioner with his cause of action, § 717 of Title VII, does not authorize interest awards. Respondent starts from the premise that had Congress expressly stated that prejudgment interest is unavailable in actions under § 717, the outcome of this case would be beyond dispute. Therefore, it is claimed, “[t]he fact that the ‘no-interest’ rule is not made explicit in the statute, but rather is a conclusion drawn by this Court in Shaw . . . , does not make the rule any less binding.” Brief for Respondent 16. This argument, in our view, misunderstands both the nature of the remedy § 717 affords and the basis of our holding in Shaw.
Without doubt, petitioner‘s cause of action in this case is derived from § 717. We do not disagree with respondent that, had § 717 explicitly stated that the cause of action it provided did not include prejudgment interest, such interest would be unavailable in this case. But Congress made no express statement of that kind. To the contrary, Congress expressly incorporated in § 717 provisions of Title VII that allow an interest award. Specifically, § 717(c),
Thus, although petitioner‘s cause of action under § 717 is circumscribed by mandatory administrative prerequisites that are distinct from the prerequisites for a civil suit brought against a private employer, a § 717 suit, once commenced, is delineated by the same provisions as a suit against a private employer. Most importantly for the purposes of this case, § 717(d) explicitly incorporates § 706(g) of Title VII into the cause of action provided. Section 706(g) allows a court to “order such affirmative action as may be appropriate, . . . includ[ing] . . . back pay . . . , or any other equitable relief as the court deems appropriate.”
Respondent‘s view that Shaw stands for the proposition that § 717 implicitly states that prejudgment interest is unavailable in all suits brought under that section misunderstands the basis of our holding in that case. In Shaw, the Court faced the question whether § 706(k) of Title VII,
The Court expressly noted in Shaw: “The no-interest rule is . . . inapplicable where the Government has cast off the cloak of sovereignty and assumed the status of a private commercial enterprise.” 478 U. S., at 317, n. 5. In creating the Postal Service, Congress did just that, and therefore, the no-interest rule does not apply to it. Thus, the search for an express waiver of immunity from interest within Title VII, which is all that Shaw was about, is unnecessary in this case. As discussed above, § 401 of the Postal Reorganization Act provides the waiver of sovereign immunity from interest awards against the Postal Service, and § 717 of Title VII provides the cause of action under which petitioner may recover interest.
IV
Accordingly, we conclude that interest may be awarded against the Postal Service in a Title VII suit. The judgment of the Court of Appeals is reversed, and the case is remanded to that court for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE KENNEDY took no part in the consideration or decision of this case.
Essentially for the reasons stated by the en banc Court of Appeals below, I believe that prejudgment interest is not available in Title VII suits against the Postal Service. Accordingly, I respectfully dissent.
