Beer v. United States

• Citation: 696 F.3d 1174
• Decision Date: 05 October 2012
• Docket Number: No. 2010–5012.,2010–5012.
• Parties: Peter H. BEER, Terry J. Hatter, Jr., Richard A. Paez, Laurence H. Silberman, A. Wallace Tashima and U.W. Clemon, Plaintiffs–Appellants, v. UNITED STATES, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

696 F.3d 1174

Peter H. BEER, Terry J. Hatter, Jr., Richard A. Paez, Laurence H. Silberman, A. Wallace Tashima and U.W. Clemon, Plaintiffs–Appellants,

v.UNITED STATES, Defendant–Appellee.

No. 2010–5012.

United States Court of Appeals, Federal Circuit.

Oct. 5, 2012.

Christopher Landau, Kirkland & Ellis, LLP, of Washington, DC, argued for plaintiffs-appellants. With him on the brief were John C. O'Quinn and K. Winn Allen.

Brian M. Simkin, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director,and Michael S. Macko, Trial Attorney.

Jeffrey A. Lamken, MoloLamken LLP, of Washington, DC, for amicus curiae, The Federal Judges Association. With him on the brief were Martin V. Totaro and Lucas M. Walker.

Aaron M. Panner, Kellogg, Huber, Hansen, Todd, Evans & Figel, P.L.L.C., of Washington, DC, for amicus curiae, International Municipal Lawyers Association.

William P. Atkins, Pillsbury Winthrop Shaw Pittman, LLP, of McLean, VA, for amicus curiae, Bar Association of the District of Columbia. Of counsel was Erin M. Dunston, Buchanan Ingersoll & Rooney P.C., of Alexandria, VA.

Lawrence D. Rosenberg, Jones Day, of Washington, DC, for amicus curiae, American Bar Association.

Carter G. Phillips, Sidley Austin, LLP, of Washington, DC, for amicus curiae, Federal Circuit Bar Association. With him on the brief was Rebecca K. Wood.

Lawrence M. Friedman, Barnes, Richardson & Colburn, Of Chicago, Illinois, for amicus curiae, Customs and International Trade Bar Association.

Before RADER, Chief Judge, NEWMAN, MAYER¹, LOURIE, BRYSON, LINN, DYK, PROST, MOORE, O'MALLEY, REYNA, and WALLACH, Circuit Judges.

Opinion for the court filed by Chief Judge RADER, in which Circuit Judges NEWMAN, MAYER, LOURIE, LINN, PROST, MOORE, O'MALLEY, REYNA and WALLACH join.

Dissenting opinion filed by Circuit Judge DYK, in which Circuit Judge BRYSON joins.

Concurring opinion filed by Circuit Judge O'MALLEY, in which Circuit Judges MAYER and LINN join.

Concurring opinion filed by Circuit Judge WALLACH.

RADER, Chief Judge.

The Constitution erects our government on three foundational corner stones—one of which is an independent judiciary. The foundation of that judicial independence is, in turn, a constitutional protection for judicial compensation. The framers of the Constitution protected judicial compensation from political processes because “a power over a man's subsistence amounts to a power over his will.” The Federalist No. 79, p. 472 (Alexander Hamilton) (Clinton Rossiter ed., 1961). Thus, the Constitution provides that “Compensation” for federal judges “shall not be diminished during their Continuance in Office.” U.S. Const. art. III, § 1 (“Compensation Clause”).

This case presents this court with two issues involving judicial independence and constitutional compensation protections—one old and one new. First, the old question: does the Compensation Clause of Article III of the Constitution prohibit Congress from withholding the cost of living adjustments for Article III judges provided for in the Ethics Reform Act of 1989 (“1989 Act”)? To answer this question, this court revisits the Supreme Court's decision in United States v. Will, 449 U.S. 200, 101 S.Ct. 471, 66 L.Ed.2d 392 (1980). Over a decade ago in Williams v. United States, 240 F.3d 1019 (Fed.Cir.2001) (filed with dissenting opinion by Plager, J.), a divided panel of this court found that Will applied to the 1989 Act and concluded that Congress could withdraw the promised 1989 cost of living adjustments. This court en banc now overrules Williams and instead determines that the 1989 Act triggered the Compensation Clause's basic expectations and protections. In the unique context of the 1989 Act, the Constitution prevents Congress from abrogating that statute's precise and definite commitment to automatic yearly cost of living adjustments for sitting members of the judiciary.

The new issue involves pure statutory interpretation, namely, whether the 2001 amendment to Section 140 of Pub. L. No. 97–92 overrides the provisions of the 1989 Act. This court concludes the 1989 Act was enacted after Section 140, and as such, the 1989 Act's automatic cost of living adjustments control.

I.

The 1989 Act overhauled compensation and ethics rules for all three branches of government. With respect to the judiciary, it contained two reciprocal provisions. On the one hand, the 1989 Act limited a federal judge's ability to earn outside income and restricted the receipt of honoraria. On the other hand, the 1989 Act provided for self-executing and non-discretionary cost of living adjustments (“COLA”) to protect and maintain a judge's real salary.

The 1989 Act provides that whenever a COLA for General Schedule federal employees takes effect under 5 U.S.C. § 5303, the salary of judges “shall be adjusted” based on “the most recent percentage change in the [Employment Cost Index] ... as determined under section 704(a)(1) of the Ethics Reform Act of 1989.” Pub. L. No. 101–194, § 704(a)(2)(A), 103 Stat. 1716, 1769 (Nov. 30, 1989). The Employment Cost Index (“ECI”) is an index of wages and salaries for private industry workers published quarterly by the Bureau of Labor Statistics. Section 704(a)(1) of the 1989 Act calculates COLAs by first determining the percent change in the ECI over the previous year. Id. at § 704(a)(1)(B). Next, the statutory formula reduces the ECI percentage change by “one-half of 1 percent ... rounded to the nearest one-tenth of 1 percent.” Id. However, no percentage change determined under Section 704(a)(1) shall be “less than zero” or “greater than 5 percent.” Id.

While the 1989 Act states that judicial salary maintenance would only occur in concert with COLAs for General Schedule federal employees under 5 U.S.C. § 5303, these General Schedule COLAs are automatic, i.e., they do not require any further congressional action. See5 U.S.C. § 5303(a). The only limitation on General Schedule COLAs is a presidential declaration of a “national emergency or serious economic conditions affecting the general welfare” making pay adjustments “inappropriate.” 5 U.S.C. § 5303(b).

Notwithstanding the precise, automatic formula in the 1989 Act, the Legislative branch withheld from the Judicial branch those promised salary adjustments in fiscal years 1995, 1996, 1997, and 1999. During these years, General Schedule federal employees received the adjustments under Section 5303(a), but Congress blocked the adjustments for federal judges. SeePub. L. No. 103–329, § 630(a)(2), 108 Stat. 2382, 2424 (Sept. 30, 1994) (FY 1995); Pub. L. No. 104–52, § 633, 109 Stat. 468, 507 (Nov. 19, 1995) (FY 1996); Pub. L. No. 104–208, § 637, 110 Stat. 3009, 3009–364 (Sept. 30, 1996) (FY 1997); Pub. L. No. 105–277, § 621, 112 Stat. 2681, 2681–518 (Oct. 21, 1998) (FY 1999).

In response to these missed adjustments, several federal judges filed a class action alleging these acts diminished their compensation in violation of Article III. After certifying a class of all federal judges serving at the time (including appellants) and without providing notice or opt-out rights, the district court held that Congress violated the Compensation Clause by blocking the salary adjustments. See Beer v. United States, 671 F.3d 1299, 1308–09 (Fed.Cir.2012); Williams v. United States, 48 F.Supp.2d 52 (D.D.C.1999).

On appeal, this court reversed the district court's judgment. See Williams, 240 F.3d at 1019. This court opined that the Supreme Court's decision in Will foreclosed the judges' claim as a matter of law. Id. at 1033, 1035, 1040. According to this court, Will ruled that promised future salary adjustments do not qualify as “Compensation” protected under the Constitution until they are “due and payable.” Id. at 1032 (quoting Will, 449 U.S. at 228, 101 S.Ct. 471). Thus, Congress enjoyed full discretion to revoke any future judicial COLAs previously established by law, no matter how precise or definite, as long as the adjustments had not yet taken effect. Id. at 1039. This court declined to hear the case en banc over the dissent of three judges. See264 F.3d 1089, 1090–93 (Fed.Cir.2001) (Mayer, C.J., joined by Newman and Rader, JJ.); id. at 1093–94 (Newman, J., joined by Mayer, C.J. and Rader, J.). The Supreme Court denied certiorari over the dissent of three Justices. See535 U.S. 911, 122 S.Ct. 1221, 152 L.Ed.2d 153 (2002) (Breyer, J., joined by Scalia and Kennedy, JJ., dissenting from denial of certiorari).

Following this court's decision in Williams, Congress amended a 1981 appropriations rider commonly known as Section 140. Section 140 originally read:

Notwithstanding any other provision of law or of this joint resolution, none of the funds appropriated by this joint resolution or by any other Act shall be obligated or expended to increase, after the date of enactment of this joint resolution, any salary of any Federal judge or Justice of the Supreme Court, except as may be specifically authorized by Act of Congress hereafter enacted: Provided, That nothing in this limitation shall be construed to reduce any salary which may be in effect at the time of enactment of this joint resolution nor shall this limitation be construed in any manner to reduce the salary of any Federal judge or of any Justice of the Supreme Court.

Pub. L. No. 97–92, § 140, 95 Stat. 1183, 1200 (1981) (codified at 28 U.S.C. § 461 note) (emphasis added). While Section 140 originally expired in 1982, see Williams, 240 F.3d at 1026–27, it was revived by a 2001 amendment that added: “This section shall apply to fiscal year 1981 and each fiscal year thereafter.” Pub. L. No. 107–77, § 625, 115 Stat. 748, 803 (Nov. 28, 2001).

Following the Section 140 amendment, Congress enacted legislation specifically allowing federal judges to receive the salary adjustments mandated by the ...