Hatter v. U.S.

• Decision Date: 09 February 2000
• Citation: 203 F.3d 795
• Parties: (Fed. Cir. 2000) JUDGE TERRY J. HATTER, JR., MARY MARTIN ARCENEAUX, on behalf of the late Judge George Arceneaux, Jr., JUDGE PETER H. BEER, JUDGE DUDLEY H. BOWEN, JR., DOLORES LEE BURCIAGA, executrix of the estate of Chief Judge Juan G. Burciaga, JUDGE A.J. MCNAMARA, JUDGE HARRY PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE NORMAN C. ROETTGER, JR., CHIEF JUDGE THOMAS A. WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE HAROLD A. BAKER and CHIEF JUDGE MICHAEL M. MIHM, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee. 97-5093 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 795

203 F.3d 795 (Fed. Cir. 2000)

JUDGE TERRY J. HATTER, JR., MARY MARTIN ARCENEAUX, on behalf of the late Judge George Arceneaux, Jr., JUDGE PETER H. BEER, JUDGE DUDLEY H. BOWEN, JR., DOLORES LEE BURCIAGA, executrix of the estate of Chief Judge Juan G. Burciaga, JUDGE A.J. MCNAMARA, JUDGE HARRY PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE NORMAN C. ROETTGER, JR., CHIEF JUDGE THOMAS A. WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE HAROLD A. BAKER and CHIEF JUDGE MICHAEL M. MIHM, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

97-5093

United States Court of Appeals for the Federal Circuit

DECIDED: February 9, 2000

Appealed from: United States Court of Federal Claims Judge James T. Turner

Steven S. Rosenthal, Cooper, Carvin & Rosenthal PLLC, of Washington, DC, for

plaintiffs-appellants. With him on the brief was W. Stephen Smith, Morrison & Foerster LLP, of Washington, DC. Of counsel on the brief was Ellen E. Deason, Associate Professor, University of Illinois, College of Law, of Champaign, Illinois.

Jeanne E. Davidson, Deputy Branch Director, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, for defendant-appellee. With her on the brief were David W. Ogden, Acting Assistant Attorney General, Douglas N. Letter, Appellate Litigation Counsel, David M. Cohen, Director, and Kathleen Moriarty Mueller, Attorney, Appellate Staff.

Before MAYER, Chief Judge, NEWMAN, Circuit Judge, ARCHER, Senior Circuit

Judge, MICHEL, PLAGER, LOURIE, CLEVENGER, RADER, SCHALL, BRYSON, and GAJARSA, Circuit Judges.

ORDER

IT IS ORDERED THAT:

The judgement of the court entered on August 5, 1999 be reinstated. The opinion reported at 185 F.3d 1356 (Fed. Cir. 1999) remains in effect as to parts 1 and 2. The opinion of the court en banc issued today supercedes part 3 of that opinion.

PLAGER, Circuit Judge.

On August 5, 1999, this court issued its opinion and judgment in Hatter v. United

States, 185 F.3d 1356 (Fed. Cir. 1999) (Hatter VII).¹ In Hatter VII we were called upon to review the decision of the Court of Federal Claims regarding the measure of damages to be awarded to the plaintiff judges who had been subjected to a previously-declared, see Hatter v. United States, 64 F.3d 647 (Fed. Cir. 1995) (Hatter IV), unconstitutional diminution in compensation, and to review the ruling by the Court of Federal Claims regarding the application of the statute of limitations to these damages claims, see Hatter v. United States, 38 Fed. Cl. 166 (1997) (Hatter VI).

Subsequently both parties petitioned for rehearing by the panel which issued Hatter VII, and, failing that, for rehearing by the court en banc. By Order dated December 20, 1999, we reported the denial of both petitions for rehearing by the panel. With regard to the petitions for rehearing en banc, the court en banc granted the petition of the appellants, Terry J. Hatter, Jr., et al., and denied the petition of the appellee, the United States. In the Order, the judgment of the court in Hatter VII was vacated, and the opinion of the court accompanying the judgment was withdrawn with respect to part 3 thereof.²

Part 3 of the court's opinion in Hatter VII addressed the statute of limitations issue. The question was whether the moneys wrongfully withheld from the judges' monthly paychecks constituted a "continuing claim," as that term is understood in the jurisprudence of this court. In Hatter VII, the court concluded that it did not. After full consideration of the petition by the plaintiffs/appellants and the Government's response, the court en banc concluded that, with regard to the statute of limitations issue, the opinion in Hatter VII did not give adequate weight to this court's precedents; accordingly, part 3 of the opinion in Hatter VII was withdrawn. Following is the en banc court's opinion and judgment regarding that issue.

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3.

As explained in this court's opinion of August 5, 1999, (Hatter VII), the judgment of the trial court must be reversed and the matter must be returned to the Court of Federal Claims for determination of damages consistent with that opinion. There remains a disputed issue that needs resolving regarding the application of the statute of limitations. Under the law, a claim against the Government for money damages must be filed within six years of the time the claim first accrues. 28 U.S.C. § 2501(a). Failure to file within the time period imposed by the statute of limitations means that the Government may raise the statute as an affirmative defense. The six years begins to run when the cause of action accrues.

The judges argue that this case is controlled by what is known as the continuing claim doctrine. Under that doctrine, each time moneys are deducted from the judges' pay and paid into the Treasury of the United States, a new cause of action accrues. Thus, any judge whose salary was or is subject to the unconstitutional imposition can file a claim for each deduction within six years from the time the deduction is made; claims for deductions made longer ago than six years from the time suit is filed would be barred.

The Government argued, and the trial court agreed, that the continuing claim doctrine did not apply to this case. On appeal, this court in its August 5th opinion held with the Government, and affirmed that part of the trial court's judgment. See Hatter VII, 185 F.3d. at 1363. As we indicated earlier, on further review and after considering appellants' petition for rehearing and the Government's brief in opposition, the court is of the view that the original opinion did not give sufficient weight to our precedents, and that the Government's arguments are unsound in this respect.

In a 1962 seminal opinion, this court's predecessor, the Court of Claims, addressed the question of how to apply the six year statute of limitations to claims against the Government when the claims involve payments from the Government that were to be made in a series or periodically. See Friedman v. United States, 310 F.2d 381 (Ct. Cl. 1962).³ Judge Davis, writing for a unanimous court, examined the governing policies and precedents at length, citing over a hundred cases that had been reviewed. Though admitting that not every case was fully consistent in language, and occasionally in outcome, the court identified two basic categories of cases that emerged from its jurisprudence.

The first was those cases in which the repeated government action (or failure to act) resulted in repeated causes of action. The court described those cases as having the following characteristics: (1) the case turned on pure issues of law, or on specific issues of fact which the court was to decide for itself; (2) Congress had not interposed an administrative agency or officer charged with the duty of determining the claimant's eligibility for the money claimed (i.e., there was no discretionary administrative decision at issue), and (3) if fact issues were involved, they were "sharp and narrow." Id. at 384-85.

The cases the court had in mind were the pay cases -- those in which the claimant was suing "for additional pay at a higher grade, or claiming greater compensation (under a statute or regulation) than the claimant was receiving, or seeking special statutory increments or allowances, etc." Id. at 384. In such a case, when "no administrative agency has been set up to decide the claim, and the court passes de novo on all issues of law and fact - the 'continuing claim' doctrine is wholly appropriate and in accord with the general jurisprudence in this country on the statute of limitations." Id. at 385. The court went on to note that "[u]nder those general principles the cause of action for pay or compensation accrues as soon as the payor fails or refuses to pay what the law (or the contract) requires; [a]nd where the payments are to be made periodically, each successive failure to make proper payment gives rise to a new claim upon which suit can be brought." Id.

The court contrasted those cases with the cases in the second category, cases "in which the cause of action does not accrue until after a determination entrusted by Congress to an administrative official In those instances, the claim does not accrue until the executive body has acted (if seasonably asked to act) or declines to act." Id. The general rule here is that "in appropriate cases conditions precedent to the accrual of a cause of action can be established by statute, contract, or common law, and that where such a condition precedent has been created the claim does not ripen until the condition is fulfilled." Id. at 386. The kinds of cases the court listed here typically involved those in which a statute required a demand upon an executive official before payments were due. See id. at 386.

As the court saw it, the touchstone between the two categories was that "'continuing claims' are independent of administrative determination[,] and those other claims [are] dependent on prior administrative evaluation." Id. at 387. Applying this principle to the case before it, the court concluded that a claim for entitlement to disability retirement pay, of the type requiring discretionary action by a board or executive official, is not a continuing claim, but accrues as a whole, once it accrues. On the other hand, other types of pay claims not dependent on a discretionary finding - including claims for increased retirement pay because of new legislation, etc. - are continuing claims. See id. at 396.

In the case before us, suit was brought not as a class action but on behalf of the individually named judges. In that regard, there are distinct causes of action arising under two different statutes. The Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, imposed the Hospital Insurance portion of the Social Security tax on federal...