Beer v. United States

United States Court of Appeals
for the Federal Circuit
__________________________
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.
__________________________
2010-5012
__________________________
Appeal from the United States Court of Federal
Claims in No. 09-CV-037, Senior Judge Robert H. Hodges,
Jr.
_________________________
Decided: October 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 Depart-
ment of Justice, of Washington, DC, argued for defendant-
appellee. With him on the brief were STUART F. DELERY,
BEER v. US 2
Acting Assistant Attorney General, JEANNE E. DAVIDSON,
Director, and MICHAEL S. MACKO, Trial Attorney.
JEFFREY A. LAMKEN, MoloLamken LLP, of Washing-
ton, DC, for amicus curiae, The Federal Judges Associa-
tion. 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, Virginia, for amicus curiae, Bar
Association of the District of Columbia. Of counsel was
ERIN M. DUNSTON, Buchanan Ingersoll & Rooney P.C., of
Alexandria, Virginia.
LAWRENCE D. ROSENBERG, Jones Day, of Washington,
DC, for amicus curiae, American Bar Association.
CARTER G. PHILLIPS, Sidley Austin, LLP, of Washing-
ton, DC, for amicus curiae, Federal Circuit Bar Associa-
tion. 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, MAYER 1 , LOURIE,
BRYSON, LINN, DYK, PROST, MOORE, O’MALLEY, REYNA,
and WALLACH, Circuit Judges.
1 Judge Mayer participated in the decision on panel
rehearing.
3 BEER v. US
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 independ-
ent judiciary. The foundation of that judicial independ-
ence 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 Hamil-
ton) (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 involv-
ing judicial independence and constitutional compensa-
tion 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(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
BEER v. US 4
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 protec-
tions. In the unique context of the 1989 Act, the Constitu-
tion 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 adjust-
ments (“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
5 BEER v. US
quarterly by the Bureau of Labor Statistics. Section
704(a)(1) of the 1989 Act calculates COLAs by first de-
termining the percent change in the ECI over the previ-
ous 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 mainte-
nance would only occur in concert with COLAs for Gen-
eral 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. See 5
U.S.C. § 5303(a). The only limitation on General Sched-
ule 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. See Pub. 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 fed-
eral judges filed a class action alleging these acts dimin-
BEER v. US 6
ished 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 vio-
lated 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 fore-
closed 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, 440
U.S. at 228). 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. See 264 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. See 535 U.S. 911 (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 appropri-
ated by this joint resolution or by any other Act
7 BEER v. US
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 Su-
preme Court, except as may be specifically author-
ized 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 resolu-
tion 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) (codi-
fied 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 en-
acted legislation specifically allowing federal judges to
receive the salary adjustments mandated by the 1989 Act
in fiscal years 2002, 2003, 2004, 2005, 2006, 2008, and
2009. See Barbara L. Schwemle, Congressional Research
Service, Legislative, Executive, and Judicial Officials:
Process for Adjusting Pay and Current Salaries 2-4 (Feb.
9, 2011). For fiscal years 2007 and 2010, all General
Schedule and Executive level federal employees received
COLAs under 5 U.S.C. § 5303(a), but federal judges
received no adjustments. Congress did not affirmatively
authorize judicial COLAs in those years and took the
position that, because of the requirements of Section 140,
judicial COLAs could not be funded.”
The current case results from the combination of the
blocking legislation of the 1990s and the amendment to
BEER v. US 8
Section 140. Appellants are six current and former Arti-
cle III judges, all of whom entered into federal judicial
service before 2001. In January 2009, they filed a com-
plaint in the United States Court of Federal Claims
claiming that Congress violated the Compensation Clause
by withholding the salary adjustments established by the
1989 Act. They claimed a deficit resulted not only from
the withholding of COLAs in 2007 and 2010, but also the
calculation of adjustments due in other years by reference
to base compensation that did not include the amounts
withheld in 1995, 1996, 1997, and 1999. For relief, they
sought back pay for the additional amounts they allegedly
should have received during the period covered by the
applicable six-year statute of limitations.
The Court of Federal Claims dismissed the complaint
based on the Williams precedent. On appeal, this court
summarily affirmed the judgment, stating that “Williams
controls the disposition of this matter.” Beer v. United
States, 361 F. App’x. 150, 151–52 (Fed. Cir. 2010).
The Supreme Court granted the subsequent petition
for certiorari, vacated the judgment, remanded the case
for “consideration of the question of preclusion,” and
stated that “further proceedings . . . are for the Court of
Appeals to determine.” Beer v. United States, 131 S. Ct.
2865 (2011). Specifically, in opposing the petition for
certiorari, the Government had argued that Appellants
could not litigate anew the issue resolved in Williams
because they had been absent members of the class action
in Williams.
Upon remand, this court unanimously concluded that
Appellants were not precluded from bringing their Com-
pensation Clause claims in the present case. Beer v.
United States, 671 F.3d 1299, 1309 (Fed. Cir. 2012). The
district court in Williams had not provided Appellants
9 BEER v. US
with notice of the class certification. Thus they were not
bound by the result of that earlier litigation. See id. at
1305–09. This court nonetheless continued to feel con-
strained by the ultimate conclusion in Williams and
affirmed the Court of Federal Claims’ dismissal of the
complaint. Id. at 1309. Subsequently, this court granted
Appellants’ petition for rehearing en banc. 468 F. App’x
995 (Fed. Cir. 2012).
II.
This court has jurisdiction over the Court of Federal
Claims’ dismissal of the Appellants’ complaint under 28
U.S.C. § 1295(a)(3). This court reviews the decision to
dismiss the complaint without deference. Hearts Bluff
Game Ranch, Inc. v. United States, 669 F.3d 1326, 1328
(Fed. Cir. 2012); Frazer v. United States, 288 F.3d 1347,
1351 (Fed. Cir. 2002).
This court en banc now turns its attention to two pre-
liminary issues before addressing the merits of the ap-
peal. First, judicial review of laws affecting judicial
compensation is not done lightly as these cases implicate
a conflict of interest. Will, 449 U.S. at 211–17. After all,
judges should disqualify themselves when their impartial-
ity might reasonably be questioned or when they have a
potential financial stake in the outcome of a decision. See
28 U.S.C. § 455(a). In Will, the Supreme Court applied
the time-honored “Rule of Necessity” because if every
potentially conflicted judge were disqualified, then plain-
tiffs would be left without a tribunal to address their
claims. See Will, 449 U.S. at 213–17. The Rule of Neces-
sity states that “although a judge had better not, if it can
be avoided, take part in the decision of a case in which he
has any personal interest, yet he not only may but must
do so if the case cannot be heard otherwise.” Id. at 213(quoting F. Pollack, A First Book of Jurisprudence 270
BEER v. US 10
(6th ed. 1929)) (emphasis added). This court relies on the
Supreme Court’s complete analysis of the Rule of Neces-
sity and concludes that this en banc court may, indeed
must, hear the case. See id. at 211–18.
On the other preliminary procedural question, this
court deliberately limits the questions under review. To
be specific, this court en banc does not overrule the Wil-
liams panel’s analysis of Section 140. See 240 F.3d at1026–27. Furthermore, it does not overrule the Beer
panel’s analysis of preclusion. See 671 F.3d 1299. This
court adopts the prior panel’s analysis of the preclusion
issue in toto. Now the court en banc proceeds to the old
and new questions previously set forth.
III.
At the outset, this court must honor and address the
Supreme Court’s decision in Will. As the Williams panel
correctly noted, if Will resolves the validity of Congress’
decision to block the COLAs promised in the 1989 Act,
then any remedy for salary diminution in this case lies
not in this court but in the Supreme Court. See Williams,
240 F.3d at 1035. However, if Will is inapplicable to the
statutory scheme at play in this case, then this court has
an obligation to resolve the issue.
United States v. Will, supra, tested the validity of
congressional blocking acts preventing COLAs provided
for under the 1975 Adjustment Act (“1975 Act”). The
1975 Act purported to protect judicial salaries with ad-
justments calculated under an opaque and indefinite
process. Section 5305, as in effect in 1975, directed the
President to “carry out the policy stated in section 5301”
when giving COLAs to General Schedule federal employ-
ees. 5 U.S.C. § 5305(a) (1976). Section 5301 in turn
articulated a four-fold policy for setting federal pay: (1)
equal pay for equal work; (2) pay distinction based on
11 BEER v. US
work and performance distinctions; (3) comparable pay
with private sector jobs for comparable work; and (4)
interrelated statutory pay levels. 5 U.S.C. § 5301(a)
(1976).
In furtherance of this policy, the President appointed
an agent to prepare an annual report on federal salaries.
5 U.S.C. § 5305(a)(1) (1976). This annual report relied on
statistics from the Bureau of Labor Statistics on private
sector pay, views of the “Federal Employees Pay Council”
about the comparability of private and public sector pay
systems, and the views of employee organizations not
represented in the Council. 5 U.S.C. § 5305(a)(1) (1976).
This report did not and could not mandate the award of
COLAs.
The President also received a report from “The Advi-
sory Committee on Federal Pay.” 5 U.S.C. § 5305(a)(2)
(1976). This committee reviewed the report issued by the
President’s agent under section 5305(a)(1) and considered
further views and recommendations provided by “em-
ployee organizations, the President’s agent, other officials
of the Government of the United States, and such experts
as it may consult.” 5 U.S.C. § 5306(a)–(b) (1976).
Based on these reports, the President could provide
COLAs to General Schedule federal employees. 5 U.S.C. §
5305(a)(2). If the President decided to recommend an
adjustment, he would transmit to Congress the overall
adjustment percentage. 5 U.S.C. § 5305(a)(3). Any judi-
cial COLAs were pegged to the “overall percentage” in the
President’s report to Congress under section 5305. 28
U.S.C. § 461 (1976).
Despite the 1975 Act, Congress allowed several
COLAs for General Schedule federal employees but
denied the increases to judges and other senior officials.
The Supreme Court discussed the details of the legislation
BEER v. US 12
that blocked these increases. See Will, 449 U.S. at 205–
09. In 1978, a group of federal judges filed suit alleging
this blocking legislation was an unconstitutional diminu-
tion in salary contrary to Article III. Once the case made
its way to the Supreme Court, the Court considered
“when, if ever, . . . the Compensation Clause prohibit[s]
the Congress from repealing salary increases that other-
wise take effect automatically pursuant to a formula
previously enacted.” Id. at 221. The Court concluded that
Congress could block COLAs due to judges so long as the
blocking legislation took effect in the fiscal year prior to
the year in which the increase would have become pay-
able. Id. at 228–29. According to the Court, “a salary
increase ‘vests’ . . . only when it takes effect as part of the
compensation due and payable to Article III judges.” Id.
at 229.
The 1989 Act, informed by the failures of the 1975
Act’s procedure, adopted a different purpose, used a
different structure, and created different expectations
than the 1975 Act. The 1975 Act “involved a set of inter-
locking statutes which, in respect to future cost-of-living
adjustments, were neither definite nor precise.” Williams,
535 U.S. at 917 (Breyer, J., joined by Scalia and Kennedy,
JJ., dissenting from denial of certiorari). Instead of being
tied to the percent change in a known, published metric of
inflation such as the Employment Cost Index, the ad-
justments under the 1975 Act depended on the discretion-
ary decisions of the President’s agent and the Advisory
Committee on Federal Pay. Furthermore, the President
was not obligated to award adjustments to General
Schedule employees on a specific timeline or even pursu-
ant to the suggestions from the agent and the committee.
Rather, he only did so if it furthered the policies under-
pinning federal pay articulated in 5 U.S.C. § 5301. Thus,
the method for calculating COLAs under the 1975 Act
13 BEER v. US
was “imprecise as to amount and uncertain as to effect.”
Id.By contrast, the 1989 Act promised a mechanical im-
plementation of COLAs for judges under the following
equation:
⎛ ( ECI Year N −1 ) − ( ECI Year N − 2 ) ⎞
Adjustment Year N = ⎜⎜ ⎟⎟ × (100 ) × (0.995)
⎝ ECI Year N − 2 ⎠
See Pub. L. No. 101-194, § 704(a)(1)(B), 103 Stat. 1716,
1769 (Nov. 30, 1989). The Act contained only two limits: a
presidential prohibition (due to national emergency or
extreme economic circumstances) and a ceiling (of no
more than five percent). Id.In essence, the statutes reviewed in Will required ju-
dicial divination to predict a COLA and prevented the
creation of firm expectations that judges would in fact
receive any inflation-compensating adjustment. In that
context, as the Supreme Court noted, no adjustment
vested until formally enacted and received. However, the
statutes reviewed in Williams and in this case provide
COLAs according to a mechanical, automatic process that
creates expectation and reliance when read in light of the
Compensation Clause. Indeed a prospective judicial
nominee in 1989 might well have decided to forego a
lucrative legal career, based, in part, on the promise that
the new adjustment scheme would preserve the real value
of judicial compensation.
Aside from their respective differences in methods for
calculating COLAs, the 1989 Act’s overall scope and
legislative history distinguishes it from the statutory
scheme addressed in Will. In fact, the automaticity of the
1989 Act’s COLAs takes on heightened significance in
light of the broader statutory scheme because the 1989
BEER v. US 14
Act also banned judges from earning outside income and
honoraria. See Brown v. Gardner, 513 U.S. 115, 118
(1994) (“The meaning of statutory language, plain or not,
depends on its context.”). In sum, the salary protections
in the 1989 Act are only part of a comprehensive codifica-
tion of ethical rules, Pub. L. No. 101-194 §§ 301-03, finan-
cial reporting requirements, id. at § 202, work rules for
senior judges, id. at § 705, and -- perhaps most important
-- prohibitions on outside income and honoraria, id. at §
601.
Of the 935 active and senior judges in 1987, four hun-
dred reported earning outside income from teaching law,
speaking fees, and other sources. 135 Cong. Rec. S29,693
(daily ed. Nov. 17, 1989). More than half reported extra
earnings from $16,624 to $39,500. Id. The Report by The
Bipartisan Task Force on Ethics, which became the basis
for the Ethics Reform Act of 1989, noted that the repeated
failure to provide recommended salary increases for
judges and other executive employees meant increased
reliance on “earning honoraria as a supplement to their
official salaries.” 135 Cong. Rec. H30,744 (daily ed. Nov.
21, 1989) (Task Force Report). During consideration of the
1989 Act, Congress acknowledged that denying access to
outside income would amount to a “pay cut.” 135 Cong.
Rec. S29,662 (daily ed. Nov. 17, 1989) (statement of Sen.
Dole that removing outside income is a “pay cut”); see also
135 Cong. Rec. H29,488 (daily ed. Nov. 16, 1989) (state-
ment of Rep. Fazio), H29,492 (daily ed. Nov. 16, 1989)
(statement of Rep. Ford). In that context, reliance on the
1989 Act’s compensation maintenance formula took on
added significance. See 135 Cong. Rec. H29,503 (daily ed.
Nov. 16, 1989) (statement of Rep. Wolpe) (“[The] pay
adjustment provision [is] tied directly to the elimination
of all honoraria or speaking fees.”). Indeed, the Task
Force Report emphasized that the restrictions and limita-
15 BEER v. US
tions on outside earned income, honoraria, and employ-
ment made by the Act are conditional on the enactment of
the increased pay provisions. 135 Cong. Rec. H30,745
(daily ed. Nov. 21, 1989) (Task Force Report).
The dependable COLA system became “a final impor-
tant part” of the package designed to remove salaries
“from their current vulnerability for political demagogu-
ery.” 135 Cong. Rec. H29,483 (Nov. 16, 1989) (statement
of Rep. Fazio); H30,753 (Nov. 21, 1989) (Task Force
Report). In sum, the 1989 Act reduced judges’ income by
banning outside income but promised in exchange auto-
matic maintenance of compensation – a classic legislative
quid pro quo. 135 Cong. Rec. H29,484 (Nov. 16, 1989)
(statement of Rep. Martin stating that the Ethics Reform
Act of 1989 is a comprehensive and interrelated package);
cf. 135 Cong. Rec. H29,499 (Nov. 16, 1989) (statement of
Rep. Crane objecting to the interrelated nature of the
package and advocating separate bills for ethics and pay).
Thus, the 1989 statutory scheme was a precise legis-
lative bargain which gave judges “an employment expec-
tation” at a certain salary level. Cf. United States v.
Hatter, 532 U.S. 557, 585 (2001) (Scalia, J., concurring in
part and dissenting in part) (arguing that the repeal of
judges’ exception from Medicare tax constituted a dimin-
ishment in compensation because judges had an expecta-
tion of an exemption from this tax). Moreover, the 1989
Act COLA provisions were not an increase in judicial pay.
If so, the connection with the vesting rule for pay in-
creases articulated in Will might be a closer issue.
Rather, the statute ensured that real judicial salary
would not be reduced in the face of the elimination of
outside income and the operation of inflation. See Wil-
liams, 535 U.S. at 916 (Breyer, J., joined by Scalia and
Kennedy, JJ., dissenting from denial of certiorari).
BEER v. US 16
The vesting rules considered in Will are not expressly
limited to the 1975 Act. However, the Supreme Court had
no occasion to draw a distinction between a discretionary
COLA scheme and a self-executing, non-discretionary
adjustment for inflation coupled with a reduction in
judicial compensation via elimination of outside income.
For this reason, therefore, this court must examine fur-
ther the actual differences in the two statutory schemes.
The Supreme Court described the adjustments under
the 1975 Act as “automatic.” See Will, 449 U.S. at 203,
223–24. An examination of the 1975 Act, however, shows
that the adjustments at issue in Will were automatically
operative only “once the Executive had determined the
amount.” Id. at 203 (emphasis added). The ways that the
Executive determined the amounts under the 1975 Act
and the 1989 Act are very different. The former was an
uncertain, discretionary process. The latter is precise and
definite.
While the Supreme Court described the COLAs in
Will as “automatic,” the only aspect that was truly auto-
matic was the link between judicial and General Schedule
employee salaries. Whether General Schedule employees
(and judges) would receive COLAs in any given year or
whether those COLAs would maintain earning levels was
anything but certain under the 1975 Act. Consequently,
the only line the Supreme Court could draw in Will was
between before and after the COLAs at issue were funded.
The 1989 Act’s scheme presents a much different land-
scape than the Court confronted in Will. For these rea-
sons, Will does not foreclose the relief that the judges
seek.
Although this court determines that Williams incor-
rectly applied Will and other aspects of the law, this
determination does not end the inquiry. The court must
17 BEER v. US
now examine whether Congress’ decisions to deny the
promised COLAs actually violated the Compensation
Clause in Article III of the Constitution.
The Compensation Clause has two basic purposes.
First, it promotes judicial independence by protecting
judges from diminishment in their salary by the other
branches of Government. The founders of this nation
understood the connections amongst protections for Life,
Liberty, and the Pursuit of Happiness, protections for
judicial independence, and protections for judicial com-
pensation. Listed among the colonists’ grievances with
the English Crown was that the King “ha[d] made Judges
dependent on his Will alone for the Tenure of their Of-
fices, and the amount and payment of their salaries.”
Decl. of Independence para. 11 (U.S. 1776). As explained
in The Federalist Papers, “[n]ext to permanency in office,
nothing can contribute more to the independence of the
judges than a fixed provision for their support.” The
Federalist No. 79, p. 472 (Alexander Hamilton) (Clinton
Rossiter ed., 1961).
During the Constitutional Convention in 1787, the in-
spired draftsmen set out to protect against abuses such as
those enumerated in the Declaration of Independence.
James Madison of Virginia proposed prohibiting both
enhancement and reduction of salary lest judges defer
unduly to Congress when that body considered pay in-
creases. Will, 449 U.S. at 219–20. Madison urged that
variations in the value of money could be “guarded agst.
by taking for a standard wheat or some other thing of
permanent value.” Id. at 220 (quoting 2 M. Farrand, The
Records of the Federal Convention of 1787, p. 45 (1911)).
The Convention rejected Madison’s proposal because any
commodity chosen as a standard for judicial compensation
could also lose value due to inflationary forces, i.e., the
value of wheat could also fluctuate. Id. Thus, the Com-
BEER v. US 18
pensation Clause did not tie judicial salaries to any com-
modity. The framers instead acknowledged that “fluctua-
tions in the value of money, and in the state of society,
rendered a fixed rate of compensation [for judges] in the
Constitution inadmissible.” The Federalist No. 79, supra.
The Convention adopted the clause in its current form
while voicing, at length, concerns to protect judicial
compensation against economic fluctuation and reprisal.
The Compensation Clause, as well as promoting judi-
cial independence, “ensures a prospective judge that, in
abandoning private practice -- more often than not more
lucrative than the bench -- the compensation of the new
post will not diminish.” Will, 449 U.S. at 221. This
expectancy interest attracts able lawyers to the bench and
enhances the quality of justice. Id. This expectancy
interest does not encompass increases in future salary but
contemplates maintenance of that real salary level.
Williams, 535 U.S. at 916 (Breyer, J. joined by Scalia and
Kennedy, JJ., dissenting from denial of certiorari); The
Federalist No. 79, supra, (noting that an Article III judge
is assured “of the ground upon which he stands” and that
he should “never be deterred from his duty by the appre-
hension of being placed in a less eligible situation”).
The dual purpose of the Compensation Clause pro-
tects not only judicial compensation that has already
taken effect but also reasonable expectations of mainte-
nance of that compensation level. See Williams, 535 U.S.
at 916 (Breyer, J. joined by Scalia and Kennedy, JJ.,
dissenting from denial of certiorari). The 1989 Act prom-
ised, in precise and definite terms, salary maintenance in
exchange for prohibitions on a judge’s ability to earn
outside income. The 1989 Act set a clear formula for
calculation and implementation of those maintaining
adjustments. Thus, all sitting federal judges are entitled
to expect that their real salary will not diminish due to
19 BEER v. US
inflation or the action or inaction of the other branches of
Government. The judicial officer should enjoy the free-
dom to render decisions -- sometimes unpopular decisions
-- without fear that his or her livelihood will be subject to
political forces or reprisal from other branches of govern-
ment.
Prospective judges should likewise enjoy the same ex-
pectation of independence and protection. A lawyer
making a decision to leave private practice to accept a
nomination to the federal bench should be entitled to rely
on the promise in the Constitution and the 1989 Act that
the real value of judicial pay will not be diminished. Will,
449 U.S. at 220–21; cf. United States v. Winstar Corp.,
518 U.S. 839, 872 (1996) (recognizing that government
promises may give rise to reasonable expectations).
To be sure, the Compensation Clause does not require
periodic increases in judicial salaries to offset inflation or
any other economic forces. As noted before, the Constitu-
tional Convention did not tie judicial salaries to a com-
modity or other standard of measurement. Will, 449 U.S.
at 220. However, when Congress promised protection
against diminishment in real pay in a definite manner
and prohibited judges from earning outside income and
honoraria to supplement their compensation, that Act
triggered the expectation-related protections of the Com-
pensation Clause for all sitting judges. A later Congress
could not renege on that commitment without diminish-
ing judicial compensation. That those compensation
adjustments would happen in the future does not elimi-
nate the reasonableness of the expectations created by the
protections in the 1989 Act. Expectancy is, by its very
nature, concerned with future events.
Congress committed to providing sitting and prospec-
tive judges with annual COLAs in exchange for limiting
BEER v. US 20
their ability to seek outside income and to offset the
effects of inflation. This decision furthered the Founders’
intention of protecting judges against future changes in
the economy. Instead of fixing compensation relative to a
commodity subject to inflationary pressure, Congress
pegged the adjustment to a known measure of change to
the economy as a whole, thus protecting the real salary of
judges from both inflation and from fickle political will.
By enacting blocking legislation in 1995, 1996, 1997, and
1999, Congress broke this commitment and effected a
diminution in judicial compensation.
Congress is not precluded from amending the 1989
Act. Congress may set up a scheme promising judges a
certain pay scale or yearly cost of living increases. How-
ever, the Constitution limits those changes. If a future
Congress wishes to undo those promises, it may, but only
prospectively. Any restructuring of compensation main-
tenance promises cannot affect currently-sitting Article
III judges.
IV.
Turning now to the second question, this court deter-
mines that the 2001 amendment to Section 140 of Pub. L.
97-92 has no effect on the compensation due to judges.
Unlike the preceding discussion of the Compensation
Clause, this is a question of statutory interpretation.
Without a statutory basis for withholding the COLAs,
federal judges should have received the adjustments in
2007 and 2010. These adjustments are payable to the
judges regardless of constitutional protections. Congress
simply had no statutory authority to deny them.
As noted above, Section 140 was part of an appropria-
tions bill passed in 1981. It barred judges from receiving
additional compensation except as Congress specifically
authorized in legislation postdating Section 140. See Pub.
21 BEER v. US
L. No. 97-92, § 140, 95 Stat. 1183, 1200 (Dec. 15, 1981).
The appropriations act containing Section 140 expired by
its terms on September 30, 1982. See Williams, 240 F.3d
at 1026. Thus, the rule that judicial pay adjustments had
to be “specifically authorized by Act of Congress hereafter
enacted” expired in 1982.
Of course, in 2001, Congress amended Section 140,
purporting to apply it “to fiscal year 1981 and each fiscal
year thereafter.” Pub. L. No. 107-77, Title VI, § 625, 115
Stat. 748, 803 (2001). Notably, Congress chose 1981 as
the effective date for this extension of Section 140. As
shown above, Congress did not explicitly authorize judi-
cial compensation adjustments in 2007 and 2010. If
Section 140 applied to bar those 2007 and 2010 adjust-
ments, the absence of that additional Act of Congress
would block -- solely on the basis of this statute -- any
adjustments in those years.
Section 140, however, by its own terms, did not block
the 2007 and 2010 adjustments. Section 140 is straight-
forward: it bars judicial salary increases unless (1) “spe-
cifically authorized by Act of Congress” and (2) “hereafter
enacted.” Pub. L. No. 97-92, § 140. The 1989 Act’s precise
and definite promise of COLAs clearly satisfies the first
requirement to avoid a Section 140 bar. Williams, 240
F.3d at 1027. The 1989 Act “specifically authorized” the
2007 and 2010 adjustments which occurred under its
precise terms.
Section 140 was enacted in 1981 and the 1989 Act oc-
curred eight years later. Thus, the 1989 Act was “hereaf-
ter enacted” within Section 140’s meaning. When
Congress amended Section 140 in 2001, it did not wipe
the slate clean and set a new benchmark for the “hereaf-
ter enacted” requirement. The 2001 amendment makes
no reference to its own November 28, 2001, enactment
BEER v. US 22
date. Instead, the amendment reiterates the 1981 base-
line found elsewhere in the original Section 140, making
the provision applicable to “‘fiscal year 1981 and each
fiscal year thereafter.’” Pub. L. No. 107-77. An amend-
ment referring only to fiscal year 1981 cannot redefine
“hereafter” to refer to an entirely different date two
decades later. Thus, the “hereafter enacted” requirement
remained unchanged setting the “hereafter enacted”
trigger date as 1981. In other words, Congress amended
the existing Section 140 in 2001, but Section 140 re-
mained a part of the Public Law 97-92 enacted in 1981.
Furthermore, the amendment did not change Section
140’s enactment date. Indeed the Government agreed at
oral argument before this court en banc that the 2001
amendment did not change the “hereafter enacted” clause
of Section 140. The 2001 amendment merely erased
Section 140’s expiration date, making permanent what-
ever effect the provision had when originally enacted.
Congress thus expunged this court’s holding in Williams
that Section 140 expired in 1982. The 2001 amendment,
however, did not change Section 140’s substantive scope.
The 1989 Act’s precise, automatic COLAs satisfy the
requirements of Section 140 because it was enacted after
Section 140. The Government withheld COLAs from
judges in 2007 and 2010 solely because the government
misinterpreted Section 140 as requiring a separate and
additional authorizing enactment to put those adjust-
ments into effect. By its own terms, Section 140 did not
require that further authorizing legislation because it
permitted COLAs under the “hereafter enacted” 1989 Act.
V.
In this case, Congress’ acts in 1995, 1996, 1997, and
1999 constitute unconstitutional diminishments of judi-
cial compensation. Additionally, statutorily promised cost
23 BEER v. US
of living adjustments were withheld in 2007 and 2010
based on an erroneous statutory interpretation. Appel-
lants’ motion to amend their complaint to include a chal-
lenge to the 2010 withholdings is granted. See Mills v.
Maine, 118 F.3d 37, 53 (1st Cir. 1997) (“[A]ppellate courts
have authority to allow amendments to complaints be-
cause ‘[t]here is in the nature of appellate jurisdiction,
nothing which forbids the granting of amendments.’”)
(quoting Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
826, 834 (1989) (alterations omitted)).
The statute of limitations does not bar these claims
because, as established in Friedman v. United States, 159
Ct. Cl. 1, 7 (1962) and Hatter v. United States, 203 F.3d
795, 799–800 (Fed. Cir. 2000), aff’d in part, rev’d in part
on other grounds, 532 U.S. 557 (2001), the claims are
“continuing claims.” As relief, appellants are entitled to
monetary damages for the diminished amounts they
would have been paid if Congress had not withheld the
salary adjustments mandated by the Act. On remand, the
Court of Federal Claims shall calculate these damages as
the additional compensation to which appellants were
entitled since January 13, 2003 – the maximum period for
which they can seek relief under the applicable statute of
limitations. In making this calculation, the Court of
Federal Claims shall incorporate the base salary in-
creases which should have occurred in prior years had all
the adjustments mandated by the 1989 Act had actually
been made. See Hatter, 203 F.3d 795 (applying the “con-
tinuing claim” doctrine to calculating wrongful withhold-
ing of judicial pay).
VI.
This court has an “obligation of zealous preservation
of the fundamentals of the nation. The question is not
how much strain the system can tolerate; our obligation is
BEER v. US 24
to deter potential inroads at their inception, for history
shows the vulnerability of democratic institutions.” Beer
v. United States, 592 F.3d 1326, 1329 (Fed. Cir. 2010)
(Newman, J., dissenting from the denial of petition for
hearing en banc). The judiciary, weakest of the three
branches of government, must protect its independence
and not place its will within the reach of political whim.
The precise and definite promise of COLAs in the 1989
Act triggered the expectation-related protections of the
Compensation Clause. As such, Congress could not block
these adjustments once promised. The Court of Federal
Claims’ dismissal of Appellants’ complaint is hereby
reversed, and the case is remanded for further considera-
tion in accordance with this opinion.
OVERRULED-IN-PART, VACATED-IN-PART, AND
REMANDED
United States Court of Appeals
for the Federal Circuit
__________________________
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.
__________________________
2010-5012
__________________________
Appeal from the United States Court of Federal
Claims in No. 09-CV-037, Senior Judge Robert H. Hodges,
Jr.
__________________________
DYK, Circuit Judge, with whom BRYSON, Circuit Judge,
joins, dissenting.
The majority opinion brings to mind an exchange be-
tween Learned Hand and Justice Holmes. Judge Hand
enjoined Justice Holmes to “[d]o justice” on the bench, but
the Justice demurred: “That is not my job. My job is to
play the game according to the rules.” Learned Hand, A
Personal Confession, in The Spirit of Liberty 302, 306-07
(Irving Dilliard ed., 3d ed. 1960). If the Supreme Court
must play by the rules, that duty must be doubly binding
on subordinate federal courts. Fidelity to this principle
BEER v. US 2
mandates adherence to the Supreme Court’s opinion in
United States v. Will, 449 U.S. 200 (1980).
I
While the majority’s approach has much to recom-
mend it as a matter of justice to the nation’s underpaid
Article III judges, it has nothing to recommend it in terms
of the rules governing adjudication. “The criterion of
constitutionality is not whether we believe the law to be
for the public good,” Adkins v. Children’s Hosp., 261 U.S.
525, 570 (1923) (Holmes, J., dissenting), but whether the
law comports with the Supreme Court’s authoritative
construction of the Constitution. Here, the issue is the
scope of the Supreme Court’s 1980 decision in Will. Will’s
holding is squarely on point. The Supreme Court’s fram-
ing of the issue was unmistakably clear: “when, if ever,
does the Compensation Clause prohibit the Congress from
repealing salary increases that otherwise take effect
automatically pursuant to a formula previously enacted?”
449 U.S. at 221. The answer was that a future salary
increase “becomes irreversible under the Compensation
Clause” when it “vests,” id., and that it “‘vests’ for pur-
poses of the Compensation Clause only when it takes
effect as part of the compensation due and payable to
Article III judges,” id. at 228-29. The Court’s opinion in
Will is unambiguous that the Court adopted what it has
characterized as a “categorical” rule. See, e.g., Plaut v.
Spendthrift Farm, Inc., 514 U.S. 211, 239-40 (1995).
The Court in Will explained that for two of the years,
the statute was passed before the Adjust-
ment Act increases had taken effect—
before they had become a part of the com-
pensation due Article III judges. Thus,
the departure from the Adjustment Act
policy in no sense diminished the compen-
3 BEER v. US
sation Article III judges were receiving; it
refused only to apply a previously enacted
formula.
A paramount—indeed, an indispensa-
ble—ingredient of the concept of powers
delegated to coequal branches is that each
branch must recognize and respect the
limits on its own authority and the
boundaries of the authority delegated to
the other branches. To say that the Con-
gress could not alter a method of calculat-
ing salaries before it was executed would
mean the Judicial Branch could command
Congress to carry out an announced future
intent as to a decision the Constitution
vests exclusively in the Congress. We
therefore conclude that a salary increase
“vests” for purposes of the Compensation
Clause only when it takes effect as part of
the compensation due and payable to Arti-
cle III judges.
449 U.S. at 228-29 (footnotes omitted).
Under Will’s bright-line vesting rule, Congress was
free to “abandon” a statutory formula and revoke a
planned cost-of-living adjustment (“COLA”), as long as
the revoking legislation was enacted into law before the
COLA “took effect,” that is, became “due and payable”
(i.e., before October 1, the first day of the next fiscal year).
Id. at 227-29. In Will Years 1 and 4, Congress missed
that deadline, and the Court held that the belated with-
drawal of judges’ COLAs violated the Compensation
Clause. Id. at 226, 230. But in Will Years 2 and 3,
COLA-blocking statutes signed before October 1 were
upheld, even though one of those statutes eliminated the
BEER v. US 4
promised COLA just a day before it would have taken
effect. Id. at 229.
Will thus made clear that a future salary increase
only becomes protected by the Compensation Clause when
it becomes “due and payable”; an increase which is merely
anticipated or expected has not vested, and is not pro-
tected. By declining to follow Will’s clear vesting rule
here, the majority also rejects the carefully crafted panel
opinion in Williams v. United States, 240 F.3d 1019, 1039
(Fed. Cir. 2001), reh’g denied, 240 F.3d 1366 (Fed. Cir.
2001) (en banc), whose view of Will was supported at the
time by a clear majority of the en banc court. See Wil-
liams, 240 F.3d at 1366 (eight judges concurring in the
denial of rehearing en banc because “we are duty-bound to
enforce [Will’s] rule. If we have incorrectly read the Will
opinion, the Supreme Court will have the opportunity to
correct the error.”).
II
The majority attempts to redefine the constitutional
test as turning not on “vesting,” but on “reasonable expec-
tations,” a concept that appears nowhere in the Will
opinion. To justify this shift, the majority seeks to distin-
guish Will on its facts, namely on the dubious ground that
the “automatic” salary adjustment scheme in Will was
different from the “automatic” salary adjustment scheme
in place in Williams and here. But even if factual differ-
ences were pertinent (which, as we discuss below, could
not support a departure from Will’s holding), there is no
material difference between the statutes in Will and those
in the Williams years (1995, 1996, 1997, and 1999). The
Will statutes and the Williams statutes were not different
insofar as they tied judicial compensation to General
Schedule (“GS”) compensation, nor were they materially
different as far as the definiteness of the GS COLA was
5 BEER v. US
concerned. Contrary to the majority’s suggestion, under
both schemes, the COLA was “required” unless the Presi-
dent altered the COLA in response to “national emer-
gency” or “economic conditions.” Compare 5 U.S.C. §
5305(c)(1) (1976) with 5 U.S.C. at § 5303(b)(1) (2006). As
the House Report to the 1990 Act stated, “[t]he President
would have discretion [under the 1990 Comparability Act]
to alter this adjustment . . . . This discretion is substan-
tially similar to current law,” i.e., the 1975 Act. H.R. Rep.
No. 101-906, at 88 (1990). 1 And under both statutory
schemes, the GS COLA, once established, would “take
effect automatically.” Will, 449 U.S. at 221. 2 Thus, the
statutory schemes appear “strikingly similar” for all
practical purposes. Williams, 240 F.3d at 1027.
Nevertheless, the majority asserts that the expecta-
tion of a COLA created by the Williams statutes was
significantly more “precise and definite,” Majority Op. 16,
because under Will’s more complex scheme, there was
greater discretion over the COLA—an assertion which is
accurate only insofar as the President’s agent and Advi-
sory Committee had greater discretion in setting the
initial amount of the GS COLA. Under each statutory
scheme, the President’s discretion was the same. 3
1 Plainly Congress saw the references in the 1975
Act to “economic conditions” and in the 1990 Act to “seri-
ous economic conditions” as functionally the same, since
the President’s discretion was to remain “substantially
similar” under the 1990 Act as before.
2 Judge O’Malley’s concurrence misreads the dis-
sent in suggesting that we view the COLAs in Will as
“automatic” only because “the statutory scheme had run
its course” in the disputed years. Concur. Op. 4.
3 Will’s statutory scheme
required the President to appoint an ad-
justment agent [who] was to compare
BEER v. US 6
But whatever the discretion, if the test were “reason-
able expectations,” then the key question would not be
how the statutory scheme initially determined a COLA,
but whether the amount of the COLA had become “precise
and definite” at the time the blocking statute thwarted
the judges’ expectations. In this respect, Will cannot be
distinguished from Williams. For Will Year 3, no “judicial
divination,” Majority Op. 13, would have been required: a
GS COLA of 5.5% had already been specified in the Presi-
dent’s Alternative Plan, 14 Weekly Comp. Pres. Docs.
1480 (Aug. 31, 1978), which was adopted and transmitted
to Congress by the President a month before the Year 3
blocking statute was enacted. Will, 449 U.S. at 229. The
President had no further discretion to change the amount
of the COLA. As the majority notes, “once the Executive
had determined the amount,” the adjustments in Will
were automatically operative. Majority Op. 16 (quoting
Will, 449 U.S. at 203) (internal quotation marks omitted).
In the Williams years, at the time the blocking statutes
were enacted, the prospective amount of the GS COLA
could be calculated based on the Employment Cost Index
figures released by the Bureau of Labor Statistics, al-
salaries in the civil service with those in
the private sector and then recommend an
adjustment to an Advisory Committee.
Subsequently, the Committee would make
its own recommendation to the President,
accepting, rejecting, or modifying the
agent’s recommendation as the Committee
thought desirable. The President would
have to accept the Committee’s recom-
mendation—unless he determined that
national emergency or special economic
conditions warranted its rejection.
Williams v. United States, 535 U.S. 911, 917 (2002)
(Breyer, J., joined by Scalia & Kennedy, JJ., dissenting).
7 BEER v. US
though the President generally did not announce a final
amount until after the blocking statutes were enacted. 4
Thus, the COLA in Will Year 3 was just as “precise and
definite” as the COLAs in the Williams years.
Of course, the COLAs remained uncertain in another
respect: in both Will and Williams, the presumptive GS
COLA could still be overridden by Congressional action,
and in fact it was overridden for one of the Williams
years. 5 Again, there is no meaningful difference between
the situations in Will and Williams. 6 To summarize: in
4 For all the Williams years, GS salary adjustment
tables were promulgated by Executive Order in the pre-
ceding December. Exec. Order 12944, 60 Fed. Reg. 309(Dec. 28, 1994); Exec. Order 12984, 61 Fed. Reg. 237(Dec. 28, 1995); Exec. Order No. 13033, 61 Fed. Reg.
68987 (Dec. 27, 1996); Exec. Order No. 13106, 63 Fed.
Reg. 68151 (Dec. 7, 1998). In each year, the judges’
COLAs had been blocked several weeks to months earlier.
See Pub. L. 103-329, Title VI, § 630(a)(2), 108 Stat. 2382,
2424 (1994); Pub. L. 104-52, Title VI, § 633, 109 Stat.
468, 507 (1995); Pub. L. 104-208, Title VI, § 637, 110
Stat. 3009-364 (1996); Pub. L. 105-277, Title VI, § 621,
112 Stat. 2681-518 (1998). For one of the Williams years,
1996, the President transmitted an Alternative Plan to
Congress setting a 2% GS COLA before the blocking
statute was passed. 31 Weekly Comp. Pres. Docs. 1466,
1466-67 (1995).
5 For 1995, Congress reduced the GS COLA to 2%.
Pub. L. 103-329, Title VI, § 630(a)(1), 108 Stat. 2382, 2424
(1994). The projected GS COLA had been 2.6%. See
Sharon S. Gressle, Cong. Research Serv., Order No.
RS20278, Judicial Salary-Setting Policy 6 (March 6,
2003).
6 Under the Will scheme, in addition to enacting
separate legislation, Congress could have disapproved the
Alternative Plan by a one-house legislative veto. Will,
449 U.S. at 204. But a legislative veto would not have
zeroed out the GS COLA; it would have reinstated the
amount recommended to the President, id., which was
BEER v. US 8
both Will Year 3 and in each of the Williams years, at the
time the judges’ COLA was blocked, the amount of the GS
COLA had been established, the President retained no
discretion to change the GS COLA, and the COLA would
have taken effect automatically, absent Congressional
intervention. The Supreme Court upheld the blocking
statute in Will Year 3. 449 U.S. at 229. Yet the majority
maintains that the blocking statutes in Williams offend
the Constitution. This distinction is baffling.
Finally, the majority here suggests that Will is distin-
guishable because the statutes here (unlike the statutes
in Will) imposed limits on the judges’ outside income,
without “an increase in judicial pay.” Majority Op. 15.
But the majority can hardly make a credible claim that
judges’ outside compensation is protected by the Compen-
sation Clause, and it follows that the reduction of outside
compensation cannot create a Compensation Clause issue
where none would otherwise exist. 7
III
Even if the two statutory schemes were meaningfully
different, and the Williams scheme created “reasonable
judicial expectation[s] of future compensation” that did
not exist in Will, Appellants’ Br. 29-31, that would be
quite beside the point. Neither counsel for the appellants
higher than the President’s figure in Will Year 3. See 14
Weekly Comp. Pres. Docs. 1480 (Aug. 31, 1978). It is
unclear how Congressional action to increase the GS
COLA could have made the judges’ expectations of a
COLA in Will Year 3 less “precise and definite.” The
legislative veto was held unconstitutional after Will and
before the Williams years. INS v. Chadha, 462 U.S. 919(1983).
7 In fact, the 1989 Act did increase judicial pay by
25%, thus offsetting the limitations on outside income.
Pub.L. 101-194 § 703(a)(3), 103 Stat. 1716, 1768 (1989).
9 BEER v. US
nor the majority is able to explain how that difference
authorizes this court to disregard Will’s clear vesting rule.
The majority concedes that “the vesting rules considered
in Will are not expressly limited to the 1975 Act.” Major-
ity Op. 16. There is no basis for concluding that a “rea-
sonable expectations” test has supplanted the Will vesting
rule as the governing test. Certainly no decision of the
Supreme Court has shifted the governing principle from
vesting to reasonable expectations. There is not even a
claim that subsequent decisions of the Court have some-
how “undermine[d] the reasoning” of Will. United States
v. Hatter, 532 U.S. 557, 571 (2001) (quoting Will, 449 U.S.
at 227 n.31) (internal quotation marks omitted). And
even if Will had been undermined, it would not be this
court’s prerogative to overrule it. See id. at 567 (noting
that because Evans had been undermined but not yet
“expressly overrule[d],” the Federal Circuit “was correct in
applying Evans” and thereby “invit[ing] us to reconsider”
it).
So too our job is to follow the holding of Will, not to
confine it to its facts. Numerous Supreme Court deci-
sions, and our own decisions, have made this clear. As
the Supreme Court held in Thurston Motor Lines, Inc. v.
Jordan K. Rand, Ltd., a Court of Appeals must not “con-
fus[e] the factual contours of [Supreme Court precedent]
for its unmistakable holding” in an effort to reach a “novel
interpretation” of that precedent. 460 U.S. 533, 534-35
(1983) (per curiam). See also, e.g., Marmet Health Care
Ctr., Inc. v. Brown, 132 S. Ct. 1201, 1202 (2012) (per
curiam) (a state court “misread[] and disregard[ed] the
precedents of this Court” when it held the Federal Arbi-
tration Act’s scope to be “more limited than mandated by
this Court's previous cases”); Ariad Pharms., Inc. v. Eli
Lilly & Co., 598 F.3d 1336, 1347 (Fed. Cir. 2010) (en banc)
(“As a subordinate federal court, we may not so easily
BEER v. US 10
dismiss [the Supreme Court’s] statements as dicta but are
bound to follow them.”).
The fact that three Justices of the Court, dissenting
from a denial of certiorari, opined that Will might be
distinguished from Williams is not authoritative. See
Williams, 535 U.S. at 917 (Breyer, J., joined by Scalia &
Kennedy, JJ., dissenting). A dissent from a denial of
certiorari cannot “destroy[] the precedential effect” of a
prior opinion. Teague v. Lane, 489 U.S. 288, 296 (1989).
This court has recognized that neither the agreement of
three dissenting Justices, nor the approval of their rea-
soning by concurring Justices in later cases, can “trans-
form a dissent into controlling law.” Prometheus Labs.,
Inc. v. Mayo Collaborative Servs., 628 F.3d 1347, 1356 n.2
(Fed. Cir. 2010), rev’d on other grounds, Mayo Collabora-
tive Servs. v. Prometheus Labs, Inc., 132 S. Ct. 1289(2012).
In short, neither the dissent from denial of certiorari
in Williams nor the Supreme Court’s remand in this case
can be read as an invitation for this court to perform
reconstructive surgery on Will. The Supreme Court may
distinguish its own opinions by limiting them to their
facts, see, e.g., Williams v. Illinois, 132 S. Ct. 2221, 2242
n.13 (2012), or choose to overrule them, see, e.g., Hatter,
532 U.S. at 567, but that is not an option for this court.
We respectfully dissent. 8
8 Appellants also argue that the 2007 and 2010
COLAs were improperly withheld because no blocking
legislation was enacted in those years, and Section 140, as
amended in 2001, was either inapplicable or unconstitu-
tionally discriminated against federal judges under the
Supreme Court’s decision in Hatter. While we agree that
this issue is not resolved by Will, these statutory and
constitutional arguments were not properly raised below,
and we decline to address them here.
United States Court of Appeals
for the Federal Circuit
__________________________
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.
__________________________
2010-5012
__________________________
Appeal from the United States Court of Federal
Claims in No. 09-CV-037, Senior Judge Robert H. Hodges,
Jr.
__________________________
O’MALLEY, Circuit Judge, with whom MAYER and LINN,
Circuit Judges, join, concurring.
I join the majority, both in the judgment it reaches
and in its reasoning. I write separately to address two
issues.
First, I write to explain why I believe that, if United
States v. Will, 449 U.S. 200 (1980), must be read as
broadly as the dissent and the Williams v. United States,
240 F.3d 1019 (Fed. Cir. 2001) majority believes it must,
then Will was wrong and the Supreme Court should say
so. Second, I write because I believe that, whatever its
BEER v. US 2
current statutory reach, Section 140 is unconstitutional
and Congress can no longer rely on it to stagnate judicial
compensation.
I
I first turn to Will. I agree with the majority that Will
did not reach the issue presented here and, thus, does not
dictate the result we may reach today. The position taken
by the dissent, and by the Williams majority before it, is
not without some force, however. One cannot deny that
the adjudicatory principles upon which they rely are
important ones, even if the majority concludes they are
not determinative here. If the dissent is correct that we
are forced to glean sweeping Compensation Clause princi-
ples from Will governing all forms of statutory enact-
ments designed to increase judicial pay, we must also be
forced to conclude that Will’s analysis is flawed, both
jurisprudentially and constitutionally.
A. Jurisprudentially
I find several aspects of the Will decision problematic.
First, a close look at the facts and reasoning in Will
reveals its internal inconsistency; neither its analysis nor
its ultimate conclusion matches the facts presented.
Specifically, while the Court in Will initially characterized
the statutory scheme at issue there as “automatic,” 449
U.S. at 223, it later justified its Compensation Clause
holding by characterizing congressional action blocking
salary increases under the scheme as merely modifying
“the formula” by which “future” increases were to be
calculated. Id. at 227-28. Next, if the language employed
in Will is meant to set down a “vesting” principle applica-
ble in all Compensation Clause challenges, I believe the
Court both: (1) violated the long-standing principle that
courts are to decide only the cases before them and must
only reach constitutional issues if and to the extent neces-
3 BEER v. US
sary; and (2) landed upon a holding that, taken to its
logical extreme, creates absurd results.
1. Use of the Term “Automatic”
As the majority notes, the statutory scheme at issue
in Will – the Executive Salary Cost-of-Living Adjustment
Act of 1975, Pub. L. 94-82, 89 Stat. 419 (Aug. 9, 1975)
(“the Adjustment Act”) – was a complex scheme, fraught
with discretion and uncertainty. Despite this, Will char-
acterized the Adjustment Act as a pay adjustment scheme
which contemplated “automatic” pay increases. At issue
in Will was the constitutionality of Congress’s decision to
enact statutes preventing high-level Executive, Legisla-
tive, and Judicial officials, including Article III judges,
from receiving COLAs in four consecutive years where
General Schedule federal employees received increases.
The Court noted that these blocking statutes were de-
signed to “stop or to reduce previously authorized cost-of-
living increases initially intended to be automatically
operative” under the Adjustment Act. Will, 449 U.S. at
203 (emphasis added). The Court then phrased the
question presented in Will as: “when, if ever, does the
Compensation Clause prohibit the Congress from repeal-
ing salary increases that otherwise take effect automati-
cally pursuant to a formula previously enacted?” Id. at
221 (emphasis added).
As the majority notes, it is hard to understand the
Court’s use of the term automatic in the context of the
Adjustment Act. Normally, to say something is “auto-
matic” is to say it occurs involuntarily or without further
debate. See Oxford English Dictionary def. A(1); A(7)(a)
(3d ed. June 2011; online version June 2012); see also
American Heritage Dictionary 121 (5th ed. 2011) (def. 2a:
defining “automatic” as “[a]cting or done without volition
or conscious control; involuntary”). Nothing about the
BEER v. US 4
judicial salary adjustments at issue in Will was “auto-
matic,” however.
To the contrary, the adjustments at issue in Will were
based on civil service salary adjustments that were en-
tirely discretionary. As explained by the majority,
whether federal employees would receive a COLA, and in
what amount, depended on the initial recommendations of
an adjustment agent which were then subject to review by
an Advisory Committee, the President, and Congress.
This procedure hardly can be described as one that occurs
involuntarily. In addition, the statutes setting forth
future COLAs were “neither definite nor precise,” and
nothing provided that adjustments would be calculated
“in a mechanical way.” Williams v. United States, 535
U.S. 911, 917 (2002) (Breyer, J., joined by Scalia and
Kennedy, JJ., dissenting from denial of certiorari). Be-
cause the statutory scheme under the Adjustment Act
“was imprecise as to amount and uncertain as to effect,”
the Court’s characterization of the increases under the
Adjustment Act as “automatic” is difficult to follow. See
id.The dissent explains the Court’s mischaracterization
of the Adjustment Act’s pay scheme by noting that, for the
years in question in Will, the statutory scheme had run
its course and resulted in a recommended salary increase
by the time Congress acted to block those increases. This,
the dissent seems to suggest, explains why the Supreme
Court used the term “automatic” to describe what was
before it. While that argument has a certain logic to it, it
does not explain why the Court’s constitutional analysis
focused on the absence of a guarantee under the Adjust-
ment Act.
According to the Supreme Court, the Adjustment Act
did not “alter the compensation of judges; it modified only
5 BEER v. US
the formula for determining that compensation.” Will,
449 U.S. at 227 (emphases in original). And, the Court
said that the blocking statutes merely represented a
decision to “abandon” that “formula.” It then admonished
that, “[t]o say that the Congress could not alter a method
of calculating salaries before it was executed would mean
the Judicial Branch could command Congress to carry out
an announced future intent as to a decision the Constitu-
tion vests exclusively in the Congress.” Id. at 228 (em-
phasis added). It was on this reasoning that the Court
concluded that a salary increase does not “vest” for Com-
pensation Clause purposes until it becomes part of a
judge’s compensation that is due and payable and that
Congress had not violated the Compensation Clause when
it did not allow certain increases under the Adjustment
Act to “vest.”
Thus, the Court explained its Compensation Clause
decision in Will by saying it was only dealing with a
formula regarding an expressed “future intent” to provide
increases; the Court did not say at that point that it was
addressing increases that had already been decided upon.
More importantly, it did not say it was addressing definite
increases that had been promised by operation of law; in
explaining its assessment of the Act vis-à-vis the Com-
pensation Clause, the Court spoke of the scheme under
the Adjustment Act as one that promised no more than
potential adjustments. And, in discussing the concept of
vesting, the Court seemed to back away from the notion
that it was dealing with anything one could consider
“automatic” in the common sense of that word. How can
an increase occur “automatically” if a right to it had not
yet “vested”?
While I understand why the dissent believes we must
assume the Supreme Court meant what it said when it
described the Adjustment Act increases as “automatic”
BEER v. US 6
ones, that assumption would mean that the Court’s
description of the facts presented had little correlation
with its reasoning for why those facts did not run afoul of
the Compensation Clause.
2. Constitutional Avoidance
Next, if we read Will as broadly as Williams did, and
the dissent now does, we must assume that, in Will, the
Supreme Court violated its own well-established principle
of constitutional avoidance. The Supreme Court has long-
recognized that “[j]udging the constitutionality of an Act
of Congress is ‘the gravest and most delicate duty that
this Court is called upon to perform.’” Citizens United v.
Fed. Election Comm’n, 558 U.S. 310, 130 S.Ct. 876, 917-18
(2010) (Roberts, C.J., concurring) (quoting Blodgett v.
Holden, 275 U.S. 142, 147-48 (1927) (Holmes, J., concur-
ring)). The Court’s standard practice, therefore, has been
to “refrain from addressing constitutional questions
except when necessary to rule on particular claims before
[it].” Id. at 918 (citing Ashwander v. TVA, 297 U.S. 288,
346-48 (1936) (Brandeis, J., concurring)). In furtherance
of this practice, it has long been the rule that courts
should “not ‘formulate a rule of constitutional law broader
than is required by the precise facts to which it is to be
applied.’” Ashwander, 297 U.S. at 347 (quoting Liverpool,
New York & Philadelphia S. S. Co. v. Commissioners of
Emigration, 113 U.S. 33, 39 (1885)); see also United States
v. Raines, 362 U.S. 17, 21 (1960) (same).
Applying this principle in Citizens United, Chief Jus-
tice Roberts explained that the Court’s “standard practice
of avoiding broad constitutional questions except when
necessary” gives rise to an “order of operations,” whereby
the Court considers the narrowest claim first before
proceeding, if necessary, to any broader claims. 130 S.Ct.
at 918. Only if there is no valid narrow constitutional
7 BEER v. US
ground available, should the court resolve any broader
constitutional question. See id.If we assume that Will is to be read so broadly as to
control the result under the very different set of facts
presented here, we must also assume the Court spoke to a
question not before it. The constitutional question prop-
erly raised in Will was whether, under the specific statu-
tory scheme set out in the Adjustment Act, the four
blocking statutes at issue diminished judicial pay in
violation of the Compensation Clause. A fair reading of
Will based on “the precise facts to which it [was] applied,”
requires limiting the holding to the statutory scheme that
was before the Court. See Ashwander, 297 U.S. at 347(Brandeis, J., concurring) (citation omitted); see also
Raines, 362 U.S. at 21. If Will is read to address a ques-
tion broader than that presented – one that would govern
a host of different congressional efforts to protect judicial
pay from diminution in value – then we must conclude
that, in Will, the Supreme Court ignored its own govern-
ing jurisprudential principles.
In its briefing, the government concedes that there
was a narrower approach the Court could have taken.
Specifically, the government argues that, “even if the
Supreme Court in Will could have based its decision upon
the ‘discretionary’ character of the then-applicable statu-
tory scheme, the Court did not decide the case upon that
ground. The Court drew no such distinction.” Appellee’s
Br. 26-27. If the government is right on this point, it is
the very reason why Will was wrong to make the pro-
nouncements upon which the government now relies. If
the Court in Will consciously chose not to draw a distinc-
tion between a discretionary COLA scheme and a self-
executing, non-discretionary one, it: (1) formulated a rule
of constitutional law broader than required by the facts
presented; and (2) ignored the fundamental precept that
BEER v. US 8
judges decide only the cases before them. See Hein v.
Freedom from Religion Found., Inc., 551 U.S. 587, 615
(2007) (“Relying on the provision of the Constitution that
limits our role to resolving the ‘Cases’ and ‘Controversies’
before us, we decide only the case at hand.”)
3. Absurd Results
Finally, the definition of “vesting” Williams gleaned
from Will cannot be right. If it were: (1) Congress could
do away with judicial retirement benefits for all sitting
judges; (2) it would be inconsistent with the way the
concept of vesting has been applied to similar pay in-
creases for Members of Congress; and (3) it would run
afoul of the common law understanding of the way in
which future interests “vest” for all other purposes. It
necessarily would lead to absurd results.
First, if the definition of “vesting” Williams felt bound
to under Will is correct, then Congress could eliminate
judicial retirement pay for all sitting Article III judges
without violating the Compensation Clause. By statute,
Article III judges can retire with full pay once they reach
a certain combination of age plus years of judicial service.
See 28 U.S.C. § 371. Under this system, the Supreme
Court has said that the right to receive retirement pay
“d[oes] not vest until retirement” and the “system pro-
vide[s] nothing for a judge who le[aves] office before age
65.” United States v. Hatter, 532 U.S. 557, 575 (2001). In
other words, the Supreme Court has specifically held that
retirement benefits do not vest until a judge retires and
certain prerequisites are met.
In Will, the Court concluded that vesting occurs when
a salary increase “takes effect as part of the compensation
due and payable to Article III judges.” 449 U.S. at 229.
As such, for those years where the COLAs at issue in Will
had not yet become “due and payable,” the Court held
9 BEER v. US
that the blocking statutes did not violate the Compensa-
tion Clause’s prohibition against diminishing judicial pay.
See id. If we accept Will’s holding that Congress can
abolish judicial salary adjustments at any time before
they take effect, it logically follows that Congress would
also be free to abolish judicial retirement pay at any time.
The practical consequences of Will would place judicial
retirement benefits at risk, despite the fact that the
Supreme Court itself previously has characterized such
benefits as “compensation” under Article III. See Hatter,
532 U.S. at 574 (“the noncontributory pension salary
benefits [are] themselves part of the judge’s compensa-
tion”).
Second, Will’s definition of vesting conflicts with the
way in which that concept has been applied in the context
of the Twenty-Seventh Amendment. In Boehner v. Ander-
son, 30 F.3d 156 (D.C. Cir. 1994), the court addressed
whether the 1989 Act (which also applies to Members of
Congress) was inconsistent with the Twenty-Seventh
Amendment which provides that: “No law, varying the
compensation for services of the Senators and Represen-
tatives, shall take effect until an election of Representa-
tives shall have intervened.” Id. at 159. The court held
that the phrase “shall take effect” in the Amendment
referred to the date the Ethics Reform Act first became
operative – i.e., 1991 – rather than any earlier or later
point in time. See id. at 161-62. Because the COLA
provision of the Ethics Reform Act took effect in January
1991, after an intervening election in 1990, that provision
did not violate the Twenty-Seventh Amendment. Id. at
162. The court also held that: (1) Congress is free to
specify a formula for future and continuing salary in-
creases; and (2) the COLAs under the 1989 Act were
designated to occur automatically each year after 1991,
with no additional law necessary. Id. at 162-63. All
BEER v. US 10
yearly COLAs beyond 1990 thus became operative and
“vested” for Members of Congress when the law was first
effective in 1991. 1
In Williams, the appellee-judges relied on the holding
in Boehner to contend that the COLA increases for judi-
cial officers took effect, or vested, when the law was
effective, not when the yearly COLAs became due and
payable. Williams, 240 F.3d at 1036. This court recog-
nized the holding in Boehner, but distinguished it on
grounds that it dealt with a different question limited to
Members of Congress. Specifically, the court found that
Boehner “has no relevance . . . to the question of whether
the judicial pay aspects of the 1989 Act could, consistent
with Article III, be revised or abrogated by later Acts of
Congress.” Id. at 1037. That question, the Williams court
held, was already answered in the affirmative in Will’s
holding that “vesting, for federal judges under Article III,
occurs only when compensation begins to accrue to the
judges, not when a particular adjustment formula is
enacted.” Id. at 1036-37. By simply relying on Will to
distinguish Boehner, the court in Williams avoided the
more difficult task of trying to reconcile two contradictory
approaches to what vesting means under the Constitu-
tion.
We are now faced with two distinct definitions of the
constitutionally effective date of congressionally enacted
COLAs. While Will provides that, for Article III purposes,
1 In the alternative, the appellant in Boehner ar-
gued that, if the court found the COLA provision vested
and constitutional, then a later-enacted statute that
cancelled a planned COLA absent an intervening election
violated the Twenty-Seventh Amendment. 30 F.3d at
162. Although the answer to that question would be of
interest to us now, the court declined to address it. See
id. at 162-63.
11 BEER v. US
a COLA is effective when it becomes “due and payable,”
regardless of when the law establishing that COLA was
enacted or when it took effect, Boehner states that, for
Article I and the Twenty-Seventh Amendment, a COLA
vests when the law is first effective, even if not due and
payable for years to come. Common sense and basic
principles of interpretation counsel against drawing this
distinction.
While it is certainly true that the operative date of
congressionally designated salary increases is not pre-
scribed in the Constitution, both the Compensation
Clause and the Twenty-Seventh Amendment address the
Framers’ concerns with in-term salary changes for the
respective branches of government – one with decreases
in-term and the other with increases in-term. I see no
reason why the concept of vesting should be employed in a
way to expand Congress’s ability to decrease judicial
salaries under the Compensation Clause and be reframed
under the Twenty-Seventh Amendment so as to expand
Congress’s ability to increase its own.
Finally, the vesting rule articulated in Will is an out-
lier. As this court in Williams correctly noted, “[t]ypically,
‘vesting’ of future interests only requires two components:
an identification of the future owner, and certainty that
the property would transfer.” 240 F.3d at 1032 (citing 2
Blackstone Commentaries 168; Simes & Smith, The Law
of Future Interests, § 65, pp. 54-55 (2nd ed. 1956)). This
view of vesting of future interests is “more consistent with
black-letter [law].” See id. at 1038. The Supreme Court,
nevertheless, “departed from traditional vesting rules” for
future interests and announced a peculiar “actual posses-
sion” rule for Article III. Id. at 1032. Will ignored the
standard rule for vesting of future interests and created a
unique rule solely for judicial compensation. See id. at
1038. Despite recognition of its illogic, the Williams panel
BEER v. US 12
felt compelled to reject the use of traditional vesting rules
for Compensation Clause purposes because it found those
rules to be “simply contrary to the rule established by the
Supreme Court in Will.” Id. at 1033. 2
If we are to believe that Will advanced such an ex-
treme vesting rule – one applicable only to the Compensa-
tion Clause – then the Court should reexamine that rule
and correct its mistake. Had the Supreme Court in Will
applied the generally-accepted rule for vesting of future
interests to the Adjustment Act, the same one the
Boehner court applied to congressional pay increases,
then a COLA whose formula was codified by law would
vest, at an absolute minimum, once the amount of the
COLA was established for a particular year. This ap-
proach is grounded in “sound equitable principle[s]” and,
as we recognized in Williams, has deep common-law roots.
See id. at 1032-33.
For the reasons explained in further detail below, as
the majority has noted, a more reasonable, consistent,
and logical definition of “vesting” under Article III should
be governed by the “reasonable expectations” of sitting
2 Indeed, despite awareness of Will, various
state courts interpreting analogous provisions of their
own constitutions have held that the failure to provide
statutorily promised COLAs unconstitutionally dimin-
ishes judicial compensation. See e.g., Jorgensen v. Blago-
jevich, 811 N.E.2d 652, 664 (Ill. 2004) (noting that the
standards for conferring and calculating COLAs, which
“were formulated following the United States Supreme
Court’s decision in Will, expressly provided that COLAs
were to be given on July 1, 1991, and on July 1 of each
year thereafter and that such COLAs were to be consid-
ered a component of salary fully vested at the time the
Compensation Review Board’s report became law”). Will’s
“vesting” rule for Compensation Clause challenges – if
that is really what it is – stands alone.
13 BEER v. US
judicial officers. Put simply, if we are to read Will as
broadly as Williams did, and the dissent now does, the
Court should revisit Will’s unique vesting rule.
B. Constitutionally
If Will truly established an “actual possession” vesting
rule for Compensation Clause purposes, that holding
seems indefensible under the Constitution. The Framers
formulated the Compensation Clause for the express
purpose of maintaining judicial independence, in part by
providing judges with reasonable expectations about their
pay and the inability of Congress to reduce it. As inter-
preted in Williams, the Will rule defeats the Framers’
intent and threatens the governmental structure around
which the Constitution was formulated.
1. Historical Perspective and the Framers’ Intent
The Compensation Clause “has its roots in the long-
standing Anglo-American tradition of an independent
Judiciary.” Will, 449 U.S. at 217. As the Supreme Court
has recognized, the “colonists had been subjected to
judicial abuses at the hand of the Crown, and the Fram-
ers knew the main reasons why: because the King of
Great Britain ‘made Judges dependent on his Will alone,
for the tenure of their offices, and the amount and pay-
ment of their salaries.’” Stern v. Marshall, 131 S. Ct.
2594, 2609 (2011) (quoting the Declaration of Independ-
ence, para. 11). Against this backdrop, the Framers
designed Article III to protect the public “from a repeat of
those abuses.” Id. By giving judges life tenure and pre-
venting the other branches from reducing judicial com-
pensation, the Framers sought to “preserve the integrity
of judicial decisionmaking.” Id.As the majority notes, in Federalist 79, Alexander
Hamilton emphasized the importance of protecting judi-
BEER v. US 14
cial compensation. Specifically, he argued that, “[n]ext to
permanency in office, nothing can contribute more to the
independence of the judges than a fixed provision for their
support.” The Federalist No. 79 at 385 (Alexander Hamil-
ton) (Lawrence Goldman ed., 2008). Hamilton observed
that, “[i]n the general course of human nature, a power
over a man’s subsistence amounts to a power over his will.”
Id. at 386 (emphasis in original). For this reason, the
legislative branch must not “change the condition[s] of the
[judiciary] for the worse” so that “[a] man may then be
sure of the ground upon which he stands, and can never
be deterred from his duty by the apprehension of being
placed in a less eligible situation.” Id.
Hamilton’s concerns, and those of many other Fram-
ers, were not merely academic. Indeed, throughout the
former colonies, legislatures took retributive actions
against judges with whom they disagreed, including
attempts to remove judges who declared particular laws
unconstitutional and to call judges before the legislature
to answer for specific rulings. See Julius Goebel, Jr.,
Antecedents and Beginnings to 1801, in 1 History of the
Supreme Court of the United States, 133-42 (Paul A.
Freund ed., 1971). These events further supported the
founders’ desire to insulate judges from the influence and
control of the other branches of government.
The Supreme Court has recognized that the primary
purpose of the prohibition against reducing judicial sala-
ries is “not to benefit the judges, but . . . to promote that
independence of action and judgment which is essential to
the maintenance of the guaranties, limitations, and
pervading principles of the Constitution.” Evans v. Gore,
253 U.S. 245, 253 (1920), overruled on other grounds by
Hatter, 532 U.S. at 571. The Compensation Clause should
be “construed, not as a private grant, but as a limitation
imposed in the public interest.” Id. It is the public that
15 BEER v. US
benefits from a strong, independent judiciary that is free
to issue decisions without fear of repercussion.
The Framers’ desire to insulate judicial pay from the
political process was the subject of much debate and
angst. While, given the long tenure judges would be
asked to serve, there was no doubt some provision should
be made for salary increases, the Framers also feared
that, if salary decisions were left entirely to Congress, the
judiciary might be forced to curry favor with Congress to
secure reasonable compensation increases. See Jonathan
L. Entin & Erik M. Jensen, Taxation, Compensation, and
Judicial Independence, 56 Case W. Res. L. Rev. 965, 972
(2006). To address this concern, James Madison sug-
gested indexing judicial pay to the price of wheat or
another stable value. The Framers rejected that idea,
however, for fear fluctuations in commodity prices, like
inflation, might leave judges undercompensated. See 2
The Records of the Federal Convention of 1787 44-45 (Max
Farrand ed., 1911).
Thus, while the Framers foresaw a need for in-term
increases in judicial salaries and were concerned with
leaving the task of providing those increases to Congress,
they saw no alternative; no self-executing system they
could devise seemed adequate to ensure that, given the
dual effects of inflation and rising standards of living,
judges would not be left undercompensated. So trust
Congress they did, leaving to it the responsibility to guard
against real decreases in judicial salary by future legisla-
tive enactments.
In sum, the Framers intended to provide judges rea-
sonable expectations about their pay. The Framers, to be
sure, did not contemplate that a judges’ reasonable expec-
tation would mean that he or she would become wealthy
by taking the bench, or that Congress necessarily would
BEER v. US 16
increase judicial salaries. They believed, however, that
Congress would assess fairly and periodically the need for
increases in judicial compensation, would provide in-
creases when appropriate, and that, once it did so, judicial
officers thereafter could rely on the fact that Congress
could not take such increases away.
2. The Expectations Approach in Practice
Courts have long-endorsed this expectations-based
approach to the Compensation Clause. Indeed, as Justice
Breyer has noted, protecting “a judge’s reasonable expec-
tations” is the “basic purposive focus” of the Compensa-
tion Clause. Williams, 535 U.S. at 916 (Breyer, J., joined
by Scalia and Kennedy, JJ., dissenting from denial of
certiorari). Likewise, Justice Scalia has argued that,
when Congress takes away a previously-established
component of the federal judicial “employment package,”
it reduces compensation and thereby thwarts judicial
expectations. See Hatter, 532 U.S. at 585 (Scalia, J.,
dissenting) (arguing that repeal of federal judges’ exemp-
tion from the Medicare tax was a reduction of compensa-
tion because those judges “had an employment
expectation of a preferential exemption from taxation”).
Consistent with this expectations-related focus, the
Supreme Court has held that the Compensation Clause
forbids laws “which by their necessary operation and
effect withhold or take from the judge a part of that which
has been promised by law for his services.” O’Donoghue v.
United States, 289 U.S. 516, 533 (1933) (quoting Evans v.
Gore, 253 U.S. 245, 254 (1920)).
Other courts likewise have emphasized judicial expec-
tations in their approach to the Compensation Clause.
For example, in the early nineteenth century, the Circuit
Court for the District of Columbia held that, “if [a judge’s]
compensation has once been fixed by law, a subsequent
17 BEER v. US
law for diminishing that compensation . . . cannot affect [a
sitting judge].” United States v. More, 7 U.S. (3 Cranch)
159, 160 n.2 (1805), writ of error dism’d for want of juris-
diction. In More, Congress had enacted and later abol-
ished a system of fees for compensating justices of the
peace in the District of Columbia. Id. One of the justices
of the peace continued to charge fees under the abolished
structure, and the government brought an indictment
against him. Id. On appeal, the Circuit Court held that:
(1) the compensation of justices of the peace was subject
to the Compensation Clause; and (2) where a fee structure
is set by law, a later-enacted statute diminishing or
abolishing that structure violated the Constitution. Id. at
161. Because sitting justices had an expectation that they
would receive compensation consistent with the then-
existing fee structure, Congress could not take that struc-
ture away.
In Will, the Supreme Court discarded the long-
standing expectations-based approach to the Compensa-
tion Clause in favor of its “due and payable” vesting rule,
without clear explanation for doing so. In a terse foot-
note, the Court distinguished More. See Will, 449 U.S. at
228, n.32. Specifically, the Court claimed that, in More,
“the fee system was already in place as part of the jus-
tices’ compensation when Congress repealed it” whereas
“the increase [via the Adjustment Act] in Year 2 had not
yet become part of the compensation of Article III judges”
when it was repealed. Id. Careful consideration of the
facts in More reveal that this is a distinction without a
difference. The justices under the fee system in More
were not entitled to compensation until they actually
rendered services. See More, 7 U.S. at 160 n.2 (“This
compensation is given in the form of fees, payable when
the services are rendered.”). At all times, the justices
knew the precise amount they could charge for a particu-
BEER v. US 18
lar service, but they never knew how much their total
compensation would be, for example, in a particular week.
In other words, the fee system in More merely set out a
structure for calculating the compensation, which was not
“due and payable” – to use the Court’s terminology in Will
– until the justices performed the affirmative act of ren-
dering services.
The Adjustment Act formula was no different. In the
same way that the justices under the fee system in More
did not know how much they would work in a particular
year, under the Adjustment Act, Article III judges did not
know how much their salary would increase in a particu-
lar year, if at all. But they did know that, once the for-
mula was enacted for the year, it became part of the
compensation due. For example, looking at Year 3 in
Will, if we accept the dissent’s proposition that the COLA
of 5.5% became automatic once the President’s alternative
plan was adopted and transmitted to Congress – which
was one month before the Year 3 blocking statute was
enacted – then there is no doubt that, as was the case in
More, the COLA “was already in place as part of the
[judges’] compensation when Congress repealed it.” See
Will, 449 U.S. at 228, n.32 (citing More, 3 Cranch at 161).
In the same way that Congress was prohibited from
abolishing the fee structure in More because it was part of
the justices’ compensation, so too should Congress have
been prohibited from blocking the COLA for Year 3 in
Will.
Given these similarities, Will’s dismissal of More is
unconvincing. The two opinions are irreconcilable. Either
Will is incorrect, or the Court should have said that More
was wrong. The Supreme Court should return to the
well-established expectations-based approach to the
Compensation Clause.
19 BEER v. US
3. The Consequences of Abandoning the Expectations
Approach
Assuming Will’s vesting rule allows Congress to bar
“automatic” COLAs promised by definitive and precise
legislative enactment, that rule is contrary to the consti-
tutional balance the Framers carefully calibrated – one
which, of necessity, delegated control over judicial salaries
to the legislature, but did so in a way to guard against
congressional retribution for unpopular judicial decisions.
So understood, Will’s vesting rule puts at risk the princi-
ples the Framers struggled so hard to foster; it threatens
to make the judiciary beholden to Congress in ways which
undermine its independence. The Supreme Court should
rethink such a rule. See e.g., Mistretta v. United States,
488 U.S. 361, 383 (1989) (encouraging vigilance against a
“provision of law” that “impermissibly threatens the
institutional integrity of the Judicial Branch”) (quoting
Commodity Futures Trading Comm’n v. Schor, 478 U.S.
833, 851 (1986)).
The Framers’ concerns were prescient. Statistics
demonstrate that the erosion of judicial pay “has reached
the level of a constitutional crisis that threatens to un-
dermine the strength and independence of the federal
judiciary.” Chief Justice John G. Roberts, Jr., 2006 Year-
End Report on the Federal Judiciary, 39 The Third
Branch 1, 1 (2007). Not only is this not the world the
Framers contemplated, it is approaching one they most
feared. As Hamilton explained, if judicial independence is
“destroyed, the constitution is gone, it is a dead letter; it is
vapor which the breath of faction in a moment may dissi-
pate.” Commercial Advertiser (Feb. 26, 1802) (reprinted
in The Papers of Alexander Hamilton, Volume XXV 525
(Columbia University Press 1977)).
BEER v. US 20
III
I finally turn to Section 140 of Pub. L. No. 97-92, 95
Stat. 1183, 1200 (1981), and its role in our assessment of
the legality of the congressional action challenged here. I
agree with the majority that the existence of Section 140
does not change the conclusion that the failure to provide
COLAs mandated by the 1989 Act is unconstitutional,
whether the withholding occurred before or after Con-
gress amended that section in 2001. As the majority
explains, by its own terms, Section 140 is not applicable to
the salary adjustments contemplated by the 1989 Act. If
it were, however, as the government contends it is, we
could not enforce it because Section 140 is unconstitu-
tional.
Section 140 provides as follows:
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 en-
actment of this resolution, any salary of
any Federal judge or Justice of the Su-
preme Court, except as may be specifically
authorized by Act of Congress hereafter
enacted . . . .
Pub. L. No. 97-92, § 140, 95 Stat. 1183, 1200 (1981).
Section 140 was a rider to a Joint Resolution providing
continuing appropriations for fiscal year 1982. In Wil-
liams, we held that the government could not rely on
Section 140 as justification for the blocking statutes
passed in 1995, 1996, 1997, and 1999 because Section 140
expired by its own terms on September 30, 1982. Wil-
liams, 240 F.3d at 1026 (citing Pub. L. No. 97-161, 96
Stat. 22 (1982) (extending life of provisions from March
21 BEER v. US
31, 1982 to September 30, 1982); Pub. L. No. 97-92, §
102(c), 95 Stat. 1183 (1981)).
After Williams, Congress enacted legislation that
amended Section 140 to provide that it “shall apply to
fiscal year 1981 and each fiscal year thereafter.” Act of
Nov. 28, 2001, Pub. L. No. 107-77, § 625, 115 Stat. 803(“2001 amendment”). Today, the majority assumes that
the 2001 amendment supersedes Williams’s holding that
Section 140 expired, but agrees with the alternative
holding in Williams that, even if not expired, the 1989 Act
provides the additional authorization required by Section
140.
Were the majority’s conclusion on that point not cor-
rect, then we would be forced to conclude that Section 140
violates the Compensation Clause, both because it singles
out Article III judges for disadvantageous treatment and
because it violates the principle of separation of powers.
A. Section 140’s Discriminatory Effect
The Supreme Court has held that a law violates the
Compensation Clause when it “effectively single[s] out . . .
federal judges for unfavorable treatment” in their com-
pensation. Hatter, 532 U.S. at 559. In Hatter, the Court
struck down a statutory scheme that required sitting
federal judges to pay into the Social Security system while
other high-level government officials potentially were
exempt from making such payments. Id. at 564, 572-73.
In finding the denial of the exemption to judges unconsti-
tutional, the Court explained that the “practical upshot”
of the statutory scheme was to disadvantage judges
relative to “nearly every current federal employee.” Id. at
573. 3
3 Justice Scalia did not join in this portion of
the Court’s opinion, concurring on grounds that the
BEER v. US 22
Section 140 is no different. It only overrides the
automatic annual COLAs promised in the 1989 Act for
judicial officers. All other federal employees – including
high ranking Executive Branch appointees and Members
of Congress – remain entitled to those “automatic” ad-
justments. Only judicial officers are beholden to Congress
for an additional affirmative legislative enactment before
they may receive the 1989 Act’s COLAs. Thus, post-2001,
Section 140 turns the 1989 Act into a law that provides a
financial benefit to all federal employees other than
judges and puts the judiciary in the position of annually
needing to “curry favor” with the legislature for compen-
sation increases, just as the Framers feared. That clearly
violates the Compensation Clause. See Hatter, 532 U.S.
at 576; Williams, 535 U.S. at 911 (Breyer, J., joined by
Scalia and Kennedy, JJ., dissenting from denial of certio-
rari) (“[Section 140] refers specifically to federal judges,
and it imposes a special legislative burden upon their
salaries alone. The singling out of judges must throw the
constitutionality of the provision into doubt.”) (citing
Hatter, 532 U.S. at 564)). “Judges ‘should be removed
from the most distant apprehension of being affected in
their judicial character and capacity, by anything, except
their own behavior and its consequences.’” Hatter, 532
U.S. at 577 (quoting James Wilson, Lectures on Law
(1791), in 1 Works of James Wilson 364 (J. Andrews ed.
1896)).
Compensation Clause was violated because the congres-
sional action violated the judicial officers’ reasonable
expectations about their future income package. Hatter,
532 U.S. at 586 (Scalia, J., concurring in part and dissent-
ing in part) (“I disagree with the Court’s grounding of this
holding on the discriminatory manner in which the exten-
sion occurred.”). The “discrimination” theory, however,
received the votes of a majority of the Justices and, there-
fore, is binding precedent.
23 BEER v. US
The fear of disadvantageous treatment of judges un-
der Section 140, as amended, is not hypothetical. Until
recently, annual adjustments for federal judges remained
in step with those for Executive Branch appointees and
Members of Congress. When those groups received auto-
matic adjustments under the 1989 Act, Congress also
enacted the necessary special legislation to authorize an
adjustment for judges. In fiscal year 2007, however, both
General Schedule employees and Executive Branch
appointees received an automatic adjustment under the
1989 Act, but Congress did not enact special legislation to
adjust judicial salaries. The same thing happened in
fiscal year 2010. Thus, the link between judicial salary
adjustments and those for Executive Branch appointees
was severed such that all nonelected federal employees
other than Article III judges received COLAs in those
years. 4 This is the very sort of individualized treatment
of the judiciary that the Supreme Court has characterized
as a “disguised legislative effort to influence the judicial
will.” See Hatter, 532 U.S. at 571. Little could be more
inconsistent with the Framers’ purpose and construct
under the Compensation Clause.
B. Section 140 and the Separation of Powers
Section 140 separately poses a separation of powers
problem because it conditions the award of COLAs to
judges on the receipt of salary adjustments by Members of
Congress. The government argues that, in enacting the
1989 Act, “Congress made clear its intent to maintain a
system of salary parity among Federal judges, members of
4 Members of Congress did not receive salary ad-
justments in 2007 or 2010 because they affirmatively
chose to opt out of their right to receive them under the
1989 Act. That choice was theirs, however, and not one
otherwise mandated by preexisting legislation.
BEER v. US 24
Congress, and high-level Executive branch officers.”
Appellee’s Br. 17 (citing Report of the Bipartisan Task
Force on Ethics on H.R. 3660, Government Ethics Reform
Act of 1989, 135 Cong. Rec. 30,756 (Nov. 21, 1989)). As
noted above, any “parity” objective vis-à-vis Executive
Branch officers has been abandoned. And, it is precisely
because Congress has continued to use Section 140 to
force a parity between judicial salaries and its own that
Section 140 violates the principle of separation of powers.
The concern with the independence of the judiciary is
one which flows directly from the tripartite form of gov-
ernment on which the Constitution is structured. In
establishing the system of divided powers in the Constitu-
tion, the Framers believed it was essential that “the
judiciary remain[] truly distinct from both the legislature
and the executive.” Stern, 131 S.Ct. at 2608 (quoting The
Federalist No. 78, p. 466 (C. Rossiter ed. 1961) (A. Hamil-
ton)). Accordingly, as the Supreme Court has noted, the
Framers built into the Constitution “a self-executing
safeguard against the encroachment or aggrandizement of
one branch at the expense of the other.” Mistretta, 488
U.S. at 382 (quoting Buckley v. Valeo, 424 U.S. 1, 122
(1976)). Although the three branches “are not hermeti-
cally sealed from one another,” Article III was designed to
impose certain “basic limitations that the other branches
may not transgress.” Stern, 131 S.Ct. at 2609 (citing
Nixon v. Administrator of Gen. Servs., 433 U.S. 425, 443
(1977)).
As noted earlier, the compromise the Framers struck
under the Compensation Clause was one which would
entrust to Congress the power and obligation to ensure
reasonable salary adjustments for the judiciary over time.
This was a compromise born of necessity, however; this
mechanism for judicial salary adjustments was not meant
to tie those adjustments to legislative salary changes, or
25 BEER v. US
to make them dependent on prevailing political winds.
The Framers certainly did not mean to use the Compen-
sation Clause to blur the lines between the legislative and
judicial branches. That is precisely what Section 140
does, however.
Congress has used Section 140 to link judicial pay to
its own, affirmatively authorizing judicial compensation
increases thereunder only in years where Congress finds
it politically palatable to allow increases in its own. By
using Section 140 in this way, Congress has ignored its
constitutional duty to assess independently the adequacy
of judicial compensation. And, it has ignored the obliga-
tion entrusted to it by the Framers to jealously guard the
independence of the judiciary. “[W]hether the Judiciary is
entitled to a compensation increase must be based upon
an objective assessment of the Judiciary’s needs if it is to
retain its functional and structural independence.” Ma-
ron v. Silver, 925 N.E.2d 899, 914 (N.Y. 2010) (finding
link between legislative and judicial pay increases uncon-
stitutional under New York state constitution).
Because Section 140 skirts Congress’s obligations un-
der the Compensation Clause and undermines the inde-
pendence of the judiciary, it is unconstitutional. The
Supreme Court repeatedly has made clear that it is the
laws that “threaten[] the institutional integrity of the
Judicial Branch” that violate the principle of separation of
powers. Mistretta, 488 U.S. at 383 (quoting Commodity
Futures Trading Comm’n v. Schor, 478 U.S. 833, 851
(1986)). Under these well-established guideposts, Section
140 must fail.
IV
I agree with the majority that the failure to provide
COLAs promised by the 1989 Act to the judiciary violates
the Compensation Clause. I also agree that Will does not
BEER v. US 26
dictate a contrary result. “General propositions do not
decide concrete cases.” Lochner v. New York, 198 U.S. 45,
76 (1905) (Holmes, J., dissenting). The general concepts
espoused in Will simply do not address the very concrete
and different set of facts before us. If the Supreme Court
concludes Will must be read as broadly as this Court felt
forced to read it in Williams, however, Will must be
overruled. To the extent Section 140 plays any role in the
Court’s analysis of the issues presented here, moreover,
the Supreme Court should address its constitutionality
and put its use to rest.
United States Court of Appeals
for the Federal Circuit
__________________________
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.
__________________________
2010-5012
__________________________
Appeal from the United States Court of Federal
Claims in No. 09-CV-037, Senior Judge Robert H. Hodges,
Jr.
__________________________
WALLACH, Circuit Judge, concurring.
I concur in the results, and in the reasoning of the de-
cision, including the necessity of making this important
determination that Congress may not exceed constitu-
tional bounds in its relationship with the judiciary. I
write separately only to clarify that this decision does not
mean that any particular federal judge other than plain-
tiffs will necessarily accept accrued back pay.