A group of federal judges who won a key pay raise lawsuit last year scored a major victory on Monday when the U.S. Supreme Court declined to review the government’s appeal.

The court, without comment, denied the government’s petition in U.S. v. Beer, which sought reversal of an en banc decision last October by the U.S. Court of Appeals for the Federal Circuit.

Six current and former Article III judges had filed a lawsuit in 2009 claiming that Congress violated the Constitution’s compensation clause by withholding cost-of-living adjustments (COLAs) established by the Ethics Reform Act of 1989. They argued their salaries were unconstitutionally diminished by the withholding of COLAs in 2007 and 2010, and also by the calculation of adjustments due in other years that was based on 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 a period covered by a six-year statute of limitations.

The six judges in U.S. v. Beer were Peter Beer, Terry Hatter Jr., Richard Paez, Laurence Silberman, A. Wallace Tashima, and U.W. Clemon. They were represented by Christopher Landau, head of the appellate litigation practice at Kirkland & Ellis.

"We did not believe that Supreme Court review was warranted, and are pleased that the Supreme Court agreed with us," said Landau.

While the case was pending in the Supreme Court, the U.S. Court of Federal Claims was considering the issue of damages as a result of the judges’ victory in the Federal Circuit. Landau said his client and the government are in "large agreement" on that issue.

"While there are certain relatively minor disputes over withholdings, the bottom line is that the district court plaintiffs’ salaries should be adjusted from $174,000 to $197,000, and the Court of Appeals plaintiffs’ salaries should be adjusted from $184,500 to $209,000," he said. "In addition, because all of the six plaintiffs in this case were judges at the time of wrongful withholdings in the 1990s, the district court plaintiffs are entitled to about $207,000 in back pay and prejudgment interest, and the court of appeals plaintiffs are entitled to about $221,000 in back pay and prejudgment interest."

He noted that a class action has been filed that seeks to apply the ruling to all Article III judges. That case remains pending in the trial court where the class has not yet been certified.

In opposing the government’s petition for review, Landau not only defended the Federal Circuit’s legal analysis, but told the justices that as a result of the denial of salary adjustments during the past 18 years, many judges had left the bench and many potential judges had declined nominations.

"Federal judges, who reasonably thought their salaries had at least some protection from erosion by inflation, are constantly forced to return to Congress as supplicants," he wrote. "The past two decades, in short, have witnessed precisely the threat to the caliber and independence of the federal bench that both the 1989 Act and the Compensation Clause were designed to avoid."

The 1989 law, which was effective in 1991, made major changes in the way federal judges were paid. While sharply limiting judges’ outside income, it established self-executing cost-of-living adjustments to protect judicial salaries from inflation. The judges’ COLAs were tied to the COLAs for general schedule federal employees.

The new scheme appeared to work well in the first four years and judges received annual adjustments. However, no adjustments were made in 1995, 1996, 1997, and 1999, even though federal employees received pay hikes in those years. In each of those four years, Congress enacted provisions in appropriations bills to block adjustments for federal judges.

In response, several judges, in what later became a class action, sued in federal court in 1997. The district court held that Congress had violated the compensation clause by withholding the salary adjustments. The government appealed and the Federal Circuit in 2001 reversed the district court in Williams v. U.S., a decision that the Federal Circuit overruled in last fall’s Beer ruling.

Congress subsequently enacted legislation, known as Section 140, an appropriations rider that had expired in 1982. Section 140 stated that no funds were to be spent to increase, after Dec. 15, 1981, any federal judge’s salary, except as specifically authorized by an act of Congress. In fiscal years 2002, 2003, 2004, 2005, 2006, 2008 and 2009, Congress authorized salary adjustments for judges, but not in 2007 and 2010.

The Beer lawsuit then took up the cause that the Williams class had lost.

In its ruling last October, the Federal Circuit said the compensation clause "protects not only judicial compensation that has already taken effect but also reasonable expectations of maintenance of that compensation level." The 1989 act, according to the court, had "set a clear formula" for making annual COLAs to judicial salaries, and that "all sitting federal judges are entitled to expect that their real salary will not diminish due to inflation or the action or inaction of the other branches of Government."

The court, with two judges dissenting, sent the case back to the Court of Federal Claims for a calculation of damages, as measured by the additional amount the judges would have earned since January 13, 2003, if all of the 1989 act’s contemplated increases had been awarded. The dissenters claimed the Supreme Court’s 1980 decision in U.S. v. Will controlled; that decision, they said, held 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 protected."

Besides arguing that the Federal Circuit’s analysis was wrong, the government, in its petition for review, warned, "The decision below provides a basis for every current or former federal judge (active or senior) to bring suit against the United States."

The government added that "even judges who took the bench after the years in which Congress blocked judicial salary increases can claim that their salaries for the past six years, and into the future, should be adjusted to the level they would have reached had those increases gone into effect. Indeed, the universe of potential plaintiffs goes well beyond Article III judges to include the numerous federal officials (such as bankruptcy judges) whose salaries are set by statute as a function of the salaries paid to Article III judges."

The government noted that follow-on lawsuits already had been filed by other federal judges seeking their own recoveries against the United States. Those suits, all in the Federal Claims Court are: Gettleman v. U.S.; Barker v. U.S. (class-action complaint); Cornish v. U.S. (complaint filed by bankruptcy judge), and Trager v. U.S. (complaint filed by estate of deceased judge).

Marcia Coyle can be contacted at mcoyle@alm.com.