A year ago, the U.S. Supreme Court dodged a sensitive constitutional question concerning judicial salaries, but it may face that question again before the next term ends.

On Sept. 7, in a rare en banc hearing by the U.S. Court of Appeals for the Federal Circuit, six current and former federal judges will argue that Congress unconstitutionally withheld judges’ pay adjustments and the Federal Circuit was wrong when it ruled otherwise over a decade ago.

In asking the Federal Circuit to overrule its 2001 precedent, the six judges said they recognize “that there are few matters more delicate for judges to decide than those involving their own pay. The compensation clause, however, ‘is designed to benefit, not the judges as individuals, but the public interest in a competent and independent judiciary.’”

The six judges behind Beer v. U.S. are Peter Beer, Terry Hatter Jr., Richard Paez, Laurence Silberman, A. Wallace Tashima and U.W. Clemon. They brought their lawsuit in 2009, but the controversy goes back almost 20 years.

The Ethics Reform Act of 1989, which was effective in 1991, made major changes in the way federal judges were paid. Although the act sharply limited judges’ outside income, it established “self-executing and non-discretionary cost-of-living adjustments to protect judicial salaries from inflation,” said the Beer groups’ counsel, Christopher Landau, head of the appellate litigation practice at Kirkland & Ellis.

The act states that “each [federal judicial] salary rate … shall be adjusted by an amount … as determined under section 704(a)(1)” of the act. That section requires judicial salaries to be adjusted by reference to the employment cost index, a measure of private-sector salaries published by the Bureau of Labor Statistics. The pay adjustment could not exceed the annual salary adjustment for federal civil servants or 5 percent.

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 increases in those years. In each of those four years, Congress enacted provisions in appropriations bills to block adjustments for federal judges.
 



In response to Congress’ action, 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 reversed the district court in Williams v. U.S. — the 2001 decision that the Beer group now seeks to overturn.

In Williams, a divided panel relied on a 1980 Supreme Court decision, U.S. v. Will, for its own ruling that the salary withholding did not violate the Constitution because the compensation clause only protects from diminishment judicial pay that had already taken effect.

The Williams class sought review in the Supreme Court, but the justices, with three dissenting, denied review in 2002. The dissenters, Stephen Breyer, Antonin Scalia and Anthony Kennedy, wrote that the Court’s Will decision did not focus on the issue presented in Williams, explaining, “Will involved a set of interlocking statues which, in respect to future cost-of-living adjustments, were neither definite nor precise.”

In the aftermath of the Williams’ decision, Congress 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. There were no pay adjustments in 2007 and 2010.

The Beer lawsuit then came in 2009. Landau knew from the outset that he had to attack the Williams precedent in order to move the case towards the Supreme Court. The U.S. Court of Federal Claims summarily dismissed the complaint based on Williams. A Federal Circuit panel summarily affirmed, saying Williams controlled. Landau petitioned the Supreme Court, which in June 2011 vacated the panel decision and sent the case back to the Federal Circuit to resolve a procedural question on whether the Beer group was precluded from bringing its compensation clause challenge because of the Williams class litigation.

Landau won the procedural battle, but once again a panel ruled that Williams controlled the merits. He sought en banc review in which he “freely acknowledged” that his clients sought to overturn Williams. This time, the full Federal Circuit agreed to hear arguments on the merits of the compensation clause claim and the effect of Section 140.

“I’ve learned in this job you don’t want to be optimistic or pessimistic,” said Landau. “You want to be realistic. They have taken the unusual step of granting en banc review. One would presume they wouldn’t have taken it unless there were some willingness to reconsider that decision, and we hope we can persuade them to reconsider and reverse it. We certainly have our work cut out for us.”

Landau is getting some strong support from nine bar groups that have filed five amicus briefs: American Bar Association, Federal Judges Association, Bar Association of the District of Columbia, International Municipal Lawyers Association, Intellectual Property Owners Association, Federal Circuit Bar Association, Customs & International Trade Association, Intellectual Property Law Association, and the Federal Bar Association.

“There are a lot of groups that really understand these issues don’t just affect judges but affect litigants and the quality of justice,” said Landau. “I can’t claim any credit for the amicus effort. The amici are driving their own train.”

William Atkins of Pillsbury Winthrop Shaw Pittman filed the brief on behalf of the Bar Association of the District of Columbia because, he said, “I do IP litigation and I’m a federal animal. I’m in front of a lot of federal judges. They are given enormous power, and rightfully so, but are woefully underpaid.”

In his brief, Atkins delved into the Federalist Papers, which he downloaded as a podcast, to find support for his argument. “They say judges should be paid what the market is,” he said, adding, “That’s a heck of lot more than $174,000 a year. The problem is they have been linked to Congress.”

Before the Federal Circuit, Landau argues, “By establishing a regime of self-executing and non-discretionary future salary adjustments as a quid pro quo for drastic limitations on federal judges’ ability to earn outside income, the 1989 Act gave rise to a firm judicial expectation that the promised adjustments would in fact be paid.” Those promised, future salary adjustments, he contends, constitute part of the compensation protected from diminishment by Article III, and Congress violated the compensation clause by withholding them in 1995, 1996, 1997, 1999, 2007, and 2010.

The government, however, counters that the Federal Circuit in its 2001 Williams decision correctly interpreted the Supreme Court’s Will decision. The salary scheme in Will is no different from the one in the Beer case for compensation clause purposes, according to the government.

“Nothing in the compensation clause prohibits Congress from changing the rate of a future increase or from preventing an increase at all before judges have performed services for which compensation is due and payable,” writes the government. “Indeed, Congress cannot be said to `diminish’ judicial compensation before it was received, before it was due and payable, and before it was effective. The Supreme Court recognized as much in Will, and that precedent controls the outcome here.”

Both sides and the Beer amici find support for their arguments in the Federalist Papers and comments by the Framers of the Constitution.

In the end, regardless of what the Federal Circuit does, the disagreement over the meaning of the Supreme Court’s Will decision seems to guarantee that the government and the judges will meet again sometime soon in the Supreme Court.

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