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Williams v. United States of America

July 16, 1999

SPENCER WILLIAMS, ET AL., PLAINTIFFS
v.
UNITED STATES OF AMERICA DEFENDANT



The opinion of the court was delivered by: John Garrett Penn, United States District Judge

OPINION

The plaintiffs, twenty United States District Court judges appointed pursuant to Article III of the Constitution of the United States, filed this case as a class action seeking to have the Court declare that Section 140 of Pub. L. No. 97-92 (Section 140) does not operate to prevent the payment of Employment Cost Index (ECI) adjustments due federal judges under the Ethics Reform Act of 1989 (Pub. L. No. 101-194, 103 Stat. 1716)(now codified at 5 U.S.C. § 5318, note), sometimes hereinafter referred to as the "1989 Act," "because: (1) Section 140 expired on September 30, 1982; or (2) the provisions of Section 140 were superseded by the Ethics Reform Act of 1989 or, (3) the salary adjustments payable by operation of the Ethics Reform Act have been 'authorized by Act of Congress hereafter enacted' within the meaning of Section 140." Otherwise, the plaintiffs ask the Court to declare "that Section 140 is unconstitutional or void." The case is before the Court on plaintiffs' Motion for Summary Judgment and defendant's Motion for Summary Judgment. The parties agree that there are no genuine issues of material fact. Fed. R. Civ. P. 56. The Court certified this case as a class action. See Fed. R. Civ. P. 23.

I

Article III, Section 1 of the Constitution provides, in pertinent part, that judges of the United States Courts "shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation which shall not be diminished during their Continuance in Office." (The Compensation Clause). The compensation of a federal district judge, appointed pursuant to Article III, is defined, in part, at 28 U.S.C. § 135, which provides in pertinent part: "Each judge of a district court of the United States shall receive a salary at an annual rate determined under Section 225 of the Federal Salary Act of 1967 (2 U.S.C. §§ 351-361)(Salary Act) as adjusted by" 28 U.S.C. § 461, of the Executive Salary Cost-of-Living Adjustment Act (Adjustment Act). The plaintiffs contend that the Adjustment Act, as amended by the Ethics Reform Act, requires that the salary of a federal judge be adjusted annually pursuant to an index set forth in the 1989 Act. The plaintiffs note that the adjustment is subject to one condition only, that there be in the same fiscal year an adjustment in the rates of pay of positions covered by the General Schedule determined under the Federal Pay Comparability Act of 1970, Pub. L. No. 91-656, 84 Stat. 1946 (1971), codified at 5 U.S.C. 5305-5306 (Comparability Act). The Comparability Act is the mechanism for annually adjusting the rates of pay of most federal employees to reflect increases in the cost of living and salary increases in the private sector.

In the Ethics Reform Act, Congress revised the pay system for high-ranking government officials, including federal judges. The Act changed the method by which the salary of federal judges would be periodically reviewed by the Commission, imposed severe limitations on the outside income judges can earn, forbade receipt of honorariums and provided a new mechanism for annual adjustments to judges' pay. The Ethics Reform Act provided that each judge would receive a base salary increase, effective January 1, 1991. Relevant to the contentions of the plaintiffs, the Act provided that, beginning in 1991 and in each subsequent year, the salary of a federal judge shall be adjusted based upon a specific schedule and index. Under the Act, in any year in which salaries of General Schedule employees are adjusted under the Comparability Act, federal judges' salaries are to be adjusted by an amount equal to one-half of one percent less than the percentage change in the ECI for the period ended December of the previous year. Ethics Reform Act, § 704(a)(1)(B). The statute also provides a five percent cap on any adjustment per year. Thus, according to the plaintiffs, the law makes the ECI adjustment automatic, the only condition being that there must be an adjustment in the rates of pay for General Schedule employees in the same year. Absent an adjustment for General Schedule employees, there is no adjustment for the judges.

The federal judges' salaries were adjusted pursuant to the Ethics Reform Act on the first day of January 1991, 1992 and 1993. In 1994, there was no adjustment for General Schedule employees and as a result no adjustment for the judges. There were ECI adjustments for General Schedule employees in 1995, 1996 and 1997, but no ECI adjustment or COLA for the federal judges in those years. It is the latter years and future compensation that are the subject of this case. As argued by the defendant, the failure of the federal judges to receive ECI adjustments for those years resulted from the fact that Congress, acting pursuant to Section 140, did not vote an ECI adjustment for federal judges in those years.

II

Before addressing the merits of this litigation, the Court will address whether it is necessary for this Court to recuse itself from consideration of this case. This matter is addressed in view of the defendant's "Suggestion of Designation and Temporary Assignment of District Judge Who Took office on or After January 1, 1998, to Hear and Decide This Case." The Court hastens to note that the defendant has not requested the Court to recuse itself; rather, it suggested that the assignment to a federal judge appointed after the complaint was filed and one who was not a sitting Article III judge during 1995, 1996 or 1997 might raise less of an issue of an appearance of conflict. The plaintiffs opposed the Suggestion and the Court concluded that there is no impediment to the Court retaining this case.

There is no Article III federal judge who does not have an interest in the case. This includes judges appointed before and after December 31, 1997. Thus, any decision in this case will affect the compensation of every Article III judge.

A similar issue was addressed in United States v. Will, 449 U.S. 200, 101 S.Ct. 471 (1980), a case which both sides to the controversy contend dictates the decision the Court must reach on the merits in this case. Like this case, Will involved a question as to whether Article III judges should have received a cost-of-living increase during four years in question. The Supreme Court concluded that the federal judges were entitled to the cost-of-living adjustment for two of the four years. More important on the limited issue relating to disqualification or recusal, the Supreme Court concluded that neither the District Court judge in Will nor any Justice of the Supreme Court was required to be disqualified though both the District Judge and the Justices of the Supreme Court could be said to have an interest in the outcome of the case. In so holding, the Supreme Court recognized the continuing validity of the Rule of Necessity. It noted that the rule "had its genesis at least five and a half centuries ago." 449 U.S. at 213, 101 S.Ct. at 480. Second, the Supreme Court concluded that 28 U.S.C. § 455 (relating to disqualification of a judicial officer) "was to deal with the reality of a positive disqualification by reason of an interest or the appearance or possible bias." 449 U.S. at 216, 101 S.Ct. at 481. It was "not intended by Congress to alter the time-honored Rule of Necessity." 449 U.S. at 217, 101 S.Ct. at 482. The Supreme Court went on to state that "we would not casually infer that the Legislative and Executive Branches sought by the enactment of § 455 to foreclose federal courts from exercising 'the province and duty of the judicial department to say what the law is.'" 449 U.S. at 217, 101 S.Ct. at 482 (citing to Marbury v. Madison, 1 Cranch 137, 177, 2 L.Ed. 60 (1803)). This Court is not required to recuse itself is this case. Nor is this Court disqualified from hearing this case. The case cannot be transferred to any Article III judge who does not have an interest in the outcome of the case simply because it affects every Article III judge. The Court concludes that, pursuant to the Rule of Necessity, this Court can hear and decide this case.

III

Any discussion relating to the compensation of Article III federal judges must begin with consideration of the comments and words of the Founding Fathers of this great nation. As the Supreme Court noted in Will, "[t]he Compensation Clause has its roots in the long standing Anglo-American tradition of an independent Judiciary." 449 U.S. at 217, 101 S.Ct. at 482. "A Judiciary free from control by the Executive and the Legislative is essential if there is a right to have claims decided by judges who are free from potential domination by other branches of government." 449 U.S. at 217-218, 101 S.Ct. at 482. This view can been traced to our Founding Fathers who were very aware of the importance of an independent judiciary. In Federalist No. 79, Hamilton stated that "[n]ext to permanency in office, nothing can contribute more to the independence of the judges than a fixed provision for their support." He noted that "[i]n the general course of human nature, a power over a man's subsistence amounts to a power over his will. And we can never hope to see realized in practice, the complete separation of the judicial from the legislative power, in any system which leaves the former dependent for pecuniary resources on the occasional grants of the latter." Hamilton observed that "the salaries for judicial officers may from time to time be altered, as occasion shall require, yet so as never to lessen the allowance with which any particular judge comes into office in respect to him." He even noted the distinction between a salary paid to the President, as opposed to that paid to a judge. He observed that since the President is elected "for a term of no more than four years, it can rarely happen that an adequate salary, fixed at the commencement of that period, will not continue to be such to its end." But for judges appointed to serve for life, "it will happen, especially in the early stages of government, that a stipend, which would be very sufficient at their first appointment, would become too small in the progress of their service."

In Will, the Supreme Court traced the laws protecting the compensation of judges in English history and in the history of this nation. 449 U.S. at 217-221, 101 S.Ct. at 482-483. As the Supreme Court observed, Madison's notes on the Constitutional Convention reveal that at one point there was a tentative arrangement under which Congress could neither increase nor decrease the compensation of judges. But Gouvernour Morris was successful in striking the prohibition on increases. 449 U.S. at 219, 101 S.Ct. at 483. It appears that Madison's support for Congress not having the power to decrease or increase the compensation of sitting judges grew out of a concern that in either case, judges would be inclined to defer to Congress. Morris' argument prevailed before the Constitutional Convention.

The Supreme Court quoted a significant portion of The Federalist No. 79, as follows: It will readily be understood, that the fluctuations in the value of money, and in the state of society, rendered a fixed rate of compensation [of judges] in the Constitution inadmissible. What might be extravagant to-day might in half a century become penurious and inadequate. It was therefore necessary to leave it to the discretion of the legislature to vary its provisions in conformity to the variations in circumstances; yet under such restrictions as to put it out of power of that body to change the condition of the individual for the worse.

449 U.S. at 220, 101 S.Ct. at 483 (emphasis this Court's).

The Supreme Court recognized yet another purpose of the Compensation Clause. It stated: This Court has recognized that the Compensation Clause also serves another, related purpose. As well as promoting judicial independence, it 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. Beyond doubt, such assurance has served to attract able lawyers to the bench and thereby enhances the quality of justice.

449 U.S. at 220-221, 101 S.Ct. at 483 (citations omitted, emphasis this Court's). The Supreme Court echoed a similar sentiment 79 years ago in yet another case which related to the passage of the 16th Amendment which provided for a federal income tax. Evans v. Gore, 253 U.S. 245, 40 S.Ct. 550 (1920). The plaintiff, Judge Evans, was a United States District Judge and was serving in that capacity when the new income tax law was enacted. He contended that in imposing the new income tax on him, Congress had diminished his pay in violation of the Compensation Clause. The Supreme Court agreed and held that the tax as imposed on a sitting Article III judge was invalid. The Supreme Court stated:

[T]he primary purpose of the prohibition against diminution was not to benefit the judges, but, like the clause in respect of tenure, to attract good and competent men [and women] to the bench and to promote that independence of action and judgment which is essential to the maintenance of the guaranties, limitations, and pervading principles of the Constitution and to the administration of justice without respect to persons and with equal concern for the poor and the rich. Such being its purpose, it is to be construed, not as a private grant, but as a limitation imposed in the public interest; in other words, not restrictively, but in accord with its spirit and the principle on which it proceeds.

Obviously, diminution may be effected in more ways than one. Some may be direct and others indirect, or even evasive as Mr. Hamilton suggested. But all 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 must be regarded as within the prohibition. Nothing short of this will give full effect to its spirit and principle. 253 U.S. at 253-54, 40 S.Ct. at 553 (emphasis this Court's).

There is no doubt but that those words based on experience and sound judgment over the centuries and the words written and uttered by the Founding Fathers are just as relevant and important today as they were at the dawn of this nation. It was the Founding Fathers' understanding of the need for an independent judiciary which led them to include within the Constitution, Article III, § 1, which provides:

The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office. (Emphasis this Court's).

The Founding Fathers were obviously very concerned about creating and maintaining an independent judiciary. This apparently led Madison to feel that allowing Congress to make any adjustment in judges' pay, up or down, could have a serious impact on that independence. His view did not prevail because the result would have been the opposite of what he intended. There is a suggestion that Madison thought of tying judicial salaries to the price of a commodity so that when that price rose, the judges' income would rise as well. 449 U.S. at 220, n. 22, 101 S.Ct. at 483, n. 22. He commented that: "The variations in the value of money, may be guarded agst. by taking for a standard wheat or some other thing of permanent value." 449 U.S. at 220, 101 S.Ct. at 483 (citation omitted). The Supreme Court noted that "Morris criticized the proposal for overlooking changes in the state of the economy; the value of wheat may change, he said, and leave the judges undercompensated." Id. We are told that the Founders may have rejected that plan due to an unsatisfactory experience with a similar plan in Virginia relating to payment for members of the clergy. 449 U.S. at 220, n. 22, 101 S.Ct. at 483, n. 22. But, in any event, the Founding Fathers, like our modern day Congress, grappled to find a method for providing fair compensation to judges and a method for addressing any increases in the cost of living. Indeed, Madison's suggestion that wheat be used as a measure was, no doubt, an early attempt to provide automatic cost-of-living adjustments.

One modern attempt to address that concern was the Adjustment Act. Under that Act, the judges were to receive the same annual percentage adjustment as the annual adjustment made in the General Schedule under the Comparability Act. The Comparability Act delegated to the President the power to set the salary adjustment for General Schedule employees, either by submitting an order and report based on recommendations of an agent or by submitting an Alternative Plan. The Alternative Plan was to be filed prior to September 1 of each year. In fact, the President submitted an Alternative Plan every year. That plan then became law unless vetoed by either House of Congress within thirty days. Until the Congress and the President acted on the legislation to repeal or allow an adjustment, there was no final law in place to adjust salaries. This was the state of the law in 1980 addressed by the Supreme Court in Will. In Year One, relating to adjustments for Fiscal Year 1977, the Supreme Court held that since the Congressional statute which would have repealed the adjustment was not signed until October 1, it effectively would have diminished the compensation of federal judges since the COLA under the Adjustment Act was effective midnight of September 30. 449 U.S. 224-226, 101 S.Ct. at 485-486. For Fiscal Years 1978 (Year 2) and 1979 (Year 3), the President signed the repealing statutes prior to October 1 of each year, and thus the adjustments did not vest. 449 U.S. at 226-229, 101 S.Ct. at 486-487. Finally, with respect to Year 4, Fiscal Year 1980, the President did not sign the repealing legislation until after October 1, thus the adjustment vested.

It is clear that the pay legislation addressed by the Supreme Court in Will did not vest until such time as the President acted by signing or not signing the repealing statute on or before September 30 of a given year. Although Congress had set up a mechanism to address the issue of yearly salary adjustments under that legislation, the President had until September 30 to accept or reject the proposed adjustment. Therefore, up until ...


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