In the United States Court of Federal Claims

No. 13-513C

(Filed: January 24, 2014)

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LOURDES G. BAIRD, et al.,

Plaintiffs,

v.

UNITED STATES,

Defendant.

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Compensation Clause of

Article III; damages;

statute of limitations;

continuing claim doctrine.

Deborah Leonard, Reno, NV, for plaintiffs.

Loren Misha Preheim, Trial Attorney, Commercial Litigation Branch,

Civil Division, Department of Justice, Washington, DC, with whom were

Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director,

Reginald T. Blades, Jr., Assistant Director, for defendant.

OPINION

BRUGGINK, Judge.

This is a pay claim brought by 22 retired federal judges. They contend

that their retirement pay has been unconstitutionally diminished in that their

retirement pay has not been adjusted to reflect cost of living allowances that

took effect for active duty judges in 1995, 1996, 1997, and 1999. They

contend that this is a violation of Article III of the United States Constitution

and 28 U.S.C. §§ 371 and 461 (2006). The United States moves to dismiss for

lack of jurisdiction on the ground that plaintiffs’ claims were not brought

within the applicable six year limitations period. See 28 U.S.C. § 2501 (2006).

The matter has been fully briefed, and we heard oral argument on January 17,

2014. For the reasons set out below, we deny the government’s motion.
BACKGROUND

The Compensation Clause of Article III of the Constitution provides

that “Judges . . . shall, at stated Times, receive for their services, a

Compensation, which shall not be diminished during their Continuance in

Office.” U.S. Const. Art. III, § 1. In Beer v. United States, 696 F.3d 1174

(Fed. Cir. 2012), cert. denied, 133 S. Ct. 1997 (2013), the Federal Circuit held

that Article III judges had improperly been denied six cost of living

allowances. The court reasoned that Congress improperly reduced the

plaintiffs’ compensation and violated the Constitution by withholding from

their pay cost of living adjustments (“COLAs”), which were assured under the

Ethics Reform Act of 1989, Pub. L. No. 101-194, § 704, 103 Stat. 1716, 1769

(codified as amended at 28 U.S.C. § 461). This Act provides that, when

General Schedule employees receive a pay increase, Article III judges also

receive a COLA. See id.

In certain years when General Schedule employees received

adjustments to pay, Congress passed laws blocking those COLAs for judges.

It did so for the fiscal years of 1995, 1996, 1997, and 1999. Congress also

withheld judicial COLAs in 2007 and 2010, not because it passed blocking

legislation to prevent those pay increases, but because it relied on an

interpretation of an amended statute, which provided that appropriations to

increase pay for federal judges had to “be specifically authorized by Act of

Congress hereafter enacted.” Pub. L. No. 97-92, § 140, 95 Stat. 1183, 1200

(1981) (hereinafter “Section 140”); see also 28 U.S.C.A. § 461 note (2000).

This authorization requirement expired by its own terms, however, in 1982.

Williams v. United States, 240 F.3d 1019, 1026-27 (Fed. Cir. 2001). Congress

revived it in 2001, however. Pub. L. No. 107-77, § 625, 115 Stat. 748, 803

(2001). As the Beer court explained, reliance on Section 140 to withhold the

2007 and 2010 COLAs was inappropriate because the 1989 Ethics Reform Act

had been a subsequent authorization of judicial COLAs, thus meeting the

requirements of Section 140. See 696 F.3d at 1185-86 (holding that the Ethics

Reform Actsatisfied the “hereafter enacted” requirement of Section 140). The

Federal Circuit concluded that plaintiffs must be compensated “for the

diminished amounts they would have been paid if Congress had not withheld

the salary adjustments mandated by the Act.” Id. at 1186.

The present plaintiffs are all former Article III federal judges who

retired after one or more of the first four blocked COLAs (1995, 1996, 1997,

1999) but prior to the effective date of the last two COLAs (2007, 2010).

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Their claim is that their retirement pay should have reflected COLAs that had

been enacted, but wrongfully blocked, prior to retirement. They point to three

statutory provisions. First, 28 U.S.C. § 135 provides that the active duty pay

of federal judges is set at a rate determined under the Federal Salary Act of

1967, 2 U.S.C. §§ 351-61 (2012), as adjusted by 28 U.S.C. § 461. Section

461, in turn, incorporates the Ethics Reform Act of 1989, which, as Beer held,

means that active duty judges’ salaries should have been adjusted by the

“missing” COLAs. See 28 U.S.C. § 461. Finally, 28 U.S.C. § 371 states that,

upon retirement, a judge receives “an annuity equal to the salary he was

receiving at the time he retired.” Plaintiffs argue that section 371 should be

interpreted, in light of the Beer holding, to entitle them to the correct salary at

the time of retirement. They clam that their retirement annuities should be

corrected to reflect what they should have been earning as active duty judges

immediately prior to retirement and that they should be awarded as damages

the difference between that amount and what they actually received during the

six years prior to filing of this action.

Because none of the plaintiffsretired after 2006, none claim entitlement

to the COLAs adopted in 2007 or 2010. Their suit commenced on July 26,

2013. The parties agree that the court’s general six year statute of limitations

applies, hence plaintiffs’ causes of action cannot predate 2007. See 28 U.S.C.

§ 2501. Although they retired before 2007, plaintiffs claim the benefit of the

“continuing claims” doctrine, under which certain pay claims are renewed each

time a payment is made for less than the correct amount. Plaintiffs concede

that the asserted annuity under-payments before August 2007 are barred by the

limitations period, but they contend that they can recover every under-payment

following July 2007.

The United States concedes that any judge who retired within the six

year limitations period would be protected, because they were in active duty

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status during the limitations period. The key for defendant is that the moment

of transition out of active duty status must occur within the limitations period.

Because none of the present plaintiffs retired within six years prior to filing,

defendant contends that plaintiffs’ causes of action accrued before 2007, and

that their claims cannot be salvaged by the continuing claims doctrine.

One of the judges in the Beer case, for example.

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DISCUSSION

The Tucker Act permits the court to hear claims for money based upon

“any Act of Congress.” 28 U.S.C. § 1491(a)(1) (“The United States Court of

Federal Claims shall have jurisdiction to render judgment upon any claim

against the United States founded either upon the Constitution, or any Act of

Congress . . . .”). The Ethics Reform Act of 1989 is an act of Congress and is

plainly money-mandating. We thus have subject matter jurisdiction.

On the face of it, plaintiffs’ assertion that their claims are not stale, at

least with respect to the past six years, would seem to be correct. In Beer, the

court held that the claims of the judges there were “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.” 696 F.3d at 1186. This despite the fact that most of the

missing COLAs had initially been triggered more than six years prior to

commencement of the action.

Defendant acknowledges that the lapse of more than six years after the

COLAs would not be fatal to the present plaintiffs’ claims if they had retired

within six years of filing this suit. What it argues is that their claims, in

contrast to the Beer plaintiffs, depend on an additional statute, 28 U.S.C. § 371

(the retirement provision). Defendant contends that

A claim for diminishment of judicial salary while in office is not

the same as a statutory claim regarding a retirement annuity

payment . . . . Put another way, to prevail, plaintiffs must

succeed on two claims. The first claim is that, while in office,

their salary was unconstitutionally diminished as a result of the

failure to provide COLAs in certain years. . . . The second claim

is that, when they retired, their annuity was improperly

calculated as a result of the failure to pay them the

constitutionally-correct salary. . . . Without succeeding on the

claim that their salary, while in office, was unconstitutionally

diminished, they cannot succeed in having their retirement

annuity recalculated.

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Def.’s Mot. to Dismiss 3-4.

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We reject this artificial segregation of what amounts to one cause of

action into two. Determining the correct active duty salary at the time of

retirement is not an independent cause of action, it is merely part of

determining the correct retirement pay. The amount of the annuity is fixed at

the time of retirement. Plaintiffs’ retirement annuities were miscalculated at

the precise moments of those retirements. The fact that their active duty pay

was also incorrect in the past does not foreclose their claim for the proper

annuity. And if the continuing claims doctrine applies, each successive

retirement payment thereafter gives rise to a new cause of action.

Several of the plaintiffs retired in 2006, for example. At the instant of

their retirements, they should have received an annuity which incorporated all

four missing COLAs. The fact that the day before retirement they could have

made the argument that their active duty pay also should have reflected the

same COLAs is true, but irrelevant. The character of the monies plaintiffs

were being paid would have changed from a salary to an annuity the following

day, but that does not preclude a retiree from asserting that his or her annuity

was miscalculated. The government offers no principled reason why such a

claim should be barred, and we see none.

The Federal Circuit rejected a similar argument in Hatter v. United

States, 203 F.3d 795 (Fed. Cir. 2000). There, the government argued that the

continuing claims doctrine did not apply because “plaintiffs’ claims are not

inherently susceptible to being divided into a series of independent and distinct

wrongs. This is because the continued withholding of these taxes from

plaintiffs’ judicial salaries ‘is simply the ongoing “damages resulting from the

single earlier alleged [unconstitutional] violation by the government.’”” Id. at

798 (quoting Brown Park Estates-Fairfield Dev. Co. v. United States, 127 F.3d

1449, 1457 (Fed. Cir. 1997) (internal citation omitted). The court

distinguished Brown Park Estates and concluded that the fact that there was

a single wrong in the past did not foreclose application of the continuing

As the government conceded at oral argument, the fact that the first four

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COLAs were found in Beer to have been denied in violation of the plaintiffs’

constitutional rights does not alter the analysis. The result here would be the

same with respect to the last two COLAs, which the court in Beer held were

improperly withheld after a strictly statutory analysis.

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wrong doctrine, so long as the criteria for it were met, and they were. Id. at

799.

A single and complete cause of action thus arose at the time of

retirement. The only remaining question is whether that cause of action

continues to mature at every succeeding failure to pay the proper annuity, i.e.,

whether the cause of action is subject to the continuing claims doctrine.

Defendant’s primary assertion is, as suggested above, that the court never gets

to the continuing claim doctrine because plaintiffs’ claims, like epoxy, are

composed of two elements, which were not combined within the six year

limitations period. We have rejected that position. Defendant goes on,

however, to suggest that plaintiffs are, in fact, “receiving an annuity in the

amount intended by Congress.” They point out that, “[p]laintiffs do not allege

that they are not receiving an annuity equal to the salary that they were

receiving at the time they retired . . . .” Def.’s Mot. to Dismiss 4. This

argument is taken from the language of 28 U.S.C. § 371, which provides a

judge an annuity equal to the “salary he was receiving at the time he retired.”

We do not understand the government to contend that the very language

of section 371 locks in place permanently whatever mistakes were made in the

past. The simple answer to such an assertion would be that it begs the

question: what was the correct salary at the time of retirement? We understand

the government instead to be arguing that plaintiffs had one opportunity to

challenge their annuity, at the time of retirement, and that opportunity is now

stale.

The question thus is whether a claim for a retirement annuity is, like the

claims in Beer for active duty pay, ongoing, or whether miscalculation of an

annuity is fundamentally different in kind from a claim for miscalculation of

a salary. Once again, we disagree with the government.

In Friedman v. United States, 310 F.2d 381 (1962), the Court of Claims

analyzed the court’s not-entirely consistent application of the continuing

claims doctrine in an effort to set out its metes and bounds. That case involved

the widow of a serviceman whose husband had retired more than six years

prior to commencement of her suit. The assertion was that her husband should

have been retired on disability, giving her the benefit of a higher annuity.

Before addressing Mrs. Friedman’s claim, the court described the rationale and

circumstances for application of the doctrine:

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The court’s pay cases (military and civilian) concerned

with the issue of limitations have often applied the so-called

‘continuing claim’ theory, i.e., periodic pay claims arising more

than six years prior to suit are barred, but not those arising

within the six-year span even though the administrative refusal

to pay the sum claimed may have occurred, or the statute on

which the claim is grounded may have been enacted, prior to six

years. . . . The important characteristics of all these cases were:

(a) Congress had not entrusted an administrative officer or

tribunal with the determination of the claimant’s eligibility . . .

; (b) the cases turned on pure issues of law or on specific issues

of fact which the court was to decide for itself . . . ; and (c) in

general the cases called upon the court to resolve sharp and

narrow factual issues not demanding judicial evaluation of broad

concepts such as “disability” (concepts which involve the

weighing of numerous factors and considerations as well as the

exercise of expertise and discretion). For such cases . . . the

“continuing claim” doctrine is wholly appropriate and in accord

with the general jurisprudence in this country on the statute of

limitations. Under those general principles the cause of action

for pay or compensation accrues as soon as the payor fails or

refuses to pay what the law (or the contract) requires; there is no

other condition precedent to the accrual of the cause of action

(such as a factual determination by an executive tribunal or the

exhaustion of some special procedure or remedy). And where

the payments are to be made periodically, each successive

failure to make proper payment gives rise to a new claim upon

which suit can be brought.

Id. at 384-85 (footnotes omitted). Later in the opinion, the court condensed its

analysis into a single distinction between “two separate categories of

claims—‘continuing claims’ which are independent of administrative

determination and those other claims dependent on prior administrative

evaluation.” Id. at 387. Mrs. Friedman’s claim did not benefit from the

continuing claims analysis because her husband’s entitlement to disability

retirement was subject in the first instance to review and final action by a

Retiring Board. Id. at 403.

The present pay claims comfortably fall within the criteria set out in

Friedman: 1) no administrative tribunal has been entrusted with evaluating pay

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eligibility; 2) the question of entitlement is purely one of law; 3) whatever fact

issues might arise are narrowly focused (on dates of retirement or dates of

death, for example). See also Hatter, 203 F.3d at 798 (“pay claims not

dependent on a discretionary finding–including claimsfor increased retirement

pay because of new legislation, etc.–are continuing claims.”).

It follows that plaintiffs are entitled to present their claims for

improperly withheld retirement pay beginning with the first pay period

commencing six years prior to July 2013.

CONCLUSION

Because plaintiffs have a cause of action that accrues with each

successive retirement annuity payment, their claims are not barred by the

statute of limitations. Accordingly, defendant’s motion to dismiss is denied.

Defendant is directed to file its answer on or before February 10, 2014.

s/ Eric G. Bruggink

ERIC G. BRUGGINK

Judge

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