Opinion ID: 559506
Heading Depth: 2
Heading Rank: 2

Heading: Authority Under Section 7443A

Text: 10 In challenging the power of the Chief Judge of the Tax Court to assign cases to a special trial judge, the Company asserts that the language and structure of section 7443A clearly demonstrate that Congress did not intend complex tax cases involving substantial deficiencies to be assigned to special trial judges. We, therefore, must interpret the language of this provision. 11 It is axiomatic that '[t]he starting point in every case involving construction of a statute is the language itself.'  Landreth Timber Co. v. Landreth, 471 U.S. 681, 685, 105 S.Ct. 2297, 2301, 85 L.Ed.2d 692 (1985) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935, 44 L.Ed.2d 539 (1975) (Powell, J., concurring)). The plain meaning of the statute's language should control except in the rare cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters. Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571, 102 S.Ct. 3245, 3250, 73 L.Ed.2d 973 (1982). In such cases it is the intention of the legislators, rather than the strict language, that controls. Id. Finally, in expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 51, 107 S.Ct. 1549, 1555, 95 L.Ed.2d 39 (1987) (citations omitted). With these guiding principles in mind, we turn to the statute and its language. 12 Section 7443A confers on the Chief Judge of the Tax Court the authority to appoint a special trial judge and to assign certain tax cases to such judges for adjudication. Section 7443A provides, in pertinent part: 13 (a) Appointment 14 The chief judge may, from time to time, appoint special trial judges who shall proceed under such rules and regulations as may be promulgated by the Tax Court. 15 (b) Proceedings which may be assigned to special trial judges 16 The chief judge may assign-- 17 (1) any declaratory judgment proceeding, 18 (2) any proceeding under section 7463, 19 (3) any proceeding where neither the amount of the deficiency placed in dispute (within the meaning of section 7463) nor the amount of any claimed overpayment exceeds $10,000, and 20 (4) any other proceeding which the chief judge may designate (emphasis added), 21 to be heard by the special trial judges of the court. 22 (c) Authority to make court decision 23 The court may authorize a special trial judge to make the decision of the court with respect to any proceeding described in paragraph (1), (2), or (3) of subsection (b), subject to such conditions and review as the court may provide. 24 26 U.S.C. Sec. 7443A. 25 The central question we must address is whether the phrase any other proceeding, which is found in subsection (b)(4), permits the assignment of any tax case to a special trial judge, or if subsection (b)(4) assignments are limited to small and non-complex cases. The Company concedes that the phrase any other proceeding when read in isolation could be construed to permit the assignment of cases similar to those that provided the basis for this appeal. The Company, however, relying on the rule of ejusdem generis, 2 argues that given the entire structure of section 7443A the phrase any other proceeding should not be read so broadly. It is the Company's view that the phrase any other proceeding only encompasses proceedings of a similar nature to those enumerated in section 7443A(b)(1)-(3), i.e., matters that involve a small amount, matters that do not involve complex issues, and matters in which the scope of trial is limited. Any other interpretation, reasons the Company, would render the limitations imposed by section 7443A(b)(1)-(3) a nullity. In support of this argument, the Company relies on the Supreme Court's decision in Gomez v. United States, 490 U.S. 858, 109 S.Ct. 2237, 104 L.Ed.2d 923 (1989). 26 In Gomez, the Supreme Court construed the provisions of the Federal Magistrates Act, 28 U.S.C. Sec. 631 et seq. In particular, one section of the Magistrates Act permitted federal magistrates to be assigned such additional duties as are not inconsistent with the Constitution and laws of the United States. 28 U.S.C. Sec. 636(b)(3). This general grant of authority followed a list of specifically enumerated duties which a district judge could delegate to a magistrate. The question before the Court was whether this general provision permitted the assignment to a magistrate of juror voir dire in a criminal case. In holding that the Magistrates Act did not permit a district court to assign voir dire, the Court stated: 27 When a statute creates an office to which it assigns specific duties, those duties outline the attributes of the office. Any additional duties performed pursuant to a general authorization in the statute reasonably should bear some relation to the specified duties. 28 Gomez, 490 U.S. at 864, 109 S.Ct. at 2241. The Court concluded that Congress did not intend magistrates to preside over important stages of a felony trial. Jury voir dire was found to be one of these important stages. The Court rested its decision on two grounds: (1) the statute expressly specified those functions that magistrates were authorized to conduct, and (2) the legislative history was replete with statements that magistrates were only to handle subsidiary matters thereby demonstrating Congress' intent to limit the responsibilities of the magistrates. Id. at 872, 109 S.Ct. at 2245. 29 The Company's reliance on Gomez is misplaced. Here, unlike the situation in Gomez, the statute itself draws a distinction between the categories of cases enumerated in subsections (b)(1)-(3) and the category of any other proceeding found in subsection (b)(4). The first three categories are (1) declaratory judgment proceedings, (2) small cases involving less that $10,000 conducted under section 7463, and (3) other cases involving less than $10,000. Where a special trial judge is assigned a case pursuant to subsections (b)(1)-(3), the Tax Court may authorize the special trial judge to render a final decision. 26 U.S.C. Sec. 7443A(c). Special trial judges, however, cannot render the final decision of the Tax Court in cases assigned under the fourth category--any other proceeding. 3 See id. 30 This statutory distinction demonstrates that Congress intended to differentiate subsection (b)(4) cases, in which the ultimate decisional authority remains with the Tax Court, from those cases in which a special trial judge may make the final decision. Congress' decision to vest final decisional authority exclusively in the Tax Court in subsection (b)(4) cases is a clear indication of its intention to permit the assignment of complex cases to special trial judges. We, therefore, decline to adopt the Company's proposed construction because to do so would render superfluous the distinction drawn by the plain language of subsection (c). 31 The legislative history of section 7443A lends little, if any, support to the Company's argument. Under 26 U.S.C. Sec. 7456 (1982), the predecessor to section 7443A, special trial judges were referred to as commissioners. 4 Tax Reform Act of 1984, P.L. No. 98-369, Secs. 463, 464, 1984 U.S.Code Cong. & Admin.News (98 Stat.) 824-25. The commissioners were only authorized to hear minor tax cases and declaratory judgment disputes. See 26 U.S.C. Sec. 7456 (1982) (current version at 26 U.S.C. Sec. 7443A). These small cases could not be appealed and they had no precedential value. Id. In 1984 Congress made several amendments to section 7456. Specifically, the term special trial judge was adopted to replace the term commissioner, subsection (d)(3) was changed to raise the maximum amount in dispute provision from $5,000 to $10,000, and subsection (d)(4) providing for the assignment of any other proceeding was added. Tax Reform Act of 1984, Secs. 463, 464. At the same time, the Chief Judge was given authority to permit special trial judges to render final decisions in cases arising under subsections (d)(1)-(3). Id. The statutory provisions addressing the role of special trial judges were ultimately consolidated and recodified in section 7443A. Tax Reform Act of 1986, P.L. No. 99-514, Sec. 1556, 1986 U.S.Code Cong. & Admin.News (99 Stat.) 2754-55 (recodifying section 7456(d)(1)-(4) at section 7443A(b)(1)-(4) & (c)). 32 The Company submits that Congress, in adopting these amendments, did not intend to grant special trial judges the authority to hear complex cases. The Company places great emphasis on the limited legislative history that accompanied the amendments. In explaining the basis for adopting the present section 7443A(b)(4), the Report of the Committee on Ways and Means stated: Reasons for Change 33 The committee wishes to clarify that additional proceedings may be assigned to Commissioners [Special Trial Judges] so long as a Tax Court judge must enter the decision. Explanation of Provision 34 A technical change is made to allow the Chief Judge of the Tax Court to assign any proceeding to a special trial judge for hearing and to write proposed opinions, subject to review and final decision by a Tax Court judge, regardless of the amount in issue. However, special trial judges will not be authorized to enter decisions in this latter category of cases. 35 H.R.Rep. No. 432, 98th Cong., 2nd Sess. 1568, reprinted in 1984 U.S.Code Cong. & Admin.News 697, 1198. The Company focuses on the phrase a technical change and argues that its use indicates that Congress did not intend to expand substantively the authority of special trial judges. We disagree. 36 When read in its entirety, the legislative history shows that Congress knowingly expanded the authority of special trial judges and appreciated the significance of that action. In particular, Congress not only removed the maximum amount in dispute jurisdictional requirement, but also precluded special trial judges from entering the final decision in any cases assigned pursuant to this provision. That responsibility was reserved exclusively for judges of the Tax Court. As the Conference Report emphasized: The House Bill also provides that other proceedings may be assigned to be heard by [special trial judges], but no decision with respect to these proceedings may be made by a [special trial judge]. H.R.Conf.Rep. No. 861, 98th Cong., 2nd Sess. 1127, reprinted in 1984 U.S.Code Cong. & Admin.News 1445, 1815. 37 Given the plain language of section 7443A and its legislative history, we conclude that Congress in using the phrase any other proceeding intended to authorize the Chief Judge of the Tax Court to assign any tax case, regardless of complexity or amount in controversy to a special trial judge for adjudication. We reach this conclusion ever mindful of the settled rule of construction that requires  '[f]ederal statutes ... to be so construed as to avoid serious doubt of their constitutionality.'  Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 841, 106 S.Ct. 3245, 3251, 92 L.Ed.2d 675 (1986) (quoting Machinists v. Street, 367 U.S. 740, 749, 81 S.Ct. 1784, 1790, 6 L.Ed.2d 1141 (1961)). We recognize that our construction of section 7443A raises serious questions under the Appointments Clause of Article II of the Constitution. When confronted with such a situation, however, the Supreme Court has counselled: 38 [T]his canon of construction does not give a court the prerogative to ignore the legislative will in order to avoid constitutional adjudication;  '--[a]lthough this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute ...' or judicially rewriting it. 39 Id. (quoting Aptheker v. Secretary of State, 378 U.S. 500, 515, 84 S.Ct. 1659, 1668, 12 L.Ed.2d 992 (1964) (quoting Scales v. United States, 367 U.S. 203, 211, 81 S.Ct. 1469, 1477, 6 L.Ed.2d 782 (1961))). Unable, in this instance, to avoid the plain import of the statute's language and of Congress' intent, we now direct our attention to the Company's constitutional challenge.