Opinion ID: 2060361
Heading Depth: 1
Heading Rank: 10

Heading: Diminution by Pure Inflation ( Maron and Larabee )

Text: The State Compensation Clause provides, in relevant part, that the compensation of members of the Judiciary shall be established by law and shall not be diminished during the term of office for which he or she was elected or appointed (NY Const, art VI, § 25 [a]). The purpose of this Compensation Clause is the same as its federal counterpart: to promote judicial independence and ensure that the pay of prospective judges, who choose to leave their practices or other legal positions for the bench, will not diminish ( see United States v Will, 449 US 200, 221 [1980]). The Maron petitioners and Larabee plaintiffs base their Compensation Clause arguments on an identical theory: By failing to increase judicial compensation, the Legislature has allowed inflation to considerably diminish the real value of judicial salaries, violating the State Compensation Clause's prohibition against diminution. They further claim that the State Compensation Clause's prohibition against diminishment should include the diminishment of compensation by any cause, including inflation. Since the inception of our State Constitution, this State has grappled with the issue of how best to establish the parameters of judicial compensation. In 1846, the Constitutional Convention adopted the phrase shall not be increased or diminished (1846 NY Const, art VI, § 7); an 1869 amendment (1846 Const, art VI, § 14, as amended), however, deleted the words, increased or, allowing for the increase of compensation, but not a decrease ( see Carter, New York State Constitution: Sources of Legislative Intent, at 85 [1988]). Article VI, § 12 of the 1894 Constitution restored the 1846 shall not be increased or diminished language, which was thereafter deleted in its entirety in 1909 and adopted a specific constitutional provision fixing salaries for certain judges at $10,000 per year ( see Matter of Gresser v O'Brien, 146 Misc 909, 917-918 [Sup Ct, NY County 1933], affd 263 NY 622 [1934]). In 1921, a Judiciary Constitutional Convention was held to consider, among other things, amendments to the State Constitution concerning judicial compensation ( see Judiciary Constitutional Convention of 1921: Report to Legislature, at 3 [Jan. 4, 1922]). The Convention criticized the 1909 Compensation Clause amendment's inclusion of a salary schedule in the Constitution, stating that judicial compensation `should, in the judgment of the present convention, be left entirely to the Legislature, which after all, is the body always directly in touch with and responsible to the people' ( Problems Relating to Judicial Administration and Organization, 1938 Rep of NY Constitutional Convention Comm, vol 9, at 341, quoting Judiciary Constitutional Convention of 1921: Report to Legislature, at 29). In recommending removal of the salary schedule, the Convention considered the deleterious effects of inflation on judicial compensation and how it could negatively impact the independence and effectiveness of the Judiciary, ultimately concluding that the Legislature was in the best position to address that issue ( see Judiciary Constitutional Convention of 1921: Report to Legislature, at 29). In 1925, the State Compensation Clause's shall not be diminished language was reinstated (1894 NY Const, art VI, § 19, as amended) and remains unchanged ( see Carter, at 85). It is evident from the events predating the 1925 amendment that the concept of diminution of compensation was of paramount concern, and the final outcome was to authorize the Legislature to remedy any deficiencies; notably, the Legislature was precluded from diminishing salaries in recognition of the risk that salary manipulation might be used as a tool to retaliate for unpopular judicial decisions. Although the State Compensation Clause plainly prohibits the diminution of judicial compensation by legislative act during a judge's term of office, there is no evidence in the history of the Clause's enactment or subsequent amendments that supports a broad interpretation embracing indirect diminishment by neglect. Thus, there is no evidence that the State Compensation Clause's no diminishment rule was intended to affirmatively require that judicial salaries be adjusted to keep pace with the cost of living. [6] In this regard, the state provision is comparable to the Federal Compensation Clause (US Const, art III, § 1) which also contains the same shall not be diminished language. Like the drafters of the State Compensation Clause, the Framers of the Federal Constitution were cognizant of the effects of inflation on judicial compensation, but nonetheless left that determination to the discretion of the legislature. At least two proposals concerning inflation were offered at the federal Constitutional Convention. One suggestion was that the fluctuations in the value of judicial compensation could be accounted for by taking for a standard wheat or some other thing of permanent value (2 M. Farrand, The Records of the Federal Convention of 1787, at 45 [1911]). The other suggestion left judicial compensation to the discretion of the legislature, which was in a better position to address inflationary concerns ( see Will, 449 US at 219-220; see also Hamilton, Federalist No. 79 [It (is) therefore necessary to leave it to the discretion of the legislature to vary (compensation) in conformity to the variations in circumstances, yet under such restrictions as to put it out of the power of that body to change the condition of the individual for the worse]). The latter approach carried the day, with the Convention adopting a motion to allow an increase of judicial compensation by Congress and, as a result, accepting a limited risk of external influence in order to accommodate the need to raise judges' salaries when times changed ( Will, 449 US at 220). Contrary to the contention of the Maron petitioners and Larabee plaintiffs, federal jurisprudence does not support their assertion that the State and Federal Compensation Clauses prohibit indirect diminution of compensation due to inflation. Although the cases cited support the general proposition that judicial compensation may not be either directly or indirectly reduced, none of them stands for the proposition that the Legislature's failure to adjust compensation to account for inflation constitutes an indirect attack on judicial compensation. In Evans v Gore, a federal judge challenged, on Federal Compensation Clause grounds, Congress's authority to include sitting federal judges within the scope of a federal income tax law that the Sixteenth Amendment had authorized years earlier, claiming that the imposition of such a tax constituted a diminishment in salary ( see 253 US 245, 247 [1920], overruled by United States v Hatter, 532 US 557 [2001]). In finding the tax violative of the Federal Compensation Clause, the Evans court noted that diminution may be effected in more ways than one. Some may be direct and others indirect, or even evasive . . . 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 ( id. at 254). In Miles v Graham, the United States Supreme Court extended the Evans holding to those judges who assumed office after the tax had become law (268 US 501, 508-509 [1925], overruled in part by O'Malley v Woodrough, 307 US 277 [1939]). The O'Malley court overruled Miles, but left the core holding of Evans intact ( see O'Malley, 307 US at 282-283). However, the Supreme Court in United States v Hatter overruled Evans insofar as it holds that the Compensation Clause forbids Congress to apply a generally applicable, nondiscriminatory tax to the salaries of federal judges, whether or not they were appointed before enactment of the tax ( Hatter, 532 US at 567). The Hatter court agreed with Evans, however, insofar as it holds that the Compensation Clause offers protections that extend beyond a legislative effort directly to diminish a judge's pay, say, by ordering a lower salary . . . Otherwise a legislature could circumvent even the most basic Compensation Clause protection by enacting a discriminatory tax law, for example, that precisely but indirectly achieved the forbidden effect ( id. at 569 [emphasis supplied]). The evolution of Supreme Court jurisprudence from Evans to Hatter establishes that a nondiscriminatory tax that treats judges the same as other citizens is permissible, but direct diminution of compensation or the discriminatory taxation of judges is not. In either case, it is the diminishment of salary by Congress, be it direct or indirect, that is prohibited. Here, the Legislature has not enacted legislation that has directly diminished judicial compensation in violation of the State Compensation Clause, nor has it enacted discriminatory legislation that has indirectly resulted in the diminution of judicial compensation. The claim is that inflation has had this effect. However, at least as far as the Federal Compensation Clause is concerned, the intention of the Framers was that Congress would serve as the fail-safe that prevents inflation from eating away at the real value of judicial salaries ( see Atkins v United States, 556 F2d 1028, 1048 [US Ct Cl 1977], cert denied 434 US 1009 [1978] [addressing inflation]). There is no reason for this Court to depart from that rationale, because it is evident from the history surrounding the enactment of our State Compensation Clause that, although the diminution in value of judicial compensation by inflation was a concern, the drafters decided that the best way to combat the effects of inflation was to count on the Legislaturethe body directly accountable to the publicto assure the fair and appropriate compensation of the Judiciary. We therefore determine that the Legislature's failure to address the effects of inflation in this case does not equate to a per se violation of the Compensation Clause.