Document: 532 U.S. 557121 S.Ct. 1782159 L.Ed.2d 820 NOTICE: This opinion is subject to formal revision before publication in the preliminary print of United States Reports. Readers are requested notify Reporter Decisions, Supreme Court States, Washington, D. C. 20543, any typographical or other errors, order that corrections may be made goes press.UNITED STATES, PETITIONERv.TERRY J. HATTER, Jr., JUDGE, UNITED STATES DISTRICT COURT FOR THE CENTRAL OF CALIFORNIA, et al. No. 99-1978. SUPREME Argued February 20, 2001Decided May 21, 2001 Syllabus In 1982, Congress extended Medicare federal employees. That new law meant, inter alia, then-sitting judges, like all employees and most citizens, began have taxes withheld from their salaries. 1983, required newly hired participate Social Security permitted, without requiring, about 96% then-currently employed program. The remaining 4%-a class consisting President, high-level Government employees, judges-were participate, except those who contributed a "covered" retirement program could modify participation manner left total payroll deduction for unchanged, effect allowing them avoid additional financial obligation as result joining Security. A was defined include system which an employee had contribute, did not encompass noncontributory pension whose obligations (and deductions) therefore increase. number judges appointed 1983 filed this suit, arguing violated Compensation Clause, guarantees "Compensation, shall diminished during Continuance Office," Const., Art. III, 1. Initially, Federal Claims ruled against but Circuit reversed. On certiorari, because some Justices were disqualified failed find quorum, Circuit's judgment affirmed "with same upon affirmance by equally divided court." 519 801. remand, found judges' claims time barred 1984 judicial salary increase promptly cured violation, making damages minimal. reversed, holding Clause prevented collecting violation pay Held: prevents taxes, held office Pp. 6-19. (a) rejects claim "law case" doctrine now consideration conclusive binding parties. v. Pink, 315 203, 216, on rely, concerned earlier case heard oral argument apparently considered merits affirming Court. presumes hearing merits. See, e.g., Quern Jordan, 440 332, 347, n. 18. When previously here, due absence consider either whether through grant certiorari. fact, along with obvious difficulty finding equivalent substitute forums, convinces Pink does control here. 6-7. (b) Although prohibits taxation singles out specially unfavorable treatment, it forbid enact imposing nondiscriminatory tax (including rates change conditions) citizens. See O'Malley Woodrough, 307 277, 282. Insofar Evans Gore, 253 245, 255, holds contrary, overruled. O'Malley, supra, at 283. There no good reason why judge should share burdens borne Evans, 265, 267 (Holmes, J., dissenting); 281-283. cannot directly reduce salaries even part equitable effort salaries, law, unlike mandating reduction, affects compensation indirectly, directly. Will, 449 200, 226. And prophylactic considerations justify absolute rule forbidding direct reductions absent where indirect issue. practice, likelihood represents disguised legislative influence will virtually nonexistent. Hence potential threats independence underlie see 251-252, special exemption commonly shared tax, preventive measure counter threats. Because nondiscriminatory, erred its application unconstitutional. 7-13. (c) However, retroactivity-related rules enacted effectively singled forbids judges. Four features taken together, lead conclusion discriminates forbids. First, statutory history, context, purpose, language indicate category "federal employees" appropriate asserted discrimination must measured. Second, practical upshot defining way permit nearly every then-current employee, imposed taxes. Third, substantial cost little expectation benefit them. Inclusion meant $2,000 per year, whereas 95% then-active already qualified (due private sector employment) becoming would only minority worked quarters necessary fully insured under Fourth, Government's sole justification distinction between employees-i.e., equalizing contributory belonged-is unsound such equalization takes place offering current judges) opportunities employing disadvantage offsets advantage related protections afforded two systems equalized precision. Thus, very different upheld arguments-that Article III protects reduction stated salary, measures take-home pay; there evidence here treatment intimidate, influence, punish them; disfavored also President high-ranking employees-are unconvincing. 13-19. 2. context took reveals nothing suggest intended make whole losses sustained pre-1983 Rather, everything record suggests halt slide purchasing power resulting continued unadjusted-for inflation. circumstance-specific approach more complex than proposed automatic approach, whereby later terminate regardless increase's relief prove unworkable. distinguished. 19-22. 203 F.3d 795, part, reversed remanded. ON WRIT CERTIORARI TO APPEALS FEDERAL CIRCUIT Breyer, delivered Court, Rehnquist, Kennedy, Souter, Ginsburg, JJ., joined, Scalia, joined Parts I, II, V. Opinion Justice Breyer 1 Constitution's Office." Appeals certain small 20 years ago-before early 1980's. 2 our view, prevent "non-discriminatory laid generally" 282 (1939), prohibit treatment. Consequently, Appeals, we conclude apply tax-a tax-to 1984, however, Hence, 3 * 4 us straightforward. 1965, created "hospital insurance" tied financing Amendments 79 Stat. 291. American workers (whom covered) tax. But require cover) 26 U.S.C. 3121(b)(5), (6) (1982 ed.). 5 Congress, believing "[f]ederal bear costs benefits many eventually became entitled," S. Rep. 97-494, pt. 1, p. 378 (1982), both eligibility currently well Tax Equity Fiscal Responsibility Act 278, 96 559-563. (as January 1983) contribute 1.30% 1.45% Medicare's hospital insurance system. 3101(b)(4)-(6). 6 complex. 1935, Act, 49 620. For 50 years, covered sector, cover ed.) (excluding employees); 3121(b)(7) state employees). 1981, National Commission Reform, convened chaired Alan Greenspan, noting need "action ' strengthen status" Security, recommended extend Federal, local, Report Reform 2-1, 2-7 (Jan. 1983). particular, incoming (those after 1984) enter Id., 2-7. emphasized "present affected recommendation." 2-8. 7 Commission's recommendation into (effective important exception. 101(b)(1), 97 69 (amending (6)). As recommended, It almost (about 96%) participate. 8 Contrary recommendation, added exception seemed restrict freedom choice 4% consisted Vice Executive Branch Members few Legislative 42 410(a)(5)(C)-(G); H. R. 98-25, 39 (1983); Conf. 98-542, 13 (1983) (noting these "the being changed middle game"). program, 410(a)(5)(C)-(G). But, burden. 9 then exception, Employees' Retirement Contribution Temporary Adjustment 203(a)(2), 208, 1107, 1111 (codified note following 8331). said member officials (4% employees) nonetheless choose deduction-for Security-unchanged. paying 7% continue more, avoiding 10 Civil Service Disability System-a long available employees-as contribute. 203(a)(2)(A), (D). definition judges-a respect (but spouse). 11 specifically aimed extending free thereby increased obligation. while freeing (or deduction) so they participated programs. choice. Their last mentioned group exclusively B 12 litigation 1989, when eight sued "compensation" They argued requiring Clause. jurisdictional grounds. 21 Cl. Ct. 786 (1990). 953 F.2d 626 (CA Fed. 1992). lawsuit. contested extension well. 31 436 (1994). ordering summary liability. 64 647 (1995). petitioned writ Some matter, quorum six Justices. 28 Appeals' 801 (1996); 2109. 14 remand 6-year statute limitations, 2401(a), 2501, claims, including claims; that, event, subsequently 38 166 (1997). (eventually en banc) determinations. 795 2000). 15 again asked questions: 16 (1) Whether sitting judges; 17 (2) If so, ended amount greater 18 Given specific provisions issue passage time, seven have) stake outcome case. Consequently was, is, questions presented. granted petition II 19 At outset, considering first question presented, namely, scope presented ruling point denial lack "same as" "affirmance court," add has "conclusive parties respects controversy." 216 (1942). case, Moscow Fire Ins. Co., 309 624 (1940), prior concluding appropriate. (1979). involve previous Indeed, us, Pink's statement issues proceed decide immunity authority 245 (1920). arose 1919 Judge Walter challenged Congress' within income Sixteenth Amendment authorized earlier. Revenue 1918, 213, 40 1065 (defining "gross income" salaries). itself, been U.S., 264. clear rationale appointments become law. Miles Graham, 268 501, 509 (1925). 22 Fourteen deciding Miles, overruled Miles. 277 (1939). noted, expressly overrule itself. F.3d, 650. if "changes doctrine" significantly undermined Evans' holding, "Court itself case." Ibid. Noting (involving enactment tax), controlled outcome. pre-enactment 23 correct applying instant given "it Court's prerogative alone one precedents." State Oil Co. Khan, 522 3, (1997); Rodriguez de Quijas Shearson/American Express, Inc., 490 477, 484 (1989). Nonetheless, court below, effect, invited reconsider Evans. We insofar generally applicable, 24 explaining constitutionally important, begin reaffirming explanation. points out, securing "during Behavior," 1-the life tenure-helps guarantee what Alexander Hamilton called "complete courts justice." Federalist 78, 466 (C. Rossiter ed. 1961). thought Judiciary "beyond comparison weakest three" branches government. 465-466. "no over sword purse." 465. direction strength wealth society." "neither FORCE nor WILL merely judgment." 25 Hamilton's Founders, informed firsthand experience harmful consequences brought King England "made Judges dependent his Will alone, tenure offices, payment salaries." Declaration Independence, § 11. knew "a man's subsistence amounts will." 79, 472. reason, he observed, "[n]ext permanency office, can fixed provision support." Ibid.; id., 48, 310 (J. Madison) ("[A]s department access pockets people, " full discretion pecuniary rewards fill departments, dependence thus latter, gives still facility encroachments former"). properly exist, "not judges," "as limitation public interest." 253. "promote weal," 248, helping induce "learned" men women "to quit lucrative pursuits" Kent, Commentaries Law *294, importantly secure mind spirit maintain nice adjustment individual rights governmental powers constitutes political liberty," W. Wilson, Constitutional 143 (1911). 27 Chief John Marshall pointed protection important. "between man whom prosecuting: powerful community, poorest unpopular." Proceedings Debates Virginia Convention, 1829-1830, 616 (1830). judge's decision affect individual's "property, reputation, life, all." "exercise duties," "observe utmost fairness." "perfectly completely independent, contro[l] him God conscience." "greatest scourge . ever inflicted," thought, "was ignorant, corrupt, Judiciary." 619. Those founded Republic recognized importance constitutional principles. Lectures (1791), Works James Wilson 363 Andrews 1896); (stating "completely independent" "their offices"); McKean, Debate Pennsylvania Ratifying Dec. 11, 1787, Constitution 539 Elliot 1836) (the security undiminished disposes "more easy independent"); *294 ("permanent support" "tenure office" "is calculated give [judges] requisite independence"). less today times. fact not, diminish importance. 29 agree offers beyond pay, say lower salary. 254. Otherwise legislature circumvent basic enacting discriminatory example, precisely indirectly achieved forbidden effect. 30 disagree principles matter it-a treated "all diminution," "taxation," "whether purpose another." 255. relied holding. longer sound thing, dissenters cast majority's reasoning doubt. Holmes, Brandeis, wrote exonerating" "from ordinary duties citizen, shares others. To possibly instrument attack judge." 265. Holmes analogized "diminution" might bring burden impose interstate commerce. "there commerce constituted government exempted." 267. 32 another subsequent repudiated reasoning. 1939, retreated extension. 283 (overruling Miles). doing announced Frankfurter, adopted dissent. immune incidences everyone else classes subjected." Holding "immun[e] sharing fellow citizens material government," ibid., legal profession criticized contrary conclusion, outside resolved similar matters differently, 281. concluded non-discriminatory net applied judge, diminution prohibition III." conceded reached opposite "cannot survive." Still later, noted "[b]ecause read undermine Evans." 227, (1980). 33 Finally, importantly, believe correct. concede Legislature ibid. (distinguishing compensation). 34 reasons, hold O'Malley's words, 35 just Neither argue contrary. unconstitutional, reverse decision. IV 36 matter. Respondents violates interpreted Cf. subjected" (emphasis added)). After examining statute's details, discriminate conclusion. 37 remained pursuant 3. deals primarily subject. language, discrimination. (then) explained so. 3-5. join gave (employed earlier) enter, chose. pre-1984 deductions, provided enrolled included 4%, 4-5. permitted system, adversely requirement deducted monthly check. App. 49. 115. minority. 116-119 (reviewing examples demonstrating insured). measured objectives, (between do, do incur obligations) unsound. justification, according Government, "equaliz[ing]" retirement-related Brief 40. Thus says up basically belonged 39-40; Reply 16. 41 rationale, necessarily silent Motor Vehicle Mfrs. Assn. Inc. Farm Mut. Automobile 463 29, (expressing concern crediting post hoc explanation agency action). More reflects tenure-thereby permitting draw simply continuing serve. Booth 291 339, 352 (1934) (holding retired). means likelihood, work. And, course, themselves compensation. consequently adverse solely feature preserve independence. "equaliz[ation]" guaranteed advantage. accept "justification" offered permit, reasoning, weakening eliminating independence, least enjoyed say, deny tenure. relationships here-among advantages disadvantages-are distant complex, principle similar. 43 Nor "equaliz[e]" hand, open typical 8% her annual 8334(a)(1). return Member instance, vested five value (by 2.5% Member's average salary) each year service maximum 80% survivors. 8339 8341. (based tenure) contribution retired age 65 met requirements) receive right vest until retirement. 65. provide coverage 4.5% obtain survivor's annuity, 1.25% 40% 376(b), (l) 44 These equal Before married better (vesting period, spousal benefit) worse (80% maximum) counterpart contribution. 5.7% received little, no, benefit. Viewed purely terms, seems over-equalize, putting disadvantage-though perhaps produce equality other, examples. 45 Taken four characteristics reveal special-in singling disadvantageous offset protected degree permissible determination legislation "equalized" rather gone too far. reasons "non-discriminatory" upheld. Were features, authorize diminish, equalize away, Judicial guarantees-characteristics which, said, 9-10, needs depend. Branch, 46 makes arguments support reversal. pay. 28. upholding strongly implied bar commentators work cited explicitly. Fellman, Diminution Salaries, Iowa L. Rev. 89, 99 (1938); Hall, Case Comment, Ill. 376, 377 (1925); Corwin, 1919-1920, Am. Pol. Sci. 635, 642 yet indicated bars efforts discriminate. "assume[s] contravene fundamental underlying [Compensation] itself." 37, 27. 47 argues never insisted evidence. invite embody, of, intent, engendering suspicion among undermining mutual demands. Law, 364 "should removed apprehension affected, character capacity, anything, own behavior consequences"). Nothing discloses anything benign congressional motives. offer meaningful protection, limit instances manifests, hostility Judiciary. 48 correctly far determine, provides example Tr. Oral Arg. 16-17, 37-38. President's noncontributory. 102. himself, "[c]ompensation." facts help establish faith. doubt why, otherwise, separate single individual, critical difference System V second "constitutional [of Security] respondents' Pet. Cert. (I). 51 affirmative answer. 1984. increase, imposition unconstitutional lesser amount. Otherwise, "Congress improperly reduced $140,000" $130,000" able collect improper $10,000, forever-even raising $20,000, $150,000, later. consequence, argues, look Congress's purposes increasing salaries" violation." 52 how always terminates increase? Imagine few. position leave permanent disadvantage. If, 20%, 30% applicable permanently 20% behind. cut perpetuate harm seeks prevent. 53 examined increases determine relation violation. "nothing suggest" sought judges." 185 1362-1363. presents 54 relevant economic circumstances surrounding subsequent, inflation sufficiently serious erode real insufficient parity private-sector 1989 Executive, Legislative, Hearings Senate Committee Governmental Affairs, 101st Cong., 1st Sess., 12-13 (1989) (testimony Lloyd Cutler regarding since 1969). consumer prices rose 363% 1969 1999, 421%, district 253%. Bar Association, Pay Erosion (Feb. 2001). figures reflected restore some, all, eroded. amounted adjust reflect "fluctuations money," 473 (A. Hamilton)-the kind Founders believed "may requisite," Constitution, 539; Rosenn, Guaranty Against Compensation, UCLA 308, 314-315 (1976). 55 1363 ("[E]verything record" inflation"). 56 difficult administer. 43. approach. 57 looks support. constitutionality "freezes" Government-wide cost-of-living adjustments. freeze designated Year One (where rescinded earlier-voted 4.8% increase). 225-226. "noted fiscal exceeded received" rescission. 41. adds unquestioned Will" enactment. 41-42. 58 shows circumstances, diminishment. Regardless, "unquestioned" argued. 206, complaint One's moment us. 59 cure preceding harm. VI 60 taking affirmed. affirm remanded further proceedings consistent opinion. 61 ordered. 62 Stevens O'Connor concurring dissenting part. 63 Thomas, Stevens, O'Connor, 66 I III's paths think unconstitutional.1 67 initial (1920)-holding general applicability judges-is went 280-281 catalog criticism recognized, (1980), "undermine[d] recognizes obvious: undermined, collapsed. 68 My disagreement arises focus discrimination, turns dispositive "that effect." Ante, 12. Since tax," concludes "application [that] [c]onstitutional." 12-13. dealing "Compensation Clause," "Discrimination Clause." Art ("The shall, Times, Services, Office"). exceptions 'nondiscriminatory' reductions" compensation, subjected cut. criterion uses sense invidious coercive) action acknowledges, 'promote[s] weal' 'learned' 'quit pursuits' sector," ante, (quoting 248; *294). inducement exist discriminatorily. 70 What comes down to, then, constitute "compensation," answer me obviously yes. Surely term refers entire "package" benefits-not cash, benefits, medical care, employment package. unreasonable "$150,000 tax-free" (if bargain struck) higher taxes." Ask World Bank. 71 question-though insoluble one-is cases, presence wages, factors government-inflation, charged government-owned utilities, import prices-affects element Framers mind. Hamilton, fluctuations "[i]t vary provisions" Rossiter, 1961); 227 "placed faith integrity elected representatives increases" account inflation). "put [Congress] condition [judge] worse," 473, used Constitution. 72 affecting basis 282, "[t]o recognize particular function generate ." therefore, wrongly decided-not, universal demonstrated reducing acting sovereign employer, 73 employee's tax-free status enjoy elimination compensation), conditioned reduction. acknowledges (an payable impossible understand suspended conferral compensation-in end taxed Only converting Discrimination explain 74 this, targeted exempt. abstract sense, "discriminated against," citizens; alter package-since preferential taxation-their reduced. employee) had, much employer contractual commitment behalf latter clearly former.2 Had introduced working reduced, because, none existed. exempt flat-out 75 above, though runs afoul grounding occurred. opinion, antidiscrimination slightly appeared discussion There, compared vis-a-vis (As explains, opportunity opt tax). my analysis, entitlements cl. 7, cannot, diminished. involved cuts irrelevance operative clear. 76 77 NOTES: Part law-of-the-case V, remedied increases. ensure "bear entitled" spouses' employment. (internal quotation marks citation omitted). aspect present situation eliminated benefit, value. ("[P]articipation minority"). 78 (1920), reduces Accordingly, entirety.

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