Legal Document

532 U.S. 200121 S.Ct. 1433149 L.Ed.2d 401 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 STATESv.CLEVELAND INDIANS BASEBALL CO. No. 00-203. SUPREME COURT OF THE UNITED STATES Argued February 27, 2001 Decided April 17, Syllabus Under a grievance settlement agreement, respondent Cleveland Indians Baseball Company (Company) owed 8 players backpay for wages due 1986 and 14 1987. The paid back 1994. case presents question whether, under Federal Insurance Contributions Act (FICA) Unemployment Tax (FUTA), should taxed by reference year they were actually (1994) or, instead, years have been (1986 1987). Both tax rates amount (the wage base) risen over time. Consequently, allocating 1994 payments 1987 would generate no additional FICA FUTA liability its former employees, while treating as taxable both employees significant liability. share employment taxes on according bases. After Internal Revenue Service denied claims refund those payments, initiated this action District Court. relied Sixth Circuit precedent holding not allocated period when employer finally pays but periods usual. Court, bound precedent, entered judgment ordered Government taxes. affirmed. Held: Back fact paid. Pp. 5-19. (a) Code imposes "on every ... equal [a percentage of] him with respect employment." 26 U.S.C. 3111(a), 3111(b), 3301. Social Security provision, prescribes applicable "wages during" each from 1984 onward. Medicare 3111(b)(6), sets rate "with after December 31, 1985." And 3301, "in calendar 1988 through 2007 total [the employer] during year." Section 3121(a) establishes annual ceiling defining "wages" exclude remuneration "paid [an] individual [a] year" exceeds "remuneration contribution benefit base [such] which such effective." 3306(b)(1) similarly limits tax. 5-6. (b) calls attention these provisions' constant references touchstone determining base. meaning language, contends, plain: Wages paid, regardless agrees Bd. v. Nierotko, 327 358, undermines Government's plain language argument. Nierotko concluded that, purposes wrongfully discharged worker's eligibility benefits 209(g), provision was formulated 1939 Amendments Act, award had quarters "when regular usual." Id., at 370, n. 25. found conflict between allocation-back rule 209(g) tying number which" minimum "has paid." Nierotko's allocation purposes, does here urge overrule, thus turned an implicit construction 209(g)'s terms-"wages" "paid" "in" "a quarter"-to include "regular wages" "were usual," U.S., 370. Given construction, it cannot said provisions prescribing based precludes 6-10. (c) However, rejects Company's contention because read paid" accommodate backpay, identical must same way. dealt specifically only eligibility, taxation. Court's all likelihood reflected concern scheme created disserved allowing employer's wrongdoing reduce coverage employee otherwise entitled claim toward eligibility. No similar underlies provisions. legislative history demonstrates adopting taxation designed address Congress' worry increased year, administrative difficulties confusion attend payable one until another year. (d) persuaded Congress incorporated treatment into amended shortly decided. Prior 1946, bases defined terms given 1946 law 209(a), defines calculation, already present construed Nierotko. also used redefining purposes. Although makes clear sought achieve conformity provisions, nothing do backpay. Rather, purpose amending define yardstick measuring without regard occurred. Because animates context has relevance side, sense attribute desire general "wages," exception. 10-14. (e) There some force refusal allocate creates inequities incentives strategic behavior did intend. But structural unfairness comparable inequity context. In inflexible never work employee's advantage; could inure detriment employee, counter thrust Here, contrast, sometimes disadvantages taxpayer, case; times works disadvantage fisc. Anomalous results considered light evident interest reducing complexity minimizing within schemes. concerns, incompatible statutory scheme. most can intended efficiently administrable fair, reveals tension exists seeks meet twin aims. 14-17. (f) Confronted tension, defers Service's interpretation. sit committee perfect administration laws. Correll, 389 299, 306-307. Instead, Commissioner's regulations long implement congressional mandate reasonable manner. 307. maintained interpreting their current form, specify Echoing 3111(a) 3301 continued unchanged basic substance since 1940. regulations, like statute, consistently interpreted them require earned need decide whether Rulings themselves deference. case, simply reflect agency's longstanding interpretation own regulations. reasonable, attracts substantial judicial Thomas Jefferson Univ. Shalala, 512 504, 512. 17-18. 215 F.3d 1325, reversed. ON WRIT CERTIORARI TO APPEALS FOR SIXTH CIRCUIT Ginsburg, J., delivered Rehnquist, Stevens, O'Connor, Kennedy, Souter, Thomas, Breyer, JJ., joined. Scalia, filed concurring judgment. Opinion Justice Ginsburg 1 (FUTA) impose excise fund Security, Medicare, unemployment compensation programs. concerns application wages. awards attributed Respondent urges, Appeals held, allocated, According governing statutes we hold 2 * Pursuant grievances asserted Major League Players Association concerning players' free agency rights, several clubs agreed pay $280 million valid salary damages. $610,000 damages 1986, $1,457,848 recipient 3 proper payments. FICA, employers Medicare; FUTA, (but employees) benefits. For litigation, stipulated awarded qualify FUTA. presented characterized wages, (1994), 1987), supporting amicus, Association, contend. 4 depends two determinants. first rate. 3101 3111 (FICA), (FUTA). second (also called base), 3121(a)(1) determinants 5.7 percent up $42,000;1 1987, $43,800;2 1994, 6.2 $60,600.3 remained 1.45 1994,4 rose $42,000 $43,800 1987,5 abolished ceiling, thereby subjecting tax.6 6.0 $7,000;7 $7,000.8 5 advantage employees. reason who received collected exceeding maximum well chargeable By none 1994,9 attributable calculated higher than levels 6 Uncertain about taxation, Its payment totaled $99,382, $1,008.10 relying Bowman 824 F.2d 528 (CA6 Bowman, held "[a] 'should usual.' " 530 (quoting 370 (1946)). $97,202 taxes.11 7 On appeal, observed Courts disagreement implemented Treasury Regulations, received. Walker 202 1290, 1292-1293 (CA10 2000) (finding "inapposite" "unpersuasive"); Hemelt 122 204, 210 (CA4 1997) "clear Regulations 'wages' received"). nevertheless affirmed authority Bowman. 1325 (2000) (judgt. order). We granted certiorari resolve among Appeals, 531 943 (2000), now reverse Circuit's II 9 contains table onward (e.g., "In cases 1990 thereafter [t]he shall percent."). 10 says 1985, percent." (1994 ed., Supp. IV), "6.2 (as section 3306(b)) 11 It so excluding $7,000 [the] 12 sides controversy offered plausible interpretations design. set out next parties' positions explain why ultimately defer consistent, point. interpretation, 13 view, text controlling explicitly instructs computed applying effect particular, statute's (setting particular years); (defining year"); year"). support reading, observes chose words statute replace original 1935 providing applied (1935 Act), 801, 804, 901, 49 Stat. 636-637, 639 (emphasis added). Department mean "the time performance services Treas. Regs. 91, Arts. 202, 302 (1936) 1939, provide longer apply basis performed, instead yea[r]." (1939 Amendments), 604, 608, 53 1383, 1387 remains essentially 15 Acknowledging established argues 358 (1946), weight our agree. 16 National Labor Relations Board reinstatement "back pay" covering lost 1937 September 1939. 359. July 1941. 359-360. primary aired job count Notwithstanding contrary view Bureau Revenue, wrongful discharge met definition Act. 360-370. 17 final paragraphs opinion, took how As originally enacted, extended persons 65 least $2,000 five 1936. 201(a), 210(c), 622, 625. however, introduced new scheme, place today, calendar-year "quarters coverage" accumulated individual. Amendments, (h), 1376-1377 (codified 42 413(a)(2), 414). "quarter either quarter less $50 except "where $3,000 more wages." 1377. 18 swiftly dispatched 'back pay' 'calendar quarters' money earned, if discharged." Rejecting argument impermissible refer 'paid' certain 'quarters,' id., 25 (citing 362, 209(g))), concluded: "If, above, treated doubt 19 secondary issue addressed summarily think correct undercuts urged here. us Tr. Oral Arg. 9, codified say Cf. Hilton South Carolina Public Railways Comm'n, 502 197, 205 (1991) ("stare decisis compelling" where pure construction" involved). B 20 From here, part ways Company. agree blocks formulation dispositively meaning, reject contention. latter follows night, day. 21 aggregate, there direct relation level employee. itself acknowledges, "Social 'contributions,' unlike private pension contributions, create contributor property right against government, rather [tax] contributions calculating individual's benefits." Brief 14. 22 compel symmetrical discrete contexts. generally presume "identical different parts act meaning," Atlantic Cleaners & Dyers, Inc. 286 427, 433 (1932), presumption "is rigid," [of words] vary law," ibid. Cook, "Substance" "Procedure" Conflict Laws, Yale L. J. 333, 337 (1933) ("The tendency assume word appears legal rules, connection purpose, precisely scope tenacity sin constantly guarded against."). delineated Title "no doubt" awry notwithstanding "accounting difficulties." surely described 26, worker benefits, fiscal administrability.12 23 increase "difficulties confusion" S. Rep. 734, 76th Cong., 1st Sess., 75-76; see H. R. 728, 57-58. understood "based profits, future royalties, determined close 75. Requiring "estimate unascertained amounts basis" "cause burden authorities alike." 75-76. correctly anticipated "[t]he placing [FICA FUTA] tax[es] 'wages paid' [would] relieve situation." 76. "Under amendment performed." supra, 58. 24 ground construing pari materia, insists 811(a), (FICA); 606, 1383 Paralleling identifying compose (1946 412, 414, 60 989-991 3121(a), 3306(b)(1)). 990-991. 989. Relying amended, Cannon University Chicago, 441 677, 696-699 (1979), observing redefined "confor[m] changes 209(a)," 1862, 79th 2d 36 (1946); 2447, 35 urges rule. unpersuaded. Even assuming properly incorporating reading "confor[mity]" 36; 35, Committee Reports make "yardstick" , occurred." added); rule-measuring year"-that provision. See (tax 37 (benefits base); base). Far indicating intent codify suggest Congress, all, exception year.13 10-11, C Were rely solely arguments symmetry inclined conclude, lack themselves, informed arrow quiver. 27 Apart symmetry, contends force. rule, $100,000 $50,000 owe she full 1986. Conversely, covered $250,000 year's worth (limited ceilings wages) exempt exempt. 28 Applying produces anomalies. 3121(a)(4), example, exempts disability six months worked employer. 3121(a)(4). Disability included prior award, even stopped working Company, windfalls invite withhold reap advantages strategically timed payment. 33-40 (additional examples avoidance schemes). These outcomes avoided, argues, 29 is, course, true holistic endeavor" "clarified remainder [when] permissible meanings substantive compatible rest law." Sav. Assn. Tex. Timbers Inwood Forest Associates, Ltd., 484 365, 371 (1988). leave little generates degree arbitrariness operation statutes. context, provisions.14 case. Other fisc, show. anomalous points 11-12. practical administrability underpin D 30 "we laws." 306-307 (1967). "implement manner." "We delegated [Commissioner], courts, task needful rules enforcement Code." Muffler Dealers Assn., 440 472, 477 (1979) 307 7805(a))). delegation "helps guarantee will written 'masters subject' responsible putting effect." Moore, 95 760, 763 (1878)). 31 "attaches employer," CFR 31.3111-3 added), paid," 31.3111-2(c) 31.3301-2, -3(b) (same FUTA). (FICA tax) (FUTA tax), T. 6516, Fed. Reg. 13032 (1960); 107 5566, 1947-2 Cum. Bull. 148); 106 106, 402.301-.303, 402.401-.403 (1940). Muffler, ("A regulation substantially contemporaneous presumed aware intent."). 32 Rev. Rul. 89-35, 1989-1 280; 78-336, 1978-2 255. (1994). resist deference reviewing steady 61-year-old implementing 62-year-old statute. "Treasury change, unamended reenacted statutes, deemed approval Cottage Savings Commissioner, 499 554, 561 305-306). 33 34 line relevant Accordingly, ordered. NOTES: 3101(a), 3121(a)(1); 51 40256, 40257 (1986). 50 45558, 45559 (1985). 58 58004, 58005 (1993). 3101(b), 3111(b). (1982 ed.); (1986); 3121(a)(1). ed. III). 3306(b)(1). If player addition receiving player-but Company-would credit excess single ($60,600). 6413(c)(1). To illustrate, suppose New York Mets Assuming $60,600. liable player. (Social "an tax, having individuals his employ"). Thus, proposed $60,600 reached exceeded multiple sources. withheld $99,382 employees' taxes, seek recover behalf suit. slightly small difficulties" "not insuperable" holding, noted distributively" 119 1943. 26. provided gross income earlier taxpayer's 119(a), 39. eliminated 1943 1964, Pub. 88-272, 232(a), 78 107, leaving behind principle, "too firmly embedded permit question," "payments taxpayer cash receipt, distinguished earned," Mertens, Law Income Taxation 12.42, p. 179 (1973). comes expense asymmetry collection Indeed, understanding Commissioner supplanted Letter Joseph Nunan, Jr., Administration, Old-Age Survivors (Mar. 6, 1947) decision requiring your Agency rendered enacted subsequent date decision, contained Congressional intent.") (available Lodging Respondent, Exh. F). Nevertheless, calculation Administration (SSA) continues "[b]ack statute," 404.1242(b) (such violated statute"), declining 404.1242(c) ("This reported paid."). SSA allow choose Reporting Pay Special Wage Payments 2, 957 (Sept. 1997). I believed us, might find respondent, giving (1946). principal assigning case-leaving aside statements testimony believe of-is assessments equitable considerations implicated potential arbitrary decrease ante, 10-11. acknowledges departing produce variations 15-16. immediate deferred greater inequity. difference stark cause me regulatory schemes kind, insist upon texts. 38 fact, addresses face today. Those assessed normal term; not. compensating regarded received, unlawful actions. (The parties sort, 364-370.) address, hence left resolution administering agency, Service. decided common courts fill gaps reasonable; neither compelled; involves term (or strongly suggest) uniform result. therefore concur deferring

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