The opinion
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,
Compensation Clause of
A rticle III; dam ages;
v.
statute of limitations;
continuing claim doctrine.
UNITED STATES,
Defendant.
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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 Act satisfied 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 plaintiffs retired 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,1 because they were in active duty
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.
1
One of the judges in the Beer case, for example.
3
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 3-4.2
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
2
As the government conceded at oral argument, the fact that the first four
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 claims for 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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