No. 99-1978 

In the Supreme Court of the United States 

UNITED STATES OF AMERICA, PETITIONER 

v. 
JUDGE TERRY J. HATTER, JR., ET AL. 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

APPENDIX TO THE 
PETITION FOR A WRIT OF CERTIORARI 

SETH P. WAXMAN 

Solicitor General 

Counsel of Record 

DAVID W. OGDEN 

Acting Assistant Attorney 

General 

EDWIN S. KNEEDLER 

Deputy Solicitor General 

PAUL R. Q. WOLFSON 

Assistant to the Solicitor 

General 

DAVID M. COHEN 
DOUGLAS N. LETTER 
JEANNE E. DAVIDSON 
KATHLEEN MORIARTY MUELLER 
ANNE MURPHY 

Attorneys 

Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

TABLE OF CONTENTS 

Page 

Appendix A (opinion of en banc court of appeals, 

Feb. 9, 2000) .................................................................. 

1a 

Appendix B (opinion of United States Claims Court, 

Nov. 9, 1990) .................................................................. 
12a 

Appendix C (opinion of court of appeals, Jan. 16, 
1992) ............................................................................... 19a 

Appendix D (opinion of Court of Federal Claims, 

June 22, 1994) ................................................................ 
30a 

Appendix E (opinion of court of appeals, Aug. 30, 
1995) ............................................................................... 54a 

Appendix F (order of court of appeals denying re- 
hearing and rehearing en banc, Dec. 26, 1995) ....... 

67a 

Appendix G (order of Supreme Court affirming 
for lack of quorum, Oct. 7, 1996) ................................ 
69a 

Appendix H (opinion of Court of Federal Claims, 

June 6, 1997) .................................................................. 

70a 

Appendix I (opinion of court of appeals, Aug. 5, 
1999) .............................................................................. 112a 

Appendix J (order of court of appeals granting and 
denying petitions for rehearing and rehearing 
en banc and vacating panel decision, Dec. 20, 
1999) .............................................................................. 128a 

Appendix K (constitutional and statutory provisions 
involved) ........................................................................ 130a 

Appendix L (list of other cases and judges challeng- 
ing OASDI and HI taxes) ........................................... 133a 

(I) 

APPENDIX A 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 97-5093 

JUDGE TERRY J. HATTER, JR., MARY MARTIN ARCENEAUX, 
ON BEHALF OF THE LATE JUDGE GEORGE ARCENEAUX, 
JR., JUDGE PETER H. BEER, JUDGE DUDLEY H. BOWEN, 
JR., DOLORES LEE BURCIAGA, EXECUTRIX OF THE ESTATE 
OF CHIEF JUDGE JUAN G. BURCIAGA, JUDGE A.J. 
MCNAMARA, JUDGE HARRY PREGERSON, JUDGE RAUL A. 
RAMIREZ, JUDGE NORMAN C. ROETTGER, JR., CHIEF 
JUDGE THOMAS A. WISEMAN, JR., CHIEF JUDGE TERENCE 
T. EVANS, JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE 
WILBUR D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., 
JUDGE HAROLD A. BAKER AND CHIEF JUDGE MICHAEL M. 
MIHM, PLAINTIFFS-APPELLANTS 

v. 

UNITED STATES, DEFENDANT-APPELLEE 

ORDER 

[Feb. 9, 2000] 

Before: MAYER, Chief Judge, NEWMAN, Circuit Judge, 

ARCHER, SENIOR CIRCUIT JUDGE, MICHEL, PLAGER, 
LOURIE, CLEVENGER, RADER, SCHALL, BRYSON, and 

GAJARSA, Circuit Judges. 

IT IS ORDERED THAT: 

(1a) 

2a 

The judgment of the court entered on August 5, 1999 
be reinstated. The opinion reported at 185 F.3d 1356 
(Fed. Cir. 1999) remains in effect as to parts 1 and 2. 
The opinion of the court en banc issued today super- 
cedes part 3 of that opinion. 

PLAGER, Circuit Judge. 

On August 5, 1999, this court issued its opinion and 
judgment in Hatter v. United States, 185 F.3d 1356 
(Fed. Cir. 1999) (Hatter VII ).1 In Hatter VII we were 
called upon to review the decision of the Court of 
Federal Claims regarding the measure of damages to 
be awarded to the plaintiff judges who had been sub- 
jected to a previously-declared, see Hatter v. United 
States, 64 F.3d 647 (Fed. Cir. 1995) (Hatter IV), 
unconstitutional diminution in compensation, and to 
review the ruling by the Court of Federal Claims 
regarding the application of the statute of limitations to 
these damages claims, see Hatter v. United States, 38 
Fed. Cl. 166 (1997) (Hatter VI). 

Subsequently both parties petitioned for rehearing 
by the panel which issued Hatter VII, and, failing that, 
for rehearing by the court en banc. By Order dated 
December 20, 1999, we reported the denial of both peti- 
tions for rehearing by the panel. With regard to the 

1 The history of this case now involves the following seven 
decisions: Hatter v. United States, 21 Cl. Ct. 786 (1990) (Hatter I ), 
Hatter v. United States, 953 F.2d 626 (Fed. Cir. 1992) (Hatter II), 
Hatter v. United States, 31 Fed. Cl. 436 (1994) (Hatter III), Hatter 

v. United States, 64 F.3d 647 (Fed. Cir. 1995) (Hatter IV), United 
States v. Hatter, 519 U.S. 801, 117 S. Ct. 39, 136 L.Ed.2d 3 (1996) 
(Hatter V), Hatter v. United States, 38 Fed. Cl. 166 (1997) (Hatter 

VI), and Hatter v. United States, 185 F.3d 1356 (Fed. Cir. 1999) 
(Hatter VII). 

3a 

petitions for rehearing en banc, the court en banc 
granted the petition of the appellants, Terry J. Hatter, 
Jr., et al., and denied the petition of the appellee, the 
United States. In the Order, the judgment of the court 
in Hatter VII was vacated, and the opinion of the court 
accompanying the judgment was withdrawn with 
respect to part 3 thereof.2 

Part 3 of the court’s opinion in Hatter VII addressed 
the statute of limitations issue. The question was 
whether the moneys wrongfully withheld from the 
judges’ monthly paychecks constituted a “continuing 
claim,” as that term is understood in the jurisprudence 
of this court. In Hatter VII, the court concluded that it 
did not. After full consideration of the petition by the 
plaintiffs/appellants and the Government’s response, 
the court en banc concluded that, with regard to the 
statute of limitations issue, the opinion in Hatter VII 
did not give adequate weight to this court’s precedents; 
accordingly, part 3 of the opinion in Hatter VII was 
withdrawn. Following is the en banc court’s opinion 
and judgment regarding that issue. 

* * * * * * 

3. 

As explained in this court’s opinion of August 5, 1999, 
(Hatter VII), the judgment of the trial court must be 
reversed and the matter must be returned to the Court 
of Federal Claims for determination of damages consis- 
tent with that opinion. There remains a disputed issue 
that needs resolving regarding the application of the 
statute of limitations. Under the law, a claim against 

2 The disposition of the vacated judgment in Hatter VII is dealt 
with in a separate Order of the court, issued this date. 

4a 

the Government for money damages must be filed 
within six years of the time the claim first accrues. 28 
U.S.C. § 2501. Failure to file within the time period im- 
posed by the statute of limitations means that the Gov- 
ernment may raise the statute as an affirmative de- 
fense. The six years begins to run when the cause of 
action accrues. 

The judges argue that this case is controlled by what 
is known as the continuing claim doctrine. Under that 
doctrine, each time moneys are deducted from the 
judges’ pay and paid into the Treasury of the United 
States, a new cause of action accrues. Thus, any judge 
whose salary was or is subject to the unconstitutional 
imposition can file a claim for each deduction within six 
years from the time the deduction is made; claims for 
deductions made longer ago than six years from the 
time suit is filed would be barred. 

The Government argued, and the trial court agreed, 
that the continuing claim doctrine did not apply to this 
case. On appeal, this court in its August 5th opinion 
held with the Government, and affirmed that part of the 
trial court’s judgment. See Hatter VII, 185 F.3d. at 
1363. As we indicated earlier, on further review and 
after considering appellants’ petition for rehearing and 
the Government’s brief in opposition, the court is of the 
view that the original opinion did not give sufficient 
weight to our precedents, and that the Government’s 
arguments are unsound in this respect. 

In a 1962 seminal opinion, this court’s predecessor, 
the Court of Claims, addressed the question of how to 
apply the six year statute of limitations to claims 
against the Government when the claims involve pay- 
ments from the Government that were to be made in a 

5a 

series or periodically. See Friedman v. United States, 
159 Ct. Cl. 1, 310 F.2d 381 (1962).3 

Judge Davis, 
writing for a unanimous court, examined the governing 
policies and precedents at length, citing over a hundred 
cases that had been reviewed. Though admitting that 
not every case was fully consistent in language, and 
occasionally in outcome, the court identified two basic 
categories of cases that emerged from its jurispru- 
dence. 

The first was those cases in which the repeated gov- 
ernment action (or failure to act) resulted in repeated 
causes of action. The court described those cases as 
having the following characteristics: (1) the case turned 
on pure issues of law, or on specific issues of fact which 
the court was to decide for itself; (2) Congress had not 
interposed an administrative agency or officer charged 
with the duty of determining the claimant’s eligibility 
for the money claimed (i.e., there was no discretionary 
administrative decision at issue), and (3) if fact issues 
were involved, they were “sharp and narrow.” Id. 310 
F.2d at 384-85. 

The cases the court had in mind were the pay 
cases—those in which the claimant was suing “for ad- 
ditional pay at a higher grade, or claiming greater 
compensation (under a statute or regulation) than the 
claimant was receiving, or seeking special statutory 
increments or allowances, etc.” Id. at 384. In such a 
case, when “no administrative agency has been set up 
to decide the claim, and the court passes de novo on all 
issues of law and fact—the ‘continuing claim’ doctrine is 

3 We are of course bound by the decisions of our predecessor 
court, until modified or overruled by this court en banc. See 
Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988). 

6a 

wholly appropriate and in accord with the general 
jurisprudence in this country on the statute of limita- 
tions.” Id. at 385. The court went on to note that 
“[u]nder 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; . . . [a]nd where the payments are to be 
made periodically, each successive failure to make pro- 
per payment gives rise to a new claim upon which suit 
can be brought.” Id. 

The court contrasted those cases with the cases in 
the second category, cases “in which the cause of action 
does not accrue until after a determination entrusted by 
Congress to an administrative official. . . In those in- 
stances, the claim does not accrue until the executive 
body has acted (if seasonably asked to act) or declines 
to act.” Id. The general rule here is that “in appro- 
priate cases conditions precedent to the accrual of a 
cause of action can be established by statute, contract, 
or common law, and that where such a condition prece- 
dent has been created the claim does not ripen until the 
condition is fulfilled.” Id. at 386. The kinds of cases the 
court listed here typically involved those in which a 
statute required a demand upon an executive official 
before payments were due. See id. at 386. 

As the court saw it, the touchstone between the two 
categories was that “‘continuing claims’ . . . are inde- 
pendent of administrative determination[,] and those 
other claims [are] dependent on prior administrative 
evaluation.” Id. at 387. Applying this principle to the 
case before it, the court concluded that a claim for en- 
titlement to disability retirement pay, of the type re- 
quiring discretionary action by a board or executive 

7a 

official, is not a continuing claim, but accrues as a whole, 
once it accrues. On the other hand, other types of pay 
claims not dependent on a discretionary finding— 
including claims for increased retirement pay because 
of new legislation, etc.—are continuing claims. See id. 
at 396. 

In the case before us, suit was brought not as a class 
action but on behalf of the individually named judges. 
In that regard, there are distinct causes of action aris- 
ing under two different statutes. The Tax Equity and 
Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, 
imposed the Hospital Insurance portion of the Social 
Security tax on federal judges effective January 1, 1983; 
the Old Age and Survivors Disability Insurance portion 
of the Social Security tax was imposed on federal 
judges by the Social Security Amendments of 1983, 
Pub. L. No. 98-21, and was effective January 1, 1984. 

In both cases, each month after the Acts became ef- 
fective the Government automatically deducted from 
the judges’ salary checks the amount, calculated by 
formula, that was due under the tax. No administrative 
officer or tribunal was given discretion to decide 
whether the judges were entitled not to pay the tax, or 
whether the judges had to pay only some of it. The 
question of whether the monthly tax deduction would 
occur was determined as a pure issue of law—all judges 
were to pay; and the only factual issue was to deter- 
mine the judges’ gross salary as provided by Congress 
from time to time, against which the formula would be 
applied. Under the analysis given to us by the Court of 
Claims in Friedman, there is merit to the argument of 
the judges that these periodic deductions, which have 

8a 

been ruled to have been unlawful, should be treated as 
a continuing claim. 

The Government, in its Opposition to Appellants’ 
Petition for Rehearing En banc, argues that the con- 
tinuing claim doctrine does not apply since 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 
[constitutional] violation by the government.’ ” Opposi- 
tion at 4, quoting Brown Park Estates-Fairfield Dev. 
Co. v. United States, 127 F.3d 1449, 1457 (Fed. Cir. 
1997). 

The Government relies heavily on Brown Park, as 
well as another recent case in this court, Hart v. United 
States, 910 F.2d 815 (Fed. Cir. 1990). Brown Park in- 
volved a suit by low-income housing providers against 
the Department of Housing and Urban Development 
(“HUD”), alleging breach of their housing assistance 
payments contract with HUD. The plaintiffs com- 
plained that HUD had failed to make rent adjustments 
in accordance with their contracts. Their main conten- 
tion was that “HUD has breached its contracts with the 
Plaintiffs because, in the absence of any comparability 
studies, it failed to pay full rental adjustments based on 
the [Automatic Annual Adjustment Factor in the 
contracts].” Brown Park at 1453. 

The question on appeal was whether plaintiffs could 
ward off the bar of the six year statute of limitations by 
relying on the continuing claim doctrine. This court 
cited the Court of Claims decision in Friedman, and 
pointed out the distinction drawn there between claims 

9a 

which fall within the continuing claim doctrine, such as 
periodic pay claims, and claims which do not. See id. at 
1456. 

In describing the latter category, this court spoke in 
terms of “a single distinct event, which may have ill 
effects later on,” as a wrong that does not qualify under 
the continuing claim doctrine. Id. Seizing upon that 
language, and the language above quoted, the Govern- 
ment argues that the imposition of the taxes at issue in 
1983 and 1984 constituted such a single distinct event, 
even though the events continued to have ill effects 
over the years since. 

But that language from Brown Park is simply 
descriptive of the type of case that falls outside the 
continuing claim doctrine. To determine whether a case 
falls inside or outside of that description, we return, as 
we must, to the governing considerations set out in 
Friedman, specifically, has Congress entrusted an ad- 
ministrative officer with the determination of the 
claimant’s entitlement (in Brown Park Congress had so 
entrusted the determination to HUD); does the case 
involve significant factual determinations, or does it 
turn on pure issues of law or specific facts which the 
court is to decide for itself (in Brown Park the facts in 
dispute involved complex calculations of area market 
rents that were within the expertise of HUD); and does 
the case call upon the court to address broad concepts 
rather than resolve sharp and narrow factual issues 
(Brown Park’s resolution turned on such issues as the 
“material differences between the rents charged for as- 
sisted and comparable unassisted units”). This court 
concluded, consistent with governing precedent, that 
Brown Park did not involve a continuing claim for 

10a 

statute of limitations purposes; the case thus lends no 
support to the Government’s case here. 

Similarly, the other case on which the Government 
places heavy reliance, Hart v. United States, is inap- 
posite. Hart involved a claim by the widow of a retired 
military member, in which she alleged that her 
deceased husband’s election not to participate in the 
survivors benefit program was invalid because she had 
not been given notice as required by statute. She sued 
for annuity benefits, but filed her claim more than six 
years after her husband’s death, the event under which 
her entitlement vested. 

This court held that “[b]ecause all events necessary 
to her benefits claim had occurred when her husband 
died, we conclude that plaintiff ’s claim for . . . annuity 
benefits is not a ‘continuing’ claim.” Hart, 910 F.2d at 
818. Again, it is readily apparent that this was a case in 
which Congress has charged an administrative agency 
with making a determination whether she qualified for 
an annuity, and how much, and the case did not turn on 
an issue of law but on disputed facts as to whether and 
when she received notice. The court correctly dis- 
cerned that under the Friedman precedent, this case 
fell over the line into the second category, that of non- 
continuing claim cases. 

Neither Brown Park nor Hart questioned the autho- 
rity of Friedman, nor could they, since neither was de- 
cided by this court en banc. We find the analysis pro- 
vided by Judge Davis in the Friedman opinion to be a 
useful and effective mechanism for distinguishing be- 
tween cases when the Government has failed to make a 
series of payments claimed to be due (or, as here, has 
deducted or withheld pay), and the question is whether 

11a 

there is a seminal event that constitutes one cause of 
action, or whether each wrongful deduction or refusal 
to pay constitutes a separate cause of action. State- 
ments such as “all necessary events had occurred,” or 
“the claim must be inherently susceptible to being 
broken down into a series of independent and distinct 
events or wrongs,” may be accurate ways of describing 
the events after-the-fact, but they do not contribute to 
the analysis. The Government’s reliance on such state- 
ments, rather than focusing on the Friedman factors, 
leaves us unpersuaded that the Government’s view 
should prevail. We conclude that, for the reasons 
stated above, the case before us falls comfortably on the 
side of the line governed by the continuing claim doc- 
trine. 

CONCLUSION 

The judgment of the trial court with regard to the 
application of the statute of limitations issue must be, 
and is, reversed. The matter is remanded to the trial 
court for further proceedings consistent with this 
opinion. 

REVERSED AND REMANDED. 

12a 

APPENDIX B 

UNITED STATES CLAIMS COURT 

No. 705-89 C 

TERRY J. HATTER, JR., ET AL., PLAINTIFFS 

v. 

UNITED STATES OF AMERICA, DEFENDANT 

[Filed: Nov. 9, 1990] 

OPINION AND ORDER 

TURNER, Judge. 

Plaintiffs are ten Article III* federal judges serving 
on various United States district courts and on one 
United States court of appeals. They bring this action 
pursuant to U.S. Const. art. III, § 1 (Compensation 
Clause) claiming that their compensation has been di- 
minished by reason of the Social Security Amendments 
of 1983, Pub. L. 98-21, § 101, 97 Stat. 65, 68 (codified as 

* The designation stems from Article III, Section 1, of the 
United States Constitution which provides: 

The judicial Power of the United States, shall be vested in one 

supreme Court, and in such inferior Courts as the Congress 
may from time to time ordain and establish. The Judges, both 
of the supreme and inferior Courts, shall hold their Offices 
during good Behaviour, and shall, at stated Times, receive or 
their Services a Compensation, which shall not be diminished 
during their Continuance in Office. [Emphasis added.] 

13a 

amended in scattered sections of 26 U.S.C. and 42 
U.S.C.). Plaintiffs seek damages in the amount of the 
Social Security taxes withheld from their salaries from 
January 1, 1984 to the present. 

Defendant filed a motion to dismiss the complaint 
pursuant, inter alia, to RUSCC 12(b)(1). It alleges that 
this a tax refund suit over which the Claims Court cur- 
rently lacks subject matter jurisdiction because the 
plaintiffs failed to file an administrative claim for refund 
with the Internal Revenue Service as required by 26 
U.S.C. § 7422(a). Hearing concerning defendant’s mo- 
tion was conducted on November 9, 1990 in Washing- 
ton, D.C. 

For reasons stated below, we conclude that the 
Claims Court lacks subject matter jurisdiction over the 
complaint at this time. Although plaintiffs characterize 
their claims as ones for damages other than a tax re- 
fund, we conclude that, in essence, their claims are for 
tax refunds which much be brought first before the 
IRS. 26 U.S.C. § 7422(a). 

I 

Prior to January 1, 1984, the salaries of Article III 
judges were not subject to withholding for Social 
Security taxes. Effective January 1, 1984, Congress 
amended the Social Security Act, 42 U.S.C. 
§ 401(a)(5)(E) (1988), and the Internal Revenue Code of 
1954, 26 U.S.C. § 3121(b)(5)(E) (1988), extending Social 
Security coverage to many previously exempt civilian 
government employees, including judges of the United 
States district courts and courts of appeals. Pursuant 
to this statute, the plaintiffs in this case had the 

14a 

following amounts withheld from their salaries during 
the years 1984 through 1989: 

Year Amount Withheld 

1984 $2,532.60 

1985 $2,791.80 

1986 $3,003.00 

1987 $3,131.70 

1988 $3,379.50 

1989 $3,604.80 

All of the plaintiffs were appointed and took office 
prior to January 1, 1984, the effective date of the a- 
mendments. At the time of their respective appoint- 
ments, the only mandatory deductions from their sala- 
ries were for federal and state income taxes. No man- 
datory deductions were made for retirement or for 
Social Security benefits. Plaintiffs now seek to recover 
as damages the amounts withheld for Social Security 
taxes. 

II 

Title 26 U.S.C. § 7422(a) provides in pertinent part: 

No suit or proceeding shall be maintained in any 
court for the recovery of any internal revenue tax 
alleged to have been erroneously or illegally 
assessed or collected . . . or of any sum alleged to 
have been excessive or in any manner wrongfully 
collected, until a claim for refund or credit has been 
duly filed with the Secretary, according to the 

15a 

provisions of law in that regard, and the regula- 
tions of the Secretary established in pursuance 
thereof. [Emphasis added.] 

Plaintiffs concede that if the court determines that 
their claims are for tax refunds, then they must file an 
administrative refund claim with the IRS before suit 
may be brought in this court. See 26 U.S.C. § 7422(a). 
They argue, however, that this is not a tax refund suit 
but rather a claim for damages based on the diminution 
in compensation caused by withholding the Social 
Security tax from their salaries. To support their 
position, plaintiffs rely on the Court of Claims opinion in 
Atkins v. United States, 556 F.2d 1028, 214 Ct. Cl. 196 
(1977), cert. denied, 434 U.S. 1009, 98 S. Ct. 718, 54 
L.Ed. 751 (1978). They argue that since, according to 
Atkins, the court would have great flexibility in 
fashioning a remedy for a violation of the Compensation 
Clause, their claim is somehow distinguished from an 
ordinary tax refund suit. Plaintiffs argue that the court 
could provide a remedy by awarding damages or by 
ordering an appropriate increase in their salaries to 
counteract the effect of the Social Security deductions. 
The possibility of alternative relief, according to plain- 
tiffs, demonstrates that defendant’s characterization of 
their claim as one for a tax refund is mistaken. 

Defendant argues that this is a tax refund suit, 
relying primarily on the Court of Claims opinion in 
King v. United States, 390 F.2d 894, 896, 182 Ct. Cl. 631, 
633-34 (1968), rev’d on other grounds, 395 U.S. 1, 2, 89 S. 
Ct. 1501, 1501-02, 23 L.Ed.2d 52 (1969). In King, the 
plaintiff was a retired Army colonel who claimed that 
by misclassifying his armed services retirement status, 
the government caused him to pay federal income taxes 

16a 

which he was not legally obligated to pay. King as- 
serted that he should be allowed to maintain his claim 
even though he had not filed a refund claim with the 
IRS. The Court of Claims held that this monetary 
claim was barred because he did not file an admini- 
strative refund claim but granted him relief in the form 
of a declaratory judgment and was later reversed on 
this ground. 395 U.S. at 5, 89 S. Ct. at 1503. 

Although King did not involve a diminution claim 
based on the Compensation Clause, we conclude that it 
is more analogous to the present case than Atkins. 
Plaintiffs attempt to distinguish their case from King 
on the ground that, unlike King, they do not challenge 
the government’s authority to deduct Social Security 
contributions from their wages. Plaintiffs argue that if 
they are legally obligated to pay the Social Security 
taxes, then the diminution which results must be 
rectified. Putting aside semantics, we find that this is a 
tax refund suit. Like the plaintiff in King, plaintiffs 
here are asserting that they should be allowed to 
maintain their claim in this court even though they 
have not filled a refund claim with the IRS. For juris- 
dictional purposes, plaintiffs’ position is identical to the 
plaintiff in King and we find it controlling. 

The fact that the plaintiffs in Atkins brought a claim 
for damages is of no help to the plaintiffs in this case. 
The claim in Atkins was for a violation of the Compen- 
sation Clause based on alleged diminution in salary 
caused by inflation and by the failure of Congress to 
raise judicial salaries. Since Atkins did not involve al- 
leged diminution by taxation, it did not present a juris- 
dictional problem for the court similar to the one 
addressed in King. 

17a 

The issue of whether taxes withheld from Article III 
judicial salaries constitute a diminution in violation of 
the Compensation Clause is not new. It was first 
brought before the United States Supreme Court in 
1920 in a case involving income taxes. Evans v. Gore, 
253 U.S. 245, 40 S. Ct. 550, 64 L.Ed. 887 (1920). There- 
after, each time the “diminution” issue has arisen in the 
context of income taxes, the claim originated as one 
against the IRS. See Miles v. Graham, 268 U.S. 501, 45 
S. Ct. 601, 69 L.Ed. 1067 (1925), overruled by O’Malley 

v. Woodrough, 307 U.S. 277, 59 S. Ct. 838, 83 L.Ed. 1289 
(1939). In O’Malley, the Supreme Court described the 
suit below as “an action at law to recover a tax on 
income claimed to have been illegally exacted.” 307 
U.S. at 278, 59 S. Ct. at 838. The Court further noted 
that the suit had been brought against the Collector of 
Internal Revenue and the plaintiff’s claim for refund 
had been rejected. 307 U.S. at 279, 59 S. Ct. at 838-39. 

None of the claims for violation of the Compensation 
Clause brought after O’Malley was based on taxes. See 
United States v. Will, 449 U.S. 200, 101 S. Ct. 471, 66 
L.Ed.2d 392 (1980); Duplantier v. United States, 606 
F.2d 654 (5th Cir. 1979), cert. denied, 449 U.S. 1076, 101 
S. Ct. 854, 66 L.Ed.2d 798 (1981); Atkins v. United 
States, 556 F.2d 1028, 214 Ct. Cl. 186 (1977), cert. 
denied, 434 U.S. 1009, 98 S. Ct. 718, 54 L.Ed.2d 751 
(1978). 

We conclude that there is no logical reason to view a 
claim for diminution based on Social Security taxes dif- 
ferently from one based on income taxes. In order to 
obtain a refund of either, the claim must be brought 
before the IRS prior to filing a complaint in this court. 
Manifestly, however, artfully characterized, plaintiffs 

18a 

seek recovery of Social Security taxes which have been 
deducted from their salaries since January 1, 1984. 
Based on the Supreme Court’s interpretation of diminu- 
tion claims involving income taxes as claims for a tax 
refund rather than damages, the Court of Claims 
opinion in King, and the face of 26 U.S.C. § 7422(a), we 
conclude that plaintiffs’ claims are for tax refunds over 
which this court lacks subject matter jurisdiction at this 
time. 

III 

Defendant’s motion to dismiss filed on May 15, 1990, 
to the extent that it asserts this court’s current lack of 
jurisdiction, see RUSCC 12(b)(1), is GRANTED. It is 

ORDERED that judgment be entered dismissing the 
complaint for lack of jurisdiction. 

Each party shall bear its own costs. See Johns- 
Manville Corp. v. United States, 893 F.2d 324, 328 
(Fed. Cir. 1989) (“the Claims Court has no power to 
award costs in cases over which is has no . . . 
jurisdiction”). 

19a 

APPENDIX C 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 91-5039 

JUDGE TERRY J. HATTER, JR., JUDGE GEORGE 
ARCENEAUX, JR., JUDGE PETER H. BEER, CHIEF JUDGE 
JUAN G. BURCIAGA, JUDGE A.J. MCNAMARA, JUDGE 
HARRY PREGERSON JUDGE RAUL A. RAMIREZ AND CHIEF 
JUDGE THOMAS A. WISEMAN, JR., PLAINTIFFS- 
APPELLANTS 

v. 

THE UNITED STATES, DEFENDANT-APPELLEE 

[Filed: Jan. 16, 1992] 

Before: ARCHER, PLAGER and RADER, Circuit 
Judges. 

RADER, Circuit Judge. 

Terry J. Hatter, Jr., et al., life-tenured federal 
judges, appeal the dismissal of their complaint by the 
United States Claims Court. Hatter v. United States, 
21 Cl. Ct. 786 (1990). The judges allege that imposition 
of social security taxes diminished their compensation 
in violation of the United States Constitution. The 
Claims Court dismissed their complaint for lack of juris- 
diction. Because the Tucker Act gives the Claims 
Court jurisdiction over claims of salary diminution un- 
der Article III of the Constitution, this court reverses 
and remands. 

20a 

BACKGROUND 

In 1983, Congress passed the Social Security Amend- 
ments of 1983. See 42 U.S.C. § 410(a)(5)(C)-(G) (1988). 
This Act extended social security coverage to many 
Government employees, including federal court of ap- 
peals and district court judges.* Previously, federal 
judges were exempt from paying social security taxes. 

On January 1, 1984, the Social Security Amendments 
imposed Federal Insurance Contributions Act 
(“FICA”) taxes on federal judges. From 1984 to 1989, 
plaintiffs each paid the following amounts in FICA 
taxes: 

YEAR TAX 

1984 $2,532.60 

1985 $2,791.80 

1986 $3,003.00 

1987 $3,131.70 

1988 $3,379.50 

1989 $3,604.80 

On December 29, 1989, plaintiffs filed a complaint in 
the Claims Court. In count I, plaintiffs contend that the 
1983 Amendments “unlawfully diminished and con- 
tinues to diminish plaintiffs’ compensation in violation 
of Article III, Section 1, of the Constitution of the 

* No member of this panel was an Article III judge in 1984. 
Therefore, no panel member suffered an alleged diminution in 
salary when the 1983 Amendments took effect. 

21a 

United States.” Under this count, plaintiffs sought 
monetary damages to compensate for their diminished 
wages. Count II claims that plaintiffs have an employ- 
ment contract with the Government which protects 
them against diminishment of their compensation. 
Again, plaintiffs seek damages for breach of contract. 

The Government moved to dismiss the complaint for 
lack of jurisdiction because plaintiffs did not file an 
administrative claim for a tax refund. See 26 U.S.C. 
§ 7422(a) (1988). The Claims Court granted the Govern- 
ment’s motion. Plaintiffs appealed. 

DISCUSSION 

This court must decide whether appellants have 
stated a case within the Claims Court’s jurisdiction 
under 28 U.S.C. § 1491 (1988) (Tucker Act). Under the 
Tucker Act, the United States has waived sovereign 
immunity for suits in the Claims Court: 

The United States Claims Court shall have 
jurisdiction to render judgment upon any claim 
against the United States founded either upon the 
Constitution, or any Act of Congress or any 
regulation of an executive department, or upon any 
express or implied contract with the United States, 
or for liquidated or unliquidated damages in cases 
not sounding in tort. 

28 U.S.C. § 1491(a)(1). 

The Tucker Act alone, however, does not create a 
substantive right to collect money damages from the 
United States. United States v. Testan, 424 U.S. 392, 
398, 96 S. Ct. 948, 953, 47 L.Ed.2d 114 (1976); Eastport 

22a 

S.S. v. United States, 372 F.2d 1002, 1007-1009, 178 Ct. 
Cl. 599 (1967). Rather, the Act empowers the Claims 
Court to award damages for the violation of substantive 
rights embodied in the Constitution, federal statutes, 
executive regulations, or federal contracts. United 
States v. Mitchell, 463 U.S. 206, 216-17, 103 S. Ct. 2961, 
2967-68, 77 L.Ed.2d 580 (1983). 

Thus, to invoke Tucker Act jurisdiction, claimants 
must show that their claim arises under an independent 
source of federal law. Moreover, the federal law or con- 
tract, fairly interpreted, must provide a damages rem- 
edy for violations. Id. In sum, appellants must show 
their claim arises from a federal constitutional, statu- 
tory, regulatory, or contractual provision that provides 
damages its breach. 

Appellants base their Tucker Act claim on Article 
III, Section 1, of the United States Constitution: 

The Judges, both of the supreme and inferior 
Courts, shall hold their Offices during good Be- 
haviour, and shall, at stated Times, receive for their 
Services, a Compensation, which shall not be dimi- 
nished during their Continuance in Office. 

U.S. Const. art. III, § 1. Appellants thus invoke the 
Constitution as an independent source of federal law 
providing for the payment of money. 

This provision of the Constitution, fairly interpreted, 
mandates the payment of money in the event of a pro- 
hibited compensation diminution. This provision states, 
in mandatory and unconditional terms, that judges’ 
salaries “shall not be diminished during their Contin- 
uance in Office.” This language presupposes damages 

23a 

as the remedy for a governmental act violating the com- 
pensation clause. Only a timely restoration of lost com- 
pensation would prevent violation of the Constitution’s 
prohibition against diminution of judicial salaries. 

Thus, the Constitution mandates that federal judges 
must receive, “during their Continuance in Office,” 
compensation for their services which may not be less 
than their compensation upon assuming office. In the 
event of a violation of this clause, the Constitution itself 
provides a remedy—compensation. In sum, by forbid- 
ding any diminution of judicial compensation, the 
Constitution itself requires repayment of prohibited re- 
ductions in compensation to Article III judicial officers. 

The history of the compensation clause supports this 
court’s reading that a violation of the clause mandates 
repayment or compensatory damages. According to 
James Madison’s notes, the delegates to the Philade- 
phia Convention discussed the compensation clause on 
July 18, 1787. 2 Max Farrand, The Records of the 
Federal Convention of 1787, 44-45 (1911). Gouverneur 
Morris proposed wording the compensation clause to 
prevent “any improper dependence in the Judges.” Id. 
James Madison, in response, shared Morris’s view that 
the Constitution should reduce any dependence by the 
judicial branch on the other branches for compensation. 
Id. at 45. Alexander Hamilton, too, explained the 
compensation clause: 

Next to permanency in office, nothing can con- 
tribute more to the independence of the judges 
than a fixed provision for their support . . . . In 

the general course of human nature, a power over a 
man’s subsistence amounts to a power over his 
will. And we can never hope to see realized in 

24a 

practice the complete separation of the judicial 
from the legislative power, in any system which 
leaves the former dependent for pecuniary re- 
sources on the occasional grants of the latter. 

The Federalist No. 79, at 472 (Alexander Hamilton) 
(emphasis in original) (Clinton Rossiter ed., 1961). 
These framers of the Constitution shared a common 
vision of the undiminishable compensation clause. 

These observations by the framers of the compen- 
sation clause underscore its importance to the preser- 
vation of judicial independence in a system of separated 
powers. These comments also suggest that judicial 
officers deprived of full compensation need not rely on 
legislative or executive action for a remedy. To require 
further legislative or executive actions to enforce the 
compensation clause would frustrate Article III’s pur- 
pose of judicial independence. The purpose of Article 
III, § 1, as well as its language, embraces a self- 
executing compensatory remedy. 

The Supreme Court has also considered whether an 
alleged violation of the compensation clause provides 
Tucker Act jurisdiction. United States v. Will, 449 U.S. 
200, 101 S. Ct. 471, 66 L.Ed.2d 392 (1980). In Will, 
several federal judges sought review of four statutes 
purporting to stop or reduce cost-of-living increases for 
judges. The Court concluded that two of the four 
statutes purported to roll back judicial salary increases 
already in effect. These statutes violated Article III, 
§ 1. Id. at 226, 230, 101 S. Ct. at 486, 488. Any legis- 
lative attempt to rescind those effective salary in- 
creases would diminish judges’ compensation. The 
Court upheld the other two statutes because they 
affected salary increases not yet in effect. Id. at 229, 

25a 

101 S. Ct. at 487. Therefore, those two statutes did not 
diminish judicial salaries. The case was remanded to 
the trial court to determine money damages. Id. at 230- 
31, 101 S. Ct. at 488. 

To reach these substantive results, the Court neces- 
sarily examined the jurisdiction of the trial courts to 
enforce the compensation clause. The Court stated that 
both the Court of Claims, the predecessor to the Claims 
Court’s trial jurisdiction, and district courts had juris- 
diction to determine whether the four statutes violated 
Article III, § 1. The Court stated: 

[T]here is no doubt whatever as to this Court’s 
jurisdiction under 28 U.S.C. § 1252 or that of the 
District Court under 28 U.S.C. § 1346(a)(2) (1976 
ed., Supp. III). 

Id. at 210-11, 101 S. Ct. at 478 (footnote omitted). “Jur- 
isdiction being clear,” id. at 211, 101 S. Ct. at 479, the 
Court proceeded to the next inquiry. 

The Court felt jurisdiction was “clear” based on 28 
U.S.C. § 1346(a)(2). In a footnote, the Court explained: 

This provision confers on the district courts and 
the Court of Claims concurrent jurisdiction over 
actions against the United States based on the 
Constitution when the amount in controversy does 
not exceed $10,000. 

Id. at 211, n. 10, 101 S. Ct. at 478, n. 10. Section 
1346(a)(2) of title 28, also known as the Little Tucker 
Act, mirrors the Tucker Act. It provides district courts 
concurrent jurisdiction with the Claims Court to handle 
claims against the United States, “not exceeding 

26a 

$10,000 in amount, founded either upon the Constitu- 
tion, or any Act of Congress.” The Supreme Court 
found jurisdiction in the district court for the Will 
plaintiffs under the Little Tucker Act. 

The only jurisdictional difference between the appel- 
lants in Will and the plaintiffs in this case is the amount 
in controversy. Plaintiffs in this case seek more than 
$10,000 in damages. The Supreme Court found juris- 
diction under the Little Tucker Act in the district court 
for the Will plaintiffs. The Tucker Act provides juris- 
diction in the Claims Court for the plaintiffs in this case. 

The Claims Court erred by recharacterizing plain- 
tiffs’ action as solely a request for a tax refund. Plain- 
tiffs’ complaint sought damages for violation of the com- 
pensation clause. Nonetheless, the Claims Court read 
their claim as a tax refund suit. The Claims Court er- 
red by imposing a single legal theory on the plaintiffs’ 
complaint. 

The Federal Rules of Civil Procedure permit parties 
to pursue their claim on any viable legal theory. Fed. 
R. Civ. P. 8(e)(2). In this case, plaintiffs could have pur- 
sued a tax refund. If they had, as the Claims Court 
noted, title 26 would have required a prior admini- 
strative claim. See, 26 U.S.C. § 7422(a). Plaintiffs, how- 
ever, did not pursue a tax refund. Instead they sought 
damages for violation of Article III, § 1—an action 
which is within the Tucker Act jurisdiction of the 
Claims Court. 

By requiring prior filing of an administrative claim 
with the Internal Revenue Service for a compensation 
clause violation, the Claims Court overlooked the lan- 

27a 

guage and purpose of Article III, § 1. Conditioning 
redress of an alleged compensation clause breach on 
executive branch actions would frustrate the purpose of 
Article III, § 1. The Constitution provides a compen- 
satory remedy without need for reliance on other 
branches. 

The Claims Court based its recharacterization of 
plaintiffs’ action on two cases, O’Malley v. Woodrough, 
307 U.S. 277, 59 S. Ct. 838, 83 L.Ed. 1289 (1939), and 
King v. United States, 390 F.2d 894, 182 Ct. Cl. 631 
(1968), rev’d on other grounds, 395 U.S. 1, 89 S. Ct. 
1501, 23 L.Ed.2d 52 (1969). In O’Malley, the plaintiffs 
challenged the validity of federal income taxes because 
withholding revenues allegedly diminished federal 
judges’ salaries. The Court determined that Article III 
did not bar Congress from imposing a non-discrimina- 
tory income tax on federal judges. O’Malley, 307 U.S. 
at 282, 59 S. Ct. at 840. O’Malley, however, does not 
affect the jurisdiction of the Claims Court. Contrary to 
the Claims Court’s statement, Hatter, 21 Cl. Ct. at 789, 
the Supreme Court did not recast O’Malley’s plaintiffs’ 
diminution claims as tax refund actions. The O’Malley 
plaintiffs elected to sue the Collector of Internal Reve- 
nue for a refund, rather than seeking damages. The 
O’Malley plaintiffs’ election in the 1930s, however, 
hardly binds the Hatter plaintiffs in the 1990s. As 
noted earlier, the Tucker Act provides plaintiffs an 
independent action for damages based on a purported 
violation of Article III, § 1. 

By improperly recharacterizing plaintiffs’ action, the 
Claims Court also foreclosed an issue to be determined 
on the merits. O’Malley determined that federal in- 
come taxes do not have a discriminatory impact on 

28a 

federal judges. Plaintiffs have had no opportunity to 
demonstrate whether the social security tax is dis- 
criminatory. The Claims Court erred in foreclosing this 
issue without full consideration of the merits. On 
remand, the Claims Court will have an opportunity to 
examine whether social security taxes have a dis- 
criminatory effect on federal judges. 

The Claims Court also erred in viewing King as 
identical to this case for jurisdictional purposes. Hatter, 
21 Cl. Ct. at 788. King was an Army Colonel who 
claimed that he had paid too much federal income tax 
because the Government misclassified his retirement 
status. The Court of Claims dismissed Colonel King’s 
tax refund claim for failure to file a prior administrative 
claim with the Internal Revenue Service. King, 390 
F.2d at 896. In equating the Hatter plaintiffs with 
Colonel King, the Claims Court overlooked pertinent 
distinctions. 

First, plaintiffs in this case have an independent 
jurisdictional basis for their claim. Colonel King had no 
choice except to seek a tax refund. Second, unlike 
Colonel King, plaintiffs here do not challenge the 
United States’ authority to impose a tax. Plaintiffs 
merely seek compensation to ensure that imposition of 
a tax does not diminish their salary. In sum, plaintiffs 
do not seek tax refunds, but compensation to ensure 
compliance with Article III, § 1. The Tucker Act pro- 
vides the Claims Court jurisdiction to adjudicate this 
action. 

CONCLUSION 

Appellants’ claim for relief states a claim within the 
jurisdiction of the Claims Court. Therefore, the de- 

29a 

cision of the Claims Court is reversed and this case is 
remanded for a hearing on the merits. 

REVERSED AND REMANDED. 

30a 

APPENDIX D 

UNITED STATES COURT OF FEDERAL CLAIMS 

No. 705-89 C 

JUDGE TERRY J. HATTER, JR., ET AL., PLAINTIFFS 

v. 

UNITED STATES OF AMERICA, DEFENDANT 

[Filed: June 22, 1994] 

OPINION AND ORDER 

TURNER, Judge. 

This opinion addresses plaintiffs’ motion for summary 
judgment filed September 2, 1993 and defendant’s 
cross-motion for summary judgment filed October 1, 
1993. Oral argument was heard on November 16, 1993. 
The parties agree that there are no material disputed 
facts. We conclude that defendant’s cross-motion 
should be granted. 

I 

Plaintiffs are federal district and circuit court judges 
who took office prior to January 1, 1983. On that date, 
all federal judges for the first time became subject to 
the Hospital Insurance (Medicare) portion of the Social 
Security tax. Tax Equity and Fiscal Responsibility 
Act, Pub. L. No. 97-248, § 278(a) 96 Stat. 324, 559 (1982) 
(codified as amended at 26 U.S.C. (I.R.C.) § 3121(u) 

31a 

(1988)). One year later, judges became subject to the 
Old Age Survivors and Disability Insurance portion of 
the Social Security tax, and since January 1, 1984, all 
federal judges have been fully subject to Social Security 
taxes. Social Security Amendments of 1983, Pub. L. 
No. 98-21, § 101(a)(1), (b)(1) and (d), 97 Stat. 65, 68, 
69 (codified as amended at 26 U.S.C. (I.R.C.) 
§ 3121(b)(5)(E) (1988) and 42 U.S.C. § 410(a)(5)(E) 
(1988)). Social Security taxes have therefore been duly 
withheld from plaintiffs’ monthly compensation since 
the effective dates of these acts. 

Plaintiffs all serve pursuant to Article III of the Con- 
stitution, which in pertinent part provides that federal 
judges “shall, at stated Times, receive for their Serv- 
ices, a Compensation, which shall not be diminished 
during their Continuance in Office.” U.S. Const. art. 
III, § 1 (hereafter the “Compensation Clause”). 

Plaintiffs contend that because they were already 
judges when the withholding of Social Security taxes 
from their pay began, their compensation was dimin- 
ished in violation of the Compensation Clause. In the 
alternative, plaintiffs claim a contract right to undimini- 
shed compensation. Plaintiffs seek a refund of all Social 
Security taxes collected thus far. 

After a review of Compensation Clause law in part 
II, we consider plaintiffs’ four main constitutional argu- 
ments in part III, and then address plaintiffs’ contract 
claim in part IV. 

32a 

II 

A 

An income tax on judges was first imposed in 1862 
and was collected for several years. Act of July 1, 1862, 
ch. 119, § 86, 12 Stat. 432, 472 (1862). This law occa- 
sioned the Supreme Court’s first pronouncement on the 
constitutionality of taxing judges. It came as an 
extraordinary 1863 protest against the tax issued in the 
form of a letter from Chief Justice Taney to the Treas- 
ury Secretary. This remarkable document, officially 
recorded and published by the Court1 and resembling 
nothing so much as an unsolicited advisory opinion, was 
echoed several years later by an opinion from the 
Attorney General that the income tax was unconstitu- 
tional as applied to judges. 13 Op.A.G. 161 (1869). As a 
consequence, all taxes which had been collected on 
judicial compensation were refunded in 1873. Wayne v. 
United States, 26 Ct. Cl. 274, 290, 1800 WL 1765 (1891). 
But these two seemingly non-binding opinions had an 
even more powerful effect: the courts came to consider 
the matter of judicial taxation closed without ever 
actually addressing the issue. E.g., Wayne, 26 Ct. Cl. at 
290. 

The courts finally addressed the matter when, sub- 
sequent to ratification of the 16th Amendment in 1913,2 

1 The letter is found at 157 U.S. 701. There was a 32-year lapse 
between the 1863 order of the Court recording the letter and its 
publication. 

2 “The Congress shall have power to lay and collect taxes on 
incomes, from whatever source derived, without apportionment 
among the several states, and without regard to any census or 
enumeration.” U.S. Const. amend. XVI (emphasis added). 

33a 

Congress in 1919 made its second serious attempt to 
tax federal judges. Revenue Act of 1918, ch. 18, § 213, 
40 Stat. 1057, 1065 (1919). Thus the first Compensation 
Clause case of precedential significance does not appear 
until Evans v. Gore, 253 U.S. 245, 40 S. Ct. 550, 64 
L.Ed. 887 (1920). In Evans, a federal judge who had 
taken office in 1899 challenged the Revenue Act of 
1918, arguing that the income tax was an unconstitu- 
tional diminution of his salary. 

Over a vigorous dissent by Justice Holmes, joined by 
Justice Brandeis, the Court agreed with the plaintiff 
judge, holding that an income tax on judges was an 
impermissible diminution in compensation, and that the 
Compensation Clause continued to prohibit taxation of 
judicial salaries even after the 16th Amendment. 
Holmes’s position in dissent, since adopted by the Court 
as will be seen, was that an income tax on judges would 
be valid so long as it did not single out judicial com- 
pensation but rather applied with like force to the in- 
come of all citizens. 253 U.S. at 264-267, 40 S. Ct. at 
557-558. 

The taxing authorities refused to give in so easily. In 
Miles v. Graham, 268 U.S. 501, 45 S. Ct. 601, 69 L.Ed. 
1067 (1925), the government sought to limit the Evans 
rule, arguing that the tax protection of the Compen- 
sation Clause shielded only judges appointed before the 
tax became law (hereafter “prior judges”).3 

According 
to the government, prior judges stood in contrast to 
judges taking office after the tax (hereafter “new 
judges”): taxation would not diminish the compensation 

3 Plaintiffs here are all prior judges, since they took office 
before the Social Security tax extended to the judiciary. 

34a 

of new judges, since they would never have received 
their salary untaxed. In Miles, the plaintiff was a new 
judge who argued, in essence, that the Compensation 
Clause’s protection extended to judicial compensation 
as an entity or institution, without regard to whether 
the recipient judge took office before or after enact- 
ment of the tax. 

The Court in Miles agreed with the plaintiff, firmly 
rejecting the government’s attempt to limit the Evans 
tax exemption to prior judges. (Brandeis, but not 
Holmes, dissented without comment.) Relying heavily 
on Evans, Miles made explicit the simple rule inferable 
from Evans: under the constitution, all judicial com- 
pensation provided for by Congress was tax-free. 268 
U.S. at 509, 45 S. Ct. at 602. 

In a familiar pattern, it was not long before the ini- 
tially rejected Holmes-Brandeis formulation (calling for 
judicial salary to be treated the same for tax purposes 
as income earned by any citizen) was, in effect, adopted 
by the Court. This development came after Congress in 
1932 made its third attempt to tax the judiciary, im- 
posing another income tax limited to new judges. 
Revenue Act of 1932, ch. 209, § 22(a), 47 Stat. 169, 178 
(1932). Predictably, a new judge challenged this tax 
based on the rule of Miles. O’Malley v. Woodrough, 307 
U.S. 277, 59 S. Ct. 838, 83 L.Ed. 1289 (1939) (Frank- 
furter, J.). 

For the tax collectors, the third time proved the 
charm: the Court reversed course, issuing its first 
rejection of a judge’s Compensation Clause challenge to 
a tax. The Court held that judicial compensation could 
be taxed, approving Congress’s “position that a non- 
discriminatory tax laid generally on net income is 

35a 

not . . . a diminution [of a federal judge’s] salary 
within the prohibition” of the Compensation Clause. 
307 U.S. at 282, 59 S. Ct. at 840. According to the 
Court, the constitution did not excuse judges from the 
obligations of citizenship. Id. O’Malley left Miles effec- 
tively overruled.4 

Justice Frankfurter in O’Malley also sharply criti- 
cized Evans, but in a characteristic exercise of judicial 
restraint was careful to note that only the question of 
tax immunity for new judges was properly at bar, 
whereas the plaintiff in Evans had been a prior judge. 
O’Malley, 307 U.S. at 281-82, 59 S. Ct. at 839-40. As 
will be seen, O’Malley remains the most important 
precedent in the area of taxation of federal judges. 

A generation after O’Malley, the Court of Claims5 
thoroughly reviewed Compensation Clause law in 
Atkins v. United States, 214 Ct. Cl. 186, 556 F.2d 1028 
(1977) (en banc), cert. denied, 434 U.S. 1009, 98 S. Ct. 
718, 54 L.Ed.2d 751 (1978). This review was occasioned 
by the suit of a group of federal judges who claimed 
that their compensation, though nominally unchanged 

4 The court’s language is to some degree unclear as to the fate 
of Miles: “But to the extent that what the Court now says is 
inconsistent with what was said in Miles v. Graham, 268 U.S. 501, 
45 S. Ct. 601, the latter cannot survive.” 307 U.S. at 282-83, 59 S. 
Ct. at 840. 

5 In 1982 the Court of Claims and the Court of Customs and 
Patent Appeals were abolished. Judges of those two courts be- 
came judges on the new Court of Appeals for the Federal Circuit. 
See Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 
tit. I, § 165, 96 Stat. 25, 50 (1982) (codified as amended at 28 U.S.C. 
§ 44 (1988)). Court of Claims decisions constitute precedent for 
this court to the same extent as decisions of the Federal Circuit. 
South Corp. v. United States, 690 F.2d 1368 (Fed. Cir. 1982). 

36a 

since 1969, had in fact been unconstitutionally eroded 
by inflation. In rejecting this claim, the Court of Claims 
gave valuable guidance on the import of O’Malley and 
its predecessors. 

In analyzing the Supreme Court’s holding in 
O’Malley, the Court of Claims in Atkins stated that 
both Evans and Miles are “no longer good law,” id., 214 
Ct. Cl. at 213, 556 F.2d at 1043. According to the Court 
of Claims, O’Malley “overruled Miles, and by force of 
reasoning overruled a good deal of Evans,” id. at 215, 
556 F.2d at 1044.6 

Atkins fleshes out the distinction between indirect 
and direct diminution first alluded to by the Supreme 
Court in Evans, 253 U.S. at 254, 40 S. Ct. at 553. A 
direct diminution is a reduction in the number of dollars 
authorized by Congress for a judge’s salary, while an 
indirect reduction, for instance “by virtue of a tax,” 
lowers the take-home pay of a judge but not the 
statutory salary. Atkins, 214 Ct. Cl. at 215, 556 F.2d at 
1044. Given that “the purpose of the Compensation 
Clause is to preclude a financially based attack on 
judicial independence,” id. at 222, 556 F.2d at 1048, 
cases of indirect diminution are to be handled dif- 
ferently from cases of direct diminution. The Court of 
Claims explained that while the Supreme Court’s Com- 
pensation Clause cases uniformly agreed that direct 
diminutions were always prohibited, after O’Malley 
“[i]ndirect, nondiscriminatory diminishments [like 
taxes] . . . which do not amount to an assault on the 

6 Also interesting in this regard is Justice Butler’s dissent in 
O’Malley itself, which states that the majority in O’Malley 
“intend [ed] to destroy the decision in Evans v. Gore.” 307 U.S. at 
297, 59 S. Ct. at 846. 

37a 

independence of the third branch . . . [are not 
prohibited by] the Compensation Clause,” id. at 216, 
556 F.2d at 1045. 

The 1977 Atkins decision is in full accord with the 
later Supreme Court Compensation Clause case of 
United States v. Will, 449 U.S. 200, 101 S. Ct. 471, 66 
L.Ed.2d 392 (1980), which dealt with a direct diminu- 
tion. In Will, scheduled increases in judicial, congres- 
sional, and top-level executive pay were withdrawn for 
four years running, twice just before the raises took 
hold, and twice just after. Upon a suit by federal 
judges, the Court held that while the political branches 
may cancel a prospective judicial salary increase, any 
increase allowed to become effective even for less than 
a day is permanent for Article III judges. 449 U.S. at 
224-26, 101 S. Ct. at 485-486. 

The Will decision buttresses the implication of the 
Court of Claims in Atkins that all direct reductions of 
judicial compensation are invalid regardless of congres- 
sional intent: speaking of direct diminutions, the Court 
said “the Constitution makes no exceptions for ‘nondis- 
criminatory’ reductions.” 449 U.S. at 226, 101 S. Ct. at 
486. As to indirect diminutions, not at issue in Will, the 
Court was not quite so clear. Still, Will gives some 
guidance on indirect diminutions like taxes: the Court 
discussed O’Malley with apparent approval, noting that 
O’Malley validated income taxation of judicial salaries 
and “recognized that the Compensation Clause does not 
forbid everything that might adversely affect [the 
finances of] judges.” Id. at 227 n.31, 101 S. Ct. at 486 n. 

31. In fact, Will may have left open the possibility that 
even a congressional intent to pressure the judiciary 
might not invalidate an indirect diminution: “[w]e need 

38a 

not address the question of whether evidence of an 
intent to influence the Judiciary would invalidate a 
statute that on its face does not directly reduce judicial 
compensation.” Id. at 226 n. 30, 101 S. Ct. at 486 n. 30.7 
Of course, in the absence of facts showing bad legis- 
lative intent, this legal question is moot. Atkins, 214 
Ct. Cl. at 216, 228, 235, 556 F.2d at 1045, 1051, 1055. 

B 

The following two rules and one corollary emerge 
from the foregoing review of the Compensation Clause 
case law.8 First, direct diminution of the salary 
authorized for federal judges is absolutely forbidden, no 
matter how innocent the intent of Congress is. Second, 
so-called indirect diminishments, and specifically 
income taxes, are permissible even if they result in a 
reduction in take-home pay for federal judges, at least 
so long as they are not part of an assault on judicial 
independence. This rule’s corollary is that if there is no 
evidence of legislative intent to influence the judiciary, 

7 The Court of Claims, albeit also in dicta, took a firmer stand 
on this issue, indicating that an indirect diminution which discrimi- 
nated against judges would be remediable by the courts. Atkins, 
214 Ct. Cl. at 222-23, 556 F.2d at 1048. 

8 Atkins as it applies to this case is primarily dicta, since 
Atkins dealt with the impact of inflation on judicial buying power 
rather than with an impact caused by congressional action. Will is 
likewise not on all fours here, dealing as it does with a direct 
diminution rather than a tax. O’Malley, however, is almost di- 
rectly on point, with the only arguable distinction being that it 
does not overtly deal with the problem of taxation of prior judges. 
Still, as we demonstrate, the dicta from Atkins and Will, read 
together with the all-important holding in O’Malley, form a consis- 
tent and common-sensical body of law governing the instant case. 

39a 

taxes of general applicability are valid as to Article III 
judges. 

Thus the question in this case is not whether the 
plaintiffs’ compensation has been reduced by Social 
Security taxes, for at least in terms of take-home pay it 
has been, but rather whether this indirect reduction is 
of the type forbidden by the Compensation Clause.9 As 
will be shown below, under O’Malley and subsequent 
cases, the answer is no. 

III 

As to the Compensation Clause claims, (Second 
Am.Cplt. Counts I-II at 7-8), four basic themes, some of 
them related, emerge from plaintiffs’ briefs and oral 
argument. First, plaintiffs contend that in overruling 
Miles but not Evans, the Supreme Court meant to limit 
the original broad holding of Evans to the following still 
vital rule: “[E]ven a tax of general applicability cannot 
be imposed upon [prior] judges who were appointed 

9 For the purpose of resolving the motions at bar, we accept 
plaintiffs’ assumption that inclusion in Social Security represents a 
reduction in judicial pay. But this proposition is by no means 
settled. If plaintiffs were to prevail in this litigation, and all 
affected judges were effectively taken out of Social Security and 
refunded their Social Security taxes, Compensation Clause claims 
by judges who felt their compensation had been decreased would 
surely result. For instance, though plaintiffs here claim Social Se- 
curity coverage reduces their compensation, in Robinson v. Sulli- 
van, 905 F.2d 1199 (8th Cir. 1990) (Wollman, J.), a senior judge who 
was retroactively denied Social Security credit for service during a 
brief window of Social Security coverage for senior judges chal- 
lenged the denial as a Compensation Clause diminution. This argu- 
ment was rejected on the grounds that his temporary coverage 
under Social Security was “not a direct increase” in compensation. 
905 F.2d at 1202 (emphasis added). 

40a 

. . . before the tax became law.” Pl. Br. at 29. To some 
extent linked with this reading of Evans is plaintiffs’ 
second contention that no taxation of judges is permis- 
sible if it makes judicial service relatively less attrac- 
tive than it was when a judge took office. Pl. Br. at 20- 
21; Pl. Reply at 12-13. Plaintiffs’ third argument is that 
the Social Security tax at issue here is not even an 
income tax of general applicability such as was per- 
mitted to be laid on judges by O’Malley. Pl. Br. at 25- 
26; Pl. Reply at 25-26; Tr. 15-16. Somewhat related to 
this argument is plaintiffs’ last main point: that the 
scheme designed to bring federal employees under 
Social Security coverage discriminated against the 
plaintiff judges compared to other federal workers. Pl. 
Br. at 37-8, 40, 43; Tr. at 16-17, 19, 72-74. We discuss 
these four themes in turn. 

A 

Plaintiffs’ first contention is that the factually similar 
Evans case (discussed above in part II A) controls here, 
and thus that new taxes cannot be imposed on prior 
judges even if all other citizens are included in the new 
tax. Pl. Br. at 28-29. While it is true that the Supreme 
Court has never expressly overruled Evans, subse- 
quent Court of Claims and Supreme Court cases con- 
vince us it would be irresponsible to dispose of this con- 
troversy on that ground. The Supreme Court itself 
long ago criticized the Evans case, O’Malley, 307 U.S. 
at 280-82, 59 S. Ct. at 839-40 (1939), and more recently 
confirmed that Evans has been “undermine[d],” Will, 
449 U.S. at 227 n. 31, 101 S. Ct. at 486 n. 31. Addition- 
ally in Will, the Supreme Court reversed a trial judge 
who expressly relied on Evans, albeit in a factually 

41a 

distinguishable case. Will, 449 U.S. at 227, 101 S. Ct. at 
486-487. 

Such negative Supreme Court guidance certainly dis- 
courages automatic reliance on Evans. But in addition, 
the Will and O’Malley decisions at the very least 
strongly suggest that a tax or other statute which 
indirectly reduces judicial pay is permissible absent evi- 
dence of a congressional intent to influence the judi- 
ciary. Will, 449 U.S. at 226-27 & nn.30-31, 101 S. Ct. at 
486-87 & nn.30-31; O’Malley, 307 U.S. at 282, 59 S. Ct. 
at 840. Moreover, the Court of Claims stated that the 
Supreme Court has effectively overruled Evans “at 
least as regards [new] judges,” Atkins, 214 Ct. Cl. at 
215, 556 F.2d at 1044 (emphasis added). 

Even in the face of this negative treatment, plaintiffs 
persist in their claim that though the broad rationale of 
Evans has certainly been narrowed by subsequent case 
law, the fact that Evans has never been expressly 
overruled means that some part of the holding survives. 
Pl. Br. at 28. According to plaintiffs, the surviving rule 
of Evans is that under the Compensation Clause, prior 
judges have more tax protection than new judges: you 
can’t charge a prior judge new taxes. Pl. Br. at 28-29. 
Adopting this distinction between new and prior judges 
would require us to read much into Evans, because that 
case nowhere suggested such a difference. In fact the 
Court in Evans broadly defined the issue in that case as 
the taxability of the “compensation of federal judges in 
general,” 253 U.S. at 247, 40 S. Ct. at 551 (emphasis 
added). We understand that the distinction between 
prior and new judges was arguably drawn by omission 
in O’Malley when the Court expressly limited its 
holding to new judges. 307 U.S. at 281-82, 59 S. Ct. at 

42a 

839-40. But unlike the Court in O’Malley, here we are 
squarely addressed with the question of whether new 
judges have less tax protection than prior ones under 
the constitution. O’Malley’s failure to expressly ad- 
dress the propriety of new taxes on prior judges is 
typical of the judicial restraint that Justice Frankfurter 
was known for, and is not a ruling against such taxa- 
tion. 

10 

Only the quite proper use of judicial restraint in 
O’Malley and later in Will prevented the Supreme 
Court from overruling Evans. Now that the question of 
whether prior judges should be afforded more Compen- 
sation Clause protection than new judges is at bar for 
the first time since the discredited Miles decision, 
reaching back to the 1920 Evans case to resolve the 
question in plaintiffs’ favor would require us to willfully 
ignore the intervening, and uniformly critical, case his- 
tory. This we decline to do, although because this his- 
tory developed in factually distinguishable situations, 
the question in a narrow technical sense will arguably 
remain open until the Supreme Court addresses the 
point. As discussed above, the more recent Supreme 
Court and Court of Claims cases on the Compensation 
Clause counsel reliance on the dissenting view of 
Holmes in Evans rather than on the majority. 

11 There- 

10 See Jefferson County v. Acker, 850 F. Supp. 1536, 1548 (N.D. 
Ala. 1994) (indicating in dicta that new judges would be entitled to 
the same Compensation Clause protection as the prior judges who 
were plaintiffs in the case). 

11 Plaintiffs agree that the Court of Claims in Atkins read the 
Supreme Court decision in O’Malley to adopt Holmes’s dissent in 
Evans. Pl. Br. at 33. (A district judge evaluating O’Malley re- 
cently came to the same conclusion. Acker, 850 F. Supp. at 1546.) 
Though plaintiffs argue that the Atkins and Holmes rule allowing 

43a 

fore, we hold that judicial salary, like other components 
of a judge’s income, is taxable. Will, 449 U.S. at 227 

n.31, 101 S. Ct. at 486 n.31 (citing with approval 
O’Malley, 307 U.S. 277, 59 S. Ct. 838 (1939)); Evans, 253 
U.S. at 265-266, 40 S. Ct. at 557 (Holmes, J., dissenting); 
Atkins, 214 Ct. Cl. at 216, 556 F.2d at 1044-45. 

B 

Given that we decline to rely on Evans, plaintiffs, in 
the alternative, claim that the statutes in question vio- 
late the Compensation Clause by wiping out a tax ad- 
vantage prior judges enjoyed relative to other citizens, 
a situation plaintiffs contend to be different from that 
presented in Evans. Plaintiffs argue that in Evans, a 
new tax was imposed on both judges and other citizens 
“at the same time;” 

12 in contrast, plaintiffs here were 

judicial salaries to be taxed is incompatible with the Will approach 
banning any diminution in gross judicial pay, Tr. at 70-71, we 
disagree. As we explained above in part II A, in actuality Atkins 
and Will are complementary because they deal with different facts. 
Will expressed the absolute Compensation Clause protection 
which exists when judicial pay is directly diminished, while the 
more flexible rule developed in Atkins indicates that in cases of 
indirect, take-home pay diminution like taxation, an inquiry into 
congressional intent is needed. 

12 Pl. Reply at 16 n. 7. It is unclear what plaintiffs mean by “at 
the same time.” While it certainly is true that the Revenue Act of 
1918 (which was at issue in Evans) did for the first time tax the 
income of judges, § 213, 40 Stat. at 1065, it is also true that the 
Revenue Acts of 1916 and 1917 had already imposed broad-ranging 
income taxes, although exempting judges already in office, ch. 463, 
§ 4, 39 Stat. 756, 759 (1916); ch. 63, § 1200, 40 Stat. 300, 329 (1917). 
Thus, the income tax was imposed on the public years before 
judges were included. Only by artificially viewing each successive 
year’s income tax statute in isolation can it be said that the 
Revenue Act of 1918 imposed a tax on the public and on judges “at 

44a 

subjected to the extension of an old tax they had es- 
caped by becoming judges, thereby unconstitutionally 
costing sitting judges an advantage they held relative 
to non-judges. Pl. Reply 16 n.7. As we will show, 
plaintiffs’ attempt to distinguish their case from Evans 
fails. 

1 

Plaintiffs argue that to be valid, any new tax on prior 
judges must be simultaneous with taxation of the 
public. Pl. Reply at 16 n.7; Tr. at 9-10. This is so be- 
cause as long as an identical burden is simultaneously 
laid on the public and the judiciary, not even prior 
judges have suffered a diminution relative to other 
citizens 

13 and so their judicial independence is not 
potentially threatened. Tr. at 9-10; see Pl. Br. at 16, 35- 
37; Pl. Reply at 19, 21. On the other hand, reason 
plaintiffs, the taking away of a tax exemption or other 
advantage held by prior judges relative to other 
citizens does potentially threaten judicial independence 
because it singles out judges. 

14 See Pl.Br. at 20-21, 34; 

Pl. Reply at 16 n.7, 19. 
Looking past the terms of plaintiffs’ seemingly novel 
relativity argument to its substance, it appears plain- 
tiffs’ position at bottom is nothing more remarkable 
than that a new tax laid wholesale on prior judges and 

the same time.” But for purposes of this discussion only, we accept 
plaintiffs’ characterization. 

13 Hereafter, we may refer to this as the “simultaneity require- 
ment.” 

14 Hereafter, we may refer to this as plaintiffs’ “relativity” 
argument or analysis. 

45a 

15 While this may be 
true, it provides no support for plaintiffs’ further impli- 
cation that a tax placed on the public and only later 
extended piecemeal to prior judges automatically vio- 
lates the Compensation Clause as a potential threat to 
the independence of prior judges. 

Plaintiffs have pointed to no good reason why 
Congress in taxing judges has the power to accomplish 
wholesale what it cannot do piecemeal. See, e.g., Pl. Br. 
at 34; Pl. Reply at 2-3, 9-10, 12-13, 16 n.7. Plaintiffs 
equate comparative tax advantages enjoyed by judges 
with direct increases in judicial pay, arguing that both 
should at inception be permanent for judges then in 
office. Pl. Br. at 30-31, 34; Tr. at 8-9. But the purpose 
of the Compensation Clause is not to make irrevocable 
every momentary tax exemption enjoyed by sitting 
judges relative to the public; its purpose is rather to 
protect the independence of the judicial branch by 
insuring that judges are shielded from attempts by the 
political branches to impose economic duress. O’Mal- 
ley, 307 U.S. at 282, 59 S. Ct. at 840; Evans, 253 U.S. at 
265-67, 40 S. Ct. at 557-58 (Holmes, J., dissenting); see 
Atkins, 214 Ct. Cl. at 223, 556 F.2d at 1048-49. This 
underlying purpose leads to the simple rule of thumb 
which governs this case: in general, if judges are 
treated like other citizens by the tax laws, no threat to 
judicial independence arises, and so the Compensation 
Clause is not implicated. Congress always has the 
power to place judges in tax parity with other citizens. 

15 Plaintiffs posit a scenario (first rhetorically raised in Atkins, 
214 Ct. Cl. at 223, 556 F.2d at 1048) in which an enormous tax is 
laid across the land and then all other federal workers or citizens 
except judges get a raise or some other kind of relief. Pl. Br. at 36 

n. 22. Suffice it to say that we do not here prejudge such a case. 

the public is not discriminatory. 

46a 

2 

Plaintiffs profess not to rely on Evans in deriving the 
simultaneity requirement for the taxation of prior 
judges. But plaintiffs’ simultaneity requirement leads 
inescapably to the conclusion that the Compensation 
Clause provides the class of prior judges more tax 
protection than it does to new judges. This is the very 
conclusion that we rejected in refusing to rely on Evans 
above in part A. The new packaging does not yield a 
different result. Barring some sort of targeted discrim- 
ination, the finances of one individual judge or even a 
class of judges is not the concern of the Compensation 
Clause. 

16 There is no requirement that prior judges be 
treated any differently from new judges for tax pur- 
poses: a judge escapes neither the present nor the 
future obligations of citizenship by taking the oath of 
office. 

C 

Plaintiffs go on to claim that even with the above 
arguments conceded Social Security is not a tax of 
general applicability like the one which was held proper 
as to judges in O’Malley. Pl. Reply at 24-25; Tr. at 15- 
16, 72-73. In this vein, plaintiffs first contend that 

16 The proper constitutional focus is on the interaction between 
the branches of government, not on the appointment dates of indi- 
vidual judges. (It might be said that plaintiffs’ analysis neglects 
the constitutional dimension of this case in favor of the astronomi- 
cal.) The Compensation Clause is “not a private grant of privilege 
[to judges] but a limitation intended to benefit the public at large,” 
Atkins, 214 Ct. Cl. at 223, 556 F.2d at 1049. The same idea is ex- 
pressed in Will, 449 U.S. at 217, 101 S. Ct. at 481-82 and 
O’Donoghue v. United States, 289 U.S. 516, 533, 53 S. Ct. 740, 744, 
77 L.Ed. 1356 (1933). 

47a 

Social Security is not an income tax, but is rather a 
contributory public benefit plan. E.g. Pl. Br. at 26-27. 
In addition, plaintiffs maintain that Social Security 
taxes are not a truly general obligation of citizenship 
because the plan is not universal. Id.; Tr. at 72-73. 

1 

A close reading of plaintiffs’ arguments shows that 
they do not seriously contend that Social Security is a 
contractual benefit plan rather than an income tax. In 
fact, plaintiffs themselves note that Social Security 
benefits are by no means guaranteed, and that the 
Congress could limit or cancel benefits under the 
program. Tr. at 10-11 (citing Bowen v. Public Agencies 
Opposed to Soc. Secur. Entrapment, 477 U.S. 41, 51-52, 
106 S. Ct. 2390, 2396-97, 91 L.Ed.2d 35 (1986)). We 
agree. Of course, the taking of money by the federal 
government with no specific return obligation is typical 
of tax schemes, including income taxes. And, in fact, 
Social Security has long been treated as an income tax 
by courts. Helvering v. Davis, 301 U.S. 619, 634-35, 57 
S. Ct. 904, 905-06, 81 L.Ed. 1307 (1937). It is plain that 
Social Security imposes an income tax. 

2 

At the heart of plaintiffs’ argument that Social 
Security is not a tax of general applicability is the 
contention that the Social Security income tax is not 
sufficiently widespread. See Pl. Br. at 26, 36-37; Tr. at 

72. We disagree. Social Security is a tax of general 
applicability, and so can be applied to federal judges. 
The parties have stipulated to the following facts: 
during 1984, the percentage of the paid civilian labor 
force covered by Social Security climbed from 91 

48a 

percent to 93 percent, Jt. Stip. ¶ 18 (Appendix C to Pl. 
Br.), even while the paid civilian labor force increased 
from 102.2 million workers to 105.5 million, Jt. Stip. 
¶ 27 (Table 4). 

This amounts to effectively universal coverage of the 
nation’s work force. 

17 Given the web of exemptions and 
deductions allowed by Congress in virtually all areas of 
taxation, it is doubtful if any federal tax is of general 
applicability in the sense of applying to 100 percent of 
the possible taxpayers. We do not need to decide the 
boundaries of the term “a tax of general applicability” 
today. It is enough to say that the Social Security 
income tax, which at all times relevant to this litigation 
covered over 90 percent of paid civilian workers, is a 
tax of general applicability like that held valid as to 
judges by the Supreme Court in O’Malley. 

D 

Plaintiffs’ last main Compensation Clause contention, 
somewhat linked to the idea that Social Security is not a 
tax of general applicability, is that the plaintiff judges 
were discriminated against as compared to the other 
federal employees affected by the same Social Security 
amendments. Pl. Br. at 37-38, 40, 43; Pl. Reply at 24; 
Tr. at 12, 15-17, 19, 22-23, 72-74. Plaintiffs contend that 
a Compensation Clause violation arises because judges, 
unlike all other federal employees, faced a mandatory 
reduction in take-home pay. Pl. Br. at 40, 43; Tr. at 74- 

75. 

17 In September 1983, there were over 2.7 million federal 
employees. Jt. Stip. P 19. 

49a 

1 

However, using federal employees instead of the 
general public as the Compensation Clause benchmark 
to determine the validity of a tax does not help plain- 
tiffs in this case, since for purposes of this discussion 
the two groups have historically been treated alike. 

Most federal employees have long been required to 
contribute to retirement plans in order to obtain retire- 
ment benefits. See 5 U.S.C. §§ 8331-48 (1988). This 
does not apply to Article III judges, whose basic retire- 
ment plan is free, and provides for lifetime full pay 
when certain age and length of service requirements 
are met. 28 U.S.C. § 371 (1988). By the acts challenged 
here, Congress expanded Social Security to cover most 
federal positions, including Article III judgeships, for 
the first time. Jt. Stip. ¶ 20. Speaking generally, Con- 
gress reduced or offset the contribution federal em- 
ployees were required to make to their retirement plan 
by the amount of any newly required Social Security 
tax. Pl. Proposed Findings of Uncontroverted Fact 
¶ 11 (“PPUF”). The retirement plan benefits of 
federal employees were correspondingly reduced to ac- 
count for any newly expected Social Security benefits. 
E.g., Federal Employees’ Retirement Contribution 
Temporary Adjustment Act of 1983, Pub. L. 98-168, 
§ 206(c)(2), 97 Stat. 1106, 1109-10 (1983) (codified as 
amended in a note after 5 U.S.C. § 8331 (1988)). The net 
result of inclusion in Social Security for most federal 
workers thus was no change in take-home pay or 
benefits. It is plainly the view of Congress that the 
Social Security tax is fungible with the other retire- 
ment payments required of federal employees. Thus, 
both before and after the acts in question, almost all 

50a 

non-judicial federal employees, like over 90 percent of 
the nation’s civilian workers, paid Social Security taxes 
or a mandatory equivalent. 

Judges, with no retirement plan contributions to 
offset, were unique among federal employees in seeing 
their take-home pay necessarily decrease by the 
amount of the Social Security tax. PPUF ¶ 12. But this 
happened only because judges, unlike other federal 
employees and citizens, were never before required to 
pay into Social Security or a retirement plan equivalent 
to Social Security. There is no reason that tax burdens 
equivalent to those long required of other federal 
employees and working citizens cannot be extended to 
judges. See supra, part B(1). Here, the central Com- 
pensation Clause taxation rule has not been violated: 
judges are being treated no worse than other federal 
employees and citizens. 

2 

Even if we were to assume that the Social Security 
taxes at issue here did hurt judges compared to other 
federal workers, plaintiffs’ Compensation Clause claim 
would not succeed. This is because in cases of indirect 
reduction in judicial compensation, it is an open 
question whether evidence of Congressional intent to 
pressure the judiciary would be enough to invalidate a 
statute. Will, 449 U.S. at 226 n. 30, 101 S. Ct. at 486 

n.30. At any rate, without evidence of such an intent 
this legal question is moot. Atkins, 214 Ct. Cl. at 216, 
228, 235, 556 F.2d at 1045, 1051, 1055. 

In this case, there is absolutely no evidence of an 
intent to influence the judiciary. This conclusion is not 
disputed by plaintiffs, Pl. Br. at 21-22; see Pl. Reply at 

51a 

2; rather, plaintiffs’ by-now familiar argument is that 
any reduction in take-home pay should be handled like a 
direct reduction in salary, that is to say it is prohibited 
by the Compensation Clause regardless of congres- 
sional intent. Pl. Br. at 21-23; Pl. Reply at 2, 10, 12; Tr. 
at 69, 71-72. 

As indicated above, plaintiffs’ conclusion ignores two 
related rules of Compensation Clause jurisprudence. 
First, in case of an indirect diminution of judicial com- 
pensation, it is at least arguable that judges seeking 
relief under the Compensation Clause for an indirect 
reduction in pay must show not just a discriminatory 
effect but an intent to influence the judiciary. See Will, 
449 U.S. at 226 n.30, 101 S. Ct. at 486 n.30; Atkins, 214 
Ct. Cl. at 233, 556 F.2d at 1054. Second and more im- 
portant to the instant case, it is clear that if the indirect 
diminution is due to a tax of general applicability and 
the possibility of discriminatory legislative intent has 
been ruled out, the tax is valid under the Compensation 
Clause. O’Malley, 307 U.S. at 282, 59 S. Ct. at 840; 
Atkins, 214 Ct. Cl. at 216, 556 F.2d at 1044-45. That is 
the case here. 

IV 

Plaintiffs claim that if their constitutional argument 
fails, they still may be able to prevail on a contract 
theory. Second Am. Cplt. Count III at 8-9. Defendant 
has moved for summary judgment on the contract 
claim, maintaining that judges serve pursuant to 
appointment, not contract. Def. Br. at 38-41. 

Plaintiffs are unable to cite any convincing authority 
for the proposition that judges are contract employees. 
See, e.g., Pl. Reply at 27-29; Tr. at 31-38. Plaintiffs point 

52a 

chiefly to Embry v. United States, 100 U.S. 680, 25 
L.Ed. 772 (1879), wherein the Supreme Court made the 
following statement: “No officer except the President 
or a judge of a court of the United States can claim a 
contract right to any particular amount of unearned 
compensation.” 100 U.S. at 685. While this isolated 
sentence may be in plaintiffs’ favor, the case it comes 
from is not. The holding of Embry is not that judges 
have a contract right to compensation while in office; in 
fact, the case is not about judges at all, nor even about 
incumbent officeholders. Instead, Embry holds that 
non- judicial federal officers such as postmasters do not 
have a contract right to compensation while suspended 
from office. 100 U.S. at 685. Since judges can only be 
impeached, not suspended, Embry has no relevance 
here. At any rate, the sentence relied on by plaintiffs, 
besides being taken out of context, is wholly unneces- 
sary to the holding of the case and thus a textbook 
example of dicta. 

Plaintiffs claim that even if Embry is distinguishable, 
this case falls squarely under the rule of Johnson v. 
United States, 111 Ct. Cl. 750, 79 F. Supp. 208 (1948). 
Tr. at 66. Again, we disagree. Johnson involved a 
judge who resigned from office. The Court of Claims 
found that such a judge has a contract or property right 
to his retirement pay. 111 Ct. Cl. at 756, 79 F. Supp. at 
211. Without assessing the validity of this Johnson 
holding today, we note that a judge who resigns (as the 
plaintiff did in Johnson) is no longer a federal office- 
holder. Booth v. United States, 291 U.S. 339, 348-50, 54 
S. Ct. 379, 380-81, 78 L.Ed. 836 (1934). At best for 
plaintiffs, Johnson holds that judges who resign from 
office in reliance on future retirement payments may 
have a contract remedy. The Johnson case has no 

53a 

applicability to cases involving compensation for sitting 
Article III judges. 

18 

Plaintiffs have cited no controlling authority indica- 
ting a possible contract claim. Pl. Reply at 27-29; Tr. at 
31-37, 65-66. In our view, no such claim exists. 

V 

Plaintiffs’ contention that the extension of Social 
Security taxes to sitting Article III judges violated the 
Compensation Clause is a pure question of constitu- 
tional law. There are no material facts in dispute. 
Therefore, defendant is entitled to judgment on Counts 
I and II, (Second Am. Cplt. at 7-8), as a matter of law. 
RCFC 56(c). 

Plaintiffs’ contention that they have a contract right 
to compensation is likewise a pure question of law in- 
volving no disputed material facts. Therefore, defen- 
dant is entitled to judgment on the contract claim, 
(Count III, Second Am. Cplt. at 8-9), as a matter of law. 
RCFC 56(c). 

Based on the foregoing, plaintiffs’ motion for sum- 
mary judgment is DENIED, and defendant’s cross- 
motion for summary judgment is GRANTED. Accord- 
ingly, judgment shall be entered in favor of defendant. 

Each party shall bear its own costs. 

18 This conclusion is strengthened by the fact that the Court of 
Claims in Johnson did not once cite the dicta from Embry which, if 
read in isolation, indicates that sitting judges have a contract right 
to compensation. 

54a 

APPENDIX E 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 94-5139 

JUDGE TERRY J. HATTER, JR., MARY MARTIN 
ARCENEAUX, ON BEHALF OF THE LATE JUDGE GEORGE 
ARCENEAUX, JR., JUDGE PETER H. BEER, JUDGE 
DUDLEY H. BOWEN, JR., CHIEF JUDGE JUAN G. 
BURCIAGA, JUDGE A.J. MCNAMARA, JUDGE HARRY 
PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE 
NORMAN C. ROETTER, JR., CHIEF JUDGE THOMAS A. 
WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, 
JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR 
D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE 
HAROLD A. BAKER, AND CHIEF JUDGE MICHAEL M. 
MIHM, PLAINTIFFS-APPELLANTS 

v. 

THE UNITED STATES, DEFENDANT-APPELLEE 

[Filed: Aug. 30, 1995] 

Before: ARCHER, Chief Judges, PLAGER, and 

RADER, Circuit Judges. 

RADER, Circuit Judge. 

Sixteen federal judges challenged the withholding of 
Social Security taxes from their judicial salaries as a 
violation of the Compensation Clause of the United 

55a 

States Constitution, Article III, section 1. Accordingly, 
they sought a tax refund or recovery of their dimin- 
ished compensation. The United States Court of Fed- 
eral Claims granted the Government summary judg- 
ment. Hatter v. United States, 31 Fed. Cl. 436 (1994). 
Because the Compensation Clause forbids diminish- 
ments in the compensation of Article III judges after 
they have taken office, and because the trial court did 
not determine whether a diminution in fact occurred, 
this court reverses and remands. 

BACKGROUND 

Until 1983, judges appointed under Article III of the 
Constitution, like most federal employees, did not parti- 
cipate in the Social Security program. Most legislative 
and executive federal employees acquired a retirement 
annuity by contributing to the Civil Service Retirement 
System. 5 U.S.C. §§ 8331-51 (1994). After meeting age 
and service requirements, however, Article III judges 
receive a retirement annuity equal to their judicial sala- 
ries without making additional payments. 28 U.S.C. 
§ 371(a) (1988 & Supp. V 1993). 

In the early 1980s, Congress ordered withholding of 
certain components of the Social Security tax from the 
salaries of most federal employees, including Article III 
judges. Withholding of the Hospital Insurance portion 
began on January 1, 1983. Tax Equity and Fiscal Re- 
sponsibility Act of 1982, Pub. L. No. 97-248, § 278(a), 96 
Stat. 324, 559, 562 (codified as amended at 26 U.S.C. 
§ 3121(u) (1988)). Withholding of the Old Age and Sur- 
vivors Disability Insurance portion began on January 1, 
1984. Social Security Amendments of 1983, Pub. L. No. 
98-21, § 101(a)(1),(b)(1) & (d), 97 Stat. 65, 67-70 (codified 
as amended at 26 U.S.C. § 3121(b)(5)(E) (1988 & Supp. 

56a 

V 1993) and 42 U.S.C. § 410(a)(5)(E) (1988 & Supp. V 
1993)). 

Sixteen Article III judges—all appointed before 
January 1, 1983—sued in the Court of Federal Claims 
for a refund of these Social Security taxes or recovery 
of their diminished compensation. The judges claimed 
that the taxation diminished their judicial compensation 
in violation of the Compensation Clause of the Constitu- 
tion. The trial court granted the Government summary 
judgment that the Compensation Clause does not pro- 
hibit application of the tax to sitting Article III judges. 
Hatter, 31 Fed. Cl. at 445-47. The claimants appealed. 

DISCUSSION 

This court reviews a grant of summary judgment by 
the Court of Federal Claims de novo. Cohen v. United 
States, 995 F.2d 205, 207 (Fed. Cir. 1993). 

I. 

The Constitution’s Compensation Clause states: 

The Judges, both of the supreme and inferior 
Courts, shall hold their Offices during good Be- 
haviour, and 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 (emphasis added). This con- 
stitutional language protects one of the most remark- 
able innovations of the 1787 document: a judicial branch 
sufficiently independent to enforce constitutional limi- 
tations on all branches of Government. The Supreme 
Court acknowledged: 

57a 

The Compensation Clause has its roots in the 
longstanding Anglo-American tradition of an in- 
dependent Judiciary. A Judiciary free from con- 
trol by the Executive and Legislature is essential 
if there is a right to have claims decided by 
judges who are free from potential domination by 
other branches of government. 

United States v. Will, 449 U.S. 200, 217-18, 101 S. Ct. 
471, 482, 66 L.Ed.2d 392 (1980). Alexander Hamilton, 
writing in The Federalist No. 79, explained the Fram- 
ers’ reasoning for this means of protecting the separa- 
tion of powers: “In the general course of human nature, 
a power over a man’s subsistence amounts to a power 
over his will.” The Federalist No. 79, at 472 (Clinton 
Rossiter ed., 1961) (emphasis omitted). 

To provide a judiciary with sufficient independence 
to protect constitutional rights against any incursion, 
the Framers adopted an unrestricted protection for ju- 
dicial compensation. Judicial independence, Alexander 
Hamilton prophetically noted, would prove “the citadel 
of the public justice and the public security.” The 
Federalist No. 78, at 466 (Clinton Rossiter ed., 1961). 
Thus, as the Supreme Court concluded: 

[T]he prohibition against diminution was not to 
benefit the judges, but, like the clause in respect of 
tenure, to attract good and competent men to the 
bench and to promote that independence of action 
and judgment which is essential to the maintenance 
of the guaranties, limitations, and pervading princi- 
ples of the Constitution and to the administration of 
justice without respect to persons and with equal 
concern for the poor and the rich. 

58a 

Evans v. Gore, 253 U.S. 245, 253, 40 S. Ct. 550, 553, 64 
L.Ed. 887 (1920). For these reasons, the Constitution’s 
language broadly prohibits any diminution in judicial 
compensation during a judge’s continuance in office. 

II. 

This case raises the question whether imposition of 
new taxes on judges after they have taken office uncon- 
stitutionally diminishes their compensation. The Su- 
preme Court addressed this very issue in Evans. In 
Evans, the Court held that the Compensation Clause 
prohibited imposition of the newly enacted income tax 
on sitting judges. Examining the broad constitutional 
protection for judicial independence, the Court wrote: 

The prohibition is general, contains no excepting 
words and appears to be directed against all diminu- 
tion, whether for one purpose or another; and the 
reasons for its adoption . . . make with impelling 
force for the conclusion that the fathers of the Con- 
stitution intended to prohibit diminution by taxation 
as well as otherwise,—that they regarded the inde- 
pendence of the judges as of far greater importance 
than any revenue that could come from taxing their 
salaries. 

Id. at 255, 40 S. Ct. at 553; see also id. at 249-52, 40 S. 
Ct. at 553. 

When the judges in Evans first assumed office, 
Congress had not charged them with the duty of paying 
income taxes. Thus, the imposition of these taxes on 
their salaries acted as a reduction in their salary. As 
the Court observed: 

59a 

Here the Constitution expressly forbids diminution 
of the judge’s compensation, meaning, as we have 
shown, diminution by taxation or otherwise . . . . 

[T]he compensation suffers a diminution to the 
extent that it is taxed. 

Id. at 264. The Court therefore invalidated application 
of the income tax to judges who had taken office prior 
to the tax. 

Evans controls this case. The claimants here are 
Article III judges who took office prior to imposition of 
the Social Security taxes in question. Federal law did 
not charge the claimants with the duty of paying Social 
Security taxes when they first assumed office. Sub- 
sequent imposition of the taxes reduced the claimants’ 
salaries, as in Evans. 

The subsequent Supreme Court case of O’Malley v. 
Woodrough, 307 U.S. 277, 59 S. Ct. 838, 83 L.Ed. 1289 
(1939), does not affect this analysis. In that case, the 
Court held that newly appointed Article III judges 
must continue to pay income taxes just as they had 
prior to appointment: 

To subject them to a general tax is merely to recog- 
nize that judges are also citizens, and that their 
particular function in government does not generate 
an immunity from sharing with their fellow citizens 
the material burden of the government whose Con- 
stitution and laws they are charged with administer- 
ing. 

Id. at 282, 59 S. Ct. at 840. 

60a 

Because the claimants in O’Malley took office after 
Congress had made income taxes applicable to judges’ 
salaries, those judicial claimants suffered no diminish- 
ment in compensation after taking office. The tax was a 
pre-existing obligation factored into the new judges’ 
compensation. On this basis O’Malley is distinguishable 
from Evans and the facts of this case. In Evans and 
this case, the claimants were already judges when the 
Social Security taxes took effect. The taxes therefore 
affected the claimants’ established compensation. Thus, 
Congress’s imposition of the Social Security tax on the 
claimants triggered scrutiny under the Compensation 
Clause. 

The Supreme Court has stated that O’Malley “under- 
mined the reasoning of Evans.” United States v. Will, 
449 U.S. 200, 227 n.31, 101 S. Ct. 471, 487 n.31, 66 
L.Ed.2d 392 (1980). This court’s predecessor has made 
the same point. See Atkins v. United States, 556 F.2d 
1028, 1044, 214 Ct. Cl. 186 (1977) (en banc), cert. denied, 
434 U.S. 1009, 98 S. Ct. 718, 54 L.Ed.2d 751 (1978). 
Neither of these pronouncements, however, are suffi- 
cient to overrule Evans. Had changes in judicial do- 
ctrine in fact “removed or weakened the conceptual 
underpinnings” of Evans, the Court itself would have 
overruled the case. Patterson v. McLean Credit Union, 
491 U.S. 164, 173, 109 S. Ct. 2363, 2370-71, 105 L.Ed.2d 
132 (1989). It has not done so. Further, as the Supreme 
Court recently stated: 

If a precedent of this Court has direct application 
in a case, yet appears to rest on reasons rejected in 
some other line of decisions, the Court of Appeals 
should follow the case which directly controls, 

61a 

leaving to this Court the prerogative of overruling 
its own decisions. 

Rodriguez de Quijas v. Shearson/American Express, 
Inc., 490 U.S. 477, 484, 109 S. Ct. 1917, 1921-22, 104 
L.Ed.2d 526 (1989). Again, the Supreme Court has 
never overruled Evans. Evans governs this case more 
directly than O’Malley. 

The trial court erred by upholding the imposition of 
Social Security taxes on the claimants on the grounds 
that such taxation was both “generally applicable” and 
“non-discriminatory.” See O’Malley, 307 U.S. at 282, 59 
S. Ct. at 840; see also Atkins, 556 F.2d at 1045. The 
trial court holding thus interprets the Constitution’s 
Compensation Clause to forbid only discriminatory 
taxes which single out the federal judiciary. In other 
words, the trial court in effect read the term “compen- 
sation” as synonymous with “salary,” and “diminished” 
as synonymous with “intentionally reduced.” This read- 
ing limited the protections for judicial independence to 
discriminatory attacks on the judiciary in the form of 
direct reductions in salary. 

The words of the Constitution are not so limited, nor 
are its protections for judicial independence. “Compen- 
sation” embraces all forms of remuneration, not merely 
salary. “Diminished” embraces all means of decreasing, 
regardless of the intent or target of the reduction. 
Thus, the Constitution protects judicial compensation 
against all forms of diminishment. 

The Constitution’s enactment history supports this 
reading of the Compensation Clause. On June 13, 1787, 
the Constitutional Convention’s Committee of the 
Whole drafted a resolution prohibiting Congress from 

62a 

either increasing or decreasing the compensation of 
judges. Clinton Rossiter, 1787: The Grand Convention 
365 (1966). Gouveneur Morris opposed the prohibition 
on increases, as he believed that Congress should have 
the power to augment judicial compensation “as circum- 
stances might require” to avoid “any improper depen- 
dence in the judges.” 2 Max Farrand, Records of the 
Federal Convention of 1787 at 44 (1911). Benjamin 
Franklin agreed and specified two circumstances— 
increases in workload and inflation of the currency— 
which would justify an increase. Id. at 44-45. 

James Madison favored retaining the ban on in- 
creases in compensation. He feared that judges might 
unduly defer to Congress during legislative considera- 
tion of pay raises. Id. at 45. In other words, the 
Convention was unanimous on the overriding concern 
of protecting the judicial branch against meddling with 
its compensation. Further, the Convention voiced 
grave concerns about potential compromises in judicial 
independence if judges faced the prospect of seeking 
legislative redress of compensation concerns. In sum, 
the Convention perceived only mischief in the prospect 
of judges approaching the legislative branch to seek 
proper compensation. Ultimately, on a vote of 6-2, with 
one state absent, the Convention permitted increases 
and forbade all decreases in judicial compensation. Id. 
at 45. 

Alexander Hamilton later explained this result: 

It will readily be understood that the fluctuations 
in the value of money and in the state of society 
rendered a fixed rate of compensation in the Con- 
stitution inadmissible. What might be extrava- 
gant today might in half a century become penuri- 

63a 

ous and inadequate. It was therefore necessary to 
leave it to the discretion of the legislature to vary 
its provisions 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 [judge] for the worse. 

The Federalist No. 79, at 473 (Alexander Hamilton) 
(Clinton Rossiter ed., 1961). According to Hamilton, 
the Compensation Clause’s term “diminished” forbids 
any action which changes the “condition of the individ- 
ual [judge] for the worse.” Id. 

James Madison concurred in Hamilton’s analysis and 
extended the coverage of the term “compensation” to 
all “emoluments” of the judicial office: 

[M]embers of each department should be as little 
dependent as possible on those of the others for 
the emoluments annexed to their offices. Were 
the executive magistrate, or the judges, not inde- 
pendent of the legislature in this particular, their 
independence in every other would be nominal. 

The Federalist No. 51, at 321 (James Madison) (Clinton 
Rossiter ed., 1961). In sum, the Convention considered 
judicial independence a core value of the Constitution 
and adopted a broad protection for it. See Will, 449 
U.S. at 217-21, 101 S. Ct. at 481-84; Evans, 253 U.S. at 
252-55, 40 S. Ct. at 552-54. 

The text and history of the Compensation Clause do 
not support the test applied by the trial court. The 
Supreme Court itself suggested as much in Will where, 
in considering Congress’s rescission of judicial pay 
raises, the Court stated: “the Constitution makes no 

64a 

exceptions for ‘nondiscriminatory’ reductions.” Will, 
449 U.S. at 226, 101 S. Ct. at 486. 

The Government’s attempt to limit this statement in 
Will to ‘direct diminutions’ is unpersuasive. O’Malley, 
distinguished by the Will Court as applying a nondis- 
crimination test, held that nondiscriminatory taxation 
of a judge who took office after the tax went into effect 
does not violate the Compensation Clause. In such 
circumstances, the taxation formed part of that judge’s 
compensation scheme from the outset of his tenure. See 
O’Malley, 307 U.S. at 282, 59 S. Ct. at 838. 

Nor does Atkins provide support for application of a 
nondiscrimination test to the taxes imposed in this case. 
In Atkins, the United States Court of Claims found that 
Congress’ failure to raise judicial salaries during a 
period of high inflation was not an actionable diminu- 
tion under the Compensation Clause, because the plain- 
tiff judges could not show that Congress intended an 
attack on the judiciary’s independence. 

However appropriate it may be to consider whether 
inflation diminishes judicial compensation in a discrimi- 
natory fashion, as in Atkins, or applies taxes of general 
applicability to judges taking office after such taxes are 
effective, as in O’Malley, neither the Compensation 
Clause nor Supreme Court precedent supports applying 
a non-discrimination test to the imposition of a new tax, 
even though generally applicable, on sitting judges. As 
indicated above, the controlling Supreme Court prece- 
dent, Evans, instructs otherwise. Evans, 253 U.S. at 
254-55, 40 S. Ct. at 553-54. Under Evans, only judges 
who took office prior to the imposition of the new Social 
Security taxes suffered a diminution. 

65a 

III. 

The trial court did not determine whether the Social 
Security taxes in this case in fact diminished the claim- 
ants’ compensation. Although noting that inclusion in 
Social Security might not result in an overall reduction 
of compensation, Hatter, 31 Fed. Cl. at 441 n.9, the trial 
court assumed a reduction, noting the decrease at least 
in take-home pay, for the purpose of resolving the 
summary judgment motions before it and proceeding to 
the constitutional issue. 

As noted, the term “compensation” extends beyond 
mere salary, and includes all forms of remuneration at- 
tached to the judicial office. Therefore, the claimants’ 
new Social Security retirement benefits, if any, are part 
of their compensation. These future benefits, however, 
are not vested in any manner. They thus do not give 
the claimants a certain entitlement to any offsetting 
sum. In addition, innumerable individual scenarios 
could eliminate a claimant’s potential Social Security 
benefit, or greatly reduce the amount of the potential 
benefit. Because of all the variables that would have to 
be taken into account in arriving at even a rough esti- 
mate of a current discounted value for Social Security 
benefits that might be payable in the future, it is im- 
possible accurately to weigh these benefits against the 
taxes withheld from the claimants. 

It is certain, however, that the Social Security taxes 
diminished the claimants’ salaries by specific amounts. 
The reduction was concrete, while the potential future 
benefit is entirely speculative. A speculative, incalcu- 
lable future benefit cannot offset a concrete, present 

66a 

reduction.* The Social Security taxes therefore dimin- 
ished the claimants’ compensation in violation of the 
Compensation Clause. 

CONCLUSION 

Social Security taxes diminish the compensation of 
Article III judges who took office prior to enactment of 
the taxes. This court therefore reverses and remands 
the case for tax refunds or recoveries for the sums im- 
properly withheld from the claimants’ salaries. 

COSTS 

Each party shall bear its own costs. 

REVERSED and REMANDED. 

* If the future benefits were calculable and marketable, how- 
ever, an unconstitutional diminution in compensation would occur 
when a present reduction exceeded the present value of the future 
benefits minus reasonable transaction costs in marketing them. 

67a 

APPENDIX F 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 94-5139 

JUDGE TERRY J. HATTER, JR., MARY MARTIN 
ARCENEAUX, ON BEHALF OF THE LATE JUDGE GEORGE 
ARCENEAUX, JR., JUDGE PETER H. BEER, JUDGE 
DUDLEY H. BOWEN, JR., CHIEF JUDGE JUAN G. 
BURCIAGA, JUDGE A.J. MCNAMARA, JUDGE HARRY 
PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE 
NORMAN C. ROETTGER, JR., CHIEF JUDGE THOMAS A. 
WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, 
JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR 
D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE 
HAROLD A. BAKER, AND CHIEF JUDGE MICHAEL M. 
MIHM, PLAINTIFFS-APPELLANTS 

v. 

THE UNITED STATES, DEFENDANT-APPELLEE 

[Filed: Dec. 26, 1995] 

ORDER 

A combined petition for rehearing and suggestion for 
rehearing in banc having been filed by the APPELLEE, 

and a response thereto having been invited by the court 
and filed by the APPELLANT, and the petition for 
rehearing having been referred to the panel that heard 

68a 

the appeal, and thereafter the suggestion for rehearing 
in banc and response having been referred to the circuit 
judges who are in regular active service, 

UPON CONSIDERATION THEREOF, it is 

ORDERED that the petition for rehearing be, and the 
same hereby is, DENIED and it is further 

ORDERED that the suggestion for rehearing in banc 
be, and the same hereby is DECLINED. 

The mandate of the court will issue on January 2, 
1996. 

FOR THE COURT, 
FRANCIS X. GINDHART, CLERK 

Dated: December 26, 1995 

/s/ By 
DIANE M. FRYE 

DIANE M. FRYE 
Chief Deputy Clerk 

69a 

APPENDIX G 

SUPREME COURT OF THE UNITED STATES 

October 7, 1996 

Affirmed for Absence of Quorum 

No. 95-1733. UNITED STATES v. HATTER, JUDGE, 
UNITED STATES DISTRICT COURT FOR THE CEN- 
TRAL DISTRICT OF CALIFORNIA, ET AL., C.A. Fed. 
Cir. Because the Court lacks a quorum, 28 U.S.C. § 1, 
and since a majority of the qualified Justices are of 
the opinion that the case cannot be heard and deter- 
mined at the next Term of the Court, the judgment 
is affirmed under 28 U.S.C. § 2109, which provides 
that under these circumstances the Court shall enter 
its order affirming the judgment of the court from 
which the case was brought for review with the same 
effect as upon affirmance by an equally divided Court. 

JUSTICE STEVENS, JUSTICE O’CONNOR, JUSTICE 
GINSBURG, and JUSTICE BREYER took no part in the 
consideration or decision of this petition. Reported 
below: 64 F.3d 647. 

70a 

APPENDIX H 

UNITED STATES COURT OF FEDERAL CLAIMS 

No. 705-89 C 

JUDGE TERRY J. HATTER, JR., MARY MARTIN 
ARCENEAUX, ON BEHALF OF THE LATE JUDGE GEORGE 
ARCENEAUX, JR., JUDGE PETER H. BEER, JUDGE 
DUDLEY H. BOWEN, JR., DOLORES LEE BURCIAGA, 
EXECUTIX OF THE ESTATE OF CHIEF JUDGE JUAN G. 
BURCIAGA, DECEASED, JUDGE A.J. MCNAMARA, JUDGE 
HARRY PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE 
RAUL A. RAMIREZ, JUDGE NORMAN C. ROETTGER, JR., 
CHIEF JUDGE THOMAS A. WISEMAN, JR., CHIEF JUDGE 
TERENCE T. EVANS, JUDGE HENRY A. MENTZ, JR., 
CHIEF JUDGE WILBUR D. OWENS, JR., JUDGE HENRY 
R. WILHOIT, JR., JUDGE HAROLD A. BAKER AND CHIEF 
JUDGE MICHAEL M. MIHM, PLAINTIFFS 

v. 

THE UNITED STATES OF AMERICA, DEFENDANT 

[June 6, 1997] 

OPINION AND ORDER 

TURNER, Judge. 

This opinion addresses all damages issues related to 
claims by 16 federal judges that their compensation was 

71a 

unlawfully diminished by imposition of Social Security 
taxes. There are no material facts in dispute.1 

For reasons stated below, we conclude that eight of 
the plaintiffs are entitled to refunds of a portion of 
Social Security taxes withheld from salary in January 
1984, together with compound interest. We further 
conclude, however, that any additional recovery is 
either barred by the applicable statute of limitations or 
offset by salary increases and that, consequently, the 
bulk of plaintiffs’ claims for damages must be denied. 

I 

Plaintiffs are 16 federal district and circuit judges2 
who took office prior to January 1, 1983. On that date, 
all federal judges for the first time became subject to 
the Hospital Insurance (Medicare) (hereafter HI) por- 
tion of the Social Security tax.3 Tax Equity and Fiscal 
Responsibility Act, Pub. L. No. 97-248, § 278(a), 96 Stat. 
324, 559 (1982) (codified as amended at 26 U.S.C. 
(I.R.C.) § 3121(u) (1988)). One year later, judges 

1 Procedurally, the case stands on three dispositive motions: 
plaintiffs’ motion filed November 12, 1996 for summary judgment 
and defendant’s pair of motions filed December 18, 1996, one a 
cross-motion for summary judgment and the other a motion to 
dismiss-in-part on limitations grounds. Oral argument was con- 
ducted on March 7, 1997. The order in Part IX of this opinion 
resolves all three dispositive motions. 

2 In two instances, a current plaintiff is the legal successor in 
interest to an original plaintiff. Further, Judge Raul A. Ramirez 
resigned effective as of January 1, 1990. 

3 The Hospital Insurance tax (HI) funds Medicare Part A and 
is imposed upon employees by 26 U.S.C. § 3101(b). During 1983 
the HI tax was 1.3 percent of the first $35,700 of compensation. 
Def. Br. (12/18/96), p. 7. 

72a 

became subject to the Old Age Survivors and Disability 
Insurance (hereafter OASDI) portion of the Social 
Security tax, and since January 1, 1984, all federal 
judges have been fully subject to Social Security taxes.4 
Social Security Amendments of 1983, Pub. L. No. 98-21, 
§ 101(a)(1), (b)(1) and (d), 97 Stat. 65, 68, 69 (codified as 
amended at 26 U.S.C. (I.R.C.) § 3121(b)(5)(E) (1988) and 
42 U.S.C. § 410(a)(5)(E) (1988)). Social Security taxes 
have been duly withheld from plaintiffs’ monthly com- 
pensation since the effective dates of these acts. 

Since the original plaintiffs filed their complaint on 
December 29, 1989, there have been four prior pub- 
lished opinions regarding this case. Chronologically, 
they are Hatter v. United States, 21 Cl. Ct. 786 (1990) 
(Hatter I), Hatter v. United States, 953 F.2d 626 (Fed. 
Cir.1992) (Hatter II), Hatter v. United States, 31 Fed. 
Cl. 436 (1994) (Hatter III), and Hatter v. United States, 
64 F.3d 647 (Fed. Cir.1995) (Hatter IV), aff ’d by a 
divided court, —— U.S. ——, 117 S. Ct. 39, 136 L.Ed.2d 
3 (1996). 

In Hatter I, this court dismissed plaintiffs’ claim for 
lack of jurisdiction, concluding that the plaintiffs were 
seeking a tax refund and had failed to observe statutory 
prerequisites to suit. Hatter I, 21 Cl. Ct. at 789. The 
Federal Circuit reversed, holding that plaintiffs were 
not seeking tax refunds, but rather were asserting 
damage claims arising directly under the Constitution 
which mandates the payment of money. Hatter II, 953 
F.2d at 630. The case was remanded to this court for a 
determination on the merits. 

4 Pursuant to 26 U.S.C. §§ 3101 and 3121(a) and section 230 of 
the Social Security Act (42 U.S.C. § 430), the 1984 OASDI tax was 

5.4 percent of the first $37,800 of compensation. 

73a 

In Hatter III, 31 Fed. Cl. at 447, this court dismissed 
plaintiffs’ claims on the merits. We held that although 
Social Security taxes caused a reduction in the judges’ 
take-home pay, imposition of the taxes did not violate 
the Compensation Clause of the Constitution, since the 
Social Security taxes imposed were nondiscriminatory 
and generally applicable to the public. 

The Federal Circuit reversed, holding that the im- 
position of Social Security taxes on sitting judges 
diminished their compensation. Hatter IV, 64 F.3d at 
652-53. The Federal Circuit remanded the case for 
award of “tax refunds or recoveries for the sums 
improperly withheld from the claimants’ salaries.” Id. 
at 653. 

II 

In this damages proceeding, plaintiffs seek recovery 
of the total amount of HI and OASDI taxes withheld 
from their salaries from 1983 to the present, plus inter- 
est compounded annually. In total, plaintiffs request an 
award in the amount of $1,059,675.59 (as of January 15, 
1997). 

Plaintiffs take the position that the court’s task is 
limited to calculating the precise amounts of HI and 
OASDI taxes withheld from their salaries and making 
an award of those amounts with compound interest. 
Plaintiffs say with respect to principal that the remand 
directions of the Federal Circuit in Hatter IV are not 
subject to any other reasonable interpretation. 

Defendant argues that all plaintiffs’ claims are time- 
barred to the extent they seek to recover for any 
amounts withheld prior to January 1, 1984. Similarly, 

74a 

defendant argues that claims by those judges added to 
the case in 1992 are time-barred at least for years 1984, 
1985, and part of 1986 because those claims had accrued 
more than six years before these judges or new claims 
were added to the current action. 

Defendant further argues that salary increases 
beginning as of January 1, 1984 more than offset the 
amount of any Social Security tax deductions from the 
plaintiffs’ salaries for services during and after 1984. 
Finally, defendant asserts that the plaintiffs are not 
entitled to an award of interest on any recovery of 
principal. 

III 

The history of claim presentation and appearance of 
plaintiffs in this litigation provides a useful beginning 
for resolution of damages issues. 

A 

The original complaint was filed on December 29, 
1989 by ten judges. The complaint was specifically 
limited to OASDI taxes withheld on and after January 
1, 1984. The complaint did not object to or otherwise 
address imposition of HI taxes which had become 
effective on January 1, 1983 and did not request any 
damages for taxes withheld during 1983. 

After the remand instructing this court to resolve the 
merits of the case, Hatter II, 953 F.2d at 630, a First 
Amended Complaint was filed on June 25, 1992. This 
pleading, submitted more than nine years after imposi- 

75a 

tion of HI taxes, added four new plaintiffs5 and set forth 
an alternative claim for tax refunds but, like the 
original complaint, expressed no objection to imposition 
of HI taxes and made no request for damages suffered 
in 1983. 

A Second Amended Complaint was presented on 
December 11, 1992 (filed on January 11, 1993). This 
pleading added two new plaintiffs (bringing the total to 
the current 16) and, for the first time, asserted a right 
to damages resulting from imposition of HI taxes on 
January 1, 1983.6 

As is clear from the foregoing, all 16 plaintiffs first 
presented a claim for recovery of HI taxes more than 
nine (almost ten) years after the tax was imposed. 
Although the original complaint presented OASDI 
claims, only eight of the current plaintiffs were in the 
case on the first remand in 1992. In June 1992, two 
original plaintiffs reasserted and four new plaintiffs 
asserted for the first time claims related to OASDI 
taxes; in December 1992, two additional new plaintiffs 

5 After the first judgment by this court dismissing the claims 
for failure of jurisdictional prerequisites, see Hatter I, 21 Cl. Ct. at 
789, only eight of the original ten plaintiffs appealed from the 
judgment, and consequently only eight plaintiffs were in the case 
upon the first remand. The First Amended Complaint filed on 
June 25, 1992 actually added six plaintiffs, but two of them (Judges 
Bowen and Roettger) were original plaintiffs who had not appealed 
from the first judgment. 

6 In the original complaint, ¶ 16 at p. 5, and in the First 
Amended Complaint, ¶ 21 at pp. 5-6, plaintiffs in those pleadings 
asserted that the imposition of OASDI taxes on January 1, 1984 
represented the first time that Social Security deductions were 
withheld from judges’ compensation. 

76a 

asserted for the first time claims related to OASDI 
taxes. 

(For ease of reference, we hereafter designate the 
eight original plaintiffs who prosecuted the first appeal 
and were part of the case upon the first remand as the 
“original” plaintiffs and the remaining eight plaintiffs 
who first joined or rejoined the suit after the first 
remand as the “later-filing” plaintiffs.) 

B 

In the remainder of this opinion, we first address the 
OASDI claims of the “original” plaintiffs. 

Thereafter, we address (1) the OASDI claims of the 
eight “later-filing” plaintiffs and (2) the claims of all 
plaintiffs based on imposition of HI taxes. Resolution of 
these claims involves application of statutes of limita- 
tions together with related issues including the 
“relation-back” doctrine and the “continuing claim” 
doctrine. 

Finally, we address the issue of interest on damages 
awards for Compensation Clause violations. 

IV 

In Hatter IV, 64 F.3d at 653, the Federal Circuit 
remanded “for tax refunds or recoveries for the sums 
improperly withheld from the claimants’ salaries.” 
Remand was necessary because “the trial court did not 
determine whether the Social Security taxes in this 
case in fact diminished the claimants’ compensation.” 
Id. at 652 (emphasis added). 

77a 

A 

At all material times, the salaries of federal judges 
have been paid in monthly installments as of the first 
day of each calendar month for services during the 
preceding calendar month. Hence, the salary payments 
to plaintiffs on or about January 1, 1984 were for ser- 
vices during December 1983, and OASDI taxes with- 
held from such salary installment, although assessed 
with respect to and extracted from salary paid in 1984, 
had the effect of reducing compensation earned in 
December 1983. 

Defendant concedes, in light of Hatter IV, that eight 
of the plaintiffs7 are entitled to damages for the amount 
of OASDI taxes withheld from salary payments made 
in January 1984 for services in December 1983. That 
amount is $328.95 for seven of the original plaintiffs 
who were district judges on January 1, 1984, and 
$347.85 for the original plaintiff who was a circuit judge 
on January 1, 1984. Def. Br. (2/25/97), p. 4. 

Because no salary increase which first became effec- 
tive on or after January 1, 1984 was retroactive to De- 
cember 1983, there has been no possible cure of diminu- 
tion which occurred with respect to income accrued for 
December 1983. Therefore, we agree with defendant 
that the eight plaintiffs indicated are entitled to recover 
the amount equal to OASDI taxes withheld from salary 
payments in January 1984. 

7 District Judges Hatter, Arceneaux, Beer, Burciaga, 
McNamara, Ramirez, and Wiseman (or their successors in interest) 
and Circuit Judge Pregerson. 

78a 

We address in Part VIII below plaintiffs’ claims of 
entitlement to interest on damages. 

B 

Defendant contends that pay increases in 1984 and 
subsequent years have offset the diminution of plain- 
tiffs’ salaries caused by all OASDI taxes (in fact, all So- 
cial Security taxes) withheld from salary payments af- 
ter January 1, 1984. Even though the Federal Circuit 
held in Hatter IV, 64 F.3d at 652, that “the Social Secu- 
rity taxes diminished the claimants’ salaries by specific 
amounts,” it did not have occasion to consider whether 
a simultaneous or subsequent retroactive increase could 
offset or cure the diminution in Article III compensa- 
tion8 resulting from the Social Security tax deductions. 
The issue is one of first impression. 

In resolving the issue, we start with a straight- 
forward application of arithmetic and logic to the ques- 
tion whether a simultaneous or subsequent pay raise 
can cure prospectively any diminution resulting from 
the imposition of a new tax. We then apply two con- 
cepts gleaned from legislation and case law, to wit, (1) 
that taxation of judges’ compensation does not, per se, 
constitute an unlawful diminution, rather it is imposi- 
tion of a new tax on sitting judges which results in a 
prohibited diminution, and (2) that Congress has no 

8 The Compensation Clause in the United States Constitution 
provides: “The Judges, both of the supreme and inferior Courts, 
shall hold their offices during good Behaviour, and 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. 

79a 

enforceable duty to raise the salaries of judges, rather 
any increase is a matter of legislative discretion. 

1 

At the outset, one would suppose that there could be 
no dispute that if, simultaneously with the imposition of 
a new tax, Congress granted an increase in salary 
which equaled or exceeded the tax, no diminution in the 
level of compensation just prior to imposition of the tax 
would have occurred. The mathematical result is the 
same as if the judge received either no salary increase 
or an increase in the amount of any excess of the raise 
over the tax. An increase subsequent to imposition of a 
new tax would have a similar effect prospectively. 

2 

Case law applying the Compensation Clause, U.S. 
Const. art. III, § 1, makes plain that Article III does not 
prohibit taxation of judges per se but only imposition of 
new taxes on sitting judges, Hatter IV, 64 F.3d at 650. 

In O’Malley v. Woodrough, 307 U.S. 277, 59 S. Ct. 
838, 83 L.Ed. 1289 (1939), the Supreme Court held that 
a federal circuit judge who was appointed after federal 
income taxes had become effective may be taxed by 
Congress, and that such taxation did not violate the 
Compensation Clause. O’Malley, 307 U.S. at 282, 59 S. 
Ct. at 840. 

The Federal Circuit recognized, Hatter IV, 64 F.3d at 
650, that all taxes on federal judges are not unconsti- 
tutional: 

Because the claimants in O’Malley took office 
after Congress had made income taxes applicable to 

80a 

judges’ salaries, those judicial claimants suffered no 
diminishment in compensation after taking office. 
The tax was a pre-existing obligation factored into 
the new judges’ compensation. 

Plaintiffs concede that a general increase in federal 
income tax rates would not constitute a diminution for 
any judges currently in office. 

3 

We next explore the concept that Congress has no 
enforceable obligation to raise the salaries of judges 
and, consequently, whether judges receive any increase 
in compensation is a matter within the discretion of 
Congress. 

In the Constitutional Convention of 1787 which 
drafted Article III, proposals were made and serious 
consideration given to prohibiting Congress from mak- 
ing any increase to the compensation of a judge once 
appointed. For discussions of various positions con- 
sidered at the convention, see United States v. Will, 449 
U.S. 200, 219-20, 101 S. Ct. 471, 482-83, 66 L.Ed.2d 392 
(1980); Atkins v. United States, 214 Ct. Cl. 186, 217-221, 
556 F.2d 1028 (1977), and Hatter IV, 64 F.3d at 651. 
Indeed, such a prohibition on increases as well as 
decreases in compensation was adopted with respect to 
the President. U.S. Const. art. II, § 1, cl. 6 (“The Presi- 
dent shall . . . receive . . . a Compensation, which 
shall neither be increased nor diminished during the 
Period for which he shall have been elected. . . .”). 

It is reasonable to suppose that the Founders—who 
seriously debated whether any increase in the salaries 
of sitting judges should be permitted and agreed that 

81a 

there should be none for a President between elec- 
tions—assumed that Congress would be under no 
enforceable duty or obligation to raise judicial salaries. 
Rather, Congress was left with discretion to increase 
salaries when, in its wisdom, it chose to do so. The 
same Convention drafted and proposed simultaneously 
the Appropriations Clause, U.S. Const. art. I, § 9, cl.7 
(“No money shall be drawn from the Treasury, but in 
Consequence of Appropriations made by Law. . . .”). 

The Supreme Court held in Will, 449 U.S. at 226-29, 
101 S. Ct. at 486-88, that Congress may rescind a 
judicial salary increase provided in a statute so long as 
it does so before the increase becomes effective. “The 
Constitution delegated to Congress the discretion to fix 
salaries and of necessity placed faith in the integrity 
and sound judgment of the elected representatives to 
enact increases when changing conditions demand.” Id. 
at 227, 101 S. Ct. at 487. 

Earlier, the Court of Claims in Atkins v. United 
States, 214 Ct. Cl. 186, 221-28, 556 F.2d 1028 (1977), cert. 
denied., 434 U.S. 1009, 98 S.Ct. 718, 54 L.Ed.2d 751 
(1978), rejecting assertions by judges that their com- 
pensation had been unconstitutionally diminished by 
economic inflation, recognized that Congress has discre- 
tion to increase judicial salaries or to refrain from doing 
so if the absence of increases is not the result of an 
intent to discriminate against the judiciary. No such 
discriminatory intent is alleged in the instant case. 

Congress has provided concerning judicial compensa- 
tion, § 140 of Public Law No. 97-92, 95 Stat. 1183, 1200, 
December 15, 1981, that federal judges are not entitled 
to any salary increases “except as may be specifically 
authorized by Act of Congress.” 

82a 

4 

In sum, applying the concepts under discussion, we 
conclude that when unlawful diminution of judicial 
compensation results from imposition of a new tax, as 
found by the Federal Circuit in Hatter IV, 64 F.3d at 
653, that diminution is subject to setoff or cure by 
simultaneous or subsequent salary increases which 
Congress may, in its discretion, enact, it being under no 
enforceable obligation to grant any increase. Thus, if 
Congress mandates that federal judges pay a certain 
amount in a new tax but, at the same time, gives those 
judges a salary increase in an amount equal to or 
greater than the amount of the tax, then any diminution 
within the meaning of the Compensation Clause is 
immediately cured. This is what occurred with respect 
to plaintiffs. 

The order of compensation events is obviously quite 
important. If Congress increased judicial salaries and 
thereafter took action (either a direct reduction in 
nominal salary or imposition of a new tax) resulting in a 
diminution of compensation, the earlier increase would 
have become part of constitutionally protected compen- 
sation adversely affected by the diminution. This is the 
essence of Will, 449 U.S. at 200, 101 S. Ct. at 473-74. On 
the other hand, if an increase in nominal salary occurred 
simultaneously with or subsequent to such a diminu- 
tion, the simultaneous or subsequent increase accom- 
plishes a cure to the extent of such increase. As illus- 
trated below, this is the situation in this case with 
respect to OASDI taxes withheld for 1984 and sub- 
sequent years. 

83a 

C 

The first Hatter panel in the Federal Circuit implic- 
itly recognized that Congress may restore any diminu- 
tion that may have occurred. The court reasoned that 
“only a timely restoration of lost compensation would 
prevent violation of the Constitution’s prohibition 
against diminution of judicial salaries.” Hatter II, 953 
F.2d at 628. 

Similarly, in Will, the judge claimants apparently 
recognized a prospective cure after an unlawful salary 
reduction was restored. Will, 449 U.S. at 206, n.3, 101 
S. Ct. at 476, n.3. There, in the first of four years at 
issue, Congress had made a retroactive direct reduction 
to nominal annual judicial salaries already in effect as of 
October 1, 1976, but then, effective on March 1, 1977, 
increased the salaries to a level which exceeded the 
October 1, 1976 level. Id. at 206, 101 S. Ct. at 476. The 
parties and the Court apparently assumed that the 
earlier unlawful reduction was cured prospectively as of 
the March 1, 1977 restoration. 

D 

Plaintiffs’ position on damages is exactly the same as 
it would be if there had been no increase in nominal 
salary since December 31, 1983. In plaintiffs’ analysis, 
the government gets no credit for any part of the 
increase in salary over the years. Neither does it get 
any credit for the Social Security benefit. 

It is consistent with plaintiffs’ position that if Con- 
gress awarded all judges a pay raise of $1,000,000 per 
year retroactive to January 1, 1983 but not specifically 
or expressly related to the Social Security taxes 

84a 

imposed in 1983 and 1984, it would not cure the diminu- 
tion resulting from imposition of the taxes. Under 
plaintiffs’ theory, all Social Security taxes withheld 
must be refunded to plaintiffs and there can absolutely 
be no cure by subsequent increases in salary. Plaintiffs 
insist that only a payment specifically designated as a 
refund of or damages for the Social Security taxes 
withheld can satisfy the unconstitutional diminution 
found by the Federal Circuit.9 

Plaintiffs’ current position on cure represents a 
change of position for them. In both the original com- 
plaint, ¶ 18 at 5, and in the First Amended Complaint, 
¶ 21 at 6, plaintiffs, after reciting imposition of OASDI 
taxes beginning on January 1, 1984, stated: “Either as 
a result of these deductions, or as a result of defen- 
dant’s failure to increase plaintiffs’ salaries by the 
amount of these deductions, defendant has diminished 
plaintiffs’ compensation.” (Emphasis added.) In the 
Second Amended Complaint, ¶ 23 at 6, plaintiffs made 
the identical statement concerning cure with respect to 
both OASDI taxes and HI taxes. 

9 At oral argument on damages issues conducted on March 7, 
1997, the following colloquy occurred: 

THE COURT [to plaintiffs’ counsel]: You do take the 

position that if the judges this year got a staggering raise, but 
no reasons [were] assigned for it, it would not stop the running 
of this diminution? 

[PLAINTIFFS’ COUNSEL]: Absolutely. That is our 
position. 

Transcript (3/7/97) at 10. 

85a 

E 

Plaintiffs argue that Evans v. Gore, 253 U.S. 245, 264, 
40 S. Ct. 550, 556-57, 64 L.Ed. 887 (1920), which the 
Federal Circuit has held controlling in Hatter IV, 64 
F.3d at 650, effectively precludes application of a cure 
concept as just discussed. Evans held that imposition 
of federal income taxes on federal judges constituted a 
diminution in violation of the Compensation Clause. 
Plaintiffs point out that the day after the income tax 
was enacted, Congress increased the compensation of 
federal judges by $1500, an amount significantly higher 
than the income tax withheld from the judges’ salary. 
Plaintiffs thus assert that “there was no argument that 
the subsequent pay increase ‘cured’ this diminution.” 
Pl. Reply Br. (1/16/97) at 8-9. 

There are two defects in plaintiffs’ assertion that the 
facts of Evans preclude cure as a matter of law. First, 
there was no discussion whatever of this issue in the 
Evans opinion. The Court made no mention of any 
salary increase subsequent to imposition of the tax on 
1918 income by an Act of Congress adopted in 1919. 
Second, and more importantly, the facts of Evans 
involved income tax for the single year 1918, while the 
1919 salary increase referred to by plaintiffs was not 
effective until March 1, 1919 and was prospective only. 
Pl. Reply Br. (1/16/97) at A19-A21. We would agree, on 
the Evans facts, that an unlawful reduction of income 
with respect to one calendar year is not cured by a non- 
retroactive salary increase, however large, in the next 
calendar year. 

86a 

V 

In calculating the diminution which resulted from the 
imposition of Social Security taxes, the fundamental 
first step is establishment of the compensation level 
entitled to protection from diminution. (Because, as 
explained below, all plaintiffs are time-barred from 
contesting the withholding of HI taxes in 1983, we 
address only the compensation level entitled to pro- 
tection immediately prior to January 1, 1984, the effec- 
tive date of the imposition of OASDI taxes.) 

As of December 31, 1983, the nominal annual salary 

10 

of district judges was $73,100, and the nominal annual 
salary of circuit judges was $77,300. Consequently, 
pursuant to the Federal Circuit’s holding in Hatter IV, 
those were the compensation levels entitled to protec- 
tion from diminution by imposition of the OASDI tax on 
January 1, 1984. 

Having determined that subsequent pay raises may 
cure prospectively a Social Security tax withholding for 
the same year to the extent the salary increase is equal 
to or larger than the Social Security tax withholding, 
we turn to the calculation of any actual diminution in 
plaintiffs’ compensation. 

A 

For calendar year 1984, effective as of (retroactive 
to) January 1, district judges received an increase in 

10 In this context, “nominal annual salary” designates the 
stated lawful salary before deduction of federal and state income 
taxes, Social Security taxes and voluntary items such as life and 
health insurance premiums and survivor annuity premiums. 

87a 

nominal annual salary of $2,900; circuit judges received 
a corresponding increase of $3,100. 

The OASDI tax imposed on each plaintiff for calen- 
dar year 1984 was $2,041.20. Thus, the salary increase 
for each plaintiff over the 1983 compensation base more 
than offset the OASDI tax for 1984. (Although not 
relevant for present purposes, the 1984 salary increase 
more than offset the total of both OASDI and HI taxes 
for 1984.) 

B 

For calendar year 1985, effective as of January 1, 
district judges received an additional increase in nomi- 
nal annual salary of $2,700 resulting in a cumulative 
adjustment of $5,600 over the base protected from 
diminution by OASDI taxes; circuit judges received a 
corresponding increase of $2,800 resulting in a cumu- 
lative adjustment of $5,900. 

The OASDI tax imposed on each plaintiff for calen- 
dar year 1985 was $2,257.20. Thus, the cumulative 
salary increase over the 1983 base more than offset the 
OASDI tax for 1985. (Although not relevant for pre- 
sent purposes, the cumulative salary increase more 
than offset the total of both OASDI and HI taxes for 
1985.) 

C 

As illustrated in the immediately preceding subpart, 
by calendar year 1985, the cumulative increase in nomi- 
nal annual salary for both district and circuit judges 
exceeded the base protected from diminution by 
OASDI taxes by more than $4,000; these increases have 

88a 

remained in effect. In contrast, the total of OASDI tax 
imposed on each plaintiff has never exceeded $4,000 in 
any calendar year. Thus, the cumulative salary in- 
crease over the 1983 base has more than offset the 
OASDI tax for each year from 1984 through 1996. 

D 

For 1986, although no increase to the nominal annual 
salary of any of the plaintiffs became effective, the 
cumulative increase over the protected base remained 
in effect, i.e., $5,600 for district judges and $5,900 for 
circuit judges. The OASDI tax imposed on each plain- 
tiff for calendar year 1986 was $2,394. Thus, the 
cumulative salary increase over the 1983 base more 
than offset the OASDI tax for 1986. (Although not rele- 
vant for present purposes, the cumulative increase 
more than offset the total of both OASDI and HI taxes 
for 1986.) 

E 

For calendar year 1987, district judges received an 
increase in nominal annual salary of $2,400 effective on 
January 1 and an additional increase of $8,400 effective 
on March 1, resulting in a cumulative adjustment of 
$16,400 over the base protected from diminution by 
OASDI taxes; circuit judges received corresponding 
increases of $2,500 and $9,300, resulting in a cumulative 
adjustment of $17,700. 

The OASDI tax imposed on each plaintiff for 
calendar year 1987 was $2,496.60. Thus, the cumulative 
salary increase over the 1983 base more than offset the 
OASDI tax for 1987. (Although not relevant for pre- 

89a 

sent purposes, the cumulative increase more than offset 
the total of both OASDI and HI taxes for 1987.) 

F 

As illustrated in the immediately preceding subpart, 
by calendar year 1987, the cumulative increase in nomi- 
nal annual salary for both district and circuit judges far 
exceeded $6,000; these increases have remained in 
effect. In contrast, the total of Social Security taxes 
(OASDI and HI taxes) imposed on each plaintiff has 
never exceeded $6,000 in any calendar year. See Sched- 
ules A through D, Def.Br. (2/25/97) and Appendices B & 
C, Pl. Br. (11/12/96). Thus, the cumulative salary in- 
crease over the 1983 base has more than offset the total 
of both OASDI and HI taxes for each year from 1984 
through 1996, and, consequently, no unlawful diminu- 
tion in judicial compensation occurred during those 
years. 

G 

There were additional salary increases for both 
district and circuit judges effective on February 1, 1990 
and on January 1 of 1991, 1992 and 1993. 

11 As of Jan- 
uary 1, 1993, the total nominal annual salary of district 
judges was (and remains) $133,600, and the correspond- 
ing salary of circuit judges was (and remains) $141,700. 
These most recent salary levels reflect a cumulative 
increase in nominal annual salary over the 1983 base 
protected from diminution by OASDI taxes ($73,100 for 

11 The increases in nominal annual salary for district judges 
were in the amount of $7,500 in 1990, $28,500 in 1991, $4,400 in 1992 
and $4,100 in 1993. For circuit judges the increases were $7,100 in 
1990, $30,200 in 1991, $4,600 in 1992 and $4,400 in 1993. 

90a 

district judges and $77,300 for circuit judges) in the 
amount of $60,500 for district judges and $64,400 for 
circuit judges. These annual sums are more than ten 
times higher than the total of Social Security taxes 
withheld during any calendar year. 

VI 

We next address (1) the OASDI claims of the eight 
later-filing plaintiffs and (2) the claims of all plaintiffs 
based on imposition of HI taxes. 

Resolution of these claims involves application of 
statutes of limitations together with two related issues: 
(1) whether the “relation-back” doctrine applies to 
claims of the later-filing judges and to new claims by 
the “original plaintiffs” first asserted in 1992, and (2) 
whether the “continuing claim” doctrine is applicable to 
the claims asserted in this case. Alternatively, applica- 
tion of the concept of cure discussed in Parts IV and V 
above has potential application to a complete resolution 
of these remaining claims. 

A 

Reference is made to Part I of this opinion for des- 
ignation of the two statutes which resulted in imposi- 
tion of Social Security taxes on federal judges and the 
effective date of each. Suffice it to say at this juncture 
that HI taxes became effective and were first withheld 
from judicial compensation on January 1, 1983, and that 
OASDI taxes became effective and were first withheld 
from judicial compensation on January 1, 1984. 

Reference is further made to Subpart III A above for 
a statement of the timing of claim presentation and 

91a 

appearance of plaintiffs in this litigation. Suffice it to 
say for limitations purposes that the eight later-filing 
judges first presented (or reasserted) their claims 
based on OASDI taxes in June and December 1992 
(more than eight years after imposition of OASDI taxes 
on judges) and that all plaintiffs first presented claims 
based on imposition of HI taxes in December 1992 
(more than nine years after imposition of HI taxes on 
judges). 

B 

A claim against the United States for damages is 
barred unless the complaint is filed within six years 
after the claim first accrued. 28 U.S.C. §§ 2401(a) & 
2501. 

12 A cause of action accrues “when all the events 
have occurred which fix the liability of the Government 
and entitle the claimant to institute an action,” Oceanic 
S.S. Co. v. United States, 165 Ct. Cl. 217, 225 (1964), and 
“the plaintiff was or should have been aware of their 
existence,” Hopland Band of Pomo Indians v. United 
States, 855 F.2d 1573, 1577 (Fed. Cir.1988). “A constitu- 
tional claim can become time-barred just as any other 
claim can. . . . Nothing in the Constitution requires 

otherwise.” Block v. North Dakota ex rel. Board of 
University & School Lands, 461 U.S. 273, 292, 103 S. 
Ct. 1811, 1822, 75 L.Ed.2d 840 (1983). See Lunaas v. 

12 Title 28 U.S.C. § 2401(a) provides in pertinent part: 
“[E]very civil action commenced against the United States shall be 
barred unless the complaint is filed within six years after the right 
of action first accrues.” 

Title 28 U.S.C. § 2501 provides in pertinent part: “Every claim 
of which the United States Court of Federal Claims has jurisdic- 
tion shall be barred unless the petition thereon is filed within six 
years after such claim first accrues.” 

92a 

United States, 936 F.2d 1277, 1279-80 (Fed. Cir.1991), 
cert. denied, 502 U.S. 1072, 112 S. Ct. 967, 117 L.Ed.2d 
132 (1992) (applying Block to bar suit based on Article 
VI of Constitution brought more than six years after 
accrual of claim). 

The Supreme Court has stated that the “limitations 
and conditions upon which the Government consents to 
be sued must be strictly observed and exceptions 
thereto are not to be implied.” Soriano v. United 
States, 352 U.S. 270, 276, 77 S. Ct. 269, 273, 1 L.Ed.2d 
306 (1957). 

C 

Based on this law, the critical initial matters for 
determination are the dates on which plaintiffs’ claims 
for the two new taxes first accrued. Plainly, those 
dates are January 1, 1983 for HI taxes and January 1, 
1984 for OASDI taxes, the effective dates of imposition 
of the taxes and the respective dates on which each tax 
was first withheld from plaintiffs’ salaries. 

A comparison of these claim accrual dates with the 
initial claim-presentation dates significantly exceeding 
six years from claim accrual leads inescapably to the 
conclusion that unless the claims can be deemed to 
relate back to a date within six years of initial accrual, 

13 

the claims are barred under the two controlling statutes 
of limitations. 

13 Unless the claims are deemed to relate back to a time within 
six years of first accrual or unless they are deemed to be “con- 
tinuing claims,” the six-year statutes of limitations would have run 
on HI claims on January 1, 1989 and on OASDI claims on January 
1, 1990. 

93a 

D 

Plaintiffs argue that the claims of the later-filing 
judges asserted in the first and second amended com- 
plaints (June and December 1992) relate back to the 
claims in the original complaint (December 29, 1989) 
pursuant RCFC 15(c) and thus are timely. RCFC 15(c) 
provides: “Whenever the claim or defense asserted in 
the amended pleading arose out of the conduct, transac- 
tion, or occurrence set forth or attempted to be set 
forth in the original pleading, the amendment relates 
back to the date of the original pleading.” 

The relation-back issue concerning OASDI taxation 
is different from the issue concerning HI taxation: 

(a) To the extent of their OASDI claims, the 
later-filing plaintiffs were asserting the same cause 
of action as that set forth in the original complaint. 
Therefore, while there can be no question that the 
OASDI “claim . . . asserted in the amended 
pleading arose out of the . . . occurrence set forth 

. . . in the original” complaint, the relation-back 
problem of the later-filing judges is that they were 
not the same as the original plaintiffs. Though 
similarly situated, their position in the case is no 
different than it would be if each later-filing plaintiff 
had filed his own separate suit. 

(b) To the extent of the HI claims first pre- 
sented in the Second Amended Complaint, all plain- 
tiffs are asserting a claim which did not arise “out of 
the conduct, transaction, or occurrence set forth or 
attempted to be set forth in the original pleading.” 

94a 

“The general rule . . . is that the rule of relation- 
back does not extend to amendments that add new 
parties or causes of action.” Snoqualmie Tribe of 
Indians v. United States, 178 Ct. Cl. 570, 588, 372 F.2d 
951, 961 (1967). We address these two relation-back 
issues separately. 

E 

The matter of potential relation back of HI claims 
may be dealt with succinctly. When these claims were 
broached by all plaintiffs in the Second Amended Com- 
plaint submitted almost ten years after first accrual, 
they were totally new diminution claims. 

The diminution claims set forth in the original and 
the first amended complaints were emphatically and 
specifically based on imposition of OASDI taxes pur- 
suant to legislation adopted in 1983. Although at the 
time of filing of the original complaint the HI tax 
(imposed pursuant to legislation adopted in 1982) had 
been in effect for almost one year, it was not mentioned. 
Consequently, the HI claims of all plaintiffs did not 
arise “out of the conduct, transaction, or occurrence set 
forth or attempted to be set forth in the original plead- 
ing,” RCFC 15(c), and do not relate back to any date 
prior to December 11, 1992. 

Interestingly, even if the HI tax claims of all plain- 
tiffs were deemed to relate back to the original case 
filing date, those claims would still be time barred since 
the original filing date (December 29, 1989) was more 
than six years after the claims for HI taxes first 
accrued (January 1, 1983). Further, even if all HI taxes 
withheld from the salary of each judge during 1983 are 
viewed as having been withheld on the last salary 

95a 

payment date for judges during calendar year 1983, 
that day would be December 1, 1983. Thus, in any 
event, the HI claims would still have been presented 
more than six years after they first accrued. 

14 

We address in Part VII below whether plaintiffs’ HI 
claims are continuing claims not time barred to the 
extent of taxes withheld after December 11, 1986, the 
commencement of the six-year period preceding 
presentation of the Second Amended Complaint. (How- 
ever, alternatively, even if the claims are deemed con- 
tinuing claims, any portion of such claim accruing after 
December 11, 1986 has been offset by salary increases, 
as explained in Parts IV and V above.) 

14 Plaintiffs suggest that the cause of action for diminution 
resulting from HI taxes did not first accrue until April 15, 1984. 
Pl.Br. (1/16/97) at 21-23; Transcript (3/7/97) at 16-21. Their position 
is grounded on 26 U.S.C. (I.R.C.) § 6513(c) which provides that for 
purposes of 26 U.S.C. § 6511, Social Security taxes with respect to 
one calendar year, if paid before April 15 of the following calendar 
year, are deemed paid and the corresponding returns are deemed 
filed on April 15 of such succeeding year. But 26 U.S.C. (I.R.C.) 
§ 6511 establishes deadlines (“3 years from the time the return was 
filed or 2 years from the time the tax was paid”) for administrative 
refund claims which must precede any court suit for tax refunds. 
See 26 U.S.C. (I.R.C.) § 7422(a). 

Plaintiffs’ position concerning accrual of HI claims is meritless 
for two reasons. First, the Federal Circuit has determined that 
the claims asserted in this litigation are not formal tax refund 
claims, Hatter II, 953 F.2d at 630; consequently sections 6511 and 
6513(a) of the Internal Revenue Code simply have no application. 
Second if these tax code provisions controlled the accrual of plain- 
tiffs’ claim, the limitations period would have expired not later 
than April 15, 1987 (three years after the deemed return date for 
1983 taxes), years before the filing date of the original complaint. 

96a 

F 

We next address the relation-back issue with respect 
to assertion of OASDI claims by the later-filing plain- 
tiffs. As stated in Subpart VI D above, the issue with 
respect to OASDI taxes is whether or under what cir- 
cumstances new parties may be added to a case and 
obtain the benefit of the original filing date. The 
general rule is that amendments which add new parties 
do not relate back. We must explore whether the later- 
filing plaintiffs qualify for an exception to the rule. 

A recent circuit court of appeals pronouncement on 
amendments seeking to add parties to a complaint 
asserting a claim on which the controlling statute of 
limitations has expired is as follows: 

An amendment adding a party plaintiff relates back 
to the date of the original pleading only when: 

1) the original complaint gave the defendant ade- 
quate notice of the claims of the newly proposed 
plaintiff; 2) the relation back does not unfairly 
prejudice the defendant; and 3) there is an identity 
of interests between the original and newly pro- 
posed plaintiff. 

In re Syntex Corp. Securities Litigation, 95 F.3d 922, 
935 (9th Cir. 1996) (citing Besig v. Dolphin Boating & 
Swimming Club, 683 F.2d 1271, 1278-79 (9th Cir. 
1982)). 

Court of Claims case law makes plain that in suits 
against the United States, the “identity of interests” 
requirement depends on representational relationships 
among the original and newly proposed parties, not on 

97a 

merely being similarly situated with respect to the 
claim in the original pleading. 

Here, even if it could be said that the original timely 
complaint gave the government adequate notice of the 
OASDI claims of the later-filing judges, and even if it 
could further be said that relation back of the OASDI 
claims of the later-filing plaintiffs would not unfairly 
prejudice the government, the later-filing judges do not 
share the requisite “identity of interests” with the 
original plaintiffs. 

This issue was addressed by the Court of Claims in 
Snoqualmie Tribe of Indians, 178 Ct. Cl. at 585-89, 372 
F.2d at 959-61. In that case, the Snoqualmie Tribe 
brought an action against the United States based upon 
alleged inequity in a treaty with various Indian tribes. 
After suit was filed, the Snoqualmie Tribe realized that 
the original petition should have included a claim on 
behalf of the Skykomish Tribe, since it appeared that 
the Skykomish tribe either had been a subgroup of the 
Snoqualmie Tribe at the time the treaty was made or 
had merged with the Snoqualmie Tribe thereafter 
through intermarriage. Id. at 574, 372 F.2d at 953. The 
Snoqualmie plaintiff sought to amend its complaint to 
include a claim on behalf of the by then extinct 
Skykomish Tribe, but the five-year limitations period 
had expired. Id. at 585, 372 F.2d at 959. Thus, the 
court was required to resolve whether the amendment 
would be allowed to relate back to the original pleading, 
avoiding the statute of limitations. 

After first announcing the general rule that the 
doctrine of relation-back does not extend to amend- 
ments that add new parties, Id. at 588, 372 F.2d at 961, 
the Court of Claims found that there existed a unique 

98a 

connection between the Snoqualmie Tribe and the 
Skykomish Tribe, the former being the “corporate re- 
presentative” of the latter in that case. Id. at 582, 372 
F.2d at 958. Thus, the court held that the Skykomish 
claim could relate back to the original Snoqualmie 
claim. Id. at 588-89, 372 F.2d at 961. The court rea- 
soned that “on our theory of representation there is no 
new party added by amendment. The Snoqualmie 
Tribe is the only claimant; it is simply an entity serving 
in two representative capacities.” Id. at 588, 372 F.2d 
at 961. The court further explained that “we would 
have greater difficulty allowing the amendment if we 
thought it was brought by an entirely unrelated party 
even though it arose out of the same transaction.” Id. 
at 589, 372 F.2d at 961. 

This requirement of representative relationship in 
order for an amendment adding new parties to relate 
back was reaffirmed by the Court of Claims in Baldwin 
Park Community Hospital v. United States, 231 Ct. Cl. 
1011, 1982 WL 25837 (1982). In that case, an original 
hospital plaintiff filed an amended petition in which 
thirty-six hospital plaintiffs with similar claims were 
added several months after the original petition was 
filed. Id. 231 Ct. Cl. at 1011. (It does not appear 
whether a limitations period had expired in the interim, 
but the court treated the difference in filing dates as 
significant.) The defendant argued that the new plain- 
tiffs should not enjoy the benefit of the original peti- 
tion’s filing date pursuant to a relation-back rule 
identical to RCFC 15(c). The Court of Claims found 
that the new plaintiffs were operated and owned either 
directly or through subsidiary corporations by the 
original plaintiff, or by a company to which the original 
plaintiff was the legal successor in interest. On the 

99a 

basis of this representative relationship (common 
corporate ownership of the hospitals), the court allowed 
the new plaintiffs to relate their similar claims back to 
the original complaint’s filing date. Id. at 1012. The 
requisite “identity of interests” was satisfied in that cir- 
cumstance. See generally, Custer v. United States, 224 
Ct. Cl. 140, 154-55, 622 F.2d 554, 563, cert. denied, 449 
U.S. 1010, 101 S. Ct. 565, 66 L.Ed.2d 468 (1980) (deny- 
ing relation back to original filing date by a new party 
alleging same claim). 

Recently, this court applied Court of Claims prece- 
dent concerning the relation-back doctrine to facts 
similar to those in the case at bar. Creppel v. United 
States, 33 Fed. Cl. 590 (1995). In 1991, shortly before 
expiration of the six-year statute of limitations, land- 
owners filed several related suits (consolidated by the 
court) alleging takings. After the limitations period had 
expired, the original plaintiffs moved to add 43 new 
plaintiffs who owned land affected by the alleged 
takings. The court found that, even assuming that the 
claims of the new plaintiffs arose out of the same 
transaction or occurrence that gave rise to the original 
complaints, there was no corporate or other legal 
relationship between the new and the original plaintiffs. 
Creppel, 33 Fed. Cl. at 596. The court stated: 

The identity of interest between the original and 
proposed new plaintiffs is limited to geographic 
proximity—the fact that all landowners, at the time 
of the alleged taking, owned property within [the 
affected site]. The geographic proximity of a dis- 
crete parcel of land to property owned by plaintiffs 
asserting a takings claim is not enough. 

100a 

Id. Finding no “formal connection” between the 
original plaintiffs and the proposed new plaintiff, the 
court held that the new plaintiffs could not relate their 
claims back to the filing date of the original complaints. 
Thus, their claims were barred by the statute of limita- 
tions. 

Turning to the case at bar, there is no formal con- 
nection or representational relationship among the 
original and the later-filing judges. In essence, each 
judge is suing individually for diminution of his per- 
sonal compensation. 

Plaintiffs’ interpretation of the relation-back doctrine 
would allow unrelated parties, after expiration of the 
limitations period, to obtain the benefit of a timely filed 
complaint so long as the same governmental action 
caused their damages. Under this approach, plaintiffs 
with common grievances could evade the statute of 
limitations as a matter of course by merely adding 
themselves to a timely filed complaint at any time after 
the expiration of the statute of limitations. We do not 
believe that this would be consistent with congressional 
intent and controlling precedent dealing with statutes 
of limitation and relation back. 

It would be anomalous if the later-filing judges in this 
civil action were deemed timely by application of the 
relation-back rule when other judges who filed a sepa- 
rate suit on the same day alleging an identical cause of 
action for diminution would be deemed untimely. 

Based on the foregoing, we conclude that the OASDI 
claims of the later-filing judges, all first presented more 
than six years after first accrual, do not relate back to 

101a 

the timely filing date of the original complaint and that, 
consequently, those claims are barred. 

We address in Part VII below whether the later- 
filing plaintiffs’ OASDI claims are continuing claims not 
time barred to the extent of taxes withheld after June 
and December 1986, the commencement months of the 
six-year periods preceding presentation of the First 
and Second Amended Complaints. (However, alterna- 
tively, even if the claims are deemed continuing claims, 
any portion of such claim accruing after June 1986 has 
been offset by salary increases, as explained in Parts IV 
and V above.) 

VII 

The next issue for resolution is whether the diminu- 
tion claims are “continuing claims” so that even if some 
were not presented within six years of the time of first 
accrual, they may nonetheless be maintained with re- 
spect to damages accruing within the six-year period 
preceding presentation. (The issue was raised by de- 
fendant in connection with HI taxes, Def. Br. (2/25/97), 

p. 6 n.3, presumably because no plaintiff submitted a 
timely claim for HI taxes. The issue is equally applica- 
ble to OASDI claims of the later-filing plaintiffs.) 

A 

The continuing claim doctrine provides that when the 
government owes a plaintiff a continuing, recurring 
duty to make payments of money, a new cause of action 
arises with each breach of that duty. Tabbee v. United 
States, 30 Fed. Cl. 1, 5 (1993) and cases therein cited. 
See generally Friedman v. United States, 159 Ct. Cl. 1, 
310 F.2d 381 (1962), cert. denied sub nom. Lipp v. 

102a 

United States, 373 U.S. 932, 83 S. Ct. 1540, 10 L.Ed.2d 
691 (1963). See especially Acker v. United States, 23 Cl. 
Ct. 803, 804-06 (1991), for history and analysis of the 
doctrine. Under that doctrine, each incident of with- 
holding an installment of an obligation to make continu- 
ing payments gave rise to a new claim for damages. 
The continuing claim doctrine prevented a statute of 
limitations from shielding an offender in an ongoing 
wrongdoing, and protected recurring claims that might 
otherwise be barred if based upon events occurring 
more than six years prior to suit. 

B 

However, application of the continuing claim doctrine 
was rejected by the Federal Circuit in Hart v. United 
States, 910 F.2d 815 (Fed. Cir. 1990). There the widow 
of a military retiree filed suit seeking to recover 
Survivor Benefit Plan annuity payments due after her 
husband’s death. The suit was filed more than six years 
after the death of her husband, upon which date she 
became eligible to receive the benefits. Id. at 816. 

Even though her suit was filed more than six years 
after her husband’s death, plaintiff in Hart urged the 
court to apply the continuing claim doctrine. She 
argued that she had a new claim each month for an 
annuity installment payment and that her claim as to 
that amount “first accrued” on the first day of each 
month. Id. at 818. The Federal Circuit rejected her 
argument. The court reasoned that applying the con- 
tinuing claim doctrine would mean that “the statute of 
limitations would never run in a claim such as this one, 
with respect to the six years of benefits preceding the 
filing of suit and thereafter.” Id. The court continued: 
“Because all events necessary to her benefits claim had 

103a 

occurred when her husband died, we conclude that 
plaintiff’s claim for . . . annuity benefits is not a 
‘continuing’ claim.” Id. 

The Federal Circuit reasoned: “Exceptions cannot 
be engrafted on the statute of limitations so as to allow 
claims to be asserted beyond the six year time limit set 
forth in Section 2501. . . . Only Congress can lengthen 

the time period for bringing suit against the United 
States.” Id. at 817. “Congress has not chosen to extend 
the time limit for suits such as this one.” Id. at 819. See 
Sankey v. United States, 22 Cl. Ct. 743, 746 (1991), 
af f’d, 951 F.2d 1266 (Fed. Cir. 1991) (stating, based on 
Hart, 910 F.2d 815: “this court no longer recognizes the 
continuing claim doctrine”); but see Acker, 23 Cl. Ct. at 
804-06 (recognizing that the continuing claim doctrine 
“may be analytically suspect” and “is not readily recon- 
ciled with the wording of the statute of limitations,” but 
holding that Hart “cannot be interpreted to invalidate 
the continuing claim doctrine” because Hart was not an 
en banc decision that could overrule Court of Claims 
precedent). 

C 

Likewise, in a more recent case, Fallini v. United 
States, 56 F.3d 1378 (Fed. Cir. 1995), cert. denied, 517 
U.S. 1243, 116 S. Ct. 2496, 135 L.Ed.2d 189 (1996), the 
Federal Circuit refused to apply the continuing claim 
doctrine to salvage damages for the last six years of an 
alleged ongoing taking effected by legislation. The 
Fallini plaintiffs contended that the government had 
engaged, since 1971, in a continuing course of taking in 
violation of the Fifth Amendment by requiring them to 
provide water to wild horses when plaintiffs provided 
water to their domestic livestock on federal land. As 

104a 

alleged, the takings resulted from enactment in 1971 of 
a statute which compelled plaintiffs to provide water to 
the federally-protected wild horses; plaintiffs sought 
recovery for alleged injuries they suffered within six 
years prior to the filing of their suit in 1992. 

The Federal Circuit found it unnecessary to address 
the merits of the case, instead holding that the suit was 
untimely. Id. at 1380. The court, after stating the usual 
rule that “a cause of action accrues when all the events 
have occurred that fix the defendant’s alleged liability 
and entitle the plaintiff to institute an action,” id., 
observed that the plaintiffs had “been cognizant of the 
facts underlying the alleged taking since long before 
they filed their complaint,” since the alleged taking 
resulted from legislation enacted in 1971. Id. The court 
held that “for purposes of claim accrual, such a taking 
occurs on the date of enactment of the legislation.” Id. 
at 1382-1383. 

15 

D 

Based on the case authority examined in this Part 
VII, we conclude that none of the claims asserted in 
this case are “continuing” claims within the meaning of 
the former continuing claim doctrine. On the one hand, 

15 In its discussion of the nature of the Fallini plaintiffs’ taking 
claim, the court said: “If the horses were agents or instrumentali- 
ties of the United States government, the analysis of what govern- 
mental action constituted the alleged taking might well be differ- 
ent.” Fallini, 56 F.3d at 1383 (emphasis added). This statement 
would appear to have no application to claims, as in the case at bar, 
in which the unlawful diminution, i.e., the imposition of two new 
taxes on sitting judges, Hatter IV, 64 F.3d at 652, was accom- 
plished by discrete legislative enactments which had an immedi- 
ate impact. 

105a 

the unlawful diminution consisted of imposition of two 
new taxes on specific effective dates; on the other hand, 
even if plaintiffs took the position that a new claim 
arose with each instance of withholding of HI and 
OASDI taxes, the holding in Hart, 910 F.2d 815, would 
prohibit recovery for any such recurring claim not 
asserted within six years of the initial effective date of 
each new tax. 

This holding has potential, alternative impact on the 
HI tax claims of all plaintiffs and the OASDI claims of 
the later-filing plaintiffs, since those claims were first 
presented more than six years after first accrual. 
Based on our conclusions in Parts IV and V above con- 
cerning offset resulting from salary increases, the 
claims just described would not result in recovery of 
damages even if they could be addressed as continuing 
claims. 

VIII 

Plaintiffs claim entitlement to compounded interest 
on any damages. The government objects to any award 
of interest and further argues that even if interest is 
awardable, it should be simple, not compounded. The 
threshold issue, then, is whether plaintiffs are entitled 
to recover interest on a claim under the Compensation 
Clause of the Constitution. All parties agree that this is 
an issue of first impression. 

The general rule is that a successful plaintiff may not 
obtain interest on a claim against the United States 
unless Congress has expressly waived its sovereign 
immunity on interest by contract or statute. Library of 
Congress v. Shaw, 478 U.S. 310, 317, 106 S. Ct. 2957, 
2962-63, 92 L.Ed.2d 250 (1986) (“In creating the Court 

106a 

of Claims, Congress retained the Government’s immu- 
nity from awards of interest, permitting it only where 
expressly agreed to under contract or statute.”) See 
generally 28 U.S.C. §§ 1961 & 2516, 41 U.S.C. § 611. 

A 

Under existing case law, the only exceptions to this 
general rule pertain to awards of compensation under 
the Fifth Amendment takings clause. 

16 That clause 
requires “just compensation” to one whose property 
has been taken by the government for public use. 

The seminal case authorizing an award of interest in 
addition to an award for the value of property taken by 
the government is Seaboard Air Line Ry. v. United 
States, 261 U.S. 299, 43 S. Ct. 354, 67 L.Ed. 664 (1923). 
In Seaboard, the government took possession of private 
land to provide storage space for Army supplies pur- 
suant to an Act of Congress. The Act did not authorize 
an award of interest. The Supreme Court stated: “Just 
compensation is provided for by the Constitution and 
the right to it cannot be taken away by the statute.” 
Seaboard, 261 U.S. at 304, 43 S. Ct. at 356. The Court 
determined that just compensation “means substan- 
tially that the owner shall be put in as good position 

16 The Fifth Amendment of the U.S. Constitution provides that 
“private property [shall not] be taken for public use without just 
compensation.” U.S. Const. amend. V. 

The requirement of 28 U.S.C. § 1498 that awards for unauthor- 
ized use of intellectual property be “reasonable and entire” has 
been construed to be a Congressional authorization of interest, 
Waite v. United States, 282 U.S. 508, 51 S. Ct. 227, 75 L.Ed. 494 
(1931), and Fifth Amendment principles control application of the 
statute, see ITT Corp. v. United States, 17 Cl. Ct. 199, 232-33 
(1989). 

107a 

pecuniarily as he would have been if his property had 
not been taken.” Id. 

The Court approved an award of interest under these 
circumstances. “The only question here is whether 
payment at a subsequent date of the value of the land 
as of the date of taking . . . is sufficient to constitute 
just compensation.” Id. at 305, 43 S. Ct. at 356. The 
Court held: “Where the United States . . . [takes 
land], the owner is not limited to the value of the 
property at the time of the taking; he is entitled to such 
addition as will produce the full equivalent of that value 
paid contemporaneously with the taking.” Id. at 306, 43 
S. Ct. at 356. 

The Supreme Court has repeatedly recognized enti- 
tlement to interest in Fifth Amendment takings cases 
in the absence of specific congressional authorization. 
See Shoshone Tribe of Indians v. United States, 299 
U.S. 476, 497, 57 S. Ct. 244, 251-52, 81 L.Ed. 360 (1937) 
(“the right to interest or a fair equivalent, attaches 
itself automatically to the right to an award of dam- 
ages”); Brooks-Scanlon Corp. v. United States, 265 U.S. 
106, 125, 44 S. Ct. 471, 475, 68 L.Ed. 934 (1924); United 
States v. Rogers, 255 U.S. 163, 168-69, 41 S. Ct. 281, 281- 
82, 65 L.Ed. 566 (1921). 

B 

The critical factor enabling a takings plaintiff to 
obtain interest without specific congressional allowance 
is that the source of the claim is the Constitution. 
Indeed, consistent with the general rule, the Supreme 
Court has held that no interest is allowed if a claimant’s 
cause of action if founded on a “just compensation” 
statutory provision rather than the Constitution. 

108a 

United States v. Alcea Band of Tillamooks, 341 U.S. 48, 
71 S. Ct. 552, 95 L.Ed. 738 (1951). In Tillamooks, the 
Court denied interest on compensation awarded for 
taking of original Indian title by the government, where 
the recovery by the Indians was not grounded on the 
Fifth Amendment, but on a statute. Id. The Court 
stated that the no-interest rule “precludes an award of 
interest even though a statute should direct an award 
of ‘just compensation’ for a particular taking.” Id. at 49, 
71 S. Ct. at 552. The Court then held that “the only 
exception arises when the taking entitles the claimant 
to just compensation under the Fifth Amendment. 
Only in such cases does the award of compensation 
include interest.” Id. (quoting Seaboard, 261 U.S. 299, 
43 S. Ct. 354). 

C 

Defendant argues that the “Just Compensation 
Clause” of the Fifth Amendment and the “Compensa- 
tion Clause” in Article III of the Constitution serve 
entirely different purposes and use the term “compen- 
sation” in different senses. Assuming the accuracy of 
this position, it is irrelevant. 

Resolution of the interest issue should not turn on 
whether the term “compensation” means the same 
thing in the Just Compensation Clause as in the Com- 
pensation Clause. Rather, the common denominator is 
that both clauses are contained in the Constitution. 

We find no principled basis to distinguish the con- 
stitutionally based entitlement to interest of takings 
plaintiffs from the constitutional position of federal 
judges. Both the Fifth Amendment and Article III 
affirmatively require the payment of compensation. If 

109a 

recompense for delay in compensation is required for 
takings claimants despite the general rule, surely the 
federal judge whose constitutionally protected compen- 
sation is delayed is at least equally entitled to such 
recompense. 

Indeed, for two reasons, there is a sounder basis for 
interest on delayed compensation protected under Arti- 
cle III than on just compensation guaranteed by the 
Fifth Amendment. 

First, the language of Article III specifically requires 
that judicial compensation be paid “at stated Times,” 
U.S. Const. art. III, § 1. In practical terms, how is a 
violation of that provision to be corrected other than by 
interest for the period of delay in compliance. In 
contrast, there is no specific language in the Fifth 
Amendment’s takings provision concerning timing of 
just compensation, and entitlement to interest depends 
on interpretation of the term “just compensation.” 

Second, the primary purpose of the Compensation 
Clause is to maintain the independence of the federal 
judiciary. United States v. Will, 449 U.S. 200, 217, 101 
S. Ct. 471, 481-82, 66 L.Ed.2d 392 (1980); O’Malley v. 
Woodrough, 307 U.S. 277, 284, 59 S. Ct. 838, 840-41, 83 
L.Ed. 1289 (1939); Hatter IV, 64 F.3d at 649; Atkins v. 
United States, 214 Ct. Cl. 186, 228, 556 F.2d 1028 (1977). 
Denying interest on an award to compensate for its 
violation would plainly threaten that independence; 
Congress would then be free to delay indefinitely pay- 
ment of the principal amount of protected compensation 
leaving the judges with no remedy for the delay. 

110a 

D 

We conclude that judges whose compensation has 
been diminished in violation of Article III are entitled 
to reasonable interest on the principal amount of such 
diminution. 

E 

Once the determination has been made in constitu- 
tional cases that interest is required or appropriate, the 
rate of interest, whether interest shall be simple or 
compounded and the frequency of compounding are 
matters within the broad discretion of the trial court. 
See Miller v. United States, 223 Ct. Cl. 352, 399-400, 620 
F.2d 812, 837 (1980). 

Plaintiffs have specifically requested that the 52- 
week Treasury bill rate compounded annually be used 
with respect to any damages awarded. This request is 
most reasonable, cf. Hughes Aircraft Co. v. United 
States, 31 Fed. Cl. 481, 494 (1994), af f ’d, 86 F.3d 1566, 
1575 (Fed. Cir. 1996), vacated on other grounds, —— 
U.S. ——, 117 S. Ct. 1466, 137 L.Ed.2d 680 (1997), and 
interest shall be awarded substantially as requested. 
See Part IX below for the precise expression of the 
interest awarded. 

IX 

Based on all the foregoing, it is ORDERED that: 

1. Judgment in the principal amount of $328.95, plus 
interest from January 1, 1984 to date of payment (cal- 
culated as described below), shall be entered in favor of 
each of the following seven plaintiffs: (a) District Judge 

TERRY J. HATTER, JR.; (b) MARY MARTIN AR- 

111a 

CENEAUX, on behalf of the late Judge George Ar- 
ceneaux, Jr.; (c) District Judge PETER H. BEER; (d) 

DOLORES LEE BURCIAGA, executrix of the estate of 
District Judge Juan G. Burciaga, deceased; (e) District 
Judge A.J. MCNAMARA; (f ) District Judge RAUL A. 
RAMIREZ; and (g) District Judge THOMAS A. 
WISEMAN, JR. 

2. Judgment in the principal amount of $347.85, plus 
interest from January 1, 1984 to date of payment (cal- 
culated as described below), shall be entered in favor of 
Circuit Judge HARRY PREGERSON. 

3. Judgment with respect to the remaining eight 
plaintiffs shall be entered in favor of the defendant. 

4. Interest awarded above shall be calculated at the 
52-week Treasury bill rate described in 28 U.S.C. 
§ 1961(a). The rate during any calendar year shall be 
that determined for the last auction of such bills next 
preceding January 1 of such calendar year. Interest 
shall be compounded annually as of January 1 of each 
year. 

5. Each party shall bear its own costs. 

112a 

APPENDIX I 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 97-5093 

JUDGE TERRY J. HATTER, JR., MARY MARTIN 
ARCENEAUX, ON BEHALF OF THE LATE JUDGE GEORGE 
ARCENEAUX, JR., DOLORES LEE BURCIAGA, 
EXECUTRIX OF THE ESATE OF JUDGE PETER H. BEER, 
JUDGE DUDLEY H. BOWEN, JR., CHIEF JUDGE JUAN G. 
BURCIAGA, JUDGE A.J. MCNAMARA, JUDGE HARRY 
PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE 
NORMAN C. ROETTGER, JR., CHIEF JUDGE THOMAS A. 
WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, 
JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR 
D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE 
HAROLD A. BAKER, AND CHIEF JUDGE MICHAEL M. 
MIHM, PLAINTIFF-APPELLANTS 

v. 

UNITED STATES, DEFENDANT-APPELLEE 

[Aug. 5, 1999] 

ORDER 

Before: PLAGER, Circuit Judge, ARCHER, Senior 
Circuit Judge, and RADER, Circuit Judge. 

PLAGER, Circuit Judge. 

113a 

Terry J. Hatter, Jr., et al. appeal the damages cal- 
culation of the Court of Federal Claims, Hatter v. 
United States, 38 Fed. Cl. 166 (1997) (Hatter VI), on 
remand from this court’s decision in Hatter v. United 
States, 64 F.3d 647 (Fed. Cir. 1995) (Hatter IV).1 In 
Hatter IV, we held that the Compensation Clause of the 
United States Constitution, art. III, § 1, forbids dimin- 
ishment of the compensation of Article III judges once 
in office and that the imposition of social security taxes 
on a judge’s pay after taking office unconstitutionally 
diminishes the judge’s compensation. Because the 
Court of Federal Claims improperly calculated the 
damages award due to the diminution, we reverse and 
remand the matter for further proceedings. 

BACKGROUND 

The facts of this case have been discussed in detail in 
our previous two decisions, Hatter IV and Hatter II. 
The pertinent facts are that the Hospital Insurance 
(HI) tax (i.e., Medicare) was imposed upon federal 
judges for the first time on January 1, 1983, pursuant to 
the Tax Equity and Fiscal Responsibility Act of 1982, 
Pub. L. No. 97-248, § 278(a), 96 Stat. 324, 559 (1982) 
(codified as amended at 26 U.S.C. (I.R.C.) § 3121(u) 
(1988)). The Old Age Survivors and Disability Insur- 
ance tax (OASDI) was first imposed upon federal 
judges on January 1, 1984, pursuant to the Social 

1 The history of this case involves the following six decisions: 
Hatter v. United States, 21 Cl. Ct. 786 (1990) (Hatter I), Hatter v. 
United States, 953 F.2d 626 (Fed. Cir. 1992) (Hatter II), Hatter v. 
United States, 31 Fed. Cl. 436 (1994) (Hatter III), Hatter v. United 
States, 64 F.3d 647 (Fed. Cir. 995) (Hatter IV), United States v. 
Hatter, 519 U.S. 801, 117 S. Ct. 39, 136 L.Ed.2d 3 (1996) (Hatter V), 
and Hatter v. United States, 38 Fed. Cl. 166 (1997) (Hatter VI). 

114a 

Security Amendments of 1983, Pub. L. No. 98-21, 
§ 101(a)(1), (b)(1) and (d), 97 Stat. 65, 68, 69 (codified as 
amended at 26 U.S.C. (I.R.C.) § 3121(b)(5)(E) (1988) and 
42 U.S.C. § 410(a)(5)(E) (1988)). The plaintiff judges 
asserted that their compensation was diminished in vio- 
lation of the Compensation Clause, U.S. Const., art. III, 
§ 1. 

In Hatter I, the Court of Federal Claims dismissed 
the judges’ claim for lack of jurisdiction, viewing it as a 
tax refund claim. We reversed in Hatter II, holding 
that the judges’ claim was under the Compensation 
Clause for money damages. On remand, the Court of 
Federal Claims in Hatter III again dismissed the 
judges’ claim, holding that there was no constitutional 
diminution because the taxes imposed were nondis- 
criminatory and generally applicable to the public. We 
reversed that judgment in Hatter IV. We held that the 
judges’ compensation had been unconstitutionally di- 
minished by taxes imposed after they took office and 
remanded the case for calculation of damages for sums 
improperly withheld. The Supreme Court granted 
certiorari; our judgment was affirmed in Hatter V due 
to lack of a quorum.2 

On remand, the Court of Federal Claims awarded 
damages only to the eight original judges3 who were 

2 The absence of a quorum resulted from recusals, presumably 
by Justices who could be affected by the outcome of the case. The 
members of the panel of this court who decided the earlier appeals 
and who are participating in this decision were all appointed sub- 
sequent to the events, and thus are not affected by the outcome. 

3 We follow the designation of the Court of Federal Claims, 
which referred to the plaintiffs filing the original complaint as the 
“original” judges and those who joined or rejoined (after not 

115a 

parties to the original complaint filed on December 29, 
1989. Moreover, damages were limited to the amount 
of OASDI taxes withheld in January 1984 for services 
rendered in December 1983, before the period covered 
by the retroactive 1984 salary increase. The 1984 and 
subsequent pay raises of the judges were determined 
by the court to be more than sufficient to offset the 
OADSI taxes imposed in subsequent years. All other 
claims for damages, i.e., the OASDI claim of the later- 
filing judges and the later-filed HI claim of all the 
judges, were denied. 

The Court of Federal Claims determined that the 
continuing claim doctrine did not apply to the judges’ 
salary payments and, as a result, the OASDI claims of 
the later-filing judges and the HI claims of all the 
judges were barred by the statute of limitations. The 
court also determined that, even if the continuing claim 
doctrine could be applied to the judges’ salary pay- 
ments, salary increases had more than offset any com- 
pensation diminution caused by the imposition of 
OASDI and HI taxes during the six-year limitations 
period. 

DISCUSSION 

As a preliminary matter, the judges assert that 
Hatter VI “did not implement [the] mandate” of Hatter 
IV because the Court of Federal Claims reconsidered 

joining the appeal of Hatter I) the amended complaints as the 
“later-filing” judges. 

116a 

the question of whether the social security taxes ef- 
fected a diminution in salary. In Hatter IV, we stated: 

Social Security taxes diminish the compensation 
of Article III judges who took office prior to enact- 
ment of the taxes. This court therefore reverses 
and remands the case for tax refunds or recoveries 
for the sums improperly withheld from the claim- 
ants’ salaries. 

Hatter IV, 64 F.3d at 653 (emphasis added). That 
language is clear. We determined that a new tax on a 
sitting Article III judge effected an unlawful diminu- 
tion of that judge’s compensation. Having decided the 
liability question, the remand was for the purpose of 
ascertaining the damages for that violation, i.e., “for the 
sums improperly withheld.” 

The controlling question in this appeal is whether the 
Government is correct that an unconstitutional diminu- 
tion in the compensation of a group of judges, resulting 
from a tax unlawfully applied, may be fully offset by 
any and all future salary increases generally granted to 
the judiciary. The Government’s position was adopted 
by the trial court. 

We conclude that the Government’s argument is 
fundamentally flawed, and results in a trivialization of 
the constitutional protection accorded judges by Article 
III, § 1, the Compensation Clause.4 The consequence of 

4 The extent of the trivialization is illustrated by the damage 
award made by the trial court: the judges alleged that their out-of- 
pocket losses from the unconstitutional imposition varied between 
$20,000 to $56,000, with an average of about $47,000; the trial 

117a 

the Government’s argument subverts the very purpose 
of the Compensation Clause, and is wrong, both in law 
and in policy. 

1. 

The purpose of the Constitution’s Compensation 
Clause—federal judges shall receive “a Compensation, 
which shall not be diminished during their Continuance 
in Office”—is to protect and preserve the independence 
of the judiciary. This purpose, and the reasons for this 
salutary protection of judicial independence, are well 
understood and well documented. A reader unfamiliar 
with the literature on the subject will find a thorough 
introduction to the matter in the Supreme Court’s 
seminal opinion in Evans v. Gore, 253 U.S. 245, 40 S. Ct. 
550, 64 L.Ed. 887 (1920).5 

To understand the significance of this issue, it is 
necessary to put it in its historical context. The Ad- 
ministrative Office of the U.S. Courts uses 1969 as the 
benchmark for measuring changes in judicial salaries; 
that was the year that the first Quadrennial Salary 
Commission’s recommendations were substantially im- 
plemented by Congress and the President. The Quad- 
rennial Salary Commission was created in an attempt to 
take the salaries of the judiciary, Congress, and senior 
executive officials out of politics, and to base salary 
increases for these officials on cost-of-living changes 

court’s judgment awarded a total of $329 to the district judges and 
$348 to the appellate judge, plus interest. 

5 See also United States v. Will, 449 U.S. 200, 101 S. Ct. 471, 66 
L.Ed.2d 392 (1980); O’Malley v. Woodrough, 307 U.S. 277, 59 S. Ct. 
838, 83 L.Ed. 1289 (1939); Miles v. Graham, 268 U.S. 501, 45 S. Ct. 
601, 69 L.Ed. 1067 (1925). 

118a 

similar to those granted to General Schedule federal 
employees. As the history since 1969 illustrates, the 
attempt failed.6 

Since 1969, with a few notable exceptions, judicial 
salaries have not kept pace with annual increases in 
inflation. Overall, measured in terms of purchasing 
power, judges’ salaries have declined since 1969 by 
more than 23 percent. This did not happen as a result 
of actions by Congress directly reducing the compensa- 
tion of judges, in which case it would have been 
remediable under the Constitution. Rather, it results 
from the political environment in which annual Con- 
gressional appropriations of funds for the judiciary 
occur. 

For budgeting purposes, judges’ salaries are tied to 
salaries of elected officials, including those of Congress. 
Because Congress rarely grants itself salary increases, 
the judiciary rarely receives increases, even those 
promised and scheduled as cost-of-living adjustments. 
The history of the linkage between congressional 
salaries and judicial salaries is long and complicated. 
Simply put, Title 2, U.S.C. § 135 (for district judges; 
similar provisions apply to the compensation of other 
Article III judges) ties judicial salaries to Section 205 of 
Title 2. Section 205, the “Adjustment Act,” provides for 
an annual cost-of-living salary adjustment for judges, 
members of Congress, and Executive Schedule officials 

6 Atkins v. U.S., 214 Ct. Cl. 186, 556 F.2d 1028 (Ct. Cl. 1977), 
was an unsuccessful attempt to force the Government to address 
the destructive effect of inflation on the judiciary during the period 
1969—1975, when the value of the dollar, measured by the Con- 
sumer Price Index, decreased by 34%, and Congress failed to 
provide increases to protect judges’ purchasing power. 

119a 

when the rates of pay of employees under the General 
Schedule are adjusted for inflation; the Ethics Reform 
Act of 1989, Pub. L. No. 101-194, 103 Stat. 1716, keyed 
the adjustment to the index known as the Employment 
Cost Index—ECI. 

Congress made a valiant effort in connection with the 
1989 Ethics Reform Act to play catch-up. Salaries of 
top government officials, and judges, which for years 
had been lagging behind inflation, were adjusted in the 
amount of 7.9% in 1990 and 29.5% in 1991. This was 
followed in 1992 and 1993 by the promised annual in- 
flationary adjustments pursuant to the Adjustment 
Act, and as indicated by the ECI. Since then, in every 
fiscal year (except one, 1994), General Schedule em- 
ployees have had their salaries adjusted in response to 
increases in the ECI; however, in every fiscal year 
(except one, 1998), Congress, dealing with its own po- 
litical concerns, denied the promised similar adjustment 
to judges. 

Thus, despite occasional gains, judges’ salaries re- 
main substantially behind the cost-of-living index, even 
taking into account the recent relatively modest in- 
creases in inflation. The issue is hardly the dollar cost 
of the needed adjustment in judicial salaries—the 
entire judiciary budget constitutes two-tenths of one 
percent (0.2%) of the annual budget of the Federal 
Government, and the salaries of Article III judges con- 
stitute only seven percent (7%) of the annual judiciary 
budget. Fairness to the judiciary, and the protection of 
its quality and independence, would come at a very 
small cost in dollars. 

This brief review of the recent history of judicial 
compensation policy highlights the wisdom of the 

120a 

founders in including in Article III the express provi- 
sion for protection of judicial salaries. In the larger 
view, it behooves the Government to ensure that that 
protection has real meaning, since the judiciary’s ability 
to function as an independent judiciary is a cornerstone 
of the people’s freedom. Professor Katzmann, in his 
recent book, stated the point well: 

This relationship [between the federal judiciary and 
Congress] shapes the administration of justice in 
critical ways. What is at issue in part is the 
integrity of political institutions: the judiciary needs 
to function in an environment respectful of its core 
values and mission, with the requisite resources; 
and the legislative branch seeks a judicial system 
that faithfully interprets its laws and efficiently 
discharges justice. But a goal even greater than the 
well-being of particular branches of government is 
at stake: the preservation of the means by which 
justice is dispensed fairly and efficiently.7 

2. 

The Supreme Court has had several occasions to 
expound on the law of the Compensation Clause and on 
those occasions has established the following proposi- 
tions. The imposition of a new federal tax that has the 
effect of reducing the judicial compensation of judges 
already in office is unconstitutional. See Evans v. Gore, 
253 U.S. 245, 40 S. Ct. 550, 64 L.Ed. 887 (1920). How- 
ever, an income tax levied against the judicial salary of 
judges who took office after the levy is in effect is 
constitutional, when the taxing measure is of general, 

7 Robert Katzmann, Courts and Congress 1 (Brookings Institu- 
tion Press 1997). 

121a 

non-discriminatory application to all earners of income. 
See O’Malley v. Woodrough, 307 U.S. 277, 59 S. Ct. 838, 
83 L.Ed. 1289 (1939). In addition, though Congress may 
not rescind a salary increase for judges once it has gone 
into effect—that would be a diminishment of compen- 
sation—Congress is under no constitutional obligation 
to grant salary increases. See United States v. Will, 449 
U.S. 200, 101 S. Ct. 471, 66 L.Ed.2d 392 (1980); see also 
Atkins v. United States, 214 Ct. Cl. 186, 556 F.2d 1028 
(Ct. Cl. 1977). 

The question before us is one not yet presented to 
the Supreme Court, or previously to this court. We 
earlier held, consistent with Evans, and now law of this 
case, that the imposition in 1983 on federal judges then 
in office of entirely new taxes—the OASDI and HI 
taxes—is unconstitutional. The question before us now 
is, what is the remedy for this unconstitutional imposi- 
tion, as a result of which these judges have had with- 
held from their judicial salaries sums of money to which 
they are lawfully entitled. 

The theory of the Government led the trial court to 
declare that: 

if Congress mandates that federal judges pay a 
certain amount in a new tax but, at the same time, 
gives those judges a salary increase in an amount 
equal to or greater than the amount of the tax, then 
any diminution within the meaning of the Compen- 
sation Clause is immediately cured. This is what 
occurred with respect to plaintiffs. 

Hatter VI, 38 Fed. Cl. at 172. The Government’s theory 
of the case, that the judges sustained little if any dam- 
ages from this unconstitutional imposition because 

122a 

whatever losses they sustained were offset by later 
general salary increases, is fundamentally flawed. 

The basic problem with the Government’s theory is 
that it would create, with regard to judicial compen- 
sation, two different classes of judges. One class would 
be all judges who held office from and after 1983.8 
Those judges would be entitled the full benefit of con- 
gressionally-granted salary increases, such as they 
might be, awarded during their term of office. The 
other class would be all judges who held office prior to 
1983 and continued in office for some time thereafter. 
These latter judges would not receive the Congres- 
sionally-granted salary increases which became effec- 
tive after 1983, because a significant portion of the 
increases would be allocated to pay the damage award 
to which they are entitled as a result of the earlier 
unconstitutional imposition, a damage award owed 
them by the Government. 

That is not an acceptable proposition. There is no 
basis on which the pre-1983 judges ought to be made to 
pay, from their own pockets and out of their own 
salaries, including generally-granted increases, the 
damages owed to them by the Government, when the 
judges who were not subject to the unconstitutional 
imposition are entitled to keep all of their salaries, 
including the increases the judiciary was awarded.9 

8 For purposes of the discussion, we use the 1983 date as the 
significant cut-off. As will be seen in Part 3 of this opinion, for 
reasons related to the statute of limitations problem, that date may 
not be the controlling one. 

9 Of course the later-appointed judges are subject to general 
tax levies in effect at the time of their appointment, see O’Malley 

123a 

The unconstitutional imposition which resulted in 
dollars being taken from the pre-1983 judges, dollars 
which were then allocated by the Government to other 
uses, created a specific liability upon the Government to 
these judges. It would be inequitable to charge these 
judges with the duty to pay their own damages from 
their own salaries, out of salary increases that Congress 
thereafter granted to all judges, increases unrelated to 
that liability. It also would be destructive of the 
principle that “The Judges . . . shall . . . receive for 
their Services, a Compensation, which shall not be 
diminished during their Continuance in Office.” U.S. 
Const., art. III, § 1. 

Congress’s purpose in granting the increases 
received by judges in the years since 1983 is relevant to 
our inquiry. When the Constitutional Convention 
turned its attention to Article III and the issue of 
judicial compensation, the draftsmen first proposed 
that Congress would be precluded from either decreas- 
ing or increasing the compensation of judges. As the 
Supreme Court explained in Will, “Gouverneur Morris 
succeeded in striking the prohibition on increases; with 
others, he believed the Congress should be at liberty to 
raise salaries to meet such contingencies as inflation, a 
phenomenon known in that day as it is in ours.” Will, 
449 U.S. at 219, 101 S. Ct. 471. 

In The Federalist No. 79, Alexander Hamilton ex- 
plained the thinking behind this approach: 

It will readily be understood, that the fluctua- 
tions in the value of money, and in the state of 

v. Woodrough, 307 U.S. 277, 59 S. Ct. 838, 83 L.Ed. 1289 (1939), but 
that is another matter entirely. 

124a 

society, rendered a fixed rate of compensation [of 
judges] in the Constitution inadmissible. What 
might be extravagant to-day might in half a century 
become penurious and inadequate. It was therefore 
necessary to leave it to the discretion of the legisla- 
ture to vary its provisions in conformity to the 
variations in circumstances; yet under such restric- 
tions as to put it out of the power of that body to 
change the condition of the individual for the worse. 

The Federalist No. 79, at 491-492 (Alexander Hamilton) 
(Clinton Rossiter ed., 1961). 

The wisdom of our founding fathers is borne out by 
history; since 1969, the base date currently used by the 
judiciary, inflation has increased by 344% in the 
aggregate. In the general salary increases Congress 
has seen fit to grant the judiciary in the years since 
1983, there is nothing to suggest that the congressional 
purpose was to make whole the losses sustained by the 
pre-1983 judges resulting from the unconstitutional 
imposition of the tax at issue in this case. On the 
contrary, everything in the record and the legislative 
history makes clear that these increases were in 
response to continued concerns expressed in Congress, 
within the judiciary itself, in the bar, as well as among 
segments of the informed public, concerns for the well- 
being and continued vitality of the federal judiciary if 
the slide in purchasing power resulting from continued 
and unadjusted-for inflation was not halted. 

10 

10 See Report of 1989 Commission on Executive, Legislative and 
Judicial Salaries: Hearings Before the Senate Committee on Gov- 
ernmental Affairs, 101st Cong., 1st. Sess., 130 (1989). 

125a 

That slide was as much a concern with regard to the 
pre-1983 judges who remained in service as it was with 
regard to those who came to the office later. To deprive 
the pre-1983 judges of the benefit of those increases by 
using them to offset the losses they incurred from the 
Government’s earlier wrongful act would not only be 
unfair, but would be contrary to Congress’s purpose in 
granting the increases. The only proper conclusion that 
can be reached on the facts before us is that these 
plaintiffs are entitled to the full measure of compen- 
sation for the damages they sustained by the wrong 
that was visited upon them, and that measure is inde- 
pendent of any generally awarded adjustment to 
judicial salaries. 

3. 

The judgment of the trial court must be reversed, 
and the matter must be returned to that court for de- 
termination of damages consistent with this opinion. 
Because a remand is necessary, there remains a dis- 
puted issue that needs resolving regarding the applica- 
tion of the statute of limitations. The judges argue that 
this case involves what is known as a “continuing 
wrong,” so that each year in which moneys are withheld 
by the Government, a new cause of action arises. By 
this theory, no judge whose salary was or is subject to 
the unconstitutional imposition is barred by the six- 
year statute of limitations applicable to suits in the 
Court of Federal Claims. See 28 U.S.C. § 2401(a) (1994) 
(“[E]very civil action commenced against the United 
States shall be time barred unless the complaint is filed 
within six years after the right of action first accrues.”). 

The Government responds that the continuing wrong 
doctrine is inapplicable to this type of case, and cites 

126a 

this court’s opinion in Hart v. United States, 910 F.2d 
815 (Fed. Cir. 1990). The Government also notes that 
the application of the continuing wrong theory would 
mean that no judge would be entitled to more than six 
years’ worth of recovery, since any claim for years prior 
to that would be barred. 

We agree with the Government that this is not the 
type of case in which the continuing wrong theory 
makes sense. See Brown Park Estates—Fairfield Dev. 
Co. v. United States, 127 F.3d 1449, 1456- 59 (Fed. Cir. 
1997). The cause of action arose when the statutes 
which established the unconstitutional imposition be- 
came effective. Some judges “voluntarily” allowed the 
taxes to be taken from them year after year, in the 
sense that they did not protest the imposition in the 
only legally-effective way open to them, by a timely 
challenge in the courts. A judge who does not challenge 
the imposition by filing a complaint within the period 
allowed from the time the cause of action accrued is not 
protected from the defense of the running of the statute 
of limitations; like any litigant against the Government, 
such a plaintiff is subject to having the cause of action 
barred. 

In this case, suit was brought not as a class action but 
on behalf of the individually named judges. In that 
regard, there are two causes of action arising under two 
different statutes. The Tax Equity and Fiscal Respon- 
sibility Act of 1982, Pub. L. No. 97-248, imposed the 
Hospital Insurance portion of the Social Security tax on 
federal judges effective January 1, 1983. Since the 
pleadings in this case were filed on December 29, 1989, 
just short of seven years after the cause of action arose, 
all claims under that Act are subject to being barred by 

127a 

the running of the statute of limitations. The Old Age 
and Survivors Disability Insurance portion of the Social 
Security tax was imposed on federal judges by the 
Social Security Amendments of 1983, Pub. L. No. 98-21, 
and was effective January 1, 1984. Since this suit was 
filed by the original ten judges a few days short of six 
years from when that cause of action arose, the suit on 
that claim is not barred. 

The rather convoluted accounting the trial judge 
found himself enmeshed in because of the theory of the 
case that was adopted in the trial court is wholly irre- 
levant; therefore we express no opinion thereon. 

CONCLUSION 

The judgment of the Court of Federal Claims is 
reversed, and the matter remanded to that court for 
further proceedings consistent with this opinion. 

REVERSED AND REMANDED. 

128a 

APPENDIX J 

UNITED STATES COURT OF APPEALS 
FOR THE FEDERAL CIRCUIT 

No. 94-5139 

JUDGE TERRY J. HATTER, JR., MARY MARTIN 
ARCENEAUX, ON BEHALF OF THE LATE JUDGE GEORGE 
ARCENEAUX, JR., JUDGE PETER H. BEER, JUDGE 
DUDLEY H. BOWEN, JR., CHIEF JUDGE JUAN G. 
BURCIAGA, JUDGE A.J. MCNAMARA, JUDGE HARRY 
PREGERSON, JUDGE RAUL A. RAMIREZ, JUDGE 
NORMAN C. ROETTGER, JR., CHIEF JUDGE THOMAS A. 
WISEMAN, JR., CHIEF JUDGE TERENCE T. EVANS, 
JUDGE HENRY A. MENTZ, JR., CHIEF JUDGE WILBUR 
D. OWENS, JR., JUDGE HENRY R. WILHOIT, JR., JUDGE 
HAROLD A. BAKER, AND CHIEF JUDGE MICHAEL M. 
MIHM, PLAINTIFF-APPELLANTS 

v. 

THE UNITED STATES, DEFENDANT-APPELLEE 

ORDER 

Each party has filed a combined petition for panel 
rehearing and petition for rehearing en banc. 

Upon consideration thereof, 

IT IS ORDERED THAT: 

(1) Both petitions for panel rehearing are denied. 

129a 

(2) The petition for rehearing en banc of the 
Appellants is granted. 

(3) The petition for rehearing en banc of the 
Appellee is denied. 

(4) The judgment of the court entered on August 5, 
1999, and reported in 185 F.3d 1356 (Fed. Cir. 1999), is 
vacated and the opinion of the court accompanying the 
judgment is withdrawn with respect to part 3. 

(5) Additional briefing and argument are not 
indicated at this time. 

FOR THE COURT, 

December 20, 1999 

/s/ JAN HORBALY 

Date JAN HORBALY 

Clerk 

130a 

APPENDIX K 

1. The Compensation Clause of Article III, Section 
1, of the United States Constitution provides that “[t]he 
Judges both of the supreme and inferior courts, * * * 
shall, at stated Times, receive for their Services, a 
Compensation, which shall not be diminished during 
their Continuance in Office.” 

2. Section 3101 of Title 26, United States Code, 
provides, in part: 

(a) Old-age, survivors, disability insurance 

In addition to other taxes, there is hereby im- 
posed on the income of every individual a tax equal 
to the following percentage of the wages (as defined 
in section 3121(a)) received by him with respect to 
employment (as defined in section 3121(b))— 

* * * * * 

(b) Hospital insurance 

In addition to the tax imposed by the preceding 
subsection, there is hereby imposed on the income of 
every individual a tax equal to the following per- 
centage of the wages (as defined in section 3121(a)) 
received by him with respect to employment (as 
defined in section 3121(b)) * * * 

131a 

3. Section 3121 of Title 26, United States Code, 
provides in part: 

(b) Employment 

For purpose of this chapter, the term “employ- 
ment” means any service, of whatever nature, per- 
formed * * * ; except that such term shall not 
include—* * * 

(5) service performed in the employ of 
the United States or any instrumentality of 
the United States * * * except that this 
paragraph shall not apply with respect to any 
such service performed on or after any date on 
which such individual performs—* * * 

(E) service performed as the Chief 
Justice of the United States, an Associate 
Justice of the Supreme Court, a judge of a 
United States court of appeals, a judge of a 
United States district court (including the 
district court of a territory), a judge of the 
United States Court of Federal Claims, a 
judge of the United States Court of Inter- 
national Trade, a judge of the United States 
Tax Court, a United States magistrate, or a 
referee in bankruptcy or United States 
bankruptcy judge[.] 

* * * * * 

132a 

(u) Application of hospital insurance tax to 

Federal, State, and local employment 

(1) Federal employment 

For purposes of the taxes imposed by 
sections 3101(b) and 3111(b), subsection (b) 
shall be applied without regard to para- 
graph (5) thereof. 

133a 

APPENDIX L 

The following is a list of other actions that have been 
filed against the United States in the Court of Federal 
Claims, challenging thte constitutionality of the exten- 
sion of the HI or OASDI tax to federal judges’ salaries, 
as well as a list of the plaintiffs to those actions: 

Anderson v. United States, No. 95-856 

Plaintiffs: G. Ross Anderson, Jr. 

Richard A. Enslen 
Gerald W. Heaney 
Douglas W. Hillman 
William C. Lee 
Theodore McMillan 
James T. Moody 
John T. Nixon 
Allen Sharp 
Thomas R. Brett 
William J. Castagne 
Stuart Daly, on behalf of T.F. Gilroy Daly 
A. Joe Fish 
Betty J. Fletcher 
J. Owen Forrester 
John M. Manos 
Consuelo B. Marshall 
Neal P. McCurn 
Thomas J. Meskill 
Stewart A. Newblatt 
James C. Paine 
Manuel L. Real 
Stephen Reinhardt 
David L. Russell 
Frank Howell Sealy 
Joseph E. Stevens, Jr. 

Robert W. Sweet 

134a 

Anna Diggs Taylor 
Filemon B. Vela 
C. Rogert Vinson 
Lee R. West 
David K. Winder 
Rya W. Zobel 
Davis N. Edelstein 
Warren W. Eginton 
Sherman G. Finesilver 
Eugene H. Nickerson 
Barbara Jacobs Rothstein 
Charles P. Sifton 
Leonard D. Wexler 
William A. Norris 
William O. Bertelsman 
Clarence A. Brimmer 
W. Earl Britt 
Ellen Bree Burns 
Peter C. Dorsey 
Sam J. Ervin, III 
Gerard L. Goettel 
J. Dickerson Phillips, Jr. 
Thomas C. Platt, Jr. 

H. Lee Sarokin 
Eugene E. Siler, Jr. 
Harold A. Ackerman 
Norman W. Black 
Harry T. Edwards 
Orinda D. Evans 
C. Weston Houck 
Patricia M. Wald 
Thomas G. Hull 
Francis G. Murnaghan, Jr. 
James A. Redden 
John W. Bissell 

135a 

Carman v. United States, No. 95-809T 

Plaintiff: Gregory W. Carman 

Cerezo v. United States, No. 96-300C 

Plaintiffs: Carmen C. Cerezo 

Juan M. Perez-Gimenez 
Hector M. Laffitte 

Garcia v. United States, No. 96-215 

Plaintiffs: H.F. Garcia 

James R. Nowlin 
Lucius D. Bunton, III 

Grady v. United States, No. 96-127 

Plaintiffs: John F. Grady 

James B. Moran 
Milton I. Shadur 
John A. Nordberg 
Marvin E. Aspen 
Charles P. Kocoras 
Paul E. Plunkett 

Henderson v. United States, No. 95-856 

Plaintiffs: Thelton E. Henderson 

Robert P. Aguilar 

Kearse v. United States, No. 96-426 

Plaintiff: Amalya L. Kearse 

Newman v. United States, No. 97-519C 

Plaintiffs: Jon O. Newman 

Robert G. Doumar 
David D. Dowd, Jr. 
Thomas P. Griesa 
Hayden W. Head, Jr. 
George P. Kazen 

136a 

Rambo v. United States, No. 96-380 

Plaintiff: Sylvia H. Rambo 

Wicker v. United States, No. 96-420 

Plaintiff: Thomas C. Wicker, as executor of estate 
of Veronica D. Wicker