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Appeals Court to Congress: No Reneging on Automatic Judicial Pay Hike

A federal appeals court has ruled that Congress cannot retroactively take away cost-of-living adjustments promised to federal judges in a 1989 law, handing an important victory to the judiciary in its long-running effort to raise judicial compensation.

The U.S. Court of Appeals for the Federal Circuit ruled 10-2 on Oct. 5 that automatic judicial pay increases contained in the 1989 Ethics Reform Act (PL 101-194) are protected by the Constitution’s Compensation Clause. The provision states that judges’ pay “shall not be diminished during their continuance in office.”

While the courts have interpreted that provision to apply to judges’ base salaries, the ruling finds that it also applies to the automatic cost-of-living increases spelled out by the ethics statute, pay increases Congress has since sought to rescind.

“The Constitution prevents Congress from abrogating that statute’s precise and definite commitment to automatic yearly cost of living adjustments for sitting members of the judiciary,” Chief Judge Randall R. Rader wrote for the majority.

In addition to deciding the broad constitutional question, the court found that Congress’ 2001 amendment to an appropriations bill (PL 97-92) passed by Congress in 1981 — in which it revoked some of the judicial cost-of-living adjustments provided in the ethics law — could not stand, since the underlying spending bill that Congress amended was on the books before the ethics law was enacted.

“This court concludes that the 1989 act was enacted after [the underlying appropriations law], and, as such, the 1989 act’s automatic cost of living adjustments control,” the court ruled.

The ruling in the case, Beer v. United States, marks a notable reversal by the Federal Circuit. In 2001, a three-judge panel of the same court found that promised future salary increases for judges are separate from judges’ current pay, and therefore are not protected by the Constitution’s Compensation Clause. Since then, the issue has been mired in the courts, with procedural questions delaying a definitive ruling on the substance of the challenge until last week.

For now, the court’s decision applies only to the six current and former federal judges who filed the challenge, and could provide them with back pay totaling about $25,000 for each judge, said Christopher Landau, the attorney who argued the case on behalf of the judges and a partner at Kirkland & Ellis in Washington, D.C. However, Landau said, the ruling — if it stands — is likely to open the door to broader legal challenges that could give all federal judges an opportunity to seek cost-of-living adjustments that Congress has repeatedly denied, even as it granted those increases for other federal employees.

Landau said the ruling should not be seen as a windfall for judges, who have long complained that their compensation lags the private sector and could have a long-term negative impact on the courts. Rather, he said, “This is doing nothing more than holding Congress to its promises.”

The ruling can be appealed to the Supreme Court, which rejects the majority of petitions it receives and may be particularly hesitant to decide a case that raises conflict-of-interest questions. That same concern was raised by the appeals court in its ruling Oct. 5, though it said the questions presented demanded judicial intervention.

“Judicial review of laws affecting judicial compensation is not done lightly as these cases implicate a conflict of interest,” the court wrote. “After all, judges should disqualify themselves when their impartiality might reasonably be questioned or when they have a potential financial stake in the outcome of a decision.”

The ethics measure at the heart of the ruling was signed into law by President George Bush, who said it “contains important reforms to federal ethical standards,” including “important adjustments to compensation for all three branches of government.”

For federal judges, the measure both limited their ability to earn outside income and provided pay increases under a formula tied to the Employment Cost Index, a quarterly index of private-sector salaries published by the Bureau of Labor Statistics.

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