Hatter v. United States

RADER, Circuit Judge. This case is back in this court on remand from the Supreme Court of the United States. United States v. Hatter, 532 U.S. 557, 121 S.Ct. 1782, 149 L.Ed.2d 820 (2001) (Hatter IX). The history of this case involves nine 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), Hatter v. United States, 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), Hatter v. United States, 185 F.3d 1356 (Fed.Cir.1999) (Hatter VII), Hatter v. United States, 203 F.3d 795 (Fed.Cir.2000) (Hatter VIII), and United States v. Hatter, 532 U.S. 557, 121 S.Ct. 1782, 149 L.Ed.2d 820 (2001) (Hatter IX). In Hatter TV, this court relied upon Evans v. Gore, 253 U.S. 245, 40 S.Ct. 550, 64 L.Ed. 887 (1920), to hold that Congress violated the Compensation Clause of the United States Constitution when it imposed Medicare and Social Security taxes upon then-sitting Article III judges. 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). In Hatter VII, this court relied upon the unconstitutional diminution determined in Hatter TV as law of the case, and held further that the full measure of damages sustained by the then-sitting Article III judges is independent of any salary increase awarded thereafter, absent Congressional purpose to cure the constitutional wrong. Sitting en banc, this court superseded certain portions of the panel opinion but left intact that portion of Hatter VII described above. Hatter v. United States, 203 F.3d 795 (Fed.Cir.2000) (en banc) (Hatter VIII). Thereafter the Supreme Court granted the Government’s petition for certiorari to consider “[wjhether Congress violated the Compensation Clause when it extended the Medicare and Social Security taxes to the salaries of sitting federal judges; and, [i]f so, whether any such violation ended when Congress subsequently increased the salaries of all federal judges by an amount greater than the new taxes.” Hatter IX, 532 U.S. 557, 121 S.Ct. at 1789. In Hatter IX, the Supreme Court overruled Evans, and held that Congress may impose a nondiseriminatory tax upon sitting Article III judges, but that taxation that singles out judges for specially unfavorable treatment is prohibited. The Supreme Court then reversed the opinions of this court in Hatter TV and Hatter VII as they related to nondiseriminatory taxes. The Court found that in this case Congress acted within its constitutional limits when it extended Medicare eligibility and taxes to all federal employees including all then-sitting Article III judges. Hatter IX, 532 U.S. 557, 121 S.Ct. at 1793. The Supreme Court opinion also affirmed, however, the holding of this court in Hatter VII that the Social Security rules that effectively singled out then-sitting Article III judges for imposition of Social Security taxes were unconstitutional. Hatter IX, 532 U.S. 557, 121 S.Ct. at 1795. The Supreme Court also held that Congress cannot cure an unconstitutional diminution with a subsequent pay increase absent some intent to cure the constitutional violation. Hatter IX, 532 U.S. 557, 121 [930] S.Ct. at 1796-97. In view of this holding and the evidence of record, the Supreme Court affirmed the judgment of this court in Hatter VII on these issues and concluded that in this case “later statutory salary increases did not cure the preceding unconstitutional harm.” Hatter IX, 532 U.S. 557, 121 S.Ct. at 1797. Accordingly, this court remands to the United States Court of Federal Claims to determine damages to the defendants arising from the unconstitutional imposition of the Social Security tax, consistent with the opinion of the Supreme Court. REMANDED