DYK, Circuit Judge.
This case returns to us on remand from the Supreme Court. The Court ordered us to determine "the question of preclusion." Beer v. United States, ___ U.S. ___, 131 S.Ct. 2865, 2865, 180 L.Ed.2d 909 (2011). We hold that the plaintiffs' claims are not precluded by our prior decision in Williams v. United States, 240 F.3d 1019 (Fed.Cir.2001), cert. denied, 535 U.S. 911, 122 S.Ct. 1221, 152 L.Ed.2d 153 (2002). But, as Williams remains binding precedent on this panel, we again affirm the judgment of the Court of Federal Claims granting summary judgment in favor of the government.
This case involves the question of whether various congressional enactments violate the Compensation Clause by reducing the compensation of Article III federal judges. The Ethics Reform Act of 1989 ("the ERA"), Pub. L. No. 101-194, 103 Stat. 1716, put in place a system whereby federal judges were to receive yearly cost-of-living salary adjustments ("COLAs"). Under the ERA, once a determination was made by Congress that COLAs would be given to federal employees on the General Schedule for a given year, COLAs would also be granted to federal judges, "effective at the beginning of the first applicable pay period" for the COLAs on the General Schedule, 28 U.S.C. § 461(a)(1), and up to a maximum of five percent each year, ERA § 704(a)(1)(B).
Prior to the calendar years 1995, 1996, 1997, and 1999, in which COLAs were provided to General Schedule employees, Congress passed separate legislation that
In 1997, a group of Article III federal judges filed a class action complaint in the United States District Court for the District of Columbia, alleging that the blocking legislation for the years 1995, 1996, and 1997, violated the Compensation Clause by diminishing their compensation. Jurisdiction was predicated on the Little Tucker Act, 28 U.S.C. § 1346, and, after an amendment to the complaint, on the district court's general federal question jurisdiction, 28 U.S.C. § 1331. The plaintiffs' requested relief was framed as declaratory relief, asking the court, for example, to "declare" that the blocking legislation was "unconstitutional and void," and to "declare" that the plaintiffs were "entitled to damages in an amount to be determined by the Court." Complaint at 18, Williams v. United States, 48 F.Supp.2d 52 (D.D.C.1999) (No. 97-CV-3106).
Federal Rule of Civil Procedure 23 provides for two types of class actions that could potentially be certified in the circumstances of the Williams case—a Rule 23(b)(2) class action or a Rule 23(b)(3) class action. A Rule 23(b)(2) class action involves requests for "injunctive relief or corresponding declaratory relief" and does not in terms require notice to the class. See Fed.R.Civ.P. 23(c)(2)(A). It also does not require opt-out procedures. A Rule 23(b)(3) class action typically involves claims for past damages and requires notice and opt-out procedures. See Fed. R.Civ.P. 23(c)(2)(B). The district court in Williams certified the class under Rule 23(b)(2), with the class including "[a]ll persons who served as Judges of the United States pursuant to Article III of the Constitution" at any time during the years 1995, 1996, and 1997. Class Certification Order at 2, Williams, 48 F.Supp.2d 52 (No. 97-CV-3106). According to the minimum requirements for Rule 23(b)(2) classes, the court did not provide the absent class members with notice or an opportunity to opt out of the litigation. See id.
On July 15, 1999, the district court in Williams held that the blocking statutes for the years 1995, 1996, and 1997, violated the Compensation Clause. 48 F.Supp.2d at 65. Thus the class was declared to be "entitled to cost-of-living adjustments for 1995, 1996 and 1997, together with all other
On appeal, this court held that "the district court possessed Little Tucker Act jurisdiction," "at least as to the Judges' prayer for relief for the 1995 year, since each individual judge would receive less than $10,000 for the unpaid COLA for that year." Williams, 240 F.3d at 1025. With respect to the merits of the case, we held that the blocking legislation at least for 1995, preventing COLAs established in the ERA from taking effect (before those COLAs "vested"), was not unconstitutional. Id. at 1032, 1039-40. In this respect, we held that the result was dictated by the Supreme Court's decision in United States v. Will, 449 U.S. 200, 101 S.Ct. 471, 66 L.Ed.2d 392 (1980). One judge dissented. On February 16, 2001, the same day that a panel of this court decided Williams, the court declined to hear the case en banc, with three judges dissenting. Williams v. United States, 264 F.3d 1089 (Fed.Cir. 2001). Subsequently, the Supreme Court denied the plaintiffs' petition for certiorari, with three Justices dissenting. Williams v. United States, 535 U.S. 911, 122 S.Ct. 1221, 152 L.Ed.2d 153 (2002).
On November 28, 2001, Congress enacted further legislation affecting judicial pay. See Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act of 2002, Pub. L. No. 107-77, § 625, 115 Stat. 748, 803 (2001) (the "2001 legislation"). Instead of proceeding in a piecemeal fashion to block the COLAs, the 2001 legislation broadly provided:
Act of Dec. 15, 1981, Pub. L. No. 97-92, § 140, 95 Stat. 1183, 1200, amended by § 625, 115 Stat. at 803. For fiscal year 2007, Congress enacted legislation providing COLAs for federal employees on the General Schedule, but did not enact legislation providing COLAs for federal judges, and accordingly, federal judges received no COLA for that year. Article III judges were granted COLAs in years 2002, 2003, 2004, 2005, 2006, and 2008, but these adjustments did not reflect the disputed 1995, 1996, 1997, and 1999 COLAs.
On January 16, 2009, the plaintiffs, all members of the certified class in Williams, but not named plaintiffs in the Williams litigation, filed the present suit in the Court of Federal Claims under the Tucker Act, seeking back pay for the failure to
The government moved for summary judgment on the ground that, as a matter of stare decisis, the suit was barred by our Williams decision, and on the alternative ground that, inter alia, the suit was barred by "res judicata" because of the earlier Williams judgment. See Order, Beer v. United States, No. 09-37C, slip op. at 1 (Fed.Cl. Oct. 16, 2009). Although the preclusion issue was designated by the government as an issue of "res judicata" at the Court of Federal Claims, it was more properly termed a question of collateral estoppel or issue preclusion.
The Court of Federal Claims did not reach the issue preclusion question. Instead, the court found that an analysis of the "complex legal and constitutional issues" presented by the preclusion argument was not "an effective use of judicial resources" given the parties' agreement that the court "must dismiss plaintiffs' Complaint in light of the Williams precedent." Order, Beer, No. 09-CV-37, slip op. at 2. On October 16, 2009, the Court of Federal Claims dismissed the complaint, solely on the ground that the precedent set by "Williams forecloses [the] court's ability to grant plaintiffs the relief they seek." Id. (internal quotation marks omitted).
The plaintiffs appealed to this court. On January 15, 2010, a panel of this court summarily affirmed the judgment of the Court of Federal Claims. We agreed with the parties "that this court's opinion in Williams . . . controls the disposition of this appeal by a panel of this court," and accordingly summarily affirmed the decision of the Court of Federal Claims. Beer v. United States, 361 Fed.Appx. 150, 151-52 (Fed.Cir.2010). We did not reach the government's alternative preclusion argument. On the same day, the court denied a petition for hearing en banc, with four judges dissenting. Beer v. United States, 592 F.3d 1326 (Fed.Cir.2010).
The plaintiffs subsequently petitioned for certiorari to the Supreme Court. In its opposition brief, the government argued that our decision in Williams was correct, and alternatively that plaintiffs were precluded from relitigating the Compensation Clause issue decided in Williams because they were members of the certified class in that case. On June 28, 2011, the Supreme Court granted certiorari, and entered the following order:
The preclusion question here is whether absent class members in an unsuccessful Rule 23(b)(2) class action, who did not receive notice of the pendency of the action, are subject to preclusion. The Supreme Court has held that absent class members may not challenge the certification of a Rule 23(b)(2) class on the grounds that the certification was improper under the Federal Rules of Civil Procedure. Ticor Title Ins. Co. v. Brown, 511 U.S. 117, 121, 114 S.Ct. 1359, 128 L.Ed.2d 33 (1994) (per curiam). However, absent class members may later object to a res judicata or collateral estoppel bar on grounds of due process, for example, on the grounds that the absent class members were inadequately represented in the prior action, see Hansberry v. Lee, 311 U.S. 32, 42-43, 61 S.Ct. 115, 85 L.Ed. 22 (1940), or did not receive constitutionally required notice, see Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, 131 S.Ct. 2541, 2559, 180 L.Ed.2d 374 (2011). Thus, the issue before us is whether the plaintiffs were entitled, as a matter of due process, to notice of the Williams litigation before being bound by the final judgment in Williams. If notice was required, we must also determine what constitutes sufficient notice to meet the requirements of due process. We address each of these two issues in turn.
As a general matter, there is "no doubt that at a minimum [due process] require[s] that deprivation of life, liberty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 94 L.Ed. 865 (1950). However, there may be an exception for certain injunctive class actions, perhaps on the theory that the right to injunctive relief does not constitute a traditional property interest.
It is well established that, in class actions seeking only monetary recovery, notice is essential to binding absent class members. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985). Indeed, for claims "wholly or predominately for money judgments," absent class members, as a matter of due process, "must receive notice plus an opportunity to be heard and participate in the litigation" as well as the opportunity to "opt out" before being precluded from pursuing individual damage claims. Id. at 811, 812 & n. 3, 105 S.Ct. 2965; see also AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740, 1751, 179 L.Ed.2d 742 (2011) ("For a class-action money judgment to bind absentees in litigation, class representatives must at all times adequately represent class members, and absent members must be afforded notice, an opportunity to be heard, and a right to opt out of the class."); Wal-Mart, 131 S.Ct. at 2559 ("In the context of a class action predominantly for money damages we have held that absence of notice and opt-out violates due process."). In other words, in a Rule 23(b)(3) class action for money damages, notice and opt-out rights are essential to due process. Adequate representation is not alone sufficient. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176-77, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974).
The Supreme Court established in Wal-Mart that due process requires notice be given to absent class members when monetary claims are more than just "incidental" to the claims for injunctive or declaratory relief. See Wal-Mart, 131 S.Ct. at 2557, 2559-60. Wal-Mart explicitly declined, however, to decide whether notice was required as a matter of due process when monetary claims were "incidental" to injunctive or declaratory claims in a class action. Id. at 2560. The Court held instead that the monetary claims in Wal-Mart were clearly not "incidental," because Wal-Mart was "entitled to individualized determinations" of its liability, affording Wal-Mart the opportunity to "show that it took [ ] adverse employment action[s] against [particular] employee[s] for any reason other than discrimination." Id. at 2560-61. Thus the Court stated: "We need not decide in this case whether there are any forms of `incidental' monetary relief that are consistent with the interpretation of Rule 23(b)(2) we have
As recognized in Wal-Mart, the source of the "incidental" concept lies in decisions of some of our sister circuits that concluded that a Rule 23(b)(2) class action could be certified without notice to absent class members in circumstances where monetary relief "is incidental to requested injunctive or declaratory relief." Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir.1998); see also Lemon v. Int'l Union of Operating Eng'rs, 216 F.3d 577, 581 (7th Cir.2000) ("[C]ertification under Rule 23(b)(2), without notice or opportunity to opt out, is impermissible unless the requested monetary damages are `incidental' to requested injunctive or declaratory relief."). But those cases did not involve issue preclusion, and did not decide whether notice was required as a matter of due process before binding absent class members.
Even if we were to assume that there could be an "incidental" exception for due process purposes, the question would remain as to the scope of the exception. The parties here disagree as to what monetary relief qualifies as "incidental." Citing Allison, the government argues that the monetary aspects of the claims in Williams were incidental because they "flow[ed] directly from liability to the class as a whole" and were "capable of computation by means of objective standards and not dependent in any significant way on the intangible, subjective differences of each class member's circumstances." Allison, 151 F.3d at 415. The plaintiffs, on the other hand, argue that monetary relief is the quintessential remedy at law, readily divisible, and cannot be reduced to "incidental" status through a combination with a request for injunctive or declaratory relief. The plaintiffs further argue that the monetary aspect of Williams could not be incidental to the requested declaratory relief because that requested declaratory relief was itself about an entitlement to money.
We agree with the plaintiffs that the incidental exception, if there is one, cannot apply where the requested injunctive or declaratory relief is directed to the payment of money. The requested relief in Williams was framed as declaratory relief, asking the court, for example, to "declare" that the blocking legislation was "unconstitutional and void," and to "declare" that the plaintiffs were "entitled to damages in an amount to be determined by the Court." Complaint at 18, Williams, 48 F.Supp.2d 52 (No. 97-CV-3106). Thus the government conceded that the declaratory relief requested in Williams was itself directed to the payment of money, and the case was "essentially one for money damages." Brief of Defendant-Appellant at 24, Williams, 240 F.3d 1019 (No. 99-1572), 1999 WL 33607449.
It may be, as the government argues, that the "other than money damages" provision of the Administrative Procedure Act ("APA"), 5 U.S.C. § 702, turns on whether a request is for past damages or an order for payment of money in the future.
Because we conclude that both the prospective and retrospective aspects of the claims in Williams were essentially monetary in nature, we hold that due process does not allow the plaintiffs' claims in the present suit to be precluded by Williams in the absence of notice of the Williams class. In other words, Williams was a case in which money claims predominated and in which, accordingly, notice to absent class members was required as a matter of due process. We need not address whether opt-out rights are also required as a matter of due process.
The government argues that even if notice were required, the due process notice obligation was satisfied because the plaintiffs here received actual notice of the Williams litigation while it was pending. We consider whether actual notice is sufficient.
The government's theory is that the plaintiffs received actual notice of the Williams suit through the press, and specifically through an article in The Third Branch,
The government relies on United Student Aid Funds, Inc. v. Espinosa, ___ U.S. ___, 130 S.Ct. 1367, 176 L.Ed.2d 158 (2010), to support its argument that actual notice is sufficient. However, the government's reliance on United is misplaced. United involved a bankruptcy proceeding whereby the debtor sought to obtain a discharge of a government-sponsored student loan debt via an "undue hardship" determination. Id. at 1373. Though the debtor failed to serve United with the
The Supreme Court has recognized the fundamental importance of providing a party with formal notice before binding them to a judgment. The Court's decision in Nelson v. Adams USA, Inc., 529 U.S. 460, 120 S.Ct. 1579, 146 L.Ed.2d 530 (2000), is in fact quite similar to this case in rejecting the proposition that actual notice is sufficient. In Nelson, a trial court added the president and sole shareholder of a defendant company to a judgment against that company without affording him, in his individual capacity, formal notice or an opportunity to be heard. Id. at 462-63, 120 S.Ct. 1579. The Supreme Court noted that Nelson "knew as soon as Adams moved to amend the pleading and alter the judgment that he might ultimately be subjected to personal liability." Id. at 466, 120 S.Ct. 1579. But despite Nelson's actual knowledge of the circumstances, he could not be added to the judgment, as a matter of due process, without first receiving formal notice and being given an opportunity to be heard. Id. at 465-67, 120 S.Ct. 1579.
In this case, it is undisputed that the plaintiffs did not receive formal notice of the class certification in Williams from either the court or the class representatives. "[D]ue process . . . demand[ed] a more reliable and orderly course." Id. at 467, 120 S.Ct. 1579. Though Nelson involved the provision of notice to a defendant as opposed to an absent class member, we find no basis for distinguishing between the two, as each were entitled to notice. Consistent with this principle, we hold that when absent class members are entitled to notice as a matter of due process, formal notice must be provided advising absent class members of the pendency of the action and their right to participate before being precluded from bringing their own action.
In summary, we hold that the plaintiffs are not precluded by the Williams litigation from bringing their Compensation Clause claims in the present case. However, there has been no intervening precedent bearing on the underlying constitutional issue since our prior affirmance on January 15, 2010. There we stated: "The parties agree, and we must also agree," that "this court's opinion in Williams . . . controls the disposition of this appeal by a panel of this court." Beer, 361 Fed.Appx. at 151-52. Accordingly, we must again affirm the judgment of the Court of Federal Claims. If the original Williams panel was mistaken in its interpretation of the Will case, the remedy lies with this court en banc, with the Supreme Court, or with Congress.
Accordingly,
The judgment of the Court of Federal Claims is affirmed.
MAYER, Circuit Judge, concurring.
I join the court's opinion, but I continue to believe Williams v. United States was wrongly decided for the reasons set out in my opinion dissenting from the refusal to rehear that case en banc. 264 F.3d 1089, 1090-93 (Fed.Cir.2001).