United States Railroad Retirement Board v. Fritz

UNITED STATES RAILROAD RETIREMENT BOARD

v. FRITZ Argued 79-870. October 1980 Decided December Burgee, Court, Rehnquist, J., opinion in which delivered joined. White, Blackmun, JJ., Stewart, Powell, J., and C. post, p. 180. judgment, concurring opinion SteveNS, J., filed joined, Marshall, J., in which dissenting opinion, J., BrenNAN, filed a post, p. 182. With appellant. cause argued Kneedler

Edwin S. McCree, Deputy Solicitor General were the briefs him on Zimmerman, Edward Geller, G. Dale General Solicitor Lanter. Hintzke, E. James him With appellee. the cause argued Byron P.

Daniel Terry and Gill Phillip A. brief were on the Deford.* the Court. Rehnquist opinion delivered Justice District Southern for the District Court States The United Railroad a section unconstitutional held of Indiana amended, 45 1305, as Stat. Act of Retire- Railroad States seq., and the United 231 et § S. C. U. to 28 pursuant to this Court appealed has ment Board S. 444 U. jurisdiction. probable noted 1252. § S. C. We (1980). re- the railroad fundamentally restructured Act The adopted statute, predecessor The Act’s system. tirement disability benefits and system a retirement provided industry. in the railroad careers pursued who persons for railroad for both worked person who statute, Under railroad for qualified who employers nonrailroad and and S. C. security benefits, 42 U. and social retirement benefits systems under both retirement seq., 401 et received legislative The benefit.1 “windfall” accompanying an and Conway T. by Richard reversal were filed *Briefs of amici curiae urging D. Friedman Edward Conference; by Railway Labor and for the National Railway Executives Association. for the Labor A. Weiss Jonathan by urging amici curiae affirmance were filed Briefs of Bright Gary by Steven F. E. Elderly; for Legal Services the et al. Smith for T. W. Smith employee new, worked Act, who old Under qualified benefits. retirement years business railroad in the railroad industry for a sufficient outside railroad employee also worked If the history of the 1974 Act shows payment of windfall benefits threatened the railroad system retirement with bank- ruptcy by year 1981.2 therefore determined place system on a “sound financial basis” by eliminating future accruals of those benefits.3 Congress also enacted enough qualify time security for social benefits, qualified he for dual benefits. Due to the formula under computed, which those benefits were however, persons split who their employment between railroad and employment nonrailroad received dual benefits in excess of the amount they would have had split received employment. not their For example, yearn if 10 of either railroad or employment nonrailroad would produce monthly $300, benefit of years an additional 10 of the same employment at the same level of compensation creditable would not double benefit, but would say increase some lesser amount to $500. years If that 20 of service been equally had divided between railroad and employment, nonrailroad however, security the social bene- fit $300 would and the railroad retirement benefit would also be $300, for a total $600. benefit of $100 example difference in the constitutes the “windfall” generally, Rep. benefit. 93-1163, See S. No. pp. (1974); 2-3 H. Rep. R. 93-1345, pp. No. 2-3 2The relevant Reports Committee stated: “Resolution of the so called problem ‘dual benefit’ central insuring both to the fiscal soundness of system railroad retirement establishing equitable and to retirement employees.” benefits for all railroad Rep. 93-1163, supra, 11; No. Rep. H. 93-1345, supra, R. at 11. The problem reason for the was that a agreement financial interchange entered into between the security social systems and railroad caused entire cost the windfall benefits to be borne system, the railroad security the social system. The annual system drain on the approxi amounted to mately $450 per year, million and if it were not problem for “the of dual beneficiaries, the system railroad retirement would be completely almost Rep. 93-1163, solvent.” S. No. supra, 8; at Rep. 93-1345, H. R. No. supra, at 7. 3 Rep. 93-1163, supra, No. 1; Rep. at 93-1345, supra, H. No. R. 1. Congress eliminated future accruals by of windfall establishing benefits system a two-tier The benefits. first tier is measured what the security system social pay would on the basis of combined railroad and service, nonrailroad while the second tier is based on railroad service However, alone. part both are tiers the system, of railroad retirement being placed rather than the first directly tier security, under social and pro- grandfather a including provisions, transitional various benefits windfall preserved expressly which (h),4 vision, § 231b of employees. for some classes of nonrailroad security the basis on actually by social paid benefits the windfall benefit. the to eliminate as so deducted are employment origins when in 1970 its had Act of 1974 Retirement The Railroad study the to Retirement on Railroad Commission Congress the created The Commission system. retirement railroad of the soundness actuarial their at- and benefits “dual identified and report in 1972 its submitted system’s difficulties. financial the principal cause as a windfalls” tendant favoring those em- inequitable, were benefits that windfall It found also spent their who employees those over employment split their ployees who on Rail- the Commission industry. Report of railroad in the career entire Crisis, Coming System: Its Retirement, Retirement Railroad The road future ac- recommended (1972). therefore It No. 92-350 Doc. H. R. two-tier of a by the establishment eliminated be of windfall benefits cruals by Con- adopted eventually system type of to the similar system, somewhat work- rights of railroad “legally vested recommended It gress. also both fully insured who was employee An preserved. ers” be (i. e., by date changeover systems security social and length requisite and employment years of railroad having at least rights.” “legally vested to have was deemed security employment) of social requested mem- report, Commission’s receipt of the Following Manage- Labor a Joint form to labor, and retirees management, bers to referred (hereinafter Committee Negotiating Retirement Railroad ment “tak[ing] into account” report, Committee) and submit Joint as the its Committee outlined Joint the Commission. recommendations 1974. April Congress, dated to letter the form proposals agreed with Commission Although it 18391-18392 Cong. Rec. eliminated, as to it differed be benefits of windfall accruals future statutorily entitled already those afforded protection eventually adopted that were provisions transitional recommended drafted submitted principles was embodying those A bill Congress. hearings and lengthy held committees the relevant Congress, where supra; Rep. 93-1163, H. R. Rep. No. Reports. See S. detailed submitted supra. 93-1345, 1974, 88 Stat. Act of (h) Railroad Section part: pertinent (h), provides in 231b S. C. 45 U. (A) will who individual annuity of an ... amount “(1) The em- employer, an or as employee to as an (i) service rendered have

171 1974, Act in restructuring the Railroad Retirement In First, those groups. into employees various divided years requisite employees who lacked benefits for railroad retirement as qualify to employment their would have changeover date, January 1975, 1, system and computed under' the new retirement Second, those indi- any windfall benefit. not receive would receiving dual benefits as already already retired and viduals benefits, computed their changeover of the date would have continue to receive a windfall system under the old and would for both Third, employees qualified those who had benefit.5 changeover date, security social benefits as railroad and yet (and date thus were had not retired but who (ii) year 1974, had a cur- representative, during the or ployee calendar 31, 1974, industry or December at connection with the railroad on rent accrue, annuity (a)(1) began to his of this Act time under section January prior 1, 1975, years to (iii) completed twenty-five of service or January years prior 1, (i) to (B) completed ten of service and will have Society Security (ii) permanently Act 1975, insured under and been by equal 31, 1974, an amount shall be increased [the on December January prior to benefit he would have received amount of windfall dual 1, .... 1975] (A) annuity “(2) The to an individual who will amount of ... (iii) (i), (ii), met the conditions set forth subclause not have (B) (i) (A) (1) subsection, will but have clause of subdivision this January (ii) completed years prior been of service ten Security as of permanently insured under the Social Act December year last rendered service as an prior 1975 in which he of the calendar employer, employee representative, employee or as an shall be to an equal to the amount ... windfall benefit an amount [of increased . .” at time he left the railroad . . calculated service] problem” Reports that the most “difficult Committee stated The relevant phased on should be out “manner in which dual benefits was the 93-1163, supra, 11; equitable Rep. Rep. 93- basis.” S. R. No. H. 1345, supra, at 11. following 45 note The transition 88 Stat. see §231. C. provisions in Title II of the bill are not included the United States employees preserved for retired The windfall amount Code. §§ (4) (a) (3) the Act. to windfall entitled were benefits), yet receiving dual in railroad service some (1) performed they if had benefits the railroad with connection” “current a (2) or had 1974 years completed 25 (3) or 1974,6 31, December industry as of S. C. 45 U. 1974. 31, of December service of railroad qualified Fourth, who had employees those (h)(1). 231b § a but lacked date, changeover as of benefits for railroad in industry 1974 the railroad with current connection lesser obtain a could employment, years 25 of railroad lacked social for qualified had benefit if of windfall amount 1975) they left year (prior to of the security benefits as (2). 7 (h) 231b § 45 S. employment. U. C. railroad changeover date, was of the who, as Thus, an individual and suffi- employment years of railroad had 10 unretired and security for social qualify to employment cient nonrailroad if he worked windfall amount eligible for the full benefits is connection with in 1974 or had a current for railroad date. or later retirement 31, of December his 1974, railroad as service years with 24 railroad But unretired individual security for social qualify nonrailroad service to and sufficient he full amount unless is not windfall eligible benefits connection current for the railroad in had a worked retire- or his later 31, 1974, as of December with the railroad years of em- employee with 10 railroad date. And an ment security only benefits for social after ployment qualified who (o) connection” is defined in C. The term “current § industry pre general, employment mean, in the railroad ceding 30 calendar months. greater under component” is subsection The amount of the “windfall (h). (2) The former (1) of 45 U. S. under subsection C. than §231b security computed of social service on the basis consists of benefits computed latter is on the through while the basis December security only year through the in which the individual service of social industry. corresponds different The difference left employee permanently have been which the retired must insured dates Security eligible Act in order to be the Social windfall under benefit. receive wind- industry will not a reduced

leaving the railroad security for social employee qualified fall benefit while an who industry would receive prior leaving the railroad complicated compari- It with these a reduced benefit. was Congress wrestled in 1974. sons that in the United Appellee and this class action others filed Indiana, States District Court for the Southern District (h) S. C. 231b seeking declaratory judgment that 45 U. unconstitutional the Due Process Clause Fifth irrationally distinguishes Amendment because between eventually certi- of annuitants.8 The District Court classes January 1, fied of all persons eligible a class retire between January 1975, 31, permanently insured who were 1977, Security 31,1974, under Social Act but who as December eligible any component” were not to receive because “windfall they left the no “cur- industry 1974, had railroad before had rent connection” with it at the end of and had less 1974, years than 25 contended be- Appellee railroad service.9 low that it was irrational for to have drawn a dis- employees years tinction between who more than 10 had years simply but employment less than 25 railroad on they basis of had a “current connection” with the whether 8 clause, Although equal protection “the Fifth contains no Amendment unjustifiable forbid is does discrimination 'so to be violative as process.’” Rusk, (1964). Thus, 377 due Schneider v. U. S. 168 equal if protection component a federal statute is valid under the of the Fifth Amendment, perforce it is valid under the Due Process Clause of Belcher, (1971). Amendment. Richardson v. 404 U. S. precisely It is is and somewhat unclear who within the class by By terms, certified the District its class Court. certified appear qualified employees District Court would to include those who (h) (2) by reduced 231b their windfall benefits reason of year security for social benefits as of the left the railroad qualifying industry. appears, however, It that the District Court intended to include only those, Fritz, appellee subsequently qualified in the class like who security are ineligible social benefits and who for even the therefore reduced benefit. windfall industry changeover date or as of the date

of retirement.

The District Court agreed appellee with that a differen- solely tiation based on whether an employee was “active” in the railroad business as of 1974 “rationally was not re- congressional lated” purposes of solvency insuring of the railroad system retirement protecting vested bene- disagree fits. We and reverse.

The initial presented issue by this case is appropriate judicial standard of review to applied when social and legislation economic enacted Congress is challenged as being violative of the Fifth Amendment to the United States Constitution. There is no claim here that Congress has taken property in violation of the Fifth Amendment, since railroad like benefits, security social benefits, are not contractual and may be altered or even eliminated at Hisquierdo time. Hisquierdo, v. (1979); Flemming Nestor, S. 603, 608-611 And because the distinctions drawn in (h) § 231b do not burden fundamental constitu- rights tional or create “suspect” such as race classifications, or national may origin, put we cases involving judicial review of such claims to one side. San Antonio Independent School Rodriguez, District v. 411 U. 1S. (1973); Bradley, Vance v. 440 U. S. 93 (1979).

Despite the narrowness of the issue, this Court in earlier cases has not altogether been consistent in its pronouncements in this In Lindsley area. v. Natural Co., Carbonic Gas 61, U. S. 78-79 (1911), the Court said the clas- “[w]hen sification in such law is in called question, if state of facts reasonably can be conceived that would it, sustain the existence of that state of facts at the time that the law was enacted must be assumed.” On other only hand, nine years later in Royster F. S. Guano Virginia, Co. v. 253 U. S. 412, 415 (1920), the Court said that for a classification to be valid under Equal Protection Clause of the Fourteenth upon ground

Amendment it “must rest some of difference having a fair and substantial relation to object legislation . . .

In more recent years, however, the Court in cases involving- social and economic benefits consistently has refused to in- on equal protection validate grounds legislation which it simply deemed unwise or unartfully drawn. in Dandridge Williams,

Thus v. S. 471 (1970), rejected Court claim Maryland legislation welfare vio- lated the Equal Protection Clause of the Fourteenth Amend- It ment. said:

“In the area of economics and welfare, social a State does not violate Equal merely Protection Clause be cause the classifications made its imperfect. laws are If the classification has some basis,’ 'reasonable it does not offend the Constitution simply because the classifica tion 'is not made with nicety mathematical because practice it results in inequality.’ some Lindsley v. Nat Co., ural Carbonic Gas S.U. 78. 61, problems of government are practical ones and may if justify, do not require, rough illogical, may accommodations — be, and unscientific.’ Metropolis City Theatre Co. v. Chicago, 228 U. S. 68-70. . . . prin- . .

. rational-basis “[The is true to the standard] ciple that the Fourteenth gives Amendment federal courts power no impose upon the States their views of what constitutes Id., wise economic policy.” or social at 485-486.

Of like tenor are Vance v. Bradley, at New supra, 97, and Dukes, Orleans v. Earlier, Flemming Nestor, supra, upheld con- Court stitutionality of a security social eligibility saying: provision, is not within our authority

“[I]t to determine whether Congressional judgment expressed in Section is that sound or equitable, or whether it comports well or ill with 176 inquiries . The answer to such

purposes of the Act. . . concern the courts. Our Congress, come from not must often, power, is with not with wisdom.” here, as one, in that present from the And in a case not dissimilar undoubt- choice which would the State was forced make a we said: edly class, to some members of a inequitable seem of review under “Applying the traditional standard say Equal Clause], Protection we cannot that [the provide Texas’ decision to somewhat lower welfare bene- Dependent for re- fits Families with [Aid Children] or cipients budgetary is invidious irrational. Since con- payment do not allow the full of straints standard all recipients, may welfare the State con- need have infirm aged are the least able of cluded categorical recipients to bear grant hardships of an inadequate living. policy different standard While judgments are of possible, course it is irrational adaptable young the State believe are more elderly, especially than the sick and because the latter hope improving have less years their situation to them. remaining agrees Whether not one with this determination, state there nothing in the Constitution forbids it.” Hackney, v. 406 U. S. Jefferson 549

Applying principles plain those to this case, language of 231b (h) marks the beginning and end of our inquiry.10 10 opinion This and Justice equal dissent cite a number of Brennan’s protection Lindsley including cases Co., v. Natural Carbonic Gas 220 U. S. Royster (1911); 61 F. S. Guano Virginia, Co. (1920); v. 253 412 U. S. Morey Doud, (1957); Flemming v. 354 Nestor, U. S. 457 v. 363 S.U. (1960); Murgia, 603 Massachusetts Board Retirement v. 427 U. S. 307 (1976); Dukes, (1976); New Orleans v. Robison, U. S. 297 Johnson v. (1974); Dept. Agriculture 415 U. S. 361 U. Moreno, S. v. 413 U. S. Dept. Agriculture (1973); Murry, U. v. (1973); Weinberger Wiesenfeld, (1975); S. 636 Strange, and James v. There Congress determined that some of those who in the past received full windfall benefits would not continue to do so. Congress Because could have eliminated windfall bene- fits for all classes of constitutionally employees, impermissible for Congress to have drawn lines between groups employees for the purpose of out phasing those benefits. New Dukes, Orleans supra, v. at 305.

The only question remaining Congress is whether achieved purpose its in a patently arbitrary or way. irrational The classification here is not says arbitrary, because it is appellant, attempt to protect the relative equities employees and to provide benefits to career railroad employees. Congress fully protected, example, the expectations of employees those who had already retired and those employees unretired who years had 25 employment. railroad Conversely, denied all windfall benefits to employees those who lacked years of railroad employment. Congress pro- additionally vided windfall benefits, in lesser amount, employees those years’ with 10 railroad employment qualified who had for so- cial security benefits at the they time left had railroad em- U. S. 128 arrogant legal most scholar would not claim that all of applied these cases equal uniform or consistent test pro tection principles. And realistically speaking, we can be no more certain opinion this will remain joined undisturbed than were those who opinion in Lindsley, supra, Royster Co., supra, Guano of the other cases referred to in opinion this dissenting opinion. in the But like predecessors our and our successors, obliged equal we are apply pro component tection of the Fifth Amendment as we believe the Constitu requires tion and in doing so we have no contrary hesitation in asserting, to the dissent, that where regulations social or economic are involved Dandridge Williams, v. 397 U. S. 471 (1970), Hackney, Jefferson (1972), together case, with this proper state the application of the test. The dissenting opinion comments proper about cases-for which to look for the correct equal statement of protection standard, rational-basis and about which limit cases, just cases earlier are dissenting that: opinion. comments industry with connection current of a regardless ployment, retirement date. or on their in 1974 denied employees former railroad only eligible

Thus, no had who appellee, those, like are full windfall left the time to dual benefits statutory entitlement for dual eligible became thereafter but industry, security social for qualified subsequently when benefits who persons conclude that Congress properly could benefits. bene to windfall statutory entitlement actually acquired had greater industry had a in the railroad employed fits while still appel- than the members claim to those equitable when employment longer were no lee’s class who Furthermore, eligible for dual benefits. they became means patently arbitrary connection” test is not a “current railroaders,” “career employees are for which determining by Congress else the test has been used particularly since for retirement benefits.11 eligibility requirement where as an those who had a current connec Congress could assume that passed in industry when the Act was tion with the railroad retirement, industry before their 1974, or who returned likely industry prior than those who had left were more to be the class of returned, to 1974 and who never among industry, careers in the railroad class persons pursue who designed. Act was His for whom the Railroad Retirement quierdo Hisquierdo, S., v. 439 U. at 573. 11 1946 connection” test has been used as an "current since disability occupational

eligibility requirement and survivor for both (a) (1) (iv), (ch. 709, (d)(1) §§203, 231a annuities, 231a S. C. U. §§ 213, 726-735), it has been used since 1966 in 205, determin Stat. annuity. (b)(1). ing eligibility supplemental a for C. 231a § 1073.) (Pub. 89-699, 80 Stat. L. Appellee impermissible the “current connection” test contends employment on the it draws a distinction not duration of because but employment. clearly But rather this Court has on time held may eligibility condition for benefits such as these on the employee’s as well as the duration an ties to industry. character Diaz, Mathews v. Where, as here, there plausible are reasons for Congress’ action, our inquiry is at an It is, end. of course, “constitu- tionally irrelevant whether this reasoning in fact underlay Flemming legislative decision,” Nestor, v. 363 U. S., at because this Court has never insisted legislative that a body articulate its reasons enacting statute. partic- This is ularly true where the legislature must necessarily engage in process of line-drawing. The “task of classifying persons for . . . benefits . . . inevitably requires that some persons who have an equally almost strong claim to favored treat- placed ment be on different sides of the line,” Mathews Diaz, 426 U. S. 67, 83-84 (1976), and the fact the line might have been drawn differently at points some ais matter legislative, rather than consideration. judicial,

Finally, we disagree with the District Court’s conclusion that Congress was unaware of what it accomplished or that it was by misled the groups that appeared before it. If this test were applied literally every member of any legis- lature that ever voted on law, a there very would be few laws which would survive it. The language of the statute is clear, and we have historically assumed that Congress in- tended what it enacted. To be sure, appellee lost a political battle in which he had strong a interest, but this is neither the nor first the last time that such a result will occur in the legislative forum. What we have said is enough to dispose of the claims that Congress not only failed to accept appel- lee’s argument as to in toto, restructuring but that such fail- ure denied him equal protection of the laws guaranteed by the Fifth Amendment.12 12As we have recently stated: “The presumes Constitution that, absent some reason to infer antipathy, even improvident decisions will eventually by

be rectified the process democratic and judicial that intervention is generally unwarranted no matter unwisely how may we political think a branch has acted.” Vance v. Bradley, (1979) (footnote omitted). District the judgment reasons, foregoing For is Court Reversed. judgment. concurring in Stevens, Justice Court’s criticism Brennan’s Justice opinion my In than response thoughtful a more merits case this approach Bren- Justice 176-177. ante, at footnote in contained that pur- legislative analysis if that out correctly points nan ain statutory language of the reading only a requires pose a dis- basis” any “conceivable if provision, disputed attack constitutional a repel will criminatory classification tau- mere constitute will review judicial statute, on the what did that fact of the recognition tological remind- correct also is Brennan Justice do. intended “social example an is statute though the even us that ing mounted challenge here legislation,” economic fixed receiving a expectations legitimate whose individuals effect, a breach by, being frustrated are income retirement Con- When Government. their commitment solemn aof are rights of vested persons class small deprives a gress who are others enhanced1 —for indeed, even protected and,— Con- I believe position, identical though in a similar “conceiv- merely than something more requires stitution treatment. unequal explanation “plausible” or a able” conclusion Brennan’s Justice however, share not, 1 do objective further must classification statutory every purpose” the “actual confidently identified can More- unknown. is sometimes purpose Actual legislature. in may result motivation on actual emphasis undue over, State and one held valid being statutes worded identically we that I believe therefore State.2 neighboring in a invalid widows, sur spouses, benefits provided increased Act 1The (g). 231c S. C. See 45 early IT. vivors, and retirees. 1979) (upholding (CA1 Oliver, 607 2d F. Rundlett v. Compare Helgemoe, 2d 602 564 F. Meloon law), with statutory rape Maine's must discover a correlation between the classification and either the purpose actual of the legitimate statute or a purpose may that we reasonably presume to have im- motivated an partial legislature. If the adverse on impact the disfavored class is apparent an impartiality aim the legislature, its would suspect. If, however, impact may the adverse rea- sonably be viewed acceptable larger as an of achieving cost goal, impartial rationally lawmaker could decide that cost should be incurred.

In this case we need not look beyond the purpose actual legislature. As legislation is often true, this is the product multiple and somewhat purposes inconsistent led to certain compromises. One purpose was to eliminate in the future the benefit is described the Court as a “windfall benefit” and as an “earned Justice Brennan dual benefit.” That aim was objective incident to the broader protecting solvency of the entire railroad retirement program. Two purposes that conflicted somewhat with this objective broad were the purposes of preserving those bene- fits that had already vested of increasing of pay- level ments beneficiaries whose rights were not otherwise to be changed. As Justice Brennan emphasizes, Congress orig- inally protect intended to all benefits, vested but it ultimately sacrificed some the interest of achieving other objectives.

Given conflicting these I purposes, believe the decisive questions are (1) whether Congress can rationally reduce the vested benefits of some employees improve solvency program entire while simultaneously increasing the benefits of others; (2) whether, in deciding which vested reduce, benefits to may favor whose rail- annuitants service road was more recent than that of disfavored annui- tants who had an equal greater quantum of employment. (CA1 1977), denied, (1978) cert. (striking U. S. 950 down New Hampshire’s statutory rape law). affirmative. in the is questions to both

My answer unques is dual benefits to eliminate purpose congressional not undermined is legitimacy that tionably legitimate; response in remaining benefits of the level in adjustment the some question, for the second economy. As the in to inflation expectations— long-term of frustrated form hardship —in benefits. in vested any reduction from inevitably result must it had surely duty a Congress had therefore, Arguably, —and than no vested more eliminate right decide—to that made Having purpose. its fiscal necessary to achieve of vested class within it chose any distinction decision, than degree of rather a difference would involve beneficiaries distinction I am satisfied entitlement. in a difference an represents employment of currency railroad upon based Be that sort difference. identifying method impartial for greater benefits provide frequently plans retirement cause ago years those who retired than for recent retirees —and past than recent service greater reward give a thus statutory dis basis for duration —the equal service follows, It precedent. by relevant supported crimination employees’ railroad timing of my judgment, for the classification as basis” is a “reasonable service Co., 220 Gas Lindsley v. Natural Carbonic used term is Williams, S. Dandridge ante, at 174, having difference “ground as a ante, 175, as at well legislation,” object relation and substantial fair Vir Co. v. Royster Guano in F. S. used are those words ante, 174-175. ginia, 253 U. judgment. I in the concur

Accordingly, joins, Marshall Justice with whom Brennan, Justice dissenting. former class of retired represents a Fritz Gerhard

Appellee entitled Railroad statutorily were employees who overlap Security benefits, Social including until enactment benefit,” dual the “earned called herein the Railroad Retirement Act of 1974, which divested them of their entitlement to the earned dual benefit. The Act did not affect the entitlements of other railroad employees with equal service railroad and nonrailroad jobs, who can be distinguished from appellee class only because worked at least one day for, retained a “current connection” with, a railroad in 1974.

The only question in this case is whether the equal protec- tion component of the Fifth Amendment1 bars Congress from allocating pension benefits in this manner. The answer to question this turns in large part on the way in which the strictures equal protection are conceived this Court. Morey See Baud, 354 U. S. (1957) (Frankfurter, J., dissenting). The parties agree that legal standard applicable to this case is the “rational basis” test. The Dis- trict Court applied this standard below, see Conclusion of Law 7, reprinted at App. to Juris. Statement 28a. The Court today purports to apply this standard, but in actuality fails to scrutinize the challenged classification in the manner established by our precedents. governing I suggest that mode analysis employed by the Court in this case virtually immunizes social and economic legislative classifications from judicial review.

I A legislative classification may be upheld only if it bears a rational relationship to a legitimate state purpose. Vance v. Bradley, 440 U. S. 93, 97 (1979); Massachusetts Board of v. Murgia, 427 U. S. 307, 312 (1976) (per curiam); New Orleans v. Dukes, 427 S. 297, 303 (1976) (per curiam). Perhaps the clearest statement of this Court’s present approach to “rational basis” scrutiny may be found in Johnson v. Robison, 415 U. S. 361 (1974). In considering the constitutionality of limitations on the availability of edu-

1 Weinberger See v. Wiesenfeld, 420 U. 636, 638, 2 (1975). n. Beadjustment Benefits the Veterans’ cational benefits agreed of this Court eight Members Act of basis on the proceeds classification analysis of the “our protection right equal although an individual’s that, dif- deny power . treat ’does not . . of the laws ways[;] ... persons in different [it ferent classes treatment be legislate that different power denies] into different persons placed a statute accorded wholly to the on the of criteria unrelated basis classes A be rea- of that statute. “must objective classification sonable, arbitrary, upon ground and must rest some to the having a and substantial relation difference fair object legislation, persons similarly so that all ’ ” Id., circumstanced shall be treated alike.” at 374-375 Reed, Reed v. 404 (quoting 71, U. S. 75-76 which (1970), quoting Royster Virginia, in was F. S. Guano Co. turn v. (1920)) (ellipses 253 S. 415 U. and brackets (emphasis supplied). original) Congress presumption

The enactments of are entitled to a and the burden on constitutionality, challenging rests those classification to legislative demonstrate that it does not bear object “fair and substantial relation to legis- of the ibid., lation,” required under the Constitution. Mathews Lucas, (1976). 427 U. v. S. 510

Nonetheless, rational-basis “is not standard a toothless ibid., and will not be one,” by flimsy implausible satisfied legislative for the justifications classification, proffered after attorneys. See, g., the fact Government e. Jimenez v. Weinberger, 417 U. 628 U. (1974); Dept. Agriculture S. 8. 413 S. Moreno, 528 (1973); Dept. Agriculture v. Murry, 413 U. 508 (1973); Strange, S. James v. S.U. When faced challenge with a legislative to a under test, classification rational-basis the court should purposes what of the ask, first, statute are, and, second, rationally the classification is whether related to achievement purposes. of those

II purposes of the Railroad Retirement Act of 1974 are clear, because has commendably stated them in the House Reports and Senate accompanying the Act. A section is Reports “Principal entitled Purpose of It the Bill.” generally saving money interest in irrelevant is to this discrimination. pages later, Reports Several again the persons clear make that with rights vested to earned dual benefits would retain them: recognized “It be actually must that the away bill takes benefits from employees certain railroad already qualified who have not for So- —those Security Rep. cial benefits.” H. 93-1345, 6; R. No. Rep. at S. No. 93- 1163, at 7. Only section-by-section analyses in technical and in discussions the do the consequences reflect the Reports appellee actual Act on the class. Rep. 93-1345, 12, 39-40; H. R. No. at Rep. See 93-1163, S. No. at 38-39. preserve

The administration also understood the Act rights to to vested Rep. earned dual benefits. See H. R. 93-1345, (supple- at 81-82 report Management mental from the Office of Budget). and Dual benefits. upon such claims with employees and have criticized, since be fairly cannot beneficiaries they are entitled to which the benefits merely secured should equities their why is That law. existing >No. Rep. 93-1345, at 11; H. R. No. preserved.” 11. 93-1163, at Act the Railroad of purpose” “principal

Thus, a preserve towas Congress, explicitly stated already quali- had who of retirees earned the vested deprives here, which at issue classification for fied them. earned they had dual benefits of vested some retirees purpose. Congress’ stated conflicts with directly to prior rationally unrelated only is the classification such, As inimical it. it is purpose; congressional the III must (h) 231b § the conclusion today avoids The Court ways from traditional three deviating in be invalidated tautological adopts First, the Court analysis. rational-basis necessity the avoiding thereby statutory purpose, approach classi- challenged relationship between evaluating the disregards it Second, purpose. legislative fication justifica- favor purpose the actual stated by any Representative suggested was tion which never congres- stated fact with the which in conflicts Senator, without upholds Third, classification purpose. sional identified relationship to the rational analysis its purpose.

A language “the plain [45 C.] The Court states inquiry.” of our beginning and end (h) 231b marks “plain Ante, indeed, strange statement 176. This only tell us classifica of the statute can what language” classi nothing purpose tell it can us about is; tion between the classification relationship fication, let alone the and that purpose. Since § 231b (h) deprives the members of appellee class of their vested earned dual benefits, Court apparently assumes that Congress must have intended result. But presuming purpose from result, Court analysis reduces to tautology. may It always be said that Congress intended to do what it in fact did. If that were the extent of our analysis, we would find every statute, no matter how arbitrary or irrational, perfectly tailored to achieve its purpose. equal But protection scrutiny under the rational-basis test requires the courts first to deduce the in- dependent objectives of the statute, usually from statements of purpose and other evidence in the statute and legislative history, and analyze second to whether the challenged classi- fication rationally furthers achievement of those objectives. The Court’s tautological approach will not suffice.

B The Court analyzes the rationality of § 231b (h) in terms justification suggested by Government attorneys, but “ adopted never by Congress. The Court states that it is 'con stitutionally irrelevant whether this reasoning in fact under ” lay legislative Ante, decision.’ at 179 (quoting Flem ming v. Nestor, 363 U. S. 603, 612 (1960)). In fact, however, equal protection analysis has evolved substantially on this question since Flemming was decided. Over past years, this Court has frequently recognized that the actual purposes of Congress, rather than the post justifications hoc offered Government attorneys, must the primary basis for analysis under the rational-basis test. In Weinberger v. Wiesenfeld, 420 U. S. 636, 648, n. 16 (1975), we said:

“This Court need not equal protection accept cases at face value assertions of legislative purposes, when an examination legislative scheme and its history demonstrates the asserted purpose could not have been goal legislation.” (Citing cases.) Rod District v. School Independent Antonio in San Thus, chal that a stated this Court (1973), 17 riguez, basis” “rational muster pass will classification lenged artic legitimate, some “rationally furthers it only if scrutiny in Massachu added), and (emphasis purpose” state ulated we at S.,U. Murgia, 427 v. Board setts it only if be sustained will a classification such stated that State.” the purposes the “rationally furthers identified Robison, 415 v. in Johnson Moreover, added.) (Emphasis finding on a classification upheld 381-382, we S.,U. at distinctions, ex qualitative and “[tjhese quantitative that for Con basis a Congress, form rational recognized pressly added.) See also (Emphasis . . . classification gress’ 212-213 Goldfarb, ano Calif will this Court that is clear others it From these cases rational- under the challenged classification sustain a longer no suggest attorneys can Government because merely basis test ra- thought might upon which “conceivable basis” deferential properly is applied we have The standard tional. Congress has articulated Branch: where Legislative to the challenged classi- objective, legitimate governmental sustain we must objective, rationally furthers fication probe courts must however, cases, In other provision. pur- expressly stated Congress has deeply. more Where challenged classi- but where legislation, piece of a pose we purpose, counter to that to or irrelevant is either fication by Govern- proffered any post justifications hoc must view challenged A classification attorneys skepticism. with ment rationally related achievement only if it be sustained may purpose. governmental legitimate of an actual chose to discriminate argues that Court stating “Congress of equity, for reasons appellee against actually had ac- who persons conclude properly could to windfall benefits while still statutory entitlement quired industry equitable a greater had the railroad employed claim to those than members of appellee’s class who were no longer employment in railroad when they became Ante, eligible for dual benefits.” 178. This statement turns Congress’ equities assessment on its head. As I have shown,5 Congress expressed the view that it would be any inequitable deprive retirees of portion of the bene- fits had promised been and that they had earned under prior law. See also H. Rep. R. No. 93-1345, pp. 11 4, (1974); Rep. 11 93-1163, pp. (1974); Cong. 120 id., (1974) (statement Rec. 35613 Rep. Hudnut); at 35614 (statement id., Rep. Shuster); at (statement 35615 of Rep. Morgan). The Court is unable cite even one in statement legislative history by Representative a or Senator that makes the equitable judgment imputes to Congress. In legislative the entire history of Act, only persons state that the equities justified eliminating appellee’s earned dual benefits were representatives of railroad management and labor, whose self-serving interest in about this bringing destroys result for attaching basis weight to their statements.6

The findings factual of the District Court concerning the development amply §of 231b (h), supported by legisla- revealing tive are history, point.7 on this In 1970, Congress quoted justification The Court’s support fails on its face to the chal lenged Despite the apparent classification. Court’s contrary, belief to the appellee some members of the "actually acquir[e] class did statutory en titlement” to dual employed benefits while still industry, in the railroad see ante, at but deprived portion nevertheless were of a of those benefits. (h) (2). See 231b Under the Court’s reasoning, therefore, own these persons arbitrarily impermissibly were and treated. supra, See at 185-186. following, See discussion infra. 7 The Court does not claim that the District findings Court’s factual clearly erroneous, though disagreement were it does state its with one lower ante, Therefore, court conclusion. See at 179. findings the factual govern litigation in Court, any event, District Court this and in are amply supported the record. sound- investigate actuarial Commission to

established recom- to make system Railroad ness Stat. 791. 91-377, L. Pub. See reform. for its mendations management of one railroad composed was The Commission and three representative, labor railroad one representative, report submitted Commission The representatives. public retirees alia, recommending, inter Re- full Railroad to earn longer permitted be no future offset. without Security benefits Social tirement however, insisted, Commission security rights to social vested who have

“[individuals status, fully insured permanently virtue benefits retire- they are not them because cannot exercise but guaranteed should retirement, under railroad age ment por- tier the staff terms to in dollar right equivalent . . .”. including vested dual benefits, of their tion Re- Railroad Retirement, The on Railroad Commission No. 92- H. R. Doc. Coming Crisis, System: Its tirement 350, p. Congress asked rail- report, receiving the Commission

After negotiate representatives and labor management road system, Retirement the Railroad restructure a bill to submit recommendations specific into the “take account which should 93-69, Pub. L. Retirement.” on Railroad of the Commission Labor-Man- of this Joint The members Stat. 165. 107, 87 by pub- appointed were Committee Negotiating agement ap- the interests they represent the nor did officials, lic or union longer railroaders no active who were class, pellee members.8 to draft Labor-Management Negotiating Committee of a Joint The use In system was not novel. concerning Retirement the Railroad

legislation Act of original drafted the Railroad a committee fact, such Hisquierdo, Hisquierdo v. amending then. See Acts since and several Supplemental (1979); Railroad Retirement n. 3 439 U. S. Act— Subcommittee on before the Com- Benefits, Hearings H. R. 17285 on

In an proposed initial system, the restructuring Joint Committee devised a means whereby the system deficit could be completely eliminated without retirees depriving vested earned benefits. See Finding Fact No. reprinted at App. Juris. Statement 12a. However, representa- labor tives demanded that benefits be increased for their current members, the cost to be offset divesting appellee class portion had earned prior under law. See Findings of Fact Nos. 39, 40, 44, id., reprinted at liar- la. theAs District Court found:

“Essentially, negotiators railroad labor off traded plaintiff class of beneficiaries to achieve added benefits for their current employees, though even doing so violated the basic Congressional purposes of negotiations. Furthermore, sacrificing plaintiff class, the rail- road labor unions duty breached the representation fair they owed to plaintiff class, duty which from resulted the labor unions’ purported representation of plaintiff class’ interests in the negotiations.” [Joint Committee] Finding of Fact 44, reprinted id., at 12a-13a. Congress conducted hearings to consider the Joint Com- mittee’s recommendations, but never directed its attention to their effect on persons appellee class’ situation. In fact, the Joint negotiators Committee and Railroad Retirement Board members who testified congressional hearings per- petuated the inaccurate impression that all retirees with earned vested dual benefits prior law would retain their ben- efits For unchanged. example, Mr. William H. Dempsey, chairman of the management negotiators on the Joint merce and Finance of the House Committee on Foreign Interstate Commerce, Cong., 89th Sess., 2d (1966); 2-3 Railroad Retirement, Hear- ings on H. R. 1362 before the House Committee on Interstate and For- eign Commerce, Cong., 79th Sess., 1st (1945); 448 Commission on Rail- Retirement, road The Railroad System: Retirement Its Coming Crisis, 92-350, H. R. Doe. p. (1972). 147 192 told the hearings, at witness principal and

Committee committee: on who are people accorded be [will] “[Protection are who and those receiving dual now rolls 1975, the January 1, of systems as both

vested this, with agree we being, the Commission idea the law upon rely right to had a individuals these made They have working. they were when it existed the law. upon have relied They contributions. their Restructuring protected.” . . . should They H. R. 15301 on Hearings System: Retirement Railroad Foreign on Interstate Committee House before 214 Sess., Cong., 2d Commerce, 93d id., at Dempsey); Mr. (statement id., at Accord, Rep. (statement id., at Dempsey); Mr. (statement id., Dempsey); of Mr. (statement id., 213-214 at Dingell); (statement id., at 248 Dempsey); of Mr. (statement at Retirement Railroad of the Chairman Cowen, L. James of Mr. id., at Cowen); of Mr. id., (statement at 249 Board); Jr., Wythe Quarles, D. Speirs and Neil P. of Messrs. (statements id., Board); Railroad members Speirs). of Mr. (statement Represent- between colloquy following striking is the

Most Dempsey: Dingell and Mr. ative adversely affected? Dingell. to be going isWho

“Mr. is on Who neck this. it in the Somebody get has fellow? lucky to be that going think really. Dempsey. I so think Well, I don’t

“Mr. me one Let every wins. which the situation is this explain. Dingell. sleight some see Dempsey, Mr. I

“Mr. applaud I happening. how it is I don’t see but here hand is that My problem it. to understand like I would it but going system that to a realistic go going you are to pay you cost less but more in benefits. Now if have charge I accomplished this, suggest put you we should system.” Id., security of the social 201. at passed by The Act in the form was drafted the Joint Com- mittee without amendment to relevant this case.9 course, by Of misstatement several misstatements wit- Congress before ordinarily nesses would not to con- lead us Congress clude that misapprehended it In doing. what was this instance, however, complex where legislation was drafted by parties outside and Congress relied on to explain it, them where the are frequent misstatements unrebutted, where no Member of Congress can be found to have stated the effect of the classification to correctly, suspect we are entitled may have been misled. As the District Court found: “At no during time hearings did Congress even give a hint by understood that the bill language its eliminated an earned benefit plaintiff’s class.” Finding 63, reprinted Fact No. at App. Juris. Statement 22a. I do not Therefore, think that this classification ra- was tionally governmental related an actual purpose.

C The third way in which the Court has deviated from the principles of rational-basis scrutiny is its analyze failure to 9 Congress’ tendency unfortunate pass legislation Railroad Retirement by management drafted representatives labor and adequate without scru tiny by was criticized the Commission on Railroad Retirement its report: “The historical past always record shows that formulation policy has not key equity abided financing. Generally criteria of and sound major provisions system product negotiations have been the railway between labor and the bargaining process carriers in a often re- flecting power conflicts or the industry directly exercise of in an which public affects the welfare. bargaining process The results of have, this times, fully been less than screened Federal Government before by Congressional given ratified approval.” were action and Presidential 92-350, supra, H. Doc. No. at 147. R. genuinely related to challenged classification whether Having suggested by the Court. identified purpose challenged classifica- underlay the considerations” “equitable of those Congress’ to evaluation tion —in direct contradiction that the classi- of evidence considerations, and in the face by interested private negotiation of product was fication by Congress— and understood inadequately examined parties, further accept suggestion to that without proceeds Court analysis. of is,

An unadorned of considerations “equitable” claim court to It to me before a course, difficult assess. seems inquire may accept litigant’s “equity,” assertion of must principles equity might genuinely support or fairness what judgment. apparently But the Court does not de- such for it inquiry, equitable mand such has failed address might challenged to the considerations relevant classification. my following

In view, greatest considerations are equities (1) relevance to the of this contribution to the case: expectation reasonable system; (2) reliance; (3) and need; (4) industry. character of service to the railroad With I respect each these would considerations, conclude that appellee the members of great equitable class have as claim to their earned dual benefits as do their more favored co- workers, who to their remain entitled earned dual benefits (h). under 231b system.

Contribution to the appellee members of the class worked in the railroad industry for more than 10 but fewer than 25 also years, and worked in jobs nonrailroad for required years number of vesting Social Se- curity usually quarters. During they that time, contrib- — uted to both the Railroad Retirement and Social Security systems, requirements met all vesting law of benefits systems. under those In this they respect, are identical to their more favored co-workers, who contributed earnings no more of their systems to the appellee than did class. On the basis contributions to the systems, there- fore, there is no reason for this discrimination.

Reasonable expectation and reliance. their Throughout working lives, of appellee members class were assured would receive retirement accordance with the terms of the law Finding as it then stood. See Fact reprinted at App. Statement Juris. 25a. No less than their more favored they chose co-workers, career paths and made calculations for their on retirement based these assurances. For Congress to change its strip rules and them of these benefits at the time of their retirement seems decidedly inequitable. As the District Court found:

“The class’ on reliance the earned railroad retirement benefit and on the anticipated receipt full dual bene- fits is clear from the evidence adduced herein.

“Equally clear from the evidence is the that the fact class’ reliance has been to the class’ detriment. Class members have been forced to substantially alter their mode of retirement living due to the drastic reduction of Railroad Retirement benefits worked the Act. This point was confirmed in the [Joint Committee] negotiations shortly prior to the report of to its sending Congress in April, 1974: ‘Mr. . . Dempsey: . The benefit [dual is one that if we benefit] were starting out we would not have at all. So theoretically we would it be urge that out completely of as January 1, 1975. But cannot do we that —we people have who are relying on not benefits, responsible for them but merely working for them under ” the rules as stood.’ of Findings Fact 70, 71, Nos. id., reprinted at 25a-26a.

In fact, this reliance was one of the principal reasons Con- gress resolved to not the disturb vested earned dual benefits of retirees.10 Corp. Cf. Nachman v. Guaranty Pension Corp., 446 359, Benefit fixed-income of composed class appellee The Need. force work the re-entering of capable longer no elderly people, average The lost. now but earned once reacquire

to small no month, per $88 is about members class to loss no provides record budget. monthly element are class appellee of members suppose to reason co-workers. their are than need likely to less of Members industry. railroad to service Character of railroad for years least worked class appellee as long as worked them of many 1974, industry employment surely railroad of duration — Their years. equal industry to the service their —was of measure the best of the members some fact, In co-workers. their to did industry as the railroad long in as twice over class worked benefit. dual to a rights their retained who those some Ad- 21a-22a. id., at reprinted No. Fact Finding rail- from retired class appellee members mittedly, left many shows record 1974, but the to prior work road commit- a lack because involuntarily, work id., reprinted Finding of Fact industry. to the ment Retire- the Railroad purpose one since Moreover, at 26a. early, retire to workers encourage railroad towas system ment Hisquierdo workers, younger positions to create so fair hardly it is (1979), 573-574 S. Hisquierdo, having so. done now class appellee fault con- notion that accept the I able if were Even of a retirees of railroad a class deprive equitable sidered longer they no because benefits earned vested their of portion the means consider still I would railroad, for the worked a provision, this Under irrational.11 (h) 231b §in adopted Employee passing in purposes Congress’ central (one (1980) of personal 'great prevent “to Security Act was Income paid when not benefits are vested whose by employees suffered tragedy’ omitted)). (footnote terminated” plans are pension case, “line-drawing” this is not suggestion, Court’s Contrary to the along an ad- point at some a division make Congress must where retiree is favored retention of his full vested earned bene- fits if he had worked so much as day one for a 1974. This plainly is a capricious basis distinguishing among retire.es, every one whom had worked in the industry for at least 10 years: fortuity day employment one in a particular year should govern entitlement to benefits earned over a lifetime.12

I therefore conclude that the proffered justi- Government’s fication of “equitable considerations,” accepted without ques- tion the Court, cannot be defended. Rather, the legis- lative history repeatedly states, equity and fairness demand of appellee members class like their co-workers, re- tain the vested dual prior earned to A 1974. conscientious application of scrutiny demands, rational-basis therefore, 231b (h) § be invalidated.

IV protection Equal rationality analysis does not empower the courts to second-guess the wisdom of legislative classifications. On this we are agreed, have been for years. over 40 On the other hand, we are not powerless probe beneath claims by Government attorneys concerning the means and ends of mittedly rationally conceived ante, continuum. Here, See at 179. Con- gress has particular isolated a class of retirees on the basis aof distinction utterly that is any irrelevant legitimate actual or governmental purpose. wholly arbitrary nature of this highlighted by classification is analysis of exception (h) (2). subsection, Under this some appellee members class portion are entitled to retain a of their earned dual benefit, albeit level, at a reduced while others are divested of the dual altogether. benefit The basis for this added twist is the qualification timing of their for Railroad Retirement and Security. Social qualified Those who Security Social portion first retain their dual benefit; qualified those who for Railroad Retirement first do not. Need less say, the retirees had no notice at the time timing quali that the would fication make difference to their entitlement to benefits. This kind shifting of after-the-fact of the rules for retirement benefits has not justified been justified. and cannot be considered defer would Otherwise, we

Congress. litigators. arguments to the but Congress, judgment con- the unfortunate example of anas serves case instant Court Because the deference. misplaced of such sequence congressional analysis of tautological accept a willing to contrary considerations “equitable” assertion purpose, and a classification Congress, judgment expressed to the purpose, of the identified to achievement unrelated patently congressional nor equity effectuating neither it succeeds intent. dissent. respectfully

I notes bill provides complete “[t]he restructuring of the Railroad Retirement Act of place will it on a sound financial basis,” then states: already “Persons who have vested rights under both the Railroad Retirement and Security systems the Social will in the permitted future be to receive benefits computed systems just both as is true under existing law.” H. Rep. R. No. 93-1345, pp. 1, (1974); Rep. 93-1163, pp. 1, 2 (1974).3 Moreover, Congress explained that purpose this based was on considerations of fairness legitimate and the expectations of the retirees: “[A]ny plan to eliminate these dual benefits should in- protection clude of the equities existing beneficiaries course, legitimate Of governmental restoring interest in the Rail system road not, to fiscal itself, soundness does serve to support challenged why classification in this At issue case. Con gress among discriminated two classes of retirees. The overall

Case Details

Case Name: United States Railroad Retirement Board v. Fritz

Court Name: Supreme Court of the United States

Date Published: Feb 23, 1981

Citation: 449 U.S. 166

Docket Number: 79-870

Court Abbreviation: SCOTUS