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UNITED STATES RAILROAD RETIREMENT BOARD v. FRITZ
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
Argued October 6, 1980
Decided December 9, 1980
The Railroad Retirement Act of 1974 (1974 Act) fundamentally restructured the railroad retirement system under the predecessor 1937 Act, which had included provisions whereby a person who worked for both railroad and nonrailroad employers and who qualified for both railroad retirement and social security benefits received benefits under both systems and an accompanying "windfall" benefit. Although providing that employees who lacked the requisite 10 years of railroad employment to qualify for railroad retirement benefits as of the January 1, 1975, changeover date would not receive any windfall benefits, the 1974 Act preserved windfall benefits for individuals who had retired and were receiving dual benefits as of the changeover date. A provision of the 1974 Act, 45 U.S.C. 231b (h) (1), also preserved windfall benefits for employees who had qualified for dual benefits as of the changeover date, but who had not yet retired, if they had (1) performed some railroad service in 1974 or (2) had a "current connection" with the railroad industry as of December 31, 1974, or their later retirement date, or (3) completed 25 years of railroad service as of December 31, 1974. The 1974 Act further provided, 45 U.S.C. 231b (h) (2), that employees who had qualified for railroad benefits as of the changeover date, but lacked a current connection with the railroad industry in 1974 and 25 years of railroad employment, could obtain a lesser amount of windfall benefits if they had qualified for social security benefits as of the year (prior to 1975) they left railroad employment. Appellee and others filed a class action in Federal District Court for a declaratory judgment that 231b (h) is unconstitutional under the Due Process Clause of the Fifth Amendment, contending that it was irrational for Congress to distinguish between employees who had more than 10 years but less than 25 years of railroad employment simply on the basis of whether they had a "current connection" with the railroad industry as of the changeover date or as of the date of retirement. The District Court certified a plaintiff class of all persons eligible to retire between January 1, 1975, and January 31, 1977, who were permanently insured under the Social Security Act as of December 31, 1974, but who were not eligible to receive any windfall benefits because they had left the [449 U.S. 166, 167] railroad industry before 1974, had no "current connection" with it at the end of 1974, and had less than 25 years of railroad service. The court held that the differentiation based solely on whether an employee was "active" in the railroad business as of 1974 was not "rationally related" to the congressional purposes of insuring the solvency of the railroad retirement system and protecting vested benefits.
The challenged provisions of the 1974 Act do not deny the plaintiff class equal protection of the laws guaranteed by the Fifth Amendment. Pp. 174-179.
REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, WHITE, BLACKMUN, and POWELL, JJ., joined. [449 U.S. 166, 168] STEVENS, J., filed an opinion concurring in the judgment, post, p. 180. BRENNAN, J., filed a dissenting opinion, in which MARSHALL, J., joined, post, p. 182.
Edwin S. Kneedler argued the cause for appellant. With him on the briefs were Solicitor General McCree, Deputy Solicitor General Geller, Dale G. Zimmerman, Edward S. Hintzke, and James E. Lanter.
Daniel P. Byron argued the cause for appellee. With him on the brief were Phillip A. Terry and Gill Deford. *
[ Footnote * ] Briefs of amici curiae urging reversal were filed by Richard T. Conway for the National Railway Labor Conference; and by Edward D. Friedman for the Railway Labor Executives Association.
Briefs of amici curiae urging affirmance were filed by Jonathan A. Weiss for Legal Services for the Elderly; and by Steven F. Bright and Gary E. Smith for T. W. Smith et al.
JUSTICE REHNQUIST delivered the opinion of the Court.
The United States District Court for the Southern District of Indiana held unconstitutional a section of the Railroad Retirement Act of 1974, 88 Stat. 1305, as amended, 45 U.S.C. 231 et seq., and the United States Railroad Retirement Board has appealed to this Court pursuant to 28 U.S.C. 1252. We noted probable jurisdiction. 444 U.S. 1069 (1980).
The 1974 Act fundamentally restructured the railroad retirement system. The Act's predecessor statute, adopted in 1937, provided a system of retirement and disability benefits for persons who pursued careers in the railroad industry. Under that statute, a person who worked for both railroad and nonrailroad employers and who qualified for railroad retirement benefits and social security benefits, 42 U.S.C. 401 et seq., received retirement benefits under both systems and an accompanying "windfall" benefit. 1 The legislative [449 U.S. 166, 169] history of the 1974 Act shows that the payment of windfall benefits threatened the railroad retirement system with bankruptcy by the year 1981. 2 Congress therefore determined to place the system on a "sound financial basis" by eliminating future accruals of those benefits. 3 Congress also enacted [449 U.S. 166, 170] various transitional provisions, including a grandfather provision, 231b (h), 4 which expressly preserved windfall benefits for some classes of employees. [449 U.S. 166, 171]
In restructuring the Railroad Retirement Act in 1974, Congress divided employees into various groups. First, those employees who lacked the requisite 10 years of railroad employment to qualify for railroad retirement benefits as of January 1, 1975, the changeover date, would have their retirement benefits computed under the new system and would not receive any windfall benefit. Second, those individuals already retired and already receiving dual benefits as of the changeover date would have their benefits computed under the old system and would continue to receive a windfall benefit. 5 Third, those employees who had qualified for both railroad and social security benefits as of the changeover date, but who had not yet retired as of that date (and thus were [449 U.S. 166, 172] not yet receiving dual benefits), were entitled to windfall benefits if they had (1) performed some railroad service in 1974 or (2) had a "current connection" with the railroad industry as of December 31, 1974, 6 or (3) completed 25 years of railroad service as of December 31, 1974. 45 U.S.C. 231b (h) (1). Fourth, those employees who had qualified for railroad benefits as of the changeover date, but lacked a current connection with the railroad industry in 1974 and lacked 25 years of railroad employment, could obtain a lesser amount of windfall benefit if they had qualified for social security benefits as of the year (prior to 1975) they left railroad employment. 45 U.S.C. 231b (h) (2). 7
Thus, an individual who, as of the changeover date, was unretired and had 10 years of railroad employment and sufficient nonrailroad employment to qualify for social security benefits is eligible for the full windfall amount if he worked for the railroad in 1974 or had a current connection with the railroad as of December 31, 1974, or his later retirement date. But an unretired individual with 24 years of railroad service and sufficient nonrailroad service to qualify for social security benefits is not eligible for a full windfall amount unless he worked for the railroad in 1974, or had a current connection with the railroad as of December 31, 1974, or his later retirement date. And an employee with 10 years of railroad employment who qualified for social security benefits only after [449 U.S. 166, 173] leaving the railroad industry will not receive a reduced windfall benefit while an employee who qualified for social security benefits prior to leaving the railroad industry would receive a reduced benefit. It was with these complicated comparisons that Congress wrestled in 1974.
Appellee and others filed this class action in the United States District Court for the Southern District of Indiana, seeking a declaratory judgment that 45 U.S.C. 231b (h) is unconstitutional under the Due Process Clause of the Fifth Amendment because it irrationally distinguishes between classes of annuitants. 8 The District Court eventually certified a class of all persons eligible to retire between January 1, 1975, and January 31, 1977, who were permanently insured under the Social Security Act as of December 31, 1974, but who were not eligible to receive any "windfall component" because they had left the railroad industry before 1974, had no "current connection" with it at the end of 1974, and had less than 25 years of railroad service. 9 Appellee contended below that it was irrational for Congress to have drawn a distinction between employees who had more than 10 years but less than 25 years of railroad employment simply on the basis of whether they had a "current connection" with the [449 U.S. 166, 174] railroad industry as of the changeover date or as of the date of retirement.
The District Court agreed with appellee that a differentiation based solely on whether an employee was "active" in the railroad business as of 1974 was not "rationally related" to the congressional purposes of insuring the solvency of the railroad retirement system and protecting vested benefits. We disagree and reverse.
The initial issue presented by this case is the appropriate standard of judicial review to be applied when social and economic legislation enacted by 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 benefits, like social security benefits, are not contractual and may be altered or even eliminated at any time. Hisquierdo v. Hisquierdo, 439 U.S. 572, 575 (1979); Flemming v. Nestor, 363 U.S. 603, 608 -611 (1960). And because the distinctions drawn in 231b (h) do not burden fundamental constitutional rights or create "suspect" classifications, such as race or national origin, we may put cases involving judicial review of such claims to one side. San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1973); Vance v. Bradley, 440 U.S. 93 (1979).
Despite the narrowness of the issue, this court in earlier cases has not been altogether consistent in its pronouncements in this area. In Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78 -79 (1911), the Court said that "[w]hen the classification in such a law is called in question, if any state of facts reasonably can be conceived that would sustain it, the existence of that state of facts at the time that the law was enacted must be assumed." On the other hand, only nine years later in F. S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415 (1920), the Court said that for a classification to be valid under the Equal Protection Clause of the Fourteenth [449 U.S. 166, 175] Amendment it "must rest upon some ground of difference having a fair and substantial relation to the object of the legislation . . . ."
In more recent years, however, the Court in cases involving social and economic benefits has consistently refused to invalidate on equal protection grounds legislation which it simply deemed unwise or unartfully drawn.
Thus in Dandridge v. Williams, 397 U.S. 471 (1970), the Court rejected a claim that Maryland welfare legislation violated the Equal Protection Clause of the Fourteenth Amendment. It said:
The only remaining question is whether Congress achieved its purpose in a patently arbitrary or irrational way. The classification here is not arbitrary, says appellant, because it is an attempt to protect the relative equities of employees and to provide benefits to career railroad employees. Congress fully protected, for example, the expectations of those employees who had already retired and those unretired employees who lacked had 25 years of railroad employment. Conversely, Congress denied all windfall benefits to those employees who lacked 10 years of railroad employment. Congress additionally provided windfall benefits, in lesser amount, to those employees with 10 years' railroad employment who had qualified for social security benefits at the time they had left railroad employment [449 U.S. 166, 178] regardless of a current connection with the industry in 1974 or on their retirement date.
Thus, the only eligible former railroad employees denied full windfall benefits are those, like appellee, who had no statutory entitlement to dual benefits at the time they left the railroad industry, but thereafter became eligible for dual benefits when they subsequently qualified for social security benefits. Congress could properly conclude that persons who had actually acquired statutory entitlement to windfall benefits while still employed in the railroad industry had a greater equitable claim to those benefits than the members of appellee's class who were no longer in railroad employment when they became eligible for dual benefits. Furthermore, the "current connection" test is not a patently arbitrary means for determining which employees are "career railroaders," particularly since the test has been used by Congress elsewhere as an eligibility requirement for retirement benefits. 11 Congress could assume that those who had a current connection with the railroad industry when the Act was passed in 1974, or who returned to the industry before their retirement, were more likely than those who had left the industry prior to 1974 and who never returned, to be among the class of persons who pursue careers in the railroad industry, the class for whom the Railroad Retirement Act was designed. Hisquierdo v. Hisquierdo, 439 U.S., at 573 . [449 U.S. 166, 179]
Where, as here, there are plausible reasons for Congress' action, our inquiry is at an end. It is, of course, "constitutionally irrelevant whether this reasoning in fact underlay the legislative decision," Flemming v. Nestor, 363 U.S., at 612 , because this Court has never insisted that a legislative body articulate its reasons for enacting a statute. This is particularly true where the legislature must necessarily engage in a process of line-drawing. The "task of classifying persons for . . . benefits . . . inevitably requires that some persons who have an almost equally strong claim to favored treatment be placed on different sides of the line," Mathews v. Diaz, 426 U.S. 67, 83 -84 (1976), and the fact the line might have been drawn differently at some points is a matter for legislative, rather than judicial, consideration.
Finally, we disagree with the District Court's conclusion that Congress was unaware of what it accomplished or that it was misled by the groups that appeared before it. If this test were applied literally to every member of any legislature that ever voted on a law, there would be very few laws which would survive it. The language of the statute is clear, and we have historically assumed that Congress intended what it enacted. To be sure, appellee lost a political battle in which he had a strong interest, but this is neither the first nor 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 appellee's argument as to restructuring in toto, but that such failure denied him equal protection of the laws guaranteed by the Fifth Amendment. 12 [449 U.S. 166, 180]
For the foregoing reasons, the judgment of the District Court is
[ Footnote 2 ] The relevant Committee Reports stated: "Resolution of the so called `dual benefit' problem is central both to insuring the fiscal soundness of the railroad retirement system and to establishing equitable retirement benefits for all railroad employees." S. Rep. No. 93-1163, supra, at 11; H. R. Rep. No. 93-1345, supra, at 11. The reason for the problem was that a financial interchange agreement entered into in 1951 between the social security and railroad systems caused the entire cost of the windfall benefits to be borne by the railroad system, not the social security system. The annual drain on the railroad system amounted to approximately $450 million per year, and if it were not for "the problem of dual beneficiaries, the railroad retirement system would be almost completely solvent." S. Rep. No. 93-1163, supra, at 8; H. R. Rep. No. 93-1345, supra, at 7.
[ Footnote 3 ] S. Rep. No. 93-1163, supra, at 1; H. R. Rep. No. 93-1345, supra, at 1. Congress eliminated future accruals of windfall benefits by establishing a two-tier system for benefits. The first tier is measured by what the social security system would pay on the basis of combined railroad and nonrailroad service, while the second tier is based on railroad service alone. However, both tiers are part of the railroad retirement system, rather than the first tier being placed directly under social security, and [449 U.S. 166, 170] the benefits actually paid by social security on the basis of nonrailroad employment are deducted so as to eliminate the windfall benefit.
The Railroad Retirement Act of 1974 had its origins in 1970 when Congress created the Commission on Railroad Retirement to study the actuarial soundness of the railroad retirement system. The Commission submitted its report in 1972 and identified "dual benefits and their attendant windfalls" as a principal cause of the system's financial difficulties. It also found that windfall benefits were inequitable, favoring those employees who split their employment over those employees who spent their entire career in the railroad industry. Report of the Commission on Railroad Retirement, The Railroad Retirement System: Its Coming Crisis, H. R. Doc. No. 92-350 (1972). It therefore recommended that future accruals of windfall benefits be eliminated by the establishment of a two-tier system, somewhat similar to the type of system eventually adopted by Congress. It also recommended that "legally vested rights of railroad workers" be preserved. An employee who was fully insured under both the railroad and social security systems as of the changeover date (i. e., by having at least 10 years of railroad employment and the requisite length of social security employment) was deemed to have "legally vested rights."
Following receipt of the Commission's report, Congress requested members of management, labor, and retirees to form a Joint Labor Management Railroad Retirement Negotiating Committee (hereinafter referred to as the Joint Committee) and submit a report, "tak[ing] into account" the recommendations of the Commission. The Joint Committee outlined its proposals in the form of a letter to Congress, dated April 10, 1974. 120 Cong. Rec. 18391-18392 (1974). Although it agreed with the Commission that future accruals of windfall benefits be eliminated, it differed as to the protection to be afforded those already statutorily entitled to benefits and recommended the transitional provisions that were eventually adopted by Congress. A bill embodying those principles was drafted and submitted to Congress, where the relevant committees held lengthy hearings and submitted detailed Reports. See S. Rep. No. 93-1163, supra; H. R. Rep. No. 93-1345, supra.
[ Footnote 4 ] Section 3 (h) of the Railroad Retirement Act of 1974, 88 Stat. 1323, 45 U.S.C. 231b (h), provides in pertinent part:
[ Footnote 5 ] 88 Stat. 1353, see note following 45 U.S.C. 231. The transition provisions in Title II of the bill are not included in the United States Code. The windfall amount for retired employees is preserved by 204 (a) (3) and (4) of the Act.
[ Footnote 6 ] The term "current connection" is defined in 45 U.S.C. 231 (o) to mean, in general, employment in the railroad industry in 12 of the preceding 30 calendar months.
[ Footnote 7 ] The amount of the "windfall component" is greater under subsection (1) than under subsection (2) of 45 U.S.C. 231b (h). The former consists of benefits computed on the basis of social security service through December 31, 1974, while the latter is computed on the basis of social security service only through the year in which the individual left the railroad industry. The difference corresponds to the different dates by which the retired employee must have been permanently insured under the Social Security Act in order to be eligible for any windfall benefit.
[ Footnote 8 ] Although "the Fifth Amendment contains no equal protection clause, it does forbid discrimination that is `so unjustifiable as to be violative of due process.'" Schneider v. Rusk, 377 U.S. 163, 168 (1964). Thus, if a federal statute is valid under the equal protection component of the Fifth Amendment, it is perforce valid under the Due Process Clause of that Amendment. Richardson v. Belcher, 404 U.S. 78, 81 (1971).
[ Footnote 9 ] It is somewhat unclear precisely who is and is not within the class certified by the District Court. By its terms, the class certified by the District Court would appear to include those employees who qualified for reduced windfall benefits under 231b (h) (2) by reason of their qualifying for social security benefits as of the year they left the railroad industry. It appears, however, that the District Court intended to include in the class only those, like appellee Fritz, who subsequently qualified for social security benefits and who are therefore ineligible for even the reduced windfall benefit.
[ Footnote 10 ] This opinion and JUSTICE BRENNAN'S dissent cite a number of equal protection cases including Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61 (1911); F. S. Royster Guano Co. v. Virginia, 253 U.S. 412 (1920); Morey v. Doud, 354 U.S. 457 (1957); Flemming v. Nestor, 363 U.S. 603 (1960); Massachusetts Board of Retirement v. Murgia, 427 U.S. 307 (1976); New Orleans v. Dukes, 427 U.S. 297 (1976); Johnson v. Robison, 415 U.S. 361 (1974); U.S. Dept. of Agriculture v. Moreno, 413 U.S. 528 (1973); U.S. Dept. of Agriculture v. Murry, 413 U.S. 508 (1973); Weinberger v. Wiesenfeld, 420 U.S. 636 (1975); and James v. Strange, [449 U.S. 166, 177] 407 U.S. 128 (1972). The most arrogant legal scholar would not claim that all of these cases applied a uniform or consistent test under equal protection principles. And realistically speaking, we can be no more certain that this opinion will remain undisturbed than were those who joined the opinion in Lindsley, supra, Royster Guano Co., supra, or any of the other cases referred to in this opinion and in the dissenting opinion. But like our predecessors and our successors, we are obliged to apply the equal protection component of the Fifth Amendment as we believe the Constitution requires and in so doing we have no hesitation in asserting, contrary to the dissent, that where social or economic regulations are involved Dandridge v. Williams, 397 U.S. 471 (1970), and Jefferson v. Hackney, 406 U.S. 535 (1972), together with this case, state the proper application of the test. The comments in the dissenting opinion about the proper cases for which to look for the correct statement of the equal protection rational-basis standard, and about which cases limit earlier cases, are just that: comments in a dissenting opinion.
[ Footnote 11 ] The "current connection" test has been used since 1946 as an eligibility requirement for both occupational disability and survivor annuities, 45 U.S.C. 231a (a) (1) (iv), 231a (d) (1) (ch. 709, 203, 205, 213, 60 Stat. 726-735), and it has been used since 1966 in determining eligibility for a supplemental annuity. 45 U.S.C. 231a (b) (1). (Pub. L. 89-699, 1, 80 Stat. 1073.)
Appellee contends that the "current connection" test is impermissible because it draws a distinction not on the duration of employment but rather on the time of employment. But this Court has clearly held that Congress may condition eligibility for benefits such as these on the character as well as the duration of an employee's ties to an industry. Mathews v. Diaz, 426 U.S. 67, 83 (1976).
[ Footnote 12 ] As we have recently stated: "The Constitution presumes that, absent some reason to infer antipathy, even improvident decisions will eventually be rectified by the democratic process and that judicial intervention is generally unwarranted no matter how unwisely we may think a political branch has acted." Vance v. Bradley, 440 U.S. 93, 97 (1979) (footnote omitted).
JUSTICE STEVENS, concurring in the judgment.
In my opinion JUSTICE BRENNAN'S criticism of the Court's approach to this case merits a more thoughtful response than that contained in footnote 10, ante, at 176-177. JUSTICE BRENNAN correctly points out that if the analysis of legislative purpose requires only a reading of the statutory language in a disputed provision, and if any "conceivable basis" for a discriminatory classification will repel a constitutional attack on the statute, judicial review will constitute a mere tautological recognition of the fact that Congress did what it intended to do. JUSTICE BRENNAN is also correct in reminding us that even though the statute is an example of "social and economic legislation," the challenge here is mounted by individuals whose legitimate expectations of receiving a fixed retirement income are being frustrated by, in effect, a breach of a solemn commitment by their Government. When Congress deprives a small class of persons of vested rights that are protected - and, indeed, even enhanced 1 - for others who are in a similar though not identical position. I believe the Constitution requires something more than merely a "conceivable" or a "plausible" explanation for the unequal treatment.
I do not, however, share JUSTICE BRENNAN's conclusion that every statutory classification must further an objective that can be confidently identified as the "actual purpose" of the legislature. Actual purpose is sometimes unknown. Moreover, undue emphasis on actual motivation may result in identically worded statutes being held valid in one State and invalid in a neighboring State. 2 I therefore believe that we [449 U.S. 166, 181] must discover a correlation between the classification and either the actual purpose of the statute or a legitimate purpose that we may reasonably presume to have motivated an impartial legislature. If the adverse impact on the disfavored class is an apparent aim of the legislature, its impartiality would be suspect. If, however, the adverse impact may reasonably be viewed as an acceptable cost of achieving a larger goal, an impartial lawmaker could rationally decide that that cost should be incurred.
In this case we need not look beyond the actual purpose of the legislature. As is often true, this legislation is the product of multiple and somewhat inconsistent purposes that led to certain compromises. One purpose was to eliminate in the future the benefit that is described by the Court as a "windfall benefit" and by JUSTICE BRENNAN as an "earned dual benefit." That aim was incident to the broader objective of protecting the solvency of the entire railroad retirement program. Two purposes that conflicted somewhat with this broad objective were the purposes of preserving those benefits that had already vested and of increasing the level of payments to beneficiaries whose rights were not otherwise to be changed. As JUSTICE BRENNAN emphasizes, Congress originally intended to protect all vested benefits, but it ultimately sacrificed some benefits in the interest of achieving other objectives.
Given these conflicting purposes, I believe the decisive questions are (1) whether Congress can rationally reduce the vested benefits of some employees to improve the solvency of the entire program while simultaneously increasing the benefits of others; and (2) whether, in deciding which vested benefits to reduce, Congress may favor annuitants whose railroad service was more recent than that of disfavored annuitants who had an equal or greater quantum of employment. [449 U.S. 166, 182]
My answer to both questions is in the affirmative. The congressional purpose to eliminate dual benefits is unquestionably legitimate; that legitimacy is not undermined by the adjustment in the level of remaining benefits in response to inflation in the economy. As for the second question, some hardship - in the form of frustrated long-term expectations - must inevitably result from any reduction in vested benefits. Arguably, therefore, Congress had a duty - and surely it had the right to decide - to eliminate no more vested benefits than necessary to achieve its fiscal purpose. Having made that decision, any distinction it chose within the class of vested beneficiaries would involve a difference of degree rather than a difference in entitlement. I am satisfied that a distinction based upon currency of railroad employment represents an impartial method of identifying that sort of difference. Because retirement plans frequently provide greater benefits for recent retirees than for those who retired years ago - and thus give a greater reward for recent service than for past service of equal duration - the basis for the statutory discrimination is supported by relevant precedent. It follows, in my judgment, that the timing of the employees' railroad service is a "reasonable basis" for the classification as that term is used in Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61 , ante, at 174, and Dandridge v. Williams, 397 U.S. 471 , ante, at 175, as well as a "ground of difference having a fair and substantial relation to the object of the legislation," as those words are used in F. S. Royster Guano Co. v. Virginia, 253 U.S. 412 , ante, at 174-175.
Accordingly, I concur in the judgment.
[ Footnote 1 ] The 1974 Act provided increased benefits for spouses, widows, survivors, and early retirees. See 45 U.S.C. 231c (g).
[ Footnote 2 ] Compare Rundlett v. Oliver, 607 F.2d 495 (CA1 1979) (upholding Maine's statutory rape law), with Meloon v. Helgemoe, 564 F.2d 602 [449 U.S. 166, 181] (CA1 1977), cert. denied, 436 U.S. 950 (1978) (striking down New Hampshire's statutory rape law).
JUSTICE BRENNAN, with whom JUSTICE MARSHALL joins, dissenting.
Appellee Gerhard Fritz represents a class of retired former railroad employees who were statutorily entitled to Railroad Retirement and Social Security benefits, including an overlap herein called the "earned dual benefit," until enactment of [449 U.S. 166, 183] 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 in railroad and nonrailroad jobs, who can be distinguished from appellee class only because they worked at least one day for, or retained a "current connection" with, a railroad in 1974.
The only question in this case is whether the equal protection component of the Fifth Amendment 1 bars Congress from allocating pension benefits in this manner. The answer to this question turns in large part on the way in which the strictures of equal protection are conceived by this Court. See Morey v. Doud, 354 U.S. 457, 472 (1957) (Frankfurter, J., dissenting). The parties agree that the legal standard applicable to this case is the "rational basis" test. The District Court applied this standard below, see Conclusion of Law No. 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 governing precedents. I suggest that the mode of analysis employed by the Court in this case virtually immunizes social and economic legislative classifications from judicial review.
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 Retirement v. Murgia, 427 U.S. 307, 312 (1976) (per curiam); New Orleans v. Dukes, 427 U.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 educational [449 U.S. 166, 184] benefits under the Veterans' Readjustment Benefits Act of 1966, eight Members of this Court agreed that
Nonetheless, the rational-basis standard "is not a toothless one," ibid., and will not be satisfied by flimsy or implausible justifications for the legislative classification, proffered after the fact by Government attorneys. See, e. g., Jimenez v. Weinberger, 417 U.S. 628 (1974); U.S. Dept. of Agriculture v. Moreno, 413 U.S. 528 (1973); U.S. Dept. of Agriculture v. Murry, 413 U.S. 508 (1973); James v. Strange, 407 U.S. 128 (1972). When faced with a challenge to a legislative classification under the rational-basis test, the court should ask, first, what the purposes of the statute are, and, second, whether the classification is rationally related to achievement of those purposes. [449 U.S. 166, 185]
The purposes of the Railroad Retirement Act of 1974 are clear, because Congress has commendably stated them in the House and Senate Reports accompanying the Act. A section of the Reports is entitled "Principal Purpose of the Bill." It notes generally that "[t]he bill provides for a complete restructuring of the Railroad Retirement Act of 1937, and will place it on a sound financial basis," 2 and then states:
The Court today avoids the conclusion that 231b (h) must be invalidated by deviating in three ways from traditional rational-basis analysis. First, the Court adopts a tautological approach to statutory purpose, thereby avoiding the necessity for evaluating the relationship between the challenged classification and the legislative purpose. Second, it disregards the actual stated purpose of Congress in favor of a justification which was never suggested by any Representative or Senator, and which in fact conflicts with the stated congressional purpose. Third, it upholds the classification without any analysis of its rational relationship to the identified purpose.
The Court states that "the plain language of [45 U.S.C.] 231b (h) marks the beginning and end of our inquiry." Ante, at 176. This statement is strange indeed, for the "plain language" of the statute can tell us only what the classification is; it can tell us nothing about the purpose of the classification, let alone the relationship between the classification [449 U.S. 166, 187] and that purpose. Since 231b (h) deprives the members of appellee class of their vested earned dual benefits, the Court apparently assumes that Congress must have intended that result. But by presuming purpose from result, the Court reduces analysis to tautology. It may 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. But equal protection scrutiny under the rational-basis test requires the courts first to deduce the independent objectives of the statute, usually from statements of purpose and other evidence in the statute and legislative history, and second to analyze whether the challenged classification rationally furthers achievement of those objectives. The Court's tautological approach will not suffice.
The Court analyzes the rationality of 231b (h) in terms of a justification suggested by Government attorneys, but never adopted by Congress. The Court states that it is "`constitutionally irrelevant whether this reasoning in fact underlay the legislative decision.'" Ante, at 179 (quoting Flemming 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 the past 10 years, this Court has frequently recognized that the actual purposes of Congress, rather than the post hoc justifications offered by Government attorneys, must be the primary basis for analysis under the rational-basis test. In Weinberger v. Wiesenfeld, 420 U.S. 636, 648 , n. 16 (1975), we said:
From these cases and others it is clear that this Court will no longer sustain a challenged classification under the rational-basis test merely because Government attorneys can suggest a "conceivable basis" upon which it might be thought rational. The standard we have applied is properly deferential to the Legislative Branch: where Congress has articulated a legitimate governmental objective, and the challenged classification rationally furthers that objective, we must sustain the provision. In other cases, however, the courts must probe more deeply. Where Congress has expressly stated the purpose of a piece of legislation, but where the challenged classification is either irrelevant to or counter to that purpose, we must view any post hoc justifications proffered by Government attorneys with skepticism. A challenged classification may be sustained only if it is rationally related to achievement of an actual legitimate governmental purpose.
The Court argues that Congress chose to discriminate against appellee for reasons of equity, stating that "Congress could properly conclude that persons who had actually acquired statutory entitlement to windfall benefits while still employed in the railroad industry had a greater equitable [449 U.S. 166, 189] claim to those benefits than the members of appellee's class who were no longer in railroad employment when they became eligible for dual benefits." 4 Ante, at 178. This statement turns Congress' assessment of the equities on its head. As I have shown, 5 Congress expressed the view that it would be inequitable to deprive any retirees of any portion of the benefits they had been promised and that they had earned under prior law. See also H. R. Rep. No. 93-1345, pp. 4, 11 (1974); S. Rep. No. 93-1163, pp. 4, 11 (1974); 120 Cong. Rec. 35613 (1974) (statement of Rep. Hudnut); id., at 35614 (statement of Rep. Shuster); id., at 35615 (statement of Rep. Morgan). The Court is unable to cite even one statement in the legislative history by a Representative or Senator that makes the equitable judgment it imputes to Congress. In the entire legislative history of the Act, the only persons to state that the equities justified eliminating appellee's earned dual benefits were representatives of railroad management and labor, whose self-serving interest in bringing about this result destroys any basis for attaching weight to their statements. 6
The factual findings of the District Court concerning the development of 231b (h), amply supported by the legislative history, are revealing on this point. 7 In 1970, Congress [449 U.S. 166, 190] established a Commission to investigate the actuarial soundness of the Railroad Retirement system and to make recommendations for its reform. See Pub. L. 91-377, 84 Stat. 791. The Commission was composed of one railroad management representative, one railroad labor representative, and three public representatives. The Commission submitted a report in 1972, recommending, inter alia, that railroad retirees in the future no longer be permitted to earn full Railroad Retirement and Social Security benefits without offset. The Commission insisted, however, that
In an initial proposed restructuring of the system, the Joint Committee devised a means whereby the system deficit could be completely eliminated without depriving retirees of vested earned benefits. See Finding of Fact No. 43, reprinted at App. to Juris. Statement 12a. However, labor representatives demanded that benefits be increased for their current members, the cost to be offset by divesting the appellee class of a portion of the benefits they had earned under prior law. See Findings of Fact Nos. 39, 40, 44, reprinted id., at 11a-12a. As the District Court found:
Most striking is the following colloquy between Representative Dingell and Mr. Dempsey:
Of course, a misstatement or several misstatements by witnesses before Congress would not ordinarily lead us to conclude that Congress misapprehended what it was doing. In this instance, however, where complex legislation was drafted by outside parties and Congress relied on them to explain it, where the misstatements are frequent and unrebutted, and where no Member of Congress can be found to have stated the effect of the classification correctly, we are entitled to suspect that Congress may have been misled. As the District Court found: "At no time during the hearings did Congress even give a hint that it understood that the bill by its language eliminated an earned benefit of plaintiff's class." Finding of Fact No. 63, reprinted at App. to Juris. Statement 22a.
Therefore, I do not think that this classification was rationally related to an actual governmental purpose.
The third way in which the Court has deviated from the principles of rational-basis scrutiny is its failure to analyze [449 U.S. 166, 194] whether the challenged classification is genuinely related to the purpose identified by the Court. Having suggested that "equitable considerations" underlay the challenged classification - in direct contradiction to Congress' evaluation of those considerations, and in the face of evidence that the classification was the product of private negotiation by interested parties, inadequately examined and understood by Congress - the Court proceeds to accept that suggestion without further analysis.
An unadorned claim of "equitable" considerations is, of course, difficult to assess. It seems to me that before a court may accept a litigant's assertion of "equity," it must inquire what principles of equity or fairness might genuinely support such a judgment. But apparently the Court does not demand such inquiry, for it has failed to address any equitable considerations that might be relevant to the challenged classification.
In my view, the following considerations are of greatest relevance to the equities of this case: (1) contribution to the system; (2) reasonable expectation and reliance; (3) need; and (4) character of service to the railroad industry. With respect to each of these considerations, I would conclude that the members of appellee class have as great an equitable claim to their earned dual benefits as do their more favored co-workers, who remain entitled to their earned dual benefits under 231b (h).
Contribution to the system. The members of the appellee class worked in the railroad industry for more than 10 but fewer than 25 years, and also worked in nonrailroad jobs for the required number of years for vesting under Social Security - usually 40 quarters. During that time, they contributed to both the Railroad Retirement and Social Security systems, and met all requirements of the law for the vesting of benefits under those systems. In this respect, they are identical to their more favored co-workers, who contributed no more of their earnings to the systems than did appellee [449 U.S. 166, 195] class. On the basis of contributions to the systems, therefore, there is no reason for this discrimination.
Reasonable expectation and reliance. Throughout their working lives, the members of appellee class were assured that they would receive retirement benefits in accordance with the terms of the law as it then stood. See Finding of Fact No. 70, reprinted at App. to Juris. Statement 25a. No less than their more favored co-workers, they chose career paths and made calculations for their retirement based on these assurances. For Congress to change its rules and strip them of these benefits at the time of their retirement seems decidedly inequitable. As the District Court found:
Need. The appellee class is composed of fixed-income elderly people, no longer capable of re-entering the work force to reacquire benefits once earned but now lost. The average loss to the class members is about $88 per month, no small element in the monthly budget. The record provides no reason to suppose that members of the appellee class are any less likely to be in need than are their co-workers.
Character of service to the railroad industry. Members of the appellee class worked at least 10 years for the railroad industry by 1974, and many of them worked as long as 24 years. Their duration of railroad employment - surely the best measure of their service to the industry - was equal to that of their co-workers. In fact, some members of the class worked over twice as long in the railroad industry as did some of those who retained their rights to a dual benefit. Finding of Fact No. 60, reprinted id., at 21a-22a. Admittedly, the members of the appellee class retired from railroad work prior to 1974, but the record shows that many left railroad work involuntarily, not because of a lack of commitment to the industry. Finding of Fact No. 72, reprinted id., at 26a. Moreover, since one purpose of the Railroad Retirement system was to encourage railroad workers to retire early, so as to create positions for younger workers, Hisquierdo v. Hisquierdo, 439 U.S. 572, 573 -574 (1979), it is hardly fair to fault the appellee class now for having done so.
Even if I were able to accept the notion that Congress considered it equitable to deprive a class of railroad retirees of a portion of their vested earned benefits because they no longer worked for the railroad, I would still consider the means adopted in 231b (h) irrational. 11 Under this provision, a [449 U.S. 166, 197] retiree is favored by retention of his full vested earned benefits if he had worked so much as one day for a railroad in 1974. This is a plainly capricious basis for distinguishing among retirees, every one of whom had worked in the industry for at least 10 years: the fortuity of one day of employment in a particular year should not govern entitlement to benefits earned over a lifetime. 12
I therefore conclude that the Government's proffered justification of "equitable considerations," accepted without question by the Court, cannot be defended. Rather, as the legislative history repeatedly states, equity and fairness demand that the members of appellee class like their co-workers, retain the vested dual benefits they earned prior to 1974. A conscientious application of rational-basis scrutiny demands, therefore, that 231b (h) be invalidated.
Equal protection rationality analysis does not empower the courts to second-guess the wisdom of legislative classifications. On this we are agreed, and have been for over 40 years. On the other hand, we are not powerless to probe beneath claims by Government attorneys concerning the means and ends of [449 U.S. 166, 198] Congress. Otherwise, we would defer not to the considered judgment of Congress, but to the arguments of litigators. The instant case serves as an example of the unfortunate consequence of such misplaced deference. Because the Court is willing to accept a tautological analysis of congressional purpose, an assertion of "equitable" considerations contrary to the expressed judgment of Congress, and a classification patently unrelated to achievement of the identified purpose, it succeeds in effectuating neither equity nor congressional intent.
I respectfully dissent.
[ Footnote 1 ] See Weinberger v. Wiesenfeld, 420 U.S. 636, 638 , n. 2 (1975).
[ Footnote 2 ] Of course, the legitimate governmental interest in restoring the Railroad Retirement system to fiscal soundness does not, in itself, serve to support the challenged classification in this case. At issue is why Congress discriminated among two classes of railroad retirees. The overall interest in saving money is irrelevant to this discrimination.
[ Footnote 3 ] Several pages later, the Reports again make clear that persons with vested rights to earned dual benefits would retain them:
The administration also understood the Act to preserve rights to vested earned dual benefits. See H. R. Rep. No. 93-1345, at 81-82 (supplemental report from the Office of Management and Budget).
[ Footnote 4 ] The Court's quoted justification fails on its face to support the challenged classification. Despite the Court's apparent belief to the contrary, some members of the appellee class did "actually acquire[e] statutory entitlement" to dual benefits while still employed in the railroad industry, see ante, at 178, but nevertheless were deprived of a portion of those benefits. See 231b (h) (2). Under the Court's own reasoning, therefore, these persons were arbitrarily and impermissibly treated.
[ Footnote 5 ] See supra, at 185-186.
[ Footnote 6 ] See discussion following, infra.
[ Footnote 7 ] The Court does not claim that the District Court's factual findings were clearly erroneous, though it does state its disagreement with one lower court conclusion. See ante, at 179. Therefore, the factual findings of the District Court govern the litigation in this Court, and in any event, are amply supported by the record.
[ Footnote 8 ] The use of a Joint Labor-Management Negotiating Committee to draft legislation concerning the Railroad Retirement system was not novel. In fact, such a committee drafted the original Railroad Retirement Act of 1937 and several amending Acts since then. See Hisquierdo v. Hisquierdo, 439 U.S. 572, 574 , n. 3 (1979); Railroad Retirement Act - Supplemental Benefits, Hearings on H. R. 17285 before the Subcommittee on Commerce [449 U.S. 166, 191] and Finance of the House Committee on Interstate and Foreign Commerce, 89th Cong., 2d Sess., 2-3 (1966); Railroad Retirement, Hearings on H. R. 1362 before the House Committee on Interstate and Foreign Commerce, 79th Cong., 1st Sess., 448 (1945); Commission on Railroad Retirement, The Railroad Retirement System: Its Coming Crisis, H. R. Doc. No. 92-350, p. 147 (1972).
[ Footnote 9 ] Congress' unfortunate tendency to pass Railroad Retirement legislation drafted by labor and management representatives without adequate scrutiny was criticized by the Commission on Railroad Retirement in its 1972 report:
[ Footnote 10 ] Cf. Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359 , [449 U.S. 166, 196] 374 (1980) (one of Congress' central purposes in passing the Employee Retirement Income Security Act was "to prevent the `great personal tragedy' suffered by employees whose vested benefits are not paid when pension plans are terminated" (footnote omitted)).
[ Footnote 11 ] Contrary to the Court's suggestion, this is not a "line-drawing" case, where the Congress must make a division at some point along an [449 U.S. 166, 197] admittedly rationally conceived continuum. See ante, at 179. Here, Congress has isolated a particular class of retirees on the basis of a distinction that is utterly irrelevant to any actual or legitimate governmental purpose.
[ Footnote 12 ] The wholly arbitrary nature of this classification is highlighted by an analysis of the exception in 231 (h) (2). Under this subsection, some members of the appellee class are entitled to retain a portion of their earned dual benefit, albeit at a reduced level, while the others are divested of the dual benefit altogether. The basis for this added twist is the timing of their qualification for Railroad Retirement and Social Security. Those who qualified for Social Security first retain a portion of their dual benefit; those who qualified for Railroad Retirement first do not. Needless to say, the retirees had no notice at the time that the timing of qualification would make any difference to their entitlement to benefits. This kind of after-the-fact shifting of the rules for retirement benefits has not been justified and cannot be justified. [449 U.S. 166, 199]