Freytag v. Commissioner of Internal Revenue

Syllabus The chief judge of the United States Tax Court, an Article I court composed of 19 judges appointed by the President, is authorized to appoint special trial judges, 26 U.S.C. § 7443A(a), and to assign to them certain specified proceedings, §§ 7443A(b)(1), (2), and (3), and "any other proceeding which the chief judge may designate," § 7443A(b)(4). As to subsection (b)(4) proceedings, the special trial judge may hear the case and prepare proposed findings and an opinion, but the actual decision is rendered by a Tax Court judge, § 7443A(c). When petitioners sought review in the Tax Court of determinations of approximately $1.5 billion in federal income tax deficiencies, their cases were assigned to a Tax Court judge but were later reassigned, with petitioners' consent, to a special trial judge. His unfavorable opinion was adopted by the chief judge as the opinion of the Tax Court. The Court of Appeals affirmed, rejecting petitioners' arguments that the assignment of complex cases to a special trial judge was not authorized by § 7443A and that such assignment violated the Appointments Clause of the Constitution, which, inter alia, limits congressional discretion to vest the appointment of "inferior Officers" to the President, the Heads of Departments, and the Courts of Law.

Held: 1. Subsection (b)(4) authorizes the chief judge to assign any Tax Court proceeding, regardless of complexity or amount in controversy, to a special trial judge for hearing and preparation of proposed findings and a written opinion. Its plain language contains no limiting term restricting its reach to cases that are minor, simple, or narrow; and neither the statute's structure nor legislative history contradicts the broad sweep of this language. Pp. 873-877. 2. Section 7443A does not transgress the structure of separation of powers embodied in the Appointments Clause. Pp. 877-892. (a) This is one of those rare cases in which the Court should exercise its discretion to hear petitioners' challenge. That challenge goes to the validity of the Tax Court proceeding that is the basis for this litigation and, thus, is a nonjurisdictional structural constitutional objection that may be considered, even though petitioners consented to the assignment. See Glidden Co. v. Zdanok, 370 U.S. 530, 535-536, 82 S.Ct. 1459, 1464-1465, 8 L.Ed.2d 671. Pp. 878-880. (b) A special trial judge is an "inferior Officer" whose appointment must conform to the Appointments Clause. Such a judge acts as an inferior officer who exercises independent authority in cases governed by subsection (b)(1), (2), and (3). The fact that in subjection (b)(4) cases he performs duties that may be performed by an employee not subject to the Appointments Clause does not transform his status. Pp. 880-882. (c) The Clause reflects the Framers' conclusion that widely distributed appointment power subverts democratic government. Thus, such power can be vested in the Tax Court's chief judge only if that court falls within one of the three repositories the Clause specifies. Clearly Congress did not intend to grant the President the power to appoint special trial judges. And the term "Department" refers only to executive divisions like Cabinet-level departments. United States v. Germaine, 99 U.S. 508, 510-511, 25 L.Ed. 482. Treating the Tax Court as a "Department" would defy the purpose of the Clause, the meaning of the Constitution's text, and the clear intent of Congress to transform that court from an executive agency into an Article I court. Pp. 882-888. (d) An Article I court, which exercises judicial power, can be a "Court of Law," within the meaning of the Appointments Clause. The reference to "Courts of Law" cannot be limited to Article III courts merely because they are the only courts the Constitution mentions. Congress has wide discretion to assign the task of adjudication to legislative tribunals, see, ''e.g., American Ins. Co. v. Canter,'' 26 U.S. (1 Pet.) 511, 546, 7 L.Ed. 242, and an Article I court cannot exercise judicial power and not be one of the "Courts of Law." Buckley v. Valeo, 424 U.S. 1, 96 S.Ct. 612, 46 L.Ed.2d 659, distinguished. To hold otherwise would also undermine Congress' understanding that Article I courts can be given the power to appoint. See, e.g., In re Hennen, 38 U.S. (13 Pet.) 230, 10 L.Ed. 138. Pp. 888-890. (e) The Tax Court is a "Court of Law" within the Clause's meaning. It exercises judicial power to the exclusion of any other function; its function and role closely resemble those of the federal district courts;  and it is independent of the Executive and Legislative Branches, in that its decisions are appealable in the same manner as those of the district courts. Pp. 890-892. 904 F.2d 1011 (CA5 1990), affirmed. BLACKMUN, J., delivered the opinion for a unanimous Court with respect to Parts I, II, and III, and the opinion of the Court with respect to Part IV, in which REHNQUIST, C.J., and WHITE, MARSHALL, and STEVENS, JJ., joined. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, in which O'CONNOR, KENNEDY, and SOUTER, JJ., joined. Kathleen M. Sullivan, for petitioners. John G. Roberts, Jr., for respondent. Justice BLACKMUN delivered the opinion of the Court.