Edwards v. Valdez
| Decision Date | 05 May 1986 |
| Docket Number | Nos. 85-1552,85-1650,s. 85-1552 |
| Parties | Unempl.Ins.Rep. CCH 21,793 Thomas EDWARDS, Jeanette Caldwell, and John Vigil, Plaintiffs-Appellees/Cross-Appellants, v. Ruben VALDEZ, Executive Director, Colorado Department of Labor; John Kezer, Director, Division of Employment and Training; and Industrial Commission of Colorado (Ex-Officio the Unemployment Compensation Commission), in their official capacities, Defendants-Appellants/Cross-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Timothy R. Arnold, First Asst. Atty. Gen., Human Resources Section , Denver, Colo., for defendants-appellants/cross-appellees.
Melody K. Fuller (Jackson L. Peters, Jr., Pikes Peak Legal Services, Colorado Springs, Colo., and Brian Patrick Lawler, Colorado Coalition of Legal Service Programs, Denver, Colo., with her on briefs), Legal Aid Society of Metropolitan Denver, Inc., Denver, Colo., for plaintiffs-appellees/cross-appellants.
Francis X. Lilly, Sol. of Labor, Allen H. Feldman, Acting Associate Sol., Sp. Appellate and Supreme Court Litigation Div., Carol A. DeDeo, Counsel for Appellate Litigation, Steven J. Mandel and Bette J. Briggs, Washington, D.C., for the U.S. Dept. of Labor.
Jordan Rossen, General Counsel and Richard W. McHugh, Associate Gen. Counsel, Detroit, Mich., for Intern. Union, United Auto., Aerospace and Agr. Implement Workers of America.
Before SEYMOUR, SETH and BALDOCK, Circuit Judges.
This case involves the interplay between two welfare programs: social security and unemployment compensation. Plaintiffs-appellees/cross-appellants (plaintiffs) are three residents of Colorado who retired and began to receive social security payments. Each plaintiff returned to work for a new employer, subsequently became unemployed, and filed unemployment insurance claims with defendants-appellants/cross-appellees (defendants). Based on an interpretation of the pension offset provision of the Federal Unemployment Tax Act (FUTA), 26 U.S.C. Sec. 3304(a)(15), and a similar state law, Colo.Rev.Stat. Sec. 8-73-110(3)(a), defendants deducted the social security benefits each plaintiff received from the amount of unemployment insurance to which each plaintiff was otherwise entitled. The district court found in favor of plaintiffs and prohibited the defendants from deducting social security and railroad benefits from unemployment insurance benefits unless the "base period" employer is the same as the "social security" employer. Because we hold that unemployment insurance benefits are to be offset by social security payments whenever the base period employer contributes to social security, the district court's judgment is reversed.
Plaintiffs brought this action on behalf of themselves and all others similarly situated. They challenged Colorado's interpretation of 26 U.S.C. Sec. 3304(a)(15)(A)(i) 1 which allowed it to offset unemployment compensation by the amount of social security benefits received whenever the "base period" 2 employer participates in the social security program. It is plaintiffs' contention that this provision is applicable only if an employer contributed to the social security benefits of a particular employee before retirement.
In the district court, plaintiffs asserted that Colorado's interpretation of this federal statute is at variance with the statute's legislative history and that such interpretation violates their equal protection and due process rights. They also alleged that the "when due" provision of 42 U.S.C. Sec. 503(a)(1) 3 was violated by defendants' application of the offset statute. Their final argument was that the federal statute sets the maximum pension-offset level and Colorado's statute, Colo.Rev.Stat. Sec. 8-73-110(3)(a), 4 may not exceed that level.
The trial judge, in her February 13, 1985, memorandum opinion and order, ruled on these issues on cross-motions for summary judgment. Edwards v. Valdez, 602 F.Supp. 361 (D.Colo.1985). The court found 26 U.S.C. Sec. 3304(a)(15) to be ambiguous which justified an exhaustive analysis of the statute's legislative history. The district judge rejected defendants' contention that the offset provision was enacted as a savings device and found instead that its primary purpose is to avoid "double-dipping." 5 Based on this finding, she then concluded that the offset provision is applicable only when the base period employer and the social security employer are the same. She also ruled that neither the "when due" statute nor the due process clause was violated. Although she also found no violation of equal protection because of her interpretation of the statute, she noted that Colorado's interpretation would violate plaintiffs' equal protection rights. The parties stipulated that the Colorado offset statute and the federal statute are identical, and the district court found the same.
The defendants, relying on the holding in Pennhurst State School v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984), asserted that the eleventh amendment divested the court of jurisdiction because they viewed the case as a suit against Colorado for the violation of a Colorado statute. The district court concluded that there was no jurisdictional bar because the suit primarily involves federal statutory and constitutional law, but ruled that the holding in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974), limited plaintiffs' remedy to injunctive relief. Because retroactive monetary damages were not available, the court declined to certify a class under Fed.R.Civ.P. 23. Plaintiffs were awarded $25,260 for attorney's fees by order dated April 5, 1985.
Defendants now raise the following issues on appeal:
(1) Whether the eleventh amendment bars jurisdiction of this action;
(2) Whether federal and Colorado law require unemployment benefits to be offset by social security benefits whenever the base period employer contributes to social security;
(3) Whether Colorado's interpretation of the federal and state offset provisions violate plaintiffs' equal protection rights;
(4) Whether the United States Secretary of Labor is an indispensable party pursuant to Fed.R.Civ.P. 19; and
(5) Whether the court erred in awarding plaintiffs attorney's fees.
The plaintiffs cross-appeal, raising the following issues:
(1) Whether plaintiffs are entitled to retroactive monetary relief;
(2) Whether class certification is appropriate in this case; and
(3) Whether the district court erred in limiting the attorney's fee award to $75 per hour.
The eleventh amendment of the United States Constitution prohibits maintaining a suit in federal court when an unconsenting state, or one of its agencies, is named as a defendant. It provides the following limitation:
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
The amendment reflects the principle that sovereign immunity limits judicial authority granted by article III of the Constitution. In holding that the eleventh amendment prevents a federal court from considering a suit by a citizen against his own state, the Supreme Court has noted that federal jurisdiction over suits against unconsenting states "was not contemplated by the Constitution when establishing the judicial power of the United States." Hans v. Louisiana, 134 U.S. 1, 15, 10 S.Ct. 504, 507, 33 L.Ed. 842 (1890). Thus, the eleventh amendment is but an "exemplification" of the principle of sovereign immunity. Ex parte State of New York No. 1, 256 U.S. 490, 497, 41 S.Ct. 588, 589, 65 L.Ed. 1057 (1921); Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979).
When a suit is brought against state officials, it is necessary to determine whether the suit is against the state itself, i.e., whether "the state is the real, substantial party in interest," Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 350, 89 L.Ed. 389 (1945) and whether the suit is based on alleged violations of state or federal law. Pennhurst, 104 S.Ct. at 910. A suit which alleges that a state official's action is unconstitutional is not against the state itself and is not barred by the eleventh amendment. Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Nevertheless, the relief afforded for a state official's violation of federal law is limited to an injunction that governs the official's future conduct and retroactive monetary relief is not available. Edeleman v. Jordan, 415 U.S. at 666-67, 94 S.Ct. at 1357. A claim that a state official violated state law, however, is one against the state and therefore barred by the eleventh amendment. Pennhurst, 104 S.Ct. at 910.
An application of these principles to this case fails to reveal a jurisdictional impediment. Although the Colorado offset provision certainly is relevant to the analysis, because the federal statute sets forth the minimum requirement, we must look to the federal statute to resolve the questions presented by this case. Additionally, the eleventh amendment is not a bar because the suit alleges that the defendants' conduct is unconstitutional. See, e.g., Pennhurst, 104 S.Ct. at 909; Ex parte Young, 209 U.S. at 144-45, 28 S.Ct. 447-48. Thus, the eleventh amendment does not prohibit the maintenance of this suit in federal court.
The language of section 3304(a)(15)(A)(i) specifies that if a base period employer contributes to social security, then unemployment benefits must be offset by social security benefits. The language of the statute is clear and does not contain any...
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