Bleau v. Hackett

• Decision Date: 29 November 1984
• Docket Number: Civ. A. No. 83-0327 P.
• Citation: 598 F. Supp. 727
• Parties: Leo D. BLEAU, Plaintiff, v. Mary HACKETT, et al., Defendants, and United States Department of Labor, Defendant-Intervenor.
• Court: U.S. District Court — District of Rhode Island

598 F. Supp. 727

Leo D. BLEAU, Plaintiff, v. Mary HACKETT, et al., Defendants, and United States Department of Labor, Defendant-Intervenor.

Civ. A. No. 83-0327 P.

United States District Court, D. Rhode Island.

November 29, 1984.

Joseph R. DeCiantis, Joseph F. Dugan, Charles H. McLaughlin, Providence, R.I., for defendants.

Leslie Dellon, U.S. Dept. of Justice, Washington, D.C., Everett C. Sammartino, Asst. U.S. Atty., Providence, R.I., for defendant-intervenor.

MEMORANDUM DECISION AND ORDER

PETTINE, Senior District Judge.

This suit is before this Court on cross-motions for summary judgment of plaintiff, Leo D. Bleau, defendants Mary Hackett, Director, Rhode Island Department of Employment Security ("DES"); Henry F. Murray, Chairman, Board of Review, DES; E. Rex Coman and Francis P. McEntee, Members, Board of Review, DES; and Defendant-Intervenor United States Department of Labor. The issue presented is whether § 3304(a)(15)(A)(i) of the Federal Unemployment Tax Act, 26 U.S.C. § 3304(a)(15)(A)(i) ("§ (A)(i)"), permits DES to reduce the unemployment compensation of Social Security recipients whose base period employer contributed to Social Security and who became eligible for Social Security benefits as the result of work performed for a non-base period employer. For the reasons below, summary judgment is granted in favor of defendants and denied to plaintiff Bleau.

Facts and Background

Plaintiff Bleau is seventy three years old. He began receiving Social Security retirement payments in 1972, after his retirement from the company where he worked as a truck driver for twenty-three years. Plaintiff and his employer had each contributed 50% of Federal Insurance Contribution (FICA) taxes on plaintiff's behalf. Agreed Statement of Facts ¶¶ 1, 6-8. On or about November, 1980, plaintiff began working as a janitor. Id. at ¶ 10. The second employer and plaintiff each contributed 50% of FICA taxes on plaintiff's behalf. Plaintiff had not worked for this employer prior to his retirement. After being laid off in May, 1982, plaintiff applied for unemployment benefits through DES. Id. at ¶¶ 10-13.

DES concluded that plaintiff was eligible for unemployment benefits, but reduced those payments by his Social Security pension payments, prorated weekly. Id. at ¶ 16. After exhausting his administrative remedies, plaintiff filed suit, contending that the state defendants' "policy implementing" 26 U.S.C. § 3304(a)(15) violates the equal protection and due process clauses of the fourteenth amendment to the Constitution; 42 U.S.C. § 1983; and the "when due" provision of the Social Security Act, 42 U.S.C. § 503(a)(1). Complaint ¶ 29. Plaintiff asks this Court to invalidate the state defendants' interpretation of the pension offset provision and to pay retroactive unemployment benefits.

On August 5, 1983, this Court certified this suit as a class action consisting of all individuals eligible to receive unemployment benefits since January 1, 1981 through DES, who "have had or will have" those benefits reduced due to the receipt of Social Security retirement payments or Railroad Retirement Act payments "where the receipt of the retirement payments is based upon wages paid by an employer ... other than the claimant's base period employer." See Order for Class Certification (Aug. 5, 1983).

Statutory Background

Plaintiff challenges the state defendants' interpretation of § 28-44-19.1 of the Rhode Island General Laws. DES reduces the unemployment compensation payable to a laid-off worker by the amount of pension income the individual receives "when a base period employer has contributed to or maintained the pension program." DES Memorandum Re: Pension Reduction at 1 (Oct. 22, 1980), Agreed Statement of Facts, Ex. 3.¹ DES implemented this procedure in response to a 1980 amendment to the Federal Unemployment Tax Act, 26 U.S.C. § 3301 et seq.

The Federal Unemployment Tax Act ("FUTA") requires, as a condition for granting federal unemployment tax credits to employers in each state, that the state unemployment compensation law conform to certain minimum federal requirements. See 26 U.S.C. § 3304(a). If a state law meets these requirements, the Secretary of Labor must "approve" that law and "certify" that state to the Secretary of the Treasury. See 26 U.S.C. § 3304(a), (c).

To receive approval, the state law must contain, inter alia, the provision required by 26 U.S.C. § 3304(a)(15). As originally enacted in 1976, but with a deferred effective date, this provision required the states to reduce the amount of a claimant's unemployment compensation by the amount the individual received from

a governmental or other pension, retirement or retired pay, or any other similar periodic payment which is based on his previous work....

P.L. 94-566, Title III, § 314(a); 90 Stat. 2680.

In 1980, Congress modified 26 U.S.C. § 3304(a)(15). P.L. 96-364, Title IV, § 414, 94 Stat. 1310. As amended, the statute requires the states to reduce the amount of a claimant's unemployment compensation only in certain situations where the

pension, retirement or retired pay, annuity, or similar payment is under a plan maintained (or contributed to) by a base period employer or chargeable employer (as determined by applicable law)....

26 U.S.C. § 3304(a)(15)(A)(i).²

The Secretary of Labor, as the administrator of § 3304 of FUTA, has interpreted § 3304(a)(15)(A)(i) as requiring that pension income, including Social Security pension income, must be offset if the unemployment claimant's base period employer contributes to the pension plan under which the pension is received, subject to the limitation of 26 U.S.C. § 3304(a)(15)(B). DOL's Employment and Training Administration issued "Unemployment Insurance Program Letter No. 7-81" ("UIPL 7-81"), which described the Secretary's position as follows:

if an individual retires from company C to collect Social Security and then goes to work for company D where the individual is also covered under the Social Security Act, and thereafter the individual is terminated, the Social Security pension would then be deductible since company D (base period employer) contributed to the same plan as company C.

UIPL 7-81, 47 Fed.Reg. 29904, 29906 (July 9, 1982).³

Social Security Offset

By its terms, § (A)(i) requires the offset of a pension payment whenever a base period employer contributes to the same pension plan under which the pension is received. Section (A)(ii) removes from this pension offset requirement all pensions, except for Social Security and Railroad Retirement, that were not enhanced by the base period employment. Section (B) then allows the states to reduce any offset by the amount of the individual's pension contribution. Rhode Island, however, has not adopted any such limitation.

Plaintiff contends, however, that Congress intended to permit an offset only when the unemployment claimant's base period employer was also the employer under which he established his eligibility for the pension payments which he receives. Plaintiff attempts to support his construction of the statute with portions of the legislative history which he argues are contrary to the apparent meaning of the statute.⁴ The briefs submitted by the parties reveal, however, that the legislative history is, at best, ambiguous. In contrast, the statutory language is clear. When a statute is unambiguous, legislative history generally should not be used to determine its meaning. See Tennessee Valley Authority v. Hill, 437 U.S. 153, 184 n. 29, 98 S.Ct. 2279, 2296 n. 29, 57 L.Ed.2d 117 (1978); Fortin v. Marshall, 608 F.2d 525, 527-28 (1st Cir.1979); United States v. One Clipper Bow Ketsch Nisku, 548 F.2d 8, 11-12 (1st Cir.1977). An exception exists when a statute's plain meaning "would lead to an unreasonable result `plainly at variance with the policy of the legislation as a whole.'" Massachusetts Financial Services, Inc. v. Securities Investor Protection Corp., 545 F.2d 754, 756 (1st Cir.1976), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977), quoting United States v. American Trucking Associations, Inc., 310 U.S. 534, 543, 60 S.Ct. 1059, 1063, 84 L.Ed. 1345 (1940), quoting Ozawa v. United States, 260 U.S. 178, 194, 43 S.Ct. 65, 67, 67 L.Ed. 199 (1922). See Bob Jones University v. United States, 461 U.S. 574, 103 S.Ct. 2017, 2025, 76 L.Ed.2d 157 (1983). This is not the case here.

Section 3304(a)(15) clearly provides that Social Security pensions must be offset against unemployment benefits whenever a claimant's base period employer contributes to the Social Security plan.⁵ The Secretary of Labor's construction has been upheld by the United States Courts of Appeals which have considered the issue, and by other district courts. Bowman v. Stumbo, 735 F.2d 192 (6th Cir.1984); Rivera v. Becerra, 714 F.2d 887 (9th Cir.1983), cert. denied sub nom. International Union, UAW v. Donovan, ___ U.S. ___, 104 S.Ct. 1591, 80 L.Ed.2d 124 (1984); Peare v. McFarland, 577 F.Supp. 791 (N.D.Ind. 1984), appeal pending, Civ. No. 84-1360 (7th Cir.); Duso v. Adams, 600 F.Supp. 3 (D.N.H.1983). The Ninth Circuit's rejection of the very construction advocated by plaintiff Bleau is equally applicable here:

Section 3304(a)(15)(A)(i) says that if a base period employer contributes to social security, then the unemployment benefits must be offset by the social security benefits. The statutory language does not permit another interpretation. The offset applies under section 3304(a)(15)(A)(i) if the base period employer "contributed" to the "plan" from which the pension benefits are derived. Unlike section 3304(a)(15)(A)(ii), which does not apply to social security benefits, section 3304(a)(15)(A)(i) does not say the offset will not apply if the base period contributions did not affect eligibility for or the amount of the pension benefits.

Rivera, 714 F.2d at 892 (first emphasis added, second emphasis in original). The Sixth Circuit also was "convinced that the...